Johnson v. Metro. Prop. & Cas. Ins. Co.

97 F.4th 1223

Bryar G. JOHNSON, Plaintiff - Appellant, v. METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY,d/b/a Metlife Auto and Home, Defendant - Appellee.

No. 23-6061

United States Court of Appeals, Tenth Circuit

FILED April 8, 2024

Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. 5:21-CV-00490-JD)

Rex Travis of Travis Law Office, Oklahoma City, Oklahoma, for Plaintiff - Appellant.

Michael Woodson (Nevin R. Kirkland with him on the brief) of Edmonds Cole Law Firm, PC, Oklahoma City, Oklahoma, for Defendant - Appellee.

Before HARTZ, PHILLIPS, and CARSON, Circuit Judges.

PHILLIPS, Circuit Judge.

Bryar Johnson was seriously injured in a traffic accident in Tulsa, Oklahoma. First, a lane-changing car collided with his motorcycle, and then another car ran him over and dragged him down the road. After collecting the liability limits from the other two drivers' insurance policies, Bryar claimed uninsured motorist (UM) coverage from his parents' automobile policy with Metropolitan Property and Casualty Insurance Company (MetLife). MetLife denied Bryar's claim under an exclusion to his parents' policy that denies coverage to resident-relative insureds injured while operating their own motor vehicle that is "not insured by a motor vehicle insurance policy." App. vol. I, at 68. Though Bryar carried liability insurance on his motorcycle, he had declined to purchase the offered UM coverage.

Guided by Oklahoma's UM caselaw interpreting its motor-vehicle-insurance statutes, we conclude that MetLife's exclusion does not defeat UM coverage for Bryar. Because Bryar carried liability insurance on his motorcycle, we hold that his motorcycle was "insured by a motor vehicle insurance policy." In its UM exclusion, MetLife chose not to require that resident-relative insureds (as Bryar was) carry UM coverage on their own motor vehicles to be eligible for UM benefits on other applicable policies (as his parents' policy was to him). That means MetLife owes Bryar UM coverage from his parents' policy. For this and the reasons below, we affirm in part, reverse in part, and remand.

BACKGROUND

I. Factual Background

In November 2018, Bryar was in an auto accident involving two other cars while riding his motorcycle in Tulsa, Oklahoma.¹ The first motorist changed lanes immediately in front of Bryar's motorcycle, causing Bryar to collide with the rear of the car. The collision ejected Bryar off his motorcycle onto the road. Then, a second motorist ran over Bryar and dragged him about 150 feet before stopping.

Both motorists paid out the state-mandated $25,000 per person liability limits on their auto policies. See Okla. Stat. tit. 47, § 7-324. Because Bryar's injuries exceeded this amount, Bryar sought additional UM benefits as a resident-relative covered under his parents' (the Johnsons') MetLife policy.² But MetLife denied Bryar's UM claim, asserting that its policy excluded coverage to resident-relatives operating their own motor vehicles without UM coverage. So even though Bryar had bought liability insurance for the motorcycle with GEICO, MetLife required that he carry UM coverage, too.

The MetLife policy includes an endorsement for UM coverage up to $250,000 per person, including relatives. The policy defines "relative" as "a person related to [the policyholder] by blood, marriage or adoption . . . who resides in [the policyholder's] household." App. vol. I, at 26 ¶ 13. MetLife has stipulated that Bryar met this definition at the time of the accident.³ Yet, MetLife denied Bryar's UM claim under the following policy exclusion:

We do not cover you or a relative who owns, leases or has available for their regular use, a motor vehicle if such motor vehicle is not insured by a motor vehicle insurance policy.

Id. at 68.

Bryar had bought a motor vehicle insurance policy with GEICO providing liability coverage for his motorcycle, but he had declined GEICO's offer for UM coverage. Based on that, MetLife contended that the motorcycle had not been "insured by a motor vehicle insurance policy" at the time of the accident. Id. So, MetLife denied Bryar's UM claim.

II. Procedural Background

Bryar sued MetLife in Oklahoma state court for breach of contract. Bryar claimed that he was entitled to recover benefits as an insured under the Johnsons' policy because he carried a liability-insurance policy with GEICO. He argued that this satisfied MetLife's requirement that he carry a "motor vehicle insurance policy" on his motorcycle. App. vol. I, at 15. MetLife removed the case to federal district court, based on diversity jurisdiction.⁴ MetLife then moved for summary adjudication and judgment that "[MetLife's] policy contains a valid and enforceable exclusion under Oklahoma law" and summary judgment on Bryar's breach-of-contract claim.⁵ Id. at 70. Bryar cross-moved for partial summary judgment "that there is $250,000 underinsured motorist coverage for [his] injuries." App. vol. II, at 1. Almost two months after Bryar moved for partial summary judgment, he filed for leave to amend his complaint under Federal Rule of Civil Procedure 15(a)(2) to add a claim for bad faith.⁶

Before the district court held a hearing on the competing motions, the parties stipulated to the few material facts, enabling the court to turn to the legal issue of insurance coverage. Reviewing Oklahoma's UM statute, Okla. Stat. tit. 36, § 3636, and the applicable caselaw, the court ruled for MetLife. The court found it dispositive that "[a]lthough [Bryar] was a resident relative and insured under his parents' policy, [he] had the opportunity to purchase his own UM coverage, but he declined it." App. vol. I, at 150. In other words, the court read Oklahoma law as requiring Bryar to either obtain liability insurance and UM coverage on his motorcycle policy or forego UM coverage under his parents' policy. See id. (citing Ball v. Wilshire Ins. Co., 221 P.3d 717, 730 (Okla. 2009); Vickers v. Progressive N. Ins. Co., 353 F. Supp. 3d 1153, 1161 (N.D. Okla. 2018)). That is, the district court read "motor vehicle insurance policy" as requiring UM coverage too.

Next, the district court denied Bryar's motion to amend his complaint. It ruled that the bad-faith claim was untimely under Oklahoma's two-year statute of limitations for claims arising in tort, making Bryar's motion to amend his complaint futile.

In the end, the court granted MetLife's motion for summary judgment, denied Bryar's motion for partial summary judgment, denied Bryar's motion for leave to amend, and entered judgment for MetLife.

Bryar filed a timely notice of appeal. We have jurisdiction under 28 U.S.C. § 1291.

III. Legal Background

In 1968, the Oklahoma legislature enacted Okla. Stat. tit. 36, § 3636, which governs "Uninsured motorist coverage." The statute requires all auto-insurance carriers to offer policyholders UM coverage with any general liability auto policy. See id. § 3636(A), (B). Policyholders may reject the UM coverage in writing. See id. § 3636(G).

If a policyholder accepts UM coverage, then the insurance carrier must provide such coverage "for the protection of persons insured thereunder . . . to recover damages from owners or operators of uninsured motor vehicles . . . because of bodily injury." Id. § 3636(B).⁷ But § 3636(E) permits insurance carriers to exclude that otherwise-guaranteed UM coverage to insureds in limited situations. Section (E) provides:

For purposes of this section, there is no coverage for any insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the named insured, a resident spouse of the named insured, or a resident relative of the named insured, if such motor vehicle is not insured by a motor vehicle insurance policy.

Tracking § 3636(E), MetLife's UM endorsement excludes coverage to insureds as follows:

We do not cover you or a relative who owns, leases or has available for their regular use, a motor vehicle if such motor vehicle is not insured by a motor vehicle insurance policy.

App. vol. I, at 68 (emphases omitted and added).

Section 3636 has spawned much Oklahoma state and federal caselaw, laying the boundaries for UM coverage and coverage exclusions under § 3636(E). But the Oklahoma Supreme Court has not decided the precise issue presented in this appeal. So "we must determine what decision the state court would make if faced with the same facts and issue." Phillips v. State Farm Mut. Auto. Ins. Co., 73 F.3d 1535, 1537 (10th Cir. 1996) (cleaned up). Oklahoma state courts and federal courts have produced a consistent line of authority that informs our analysis. See Reeves v. Enter. Prods. Partners, LP, 17 F.4th 1008, 1012 (10th Cir. 2021) (advising that "a clear trend" of state law "can help give guidance to how we should apply state law" (citation omitted)).

DISCUSSION

Bryar appeals the district court's denial of his motion for partial summary judgment and its grant of summary judgment for MetLife, as well as the court's denial of his motion to amend his complaint to assert a bad-faith-insurance claim.

I. Motion for Summary Judgment

We review de novo a district court's grant of summary judgment, "applying the same legal standard the district court used." Edens v. Netherlands Ins. Co., 834 F.3d 1116, 1120 (10th Cir. 2016) (citation omitted). The parties stipulated to the material facts, so we can immediately consider whether Bryar is entitled to UM coverage under MetLife's policy as a matter of law. See Fed. R. Civ. P. 56(a). Because this is a diversity-of-citizenship case, we apply Oklahoma's substantive law in interpreting MetLife's policy. Genzer v. James River Ins. Co., 934 F.3d 1156, 1167 (10th Cir. 2019).

The district court granted MetLife summary judgment on Bryar's breach-of-contract claim, reasoning that Bryar "had an opportunity to purchase UM coverage for his personal protection and declined [it] in writing." App. vol. II, at 151. According to the court, this meant that MetLife "ha[d] no coverage...