Thurston v. State Farm Mut. Auto. Ins. Co.

478 P.3d 415

Eric M. THURSTON, Plaintiff/Petitioner,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Yearout Insurance Agency, Inc., and Janis Yearout, Individually, Defendants/Respondents.

No. 118,636

Supreme Court of Oklahoma.

FILED DECEMBER 8, 2020

Derek S. Franseen, Walsh & Franseen, Edmond, OK, and Monty Cain and Anthony M. Alfonzo, Cain Law Office, Oklahoma City, OK, for Plaintiff/Petitioner, Eric M. Thurston.

Joseph T. Acquaviva, Jr., Wilson, Cain & Acquaviva, Oklahoma City, OK, and Galen L. Brittingham, Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, Tulsa, OK, for Defendant/Respondent, State Farm Mutual Automobile Insurance Company.

Rex Travis, Travis Law Office, and James A. Scimeca, Burch, George & Germany, P.C., Oklahoma City, OK, for Amicus Curiae, Oklahoma Association for Justice.

Brad Smith and Michelle B. Harris, Steidley & Neal, P.L.L.C., Tulsa, OK, for Amici Curiae, Oklahoma Association of Defense Counsel, the American Property Casualty Insurance Association, and the National Association of Mutual Insurance Companies.

DARBY, V.C.J.,

¶1 In January 2020, the Oklahoma County District Court granted summary adjudication in favor of State Farm Mutual Automobile Insurance Co. (State Farm), Defendant. The question before this Court is whether State Farm expressly provided for stacking of uninsured motorist policies, pursuant to 36 O.S. Supp. 2014, § 3636(B), by charging and accepting separate premiums for uninsured motorist coverage on separate policies. We answer in the negative.

I. STANDARD OF REVIEW

¶2 "[S]ummary adjudication, like summary judgment, settles only questions of law." Am. Biomedical Grp. v. Techtrol, Inc. , 2016 OK 55, ¶ 2, 374 P.3d 820, 822. Statutory interpretation is also a question of law. Raymond v. Taylor , 2017 OK 80, ¶ 9, 412 P.3d 1141, 1143-44. We review questions of law de novo. Techtrol , 2016 OK 55, ¶ 2, 374 P.3d at 822. Summary adjudication will be affirmed only if the appellate court determines that there is no dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Id. ; see also 12 O.S.2011, § 2056(C).

II. BACKGROUND & PROCEDURAL HISTORY

¶3 In 2012, Eric M. Thurston, Plaintiff, first obtained automobile liability insurance through State Farm. At that time, Thurston inquired whether uninsured motorist (UM) coverage on multiple policies would stack. He was told yes.

¶4 State Farm's standard procedure is to only print new declaration pages when a policy issuance transaction, such as change of coverage, occurs. R. at 115, 169. In July 2013 and June 2014, the most recent policy issuance transactions for Thurston's 2013 Chevrolet K1500 and 2012 Toyota Camry, respectively, occurred. The corresponding declaration pages that were issued stated the policies were subject to any endorsements issued with subsequent renewal notices. R. at 115, 118, 167, 169.

¶5 In 2014, the Oklahoma Legislature amended title 36, section 3636(B) to "prohibit[ ] the stacking of certain insurance policies." 2014 Okla. Sess. Laws 1139. The amended statute provides that "[p]olicies issued, renewed or reinstated after November 1, 2014, shall not be subject to stacking or aggregation of limits unless expressly provided for by an insurance carrier." 36 O.S. Supp. 2014, § 3636(B). Over the next year and a half, Thurston added and removed several vehicles from his policies with State Farm and renewed other vehicle policies.

¶6 In July 2015, State Farm included "Important Notice" paperwork with the mailed Auto Renewal information for Thurston's 2013 Chevrolet and 2012 Toyota stating:

UNINSURED MOTOR VEHICLE COVERAGE

As a result of Oklahoma Senate Bill 991, the "If Other Uninsured Motor Vehicle Coverage Applies" provision has been amended to state that stacking of Uninsured Motor Vehicle Coverage from policies issued by the State Farm Companies to the named insured or resident relatives is not allowed.

R. at 211-12, 215, 254-55. The notice stated that changes that did not broaden coverage were effective on the first renewal on or after August 3, 2015. R. at 211. It also explained that "Endorsement 6128AP ... makes these changes to [the] policy." R. at 212. In September 2015, State Farm also mailed the same "Important Notice" with the Auto Renewal information for Thurston's 2015 Cadillac SRX. R. at 291-92.¹

¶7 In January 2016, State Farm mailed Thurston a copy of the declaration page for his 2015 Chevrolet K1500, and attached a copy thereof. R. at 232-35. The declaration page stated the policy was subject to Amendatory Endorsement 6128AP. R. at 237-39. Amendatory Endorsement 6128AP stated in relevant part:

If Uninsured Motor Vehicle Coverage provided by this policy and one or more other vehicle policies issued to you or any resident relative by the State Farm Companies apply [sic] to the same bodily injury , then:

a. the Uninsured Motor Vehicle Coverage limits of such policies will not be added together to determine the most that may be paid; and

b. the maximum amount that may be paid from all such policies combined is the single highest applicable limit provided by any one of the policies. We may choose one or more policies from which to make payment.

R. at 122, 243 (emphasis original). The January declaration page for the 2015 Chevrolet K1500 did not denote UM coverage on the policy, but a declaration page prepared March 1, 2016, indicated that the policy had been augmented with UM coverage and again noted the policy included Amendatory Endorsement 6128AP. See R. at 237, and R. at 161-65.

¶8 On June 9, 2016, Thurston was injured in an automobile accident. At that time, Thurston had three separate, six-month term, insurance policies with State Farm, with separate UM coverage on each, for which Thurston paid three separate premiums. The accident vehicle had $25,000 in UM coverage and the other two vehicles each had $50,000 in UM coverage.² After determining that Thurston's medical expenses from the accident exceeded the at-fault driver's policy limits, State Farm initially paid Thurston $25,000 in UM benefits under the policy for the vehicle involved in the accident. State Farm eventually paid Thurston another $25,000 under a second policy, for a total of $50,000 in paid UM benefits—i.e. , the "single highest applicable limit provided by any one of the policies." While Thurston's injuries exceeded that amount, State Farm refused further payment.

¶9 Thurston brought claims against State Farm, Janis Yearout (Agent), and Yearout Insurance Agency (Agency) for fraud, breach of contract, bad faith, and failure to procure appropriate coverage. In April 2019, Thurston filed his third amended petition arguing, in part, that State Farm expressly provided for stacking, pursuant to section 3636, when it continued to charge and accept full premiums on multiple policies without advising that the policies no longer stacked. In support, Thurston submitted his deposition testimony that he did not recall receiving notice of changes in policy language after the 2014 statutory amendment. Thurston alleged that his claims were also supported by State Farm's internal claim documents, which described the policy for the accident vehicle as "stacking" with another. R. at 381-83.

¶10 Agent acknowledged that Thurston was told the policies would stack in 2012, but claimed that she or a member of her staff had spoken to Thurston about State Farm eliminating stacking UM coverage when Thurston made coverage changes in 2015 and 2016. State Farm asserted that Thurston received written notice regarding SB 991 and the new policy endorsement. State Farm submitted affidavits from a PIM ("Printing Inserting and Mailing") Supervisor, based on his review of records, in which he asserted that all of the alleged notices and enclosures were delivered to the United States Postal Service for mailing to Thurston, in accordance with procedures, and not returned to State Farm. State Farm also argued that the policies were unambiguous and specifically provided that UM coverage does not stack. State Farm filed a motion for summary adjudication requesting the court declare that, pursuant to 36 O.S. Supp. 2014, § 3636(B), the automobile policies issued by State Farm to Thurston do not provide stackable UM coverage as a matter of law.

¶11 On October 11, 2019, the district court held a hearing on the motion; sua sponte noted a recent federal case finding UM coverage stacked under Oklahoma law, Shotts v. GEICO General Ins. Co. , No. CIV-16-1266-SLP, 2018 WL 4832625 (W.D. Okla. 2018) ; and denied summary adjudication to State Farm, based on Shotts . On November 13, 2019, State Farm requested the court reconsider its ruling because the accident in Shotts occurred before section 3636 was amended, therefore the case was inapposite.

¶12 On January 16, 2020, the district court granted the motion to reconsider, vacated the original order denying summary adjudication, and granted the motion for summary adjudication in State Farm's favor. The court ruled that the act of charging additional premiums for multiple vehicles does not fall within the exception provided in section 3636. The court certified the order for interlocutory review. We previously granted certiorari.

III. ANALYSIS

¶13 Title 36, section 3636 of the Oklahoma statutes requires that insurers offer UM coverage for every motor-vehicle liability insurance policy extended.³ UM coverage of an injured person stems from that individual falling within the definition of "insured" under a policy. State Farm Mut. Auto. Ins. Co. v. Wendt , 1985 OK 75, ¶ 11, 708 P.2d 581, 586 (quoting Babcock v. Adkins , 1984 OK 84, ¶ 14, 695 P.2d 1340, 1343 ). Prior to the recent amendment, the UM statute made no mention of stacking or aggregating UM policy limits. See 36 O.S.2011, § 3636.

¶14 UM coverage attaches to an insured "no matter where they are or in what circumstances they may be in when they are injured through the negligence of an uninsured motorist." Babcock , 1984 OK 84, ¶ 13, 695 P.2d at...