Opinion
Case Number: 117311
12-12-2020
BRYAN LINN and CARRIE LINN, Plaintiffs/Appellees, v. OKLAHOMA FARM BUREAU MUTUAL INSURANCE COMPANY, Defendant/Appellant.
James A. Scimeca, BURCH, GEORGE & GERMANY, P.C., Oklahoma City, Oklahoma, and Paul A. Bezney, Marlene Thomson, ADKERSON, HAUDER & BENZNEY, Dallas, Texas, for Plaintiffs/Appellees David B. Donchin, Katherine T. Loy, Kaci L. Trojan, DURBIN, LARIMORE & BIALICK, Oklahoma City, , for Defendant/Appellant
APPEAL FROM THE DISTRICT COURT OF
GRADY COUNTY, OKLAHOMA
HONORABLE KORY KIRKLAND, TRIAL JUDGE
AFFIRMED
James A. Scimeca, BURCH, GEORGE & GERMANY, P.C., Oklahoma City, Oklahoma, and Paul A. Bezney, Marlene Thomson, ADKERSON, HAUDER & BENZNEY, Dallas, Texas, for Plaintiffs/Appellees
David B. Donchin, Katherine T. Loy, Kaci L. Trojan, DURBIN, LARIMORE & BIALICK, Oklahoma City, , for Defendant/Appellant
P. THOMAS THORNBRUGH, PRESIDING JUDGE:
¶1 Oklahoma Farm Bureau Mutual Insurance Company (OFB) appeals the judgment resulting from the jury trial of a breach of contract and insurance bad faith case. On appeal, we affirm the court's order.
BACKGROUND
¶2 The Linns ran a cattle stocker operation. They purchased calves that were between 400 and 450 pounds, fed them until they were approximately 700 pounds, and then sold them by the pound. The Linns began financing the purchase of calves through National Livestock Credit Union in 2012. During a quarterly inventory verification count conducted in June 2013 by Jim White of National, the Linns discovered as many as 500 head were missing. The missing cattle were never located.
¶3 The Linns had a policy with OFB that covered loss of cattle by theft if theft was "likely," and in August 2013 they filed a proof of loss with OFB. OFB did not pay the claim, apparently on the basis that it did not deem that theft was "likely." The Linns alleged that, as a result of this shortfall, their stocker operation failed, and they went out of business. In February 2014, the Linns filed suit alleging breach of contract and bad faith claims handling. At the conclusion of a jury trial, the jury found for the Linns and awarded them $566,000 on their breach of contract claim, $650,000 in bad faith damages, and $250,000 in punitive damages. OFB now appeals the judgment on that verdict.
STANDARD OF REVIEW
¶4 Several issues are raised, each with differing standards and conventions for review. As such, we will state the relevant standards of review in each individual section.
ANALYSIS
I. THE QUALIFICATION OF BURL DANIEL AS AN EXPERT WITNESS
¶5 OFB's first proposition of error is that the district court erred in allowing Burl Daniel to testify as an expert regarding insurance claims handling and bad faith. Under the Oklahoma Evidence Code, the trial court stands as a "gatekeeper," admitting or excluding evidence based on the judge's assessment of its relevance and reliability. Myers v. Missouri Pac. R. Co., 2002 OK 60, ¶ 36, 52 P.3d 1014. The clear abuse of discretion standard applies when we review a decision on the admissibility of expert testimony. In the context of a ruling on the relevance of proffered evidence, "a judgment will not be reversed based on a trial judge's ruling to admit or exclude evidence absent a clear abuse of discretion." Christian v. Gray, 2003 OK 10, ¶ 43, 65 P.3d 591, quoting Myers.
¶6 The admission of expert testimony in Oklahoma is governed by 12 O.S. § 2702.
If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training or education may testify in the form of an opinion or otherwise, if:
1. The testimony is based upon sufficient facts or data;
2. The testimony is the product of reliable principles and methods; and
3. The witness has applied the principles and methods reliably to the facts of the case.
Inquiries into this standard may include the compatible but more specifically stated requirements of the Daubert test adopted in Christian v. Gray, 2003 OK 10, 65 P.3d 591.
A. " Assisting the Trier of Fact"
¶7 OFB's first challenge argues that the question of whether an insurer's claims-handling duty was performed in good faith is not one upon which an expert should be allowed to testify because a jury needs no assistance to recognize bad faith in this context. OFB cites two opinions of a federal trial court in the Northern District of Oklahoma as persuasive authority to that effect. These opinions, if applied as characterized by OFB, directly contradict the holdings of the Oklahoma Supreme Court on this issue. Oklahoma has consistently recognized the assistance of experts in this area, and the law of bad faith in the handling of insurance claims is a matter of individual state law unless an ERISA plan or other preemptive federal legislation is implicated. See Hollaway v. UNUM Life Ins. Co. of Am., 2003 OK 90, 89 P.3d 1022. OFB asks this Court to depart from the mandatory precedent of the Oklahoma Supreme Court on the matter and change precedential Oklahoma common law to conform to these federal trial court opinions. We decline to do so.
Grove v. State Farm Fire & Cas. Co., 13-CV-754-JED-FHM, 2014 WL 11532321, (N.D. Okla. Aug. 26, 2014) and Higgins v. State Auto Prop. & Cas. Ins. Co., 11-CV-90-JHP-TLW, 2012 WL 2369007 (N.D. Okla. June 21, 2012).
See e.g., Heffron v. Dist. Court Oklahoma Cty., 2003 OK 75, ¶ 17, 77 P.3d 1069 (the reasonableness of any investigation conducted by the insurer is, thus, often one of the main issues in the bad faith tort case. Also, expert testimony on the adequacy or inadequacy of the carrier's pre-denial investigation may be relied on by both sides to support their respective positions in the case.); Hall v. Globe Life and Acc. Ins. Co., 1998 OK CIV APP 161, 968 P.2d 1263 (same); Guideone Am. Ins. Co., Inc. v. Shore Ins. Agency, Inc., 2011 OK CIV APP 69, ¶ 14, 259 P.3d 864 (expert testified that GuideOne "acted in bad faith in connection with Roberts' uninsured motorist claim."); Embry v. Innovative Aftermarket Sys. L.P., 2010 OK 82, ¶ 12, 247 P.3d 1158 (plaintiff offered an expert witness concerning the type of gap protection at issue. This expert explained in detail the ways in which the actions, omissions and decisions of the defendants violated industry standards and reflected bad faith).
B. " Qualified as an Expert by Knowledge, Skill, Experience, Training or Education"
¶8 OFB next argues that Daniel was not a "witness qualified as an expert by knowledge, skill, experience, training or education" pursuant to the first part of § 2702. The main thrust of OFB's argument is that, although Daniel held several certifications in various areas of insurance and risk management, he was not a licensed adjuster, nor had he actually worked as an adjuster. In Christian v. Gray, the Supreme Court explained that a clear abuse of discretion appellate standard applies when we review a decision on the admissibility of expert testimony, and a clear abuse of discretion may be shown by an error of law or an error of fact. "An abuse of discretion occurs when a court bases its decision on an erroneous conclusion of law or where there is no rational basis in evidence for the ruling." Nelson v. Enid Med. Associates, Inc., 2016 OK 69, ¶ 11, 376 P.3d 212. Although OFB's arguments raise questions as to Daniel's expert qualifications, they do not demonstrate a decision by the Court for which there is "no rational basis in evidence." We find no error in the admission of the testimony of Burl Daniel. Any questions as to the relevance of his qualifications and experience go to the weight the jury should have accorded his testimony, not its admissibility, and OFB had the opportunity to explore these issues at trial.
II. DIRECTED VERDICT
¶9 We review the denial of a motion for directed verdict de novo. Computer Publications, Inc. v. Welton, 2002 OK 50, 49 P.3d 732. In Badillo v. Mid Century Ins. Co., 2005 OK 48, 121 P.3d 1080 (as corrected June 22, 2005), the Supreme Court recognized that the essence of an action for breach of the duty of good faith and fair dealing "is the insurer's unreasonable, bad-faith conduct . . . and if there is conflicting evidence from which different inferences may be drawn regarding the reasonableness of insurer's conduct, then what is reasonable is always a question to be determined by the trier of fact by a consideration of the circumstances in each case." Badillo at ¶ 28, quoting McCorkle v. Great Atlantic Ins. Co., 1981 OK 128, 637 P.2d 583. Pursuant to this standard, the question before the district court was, therefore, whether the evidence was such that no juror applying the correct standards could find OFB's conduct in handling the claim was unreasonable or in bad faith.
A. The Parties' Positions
¶10 The core matter in this case is a question of theft, and OFB argues that it acted reasonably in delaying or not paying the Linns' claim because there was a reasonable dispute as to whether theft occurred. The parties appear to agree that the policy in question covered loss of cattle by theft if it was "likely" that the loss was due to theft. OFB's central argument is that a Texas Ranger, Kent Dowell, investigated the matter and stated to an OFB adjuster that he could find "no evidence" of theft. OFB argues that this report was sufficient to support a reasonable conclusion that theft was therefore not likely, and the insurer had no duty to pay the claim pursuant to the policy terms.
¶11 The Linns' counter-argument is that this conclusion was not based on a reasonable investigation of the circumstances of the alleged disappearances, but upon Ranger Dowell's mathematical calculation that there were either no missing cattle at all, or a maximum of 217 missing, a conclusion he arrived at by examining the Linns' books. The Linns argue that this report was wrong because of a simple math error by Ranger Dowell that should have been obvious during any reasonable investigation, and that OFB could not have reasonably relied on it because it was inconsistent with most of the other evidence.
B. "Reasonable Conduct" and "Legitimate Dispute"
¶12 Badillo clearly statesthat, when there is conflicting evidence from which different inferences may be drawn regarding the reasonableness of an insurer's conduct, what is reasonable is always a question to be determined by the trier of fact. This standard must be integrated with another doctrine, that of a "legitimate dispute as to coverage" precluding bad faith. For example, in Andres v. Oklahoma Farm Bureau Mut. Ins. Co., 2009 OK CIV APP 97, ¶ 18, 227 P.3d 1102, this Court held that, when insurer OFB denied a claim on the ground that the claim was not covered by the policy, it relied upon decisions from nine other jurisdictions which supported its theory, its legal theory was plausible, and there was no Oklahoma precedent. This established the good faith of the insurer's interpretation of the policy and hence a legitimate dispute as to coverage, even though OFB's interpretation was later found to be contrary to Oklahoma law.
¶13 Situations similar to that presented here are less clear cut as to what behavior or reliance is reasonable, and often present a jury question. The question here was not primarily a legal dispute as to policy interpretation, but one of whether there was a reasonable and legitimate factual dispute as to theft pursuant to the Badillo standard. In clear situations such as Andres where the dispute is primarily legal, i.e., one based on the interpretation of policy language, it is often possible for a court to determine reasonableness as matter of law.
¶14 Here, however, the coverage dispute was a purely factual dispute as to whether theft had "likely" occurred. In such a case, "reasonableness" tends more towards becoming a jury question. The fact pattern here was complex and did not lend itself to resolution as a matter of law. We find no error in the district court's refusal of a directed verdict.
III. EVIDENTIARY RULINGS DURING TRIAL
¶15 Under the Oklahoma Evidence Code, the trial court stands as a "gatekeeper," admitting or excluding evidence based on the judge's assessment of its relevance and reliability. Myers v. Missouri Pac. R. Co., 2002 OK 60, ¶ 36, 52 P.3d 1014. All relevant evidence is admissible, unless the trial court determines that "its probative value is substantially outweighed by the danger of unfair prejudice, confusion of issues, misleading the jury, undue delay, needless presentation of cumulative evidence, or unfair and harmful surprise." Id. A trial court has discretion in deciding whether proffered evidence is relevant and, if so, whether it should be admitted, and a judgment will not be reversed based on a trial judge's ruling to admit or exclude evidence absent a clear abuse of discretion. Id.
A. Polygraph Tests
¶16 OFB raises a claim of error regarding the court's refusal to allow OFB to discuss two facts at trial: 1) that Bryan Linn and ranch hand Loren Zeiset were given polygraph tests as part of OFB's claims investigation, and that Loren Zeiset's test indicated he was telling the truth, and Bryan Linn's test was 'inconclusive;" 2) the fact that these tests were administered by agents of the U.S. Secret Service.
¶17 Oklahoma law has conclusively established that the results of polygraph tests are inadmissible before a jury. "Today, we reaffirm that polygraph evidence is inadmissible in criminal and civil proceedings." Collier v. Reese, 2009 OK 86, ¶ 17, 223 P.3d 966. Courts have further frowned upon mentioning polygraph tests that have not been introduced into evidence. Hames v. Anderson, 1977 OK 191, 571 P.2d 831, held that a reference to a jury that a party had volunteered and taken such a test was incompetent, although in that case it did not rise to the level of prejudice necessary to overturn a verdict. Hames was clear, however, that "Any reference to such tests in the presence of the jury in future trials is discouraged."
¶18 OFB relies on Conti v. Republic Underwriters Ins. Co., 1989 OK 128, 782 P.2d 1357 and Williamson v. Emasco Ins. Co., 696 F. Supp. 1583, 1583 (W.D. Okla. 1988) as contrary authority. The Conti Court held that a trial court could take the polygraph results into account when considering the appellant's motion for a directed verdict in a bad faith case, because the insurer's reliance on the polygraph could bolster the defense of the reasonableness of the insurer's conduct in assessing the claim. OFB attempts to go beyond the rule of Conti, however, and argue that not only should a judge be allow to consider polygraph results in deciding a directed verdict, but also that a jury should be allowed to consider polygraph results in determining if an insurer acted in good faith. Conti rejected this very proposal. "We remain committed, however, to the rule that it is error to allow the jury to hear such evidence." Id., ¶ 24. We find the Oklahoma precedents on this issue clear. Any contrary view expressed by the federal Western District of Oklahoma in Williamson v. Emasco Ins. Co., 696 F. Supp. 1583, 1583 (W.D. Okla. 1988) was expressed prior to Conti and has no value in this inquiry. We find no error in the district court's exclusion of this evidence.
¶19 OFB further argues that the court erred in refusing any mention that the Secret Service "had been involved in the investigation." We fail to find any relevance in the fact that the Secret Service conducted the inadmissible polygraph tests. Such a statement appears designed to impermissibly bolster the jury perception of "reasonable investigation" by implying that the Secret Service, not OFB, directed and carried out the claims investigation.
B. The Email from the Linns' Counsel to the Linns That They Forwarded to National Livestock
¶20 During litigation, counsel for the Linns sent Bryan Linn emails discussing various aspects of the case. These emails appear to have included both ordinary and opinion work product. Bryan Linn then forwarded the contents of one such e-mail to a Mr. John Rich at National Livestock Credit Union, apparently as part of an attempt to convince National Livestock to extend the terms of a loan by demonstrating that the Linns had a good chance of recovering insurance proceeds from OFB.
¶21 OFB obtained this email through discovery and argued that privilege was waived and it could introduce the email as evidence. OFB's brief states that "the trial court erred in not allowing into evidence an email from Plaintiff's counsel to Plaintiffs which acknowledged problems with his case and was inconsistent with the position Plaintiffs took at trial." (BIC p. 22.) The brief cites passages of volumes V and VII of the trial transcript. In volume V, the question of the email was raised, and the court made a provisional ruling that it was inadmissible. The next day, counsel for OFB attempted to have the email deemed admissible on a different theory. In volume VII of the transcript, after a discussion that begins at p. 1382 and ends at p. 1412, the trial judge states that "I'm going to admit it [the email]." Counsel for OFB than questioned Bryan Linn regarding the email at pages 1423-1427 of the transcript, but did not attempt to introduce it into evidence.
¶22 Assuming that the email was admissible, if OFB proposes any error, it must be that the failure to deem the email admissible on November 1, as opposed to November 2, was somehow prejudicial to its case. We find no such argument in its brief, however, and no error by the trial court on this question.
C. Speculation
¶23 OFB argues that "the trial court let multiple witnesses engage in pure speculation that cattle were missing due to theft." The witness OFB identifies as engaging in such speculation is James White of National Livestock Credit Union, the organization that had loaned the Linns money to buy the missing cattle, and had initiated the audit inspection to determine if all the cattle in which the credit union had a security interest were still present. White did state that he had reached a conclusion that the missing cattle were likely stolen, and clearly stated the facts he took into account to reach this conclusion. See Tr. Trans., Vol. II, pp. 291-300. OFB's objection therefore goes to the weight or credibility the jury should have given Mr. White's testimony on this issue, not its admissibility.
D. "False Representations"
¶24 OFB next argues that the court erred in limiting testimony on the alleged involvement of ranch hand Loren Zeiset in any theft to a statement that there was "not sufficient information or evidence" to show that Zeiset was involved. OFB agrees that the phrase "not sufficient information or evidence" constitutes a false representation of the result of the investigation. OFB wished instead to introduce testimony that Zeiset was "cleared" by the investigation.
¶25 The court's ruling arose because, if Zeiset was "cleared," it was by the inadmissible polygraph test previously discussed. OFB argued previously that the jury should have been informed of the polygraph tests because their existence and results supported the good faith of the insurer's action. We rejected this argument based on Supreme Court precedent. OFB now resurrects it by a different means.
¶26 OFB argues that it should be allowed an evidentiary harpoon and to elicit testimony that Zeiset was "cleared," while the Linns could not explore that statement or conclusion on cross-examination without "opening the door" to the inadmissible polygraph evidence that OFB wished to introduce. We find no indication in current case law that passing a polygraph test "clears" a suspect as a matter of law. Hence we find no error in the court's decision. It represents a reasonable compromise between allowing OFB to present its case and excluding the inadmissible polygraph evidence. We find no clear abuse of discretion in this matter.
E. Post-Suit Conduct
¶27 OFB next argues, citing Andres v. Oklahoma Farm Bureau Mut. Ins. Co., 2012 OK CIV APP 93, 290 P.3d 15, as persuasive authority, that the trial court erred by allowing its adjuster to be questioned "regarding not paying until the time of trial." OFB raises the same objection to the court allowing counsel to ask questions regarding the report of one Billy Clay, an investigator hired by OFB, on the grounds that the report was not actually submitted to OFB until after suit was filed.
¶28 The Supreme Court noted in Lewis v. Farmers Ins. Co., Inc., 1983 OK 100, 681 P.2d 67, that "a substantial part of the right purchased by the insured is the right to receive benefits promptly. Unwarranted delay causes the sort of economic hardship which the insured sought to avoid by the purchase of the policy, and results in possible mental stress which may result from the loss." Delay is clearly an element that factors into a jury determination in such a case. A bad faith plaintiff's consequential damages do not cease accruing on the date suit is filed. Any business harm done by non-payment of the claim continued to accrue, proximately caused by OFB's action. It would eviscerate the recognized tort of bad faith to hold that all damages cease to accrue at the moment suit is filed.
¶29 Regarding the second argument, OFB appears to interpret the holding of Andres beyond that intended. Andres confirmed the longstanding rule that unsuccessful litigation of a claim based on a good faith dispute as to value does not, in itself, constitute bad faith. It further confirmed that "to hold an insurer's acceptable litigation tactics as evidence of bad faith would be to deny the insurer a complete defense." (Emphasis added).
¶30 However, the situation in Andres was quite different from that presented here. In Andres, this Court initially upheld a summary judgment unfavorable to Andres' bad faith claim, but found her claim was covered by the policy in question. We remanded the matter for a determination of the value of the claim. On remand, Andres attempted to amend and add an additional bad faith claim based solely on the insurer's conduct on remand, arguing thatOFB "simply sat back and waited for Plaintiff to 'prove'" her claim's value "without ever proffering its own evaluation." Andres at ¶ 3. In response, we noted:
It is now the law of this case--and therefore not disputed--that OFB's initial denial of Plaintiff's claim was reasonable under the circumstances. It also is undisputed that the entirety of OFB's conduct--or failure to act--of which Plaintiff now complains occurred completely within the context of the parties' appropriate exercise of their rights in litigation. As such, the undisputed facts demonstrate that summary judgment in favor of OFB in this case was warranted.
¶31 OFB interprets this holding, however, as automatically excluding any and all evidence of an insurer's activities after a plaintiff files suit. It does so based on a quote from a treatise that was cited in Andres: Allan D. Windt, 2 Insurance Claims and Disputes 5th: Representation of Insurance Companies & Insureds, § 9:28. The quote from the Windt treatise stated that "normal claims handling is superseded by the litigation proceeding" and that an insurer "relie[s] upon its counsel to conduct an investigation that is appropriate in a litigation context." Hence, OFB argues, nothing that occurred after the date of suit was relevant evidence as to OFB's alleged bad faith.
¶32 If we examine the full passage from § 9:28 of the Windt treatise, however, an opposite rule to that proposed by OFB is stated.
It should logically make no difference when or how an insurer learns that policy benefits are owed; once it learns that benefits are owed, the insurer should pay them. Accordingly, the fact that the insurer is already being sued does not somehow insulate the insurer from having to pay what it knows that it owes. An insurer's duty of good faith might not, however, continue after a judgment is entered against the insurer.Allan D. Windt, 2 Insurance Claims and Disputes § 9:28 (6th ed.).
¶33 It was in this context--of the duty to an insured plaintiff on remand after coverage had been judicially determined--that Andres cited the Windt treatise. The treatise makes Windt's position even clearer a few paragraphs later:
In short, allowing an insurer's litigation conduct to be the basis for a bad faith claim would impair its right to contest questionable claims and to defend against such claims . . . .Id. (emphasis added).
. . .
However, simply because the insurer's conduct should not, under the foregoing circumstances, give rise to a bad faith claim does not necessarily mean that the conduct cannot constitute additional evidence of pre-existing bad faith.
¶34 We find the situation here substantially distinguishable from that in Andres and no indication that the rule of Andres should be extended to cover this situation.
F. Cases from Other States
¶35 OFB further argues that the common law of other states, including Ohio and Illinois, should be considered. A lack of good faith in the handling of an insurance claim is a quintessential matter of state law, and the common law of Oklahoma established by our Supreme Court is precedential on this question. We find no theory in these cases from other states that is not adequately addressed by our own state law.
IV. JURY INSTRUCTIONS
¶36 When reviewing jury instructions, the standard of review requires the consideration of the accuracy of the statement of law as well as the applicability of the instructions to the issues. Johnson v. Ford Motor Co., 2002 OK 24, ¶ 16, 45 P.3d 86. The instructions are considered as a whole. When the trial court submits a case to the jury under proper instructions on its fundamental issues and a judgment within the issues and supported by competent evidence is rendered in accord with the verdict, the judgment will not be reversed for refusal to give additional or more detailed instructions requested by the losing party if it does not appear probable that the refusal has resulted in a miscarriage of justice or substantial violation of constitutional or statutory rights. Id. A judgment will not be disturbed because of allegedly erroneous instructions, unless it appears reasonably certain that the jury was misled thereby. The test of reversible error in instructions is whether the jury was misled to the extent of rendering a different verdict than it would have rendered if the alleged errors had not occurred. Taliaferro v. Shahsavari, 2006 OK 96, ¶ 25, 154 P.3d 1240.
¶37 OFB objected at trial to 21 of the instructions given by the court. In its appellate brief, OFB objects to all instructions regarding bad faith on the grounds that no possible bad faith was shown by the evidence. This issue was decided in Section II, supra, and we need not revisit it here. We now turn to the more specific objections.
A. Instruction No. 16
¶38 Instruction No. 16 stated as follows:
INSTRUCTION No. 16
Elements of a Claim for Breach of Contract
The Linns are required to prove by the greater weight of the evidence the following in order to recover on the claim for breach of contract against Oklahoma Farm Bureau Insurance Company:
1. Formation of a contract between the Linns and Oklahoma Farm Bureau Insurance Company:
2. Oklahoma Farm Bureau Insurance Company breached the contract by failing to submit a written offer of settlement or rejection within 45 days after receipt of the Linns' proofs of loss or by failing to follow the timelines required by Oklahoma Farm Bureau's Standards of Care.
3. The Linns suffered damages as a direct result of the breach.
¶39 This instruction is legally accurate. Evidence showed a contractual agreement by OFB to submit a written offer of settlement or rejection within 45 days after receipt of the Linns' proofs of loss, and OFB had a required timeline for making an offer or denying claims. Failure to submit a written offer of settlement or rejection within 45 days after receipt of the Linns' proofs of loss could therefore constitute a breach of contract. OFB's argument is that, nonetheless, the instruction misdirected the jury away from the issue of whether it was "likely" that the cattle were stolen. OFB argues that this instruction allowed the jury to conclude that the Linns should be awarded contractual damages for the loss of all the missing cattle simply because OFB did not submit a written offer of settlement or rejection within 45 days.
¶40 If this instruction stood alone, it could have had the effect OFB complains of. However, the instructions are considered as a whole. Instruction No.4 explicitly covers the question of coverage for "likely" theft. Instruction No. 13 also emphasized the refusal to pay the claim for the missing cattle. Further, an examination of the closing statements of both counsel (Tr. Trans. Vol. IX, 1620-1670) shows that the key issue of whether a theft was "likely" and the corresponding evidence for each side was extensively discussed and emphasized during closing. We find it unlikely, and not "reasonably certain," that the jury was misled to believe that the sole requirement for an award of damages was that OFB missed a deadline.
B. Instruction No. 22
¶41 OFB also objected to Instruction No. 22, which stated:
INSTRUCTION No. 22
Foreseeability of Special Damages
In addition to other damages, the Linns claim they are entitled to recover damages for increased interest costs and lost production. In order for you to award the Linns damages for these losses, you must be satisfied by the greater weight of the evidence that they are the kind that would ordinarily result from the breach of Defendant's duty of good faith and fair dealing. Oklahoma recognizes the availability of special damages in a bad faith case.See Gov't Employees Ins. Co. v. Quine, 2011 OK 88, 264 P.3d 124; Miller v. Liberty Mut. Fire Ins. Co., 2008 OK CIV APP 65, ¶ 17, 191 P.3d 1221. OFB argues that this instruction "[told] the jury it could specifically award interest and lost cattle production on the bad faith claim." OFB's brief states that this was "improper, had no legal basis, and misled the jury." OFB's brief does not expand further on the legal basis for its objection or cite supporting authority. OFB's argument regarding "interest" appears to be based on a misinterpretation of the instruction. The instruction clearly does not allow the jury to award "interest" on its bad faith verdict. It states that higher interest costs that the Linns' business allegedly suffered as a result of OFB's failure to pay their claim could be considered as a measure of special damages if properly proven. We find no error in this part of the instruction.
¶42 OFB's objection to the second half of the instruction is more difficult to fathom. Although it chose not to elaborate on its argument, OFB appears to argue that special damages for lost production cannot be recovered in this, or any similar case, as a matter of law. OFB directs us to no such principle of law, and our own review does not reveal such a principle. We find no error regarding Instruction No. 22.
C. The Court's Refusal to Give OFB's Proposed Instructions Nos. 1, 6, 13, 14, 16, 17, 18, 20, 22, 23, 24, 25 and 26
¶43 OFB argues that the court erred in refusing to give a total of thirteen instructions it had proposed. It briefs error regarding only four of these instructions, however: Instructions Nos. 13, 14, 16 and 17. On the question of bad faith, the court gave the standard OUJI 22.2, modified only to add the names of the parties. The standard instruction states:
Instruction No. 22.2
BAD FAITH - FIRST PARTY INSURANCE - FAILURE TO PAY CLAIM OF INSURED
[Plaintiff] claims that [the Insurer] violated its duty of good faith and fair dealing by unreasonably, and in bad faith, refusing to pay [Plaintiff] the proper amount for a valid claim under the insurance policy. In order for [Plaintiff] to recover damages in this case, [he/she] must show by the greater weight of the evidence that:
1. [The Insurer] was required under the insurance policy to pay [Plaintiff's] claim;
2. [The Insurer's] refusal to pay the claim in full was unreasonable under the circumstances, because [for example, that 1) it did not perform a proper investigation, 2) it did not evaluate the results of the investigation properly, 3) it had no reasonable basis for the refusal, or 4) the amount it offered to satisfy the claim was unreasonably low];
3. [The Insurer] did not deal fairly and in good faith with [Plaintiff]; and
4. The violation by [The Insurer] of its duty of good faith and fair dealing was the direct cause of the injury sustained by [Plaintiff].
¶44 OFB argues that this uniform instruction does not adequately reflect the law of bad faith in Oklahoma and that three other instructions were necessary as follows:
PROPOSED INSTRUCTION NO. 13
You are instructed that under Oklahoma law, the minimum level of culpability necessary for liability for bad faith against an insurer to attach is more than simple negligence, but less than reckless conduct.
Authority:
Badillo v. Mid Century Ins. Co., 121 P.3d 1080 (Okla. 2005)
PROPOSED INSTRUCTION NO. 14
LEGITIMATE DISPUTE AS DEFENSE TO BAD FAITH
Where an insurer has a legitimate dispute concerning coverage of a claim or where there is no conclusive precedential legal authority requiring coverage, withholding or delaying payment is not unreasonable or in bad faith. The tort of bad faith does not prevent an insurer from denying, resisting or litigating any claim as to which the insurer has a reasonable defense.
Authority:
Ball v. Wilshire Ins. Co., 2009 OK 38, ¶22, 221 P.3d 717, 725
PROPOSED INSTRUCTION NO. 17
You are instructed that while considering Plaintiffs' claim for the breach of duty of good faith and fair dealing against Defendant Oklahoma Farm Bureau Mutual Insurance Company, the law provides that the insurer's conduct must be assessed from the standpoint of all facts known or knowable about the claim at the time the insureds requested the insurer to perform its contractual obligation.
Authority:
McCoy v. Oklahoma Farm Bureau Mut. Ins. Co., 841 P.2d 568 (Okl.1992)
Christian v. American Home Assur. Co., 577 P.2d 899 (Okl.1978)
Skinner v. John Deere Ins. Co., 998 P.2d 1219 (Okl.2000)
¶45 Whenever Oklahoma Uniform Jury Instructions (OUJI) contain an instruction applicable in a civil case or a criminal case, giving due consideration to the facts and the prevailing law, and the court determines that the jury should be instructed on the subject, the OUJI instructions shall be used unless the court determines that it does not accurately state the law. 12 O.S. § 577.2. It is the trial judge's duty to deviate from the OUJI if an instruction fails to accurately state the applicable law, is erroneous, or is improper. In re T.T.S., 2015 OK 36, ¶ 18, 373 P.3d 1022.
¶46 The scope of OFB's argument that the current uniform instruction, standing alone, does not accurately state the law goes well beyond the current case. OFB inherently argues that a jury cannot decide a bad faith case in a manner consistent with the law of Oklahoma unless additional instructions beyond the standard uniform instruction are given. It inherently argues that new mandatory instructions have been necessary since 1978 at the earliest, and 2009 at the latest.
¶47 Precedential cases involving jury instructions, or even a jury verdict in a bad faith case, are rare. In 2015, the Supreme Court decided Aduddell Lincoln Plaza Hotel v. Certain Underwriters at Lloyd's of London, 2015 OK CIV APP 34, 348 P.3d 216. That case did identify certain jury instructions as erroneous, but did not examine the soundness of OUJI No. 22.2. Before that, the last precedential cases involving a jury award for bad faith appear to be Badillo in 2005 and McCoy in 1992. We find no indication that either the Supreme Court or the Court of Civil Appeals has ever found any insufficiency in OUJI No. 22.2, but also find little or no indication that the adequacy of the instruction has been directly challenged. We find no indication that Oklahoma Supreme Court Committee for Uniform Jury Instructions has recommended any change in OUJI No. 22.2. OFB asks us to declare that it is reversible error not to give its proposed additional instructions on the law, i.e., that they are now mandatory in a bad faith case. We find no precedent indicating that this is so, and we decline to do so in this case.
V. ATTORNEY FEES
¶48 OFB alleges that the court erred in its award of attorney fees to the Linns and that OFB was actually entitled to fees. Under Oklahoma law, attorney fees are available in any suit on an insurance policy "so long as the 'core element' of the damages sought and awarded is composed of the insured loss." Taylor v. State Farm Fire & Casualty Co., 1999 OK 44, 981 P.2d 1253.
A. The 12 O.S. § 1101.1 Offers
¶49 The facts regarding § 1101.1 offers appear undisputed. OFB offered, pursuant to 12 O.S. § 1101.1, to confess judgment in the amount of $694,744. The Linns counter-offered a judgment of $2,000,000. Neither party accepted the other's offer, so both were deemed denied. The Linns recovered a judgment between the two amounts. OFB contends that it was entitled to fees pursuant to § 1101.1 because the Linns recovered less than their own counteroffer. (OFB BIC p. 30). This theory is based on a misreading of the statute that was rejected more than ten years ago by this Court in Oltman Homes, Inc. v. Mirkes, 2008 OK CIV APP 64, ¶ 52, 190 P.3d 1182.
¶50 Title 12 O.S. § 1101.1 states in part that:
2. In the event a defendant files an offer of judgment, the plaintiff may, within ten (10) days, file with the court a counteroffer of judgment directed to each defendant who has filed an offer of judgment. If a counteroffer of judgment is filed, each defendant to whom the counteroffer of judgment is made shall, within ten (10) days, file a written acceptance or rejection of the counteroffer of judgment. If a defendant fails to file a timely response, the counteroffer of judgment shall be deemed rejected.
3. In the event the plaintiff rejects the offer(s) of judgment and the judgment awarded the plaintiff is less than the final offer of judgment, then the defendant filing the offer of judgment shall be entitled to recover reasonable litigation costs and reasonable attorney fees incurred by that defendant from the date of filing of the final offer of judgment until the date of the verdict.
4. In the event a defendant rejects the counteroffer(s) of judgment and the judgment awarded to the plaintiff is greater than the final counteroffer of judgment, the plaintiff shall be entitled to recover reasonable litigation costs and reasonable attorney fees incurred by the plaintiff from the date of filing of the final counteroffer of judgment until the date of the verdict.
(Emphasis added).
Section 1101.1 sets out two clear rules:
1. A defendant can receive a fee only if:
a. the defendant makes an offer of judgment; and
b. the plaintiff recovers less at trial than the defendant's offer;
2. A plaintiff can receive a fee only if:
a. the plaintiff makes a counteroffer of judgment; and
b. the plaintiff recovers more at trial than the plaintiff's counteroffer.
¶51 Section 1101.1 therefore contemplates a situation in which, if the final award falls between a defendant's offer and a plaintiff's counteroffer, neither party can recover fees pursuant to the statute. That is the situation we have here.
¶52 As noted by Oltman:
The statute is clear: under § 1101.1, defendants in lawsuits make offers to settle; plaintiffs make counteroffers. If a defendant's offer is rejected by the plaintiff, who then fails to obtain a verdict exceeding defendant's rejected offer, defendant is entitled to a fee. § 1101.1(B)(3). If a plaintiff's counteroffer is rejected by a defendant, and the plaintiff obtains a verdict greater than its counteroffer, plaintiff is entitled to a fee.Because the recovery in this case fell between the two offers, we find that neither party was entitled to fees pursuant to 12 O.S. § 1101.1.
B. Title 36 O.S. § 3629
¶53 The version of 36 O.S. § 3629 in force at the time of the fee award, meanwhile, states that:
It shall be the duty of the insurer, receiving a proof of loss, to submit a written offer of settlement or rejection of the claim to the insured within ninety (90) days of receipt of that proof of loss. Upon a judgment rendered to either party, costs and attorney fees shall be allowable to the prevailing party. For purposes of this section, the prevailing party is the insurer in those cases where judgment does not exceed written offer of settlement. In all other judgments the insured shall be the prevailing party. (Emphasis added.)
¶54 Recovery authorized by § 3629(B) embraces both contract and tort-related theories of liability so long as the "core element" of the damages sought and awarded is composed of the insured loss. Taylor v. State Farm Fire & Cas. Co., 1999 OK 44, ¶ 2, ¶ 11, 981 P.2d 1253. The "written offer of settlement" noted in § 3629 is clearly the "written offer of settlement or rejection that must be made within 90 days of receipt of that proof of loss," not the "offer of judgment" pursuant to 12 O.S § 1101 or 1101.1. Section 3629 therefore provides a specific basis for fees in an insurance bad faith case that is separate from the general basis for fees provided by § 1101.1.
In Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1434 (10th Cir. 1993), the Tenth Circuit held that any written offer of settlement pursuant to § 3629, not just an offer made in the statutory period, is effective to defeat an insured's fee recovery if the tort/contract recovery is less than the offer. The Tenth Circuit cited its interpretation of Shinault v. Mid-Century Ins. Co., 1982 OK 136, 654 P.2d 618, as supporting this view. Although Shinault stated that "the insured, on the other hand, is the prevailing party when the judgment is more than any settlement offer that was made," (emphasis added) this statement was made entirely in the context of a discussion of § 3629 and its 90-day window. We need not decide if Oulds is correct, however,because no offer of any type made by OFB, inside or outside 90 days, was greater than the Linns' recovery.
¶55 The statute states that "the prevailing party is the insurer in those cases where judgment does not exceed written offer of settlement," and that "in all other judgments the insured shall be the prevailing party." (Emphasis added). This is not a case where the judgment was less than any written offer of settlement by OFB. In all other judgments the insured shall be the prevailing party. Hence, the Linns were the prevailing party in this matter.
C. The 15 Percent Interest
¶56 OFB next argues that the Court erred in awarding 15 percent interest on the verdict pursuant to 36 O.S. § 3629(B), which states:
If the insured is the prevailing party, the court in rendering judgment shall add interest on the verdict at the rate of fifteen percent (15%) per year from the date the loss was payable pursuant to the provisions of the contract to the date of the verdict.The statute appears clear on this question. OFB's first argument is essentially the same argument it has made throughout--that the "loss was not payable" and no verdict in favor of the Linns was justified. The jury found otherwise, and we will not disturb that finding.
¶57 OFB further argues that § 3629(B), as written, violates the principle of Taylor v. State Farm Fire & Cas. Co., 1999 OK 44, 981 P.2d 1253, that
In sum, if a (property loss) demand's value is unascertainable until its quantum is judicially settled, no prejudgment interest is the victor's due. But if the value of the demand is fairly ascertainable before its settlement by judgment, prejudgment interest will accrue.
¶58 The Taylor opinion, authored by the late Justice Opala, appears to hold that § 3629(B) had no function beyond a belated "legislative approval of the applicable common law" regarding prejudgment interest. Id. at ¶ 17. We are unsure as to the basis of this statement. The general common law on sum-certain damages and interest was well-established for many years before 1999, and would already provide for prejudgment interest in a sum-certain case. We are unsure why the Legislature would suddenly "legislatively approve" a longstanding right to pre-judgment interest, but dictate a different statutory interest rate in a specialist statute relating only to insurance and use language that does not mirror the common law. Whatever the legislative intent of § 3629(B), it does not appear to be a restatement of the common law. Despite these doubts, however, Taylor represents current precedent, and we will apply it in this case.
It is also somewhat difficult to reconcile this decision with Justice Opala's long-held view that acts of the Legislature provide only an overlay to the common law, rather than supplanting it, absent a showing of "clear intent" to do so. See Rogers v. Meiser, 2003 OK 6, ¶ 9, 68 P.3d 967. Section 3629(B) appears to be such an overlay that adds rights greater than the common law in a limited situation.
¶59 OFB argues that there was no sum that was "fairly ascertainable" in this case because the Linns submitted more than one claim amount based on an evolving count of how many cattle were missing. As OFB states the matter, "the [contract] verdict was approximately $100,000 less than the first proof of loss." Hence, it argues, the verdict shows damages that were not "fairly ascertainable" before settlement by judgment. As the Linns state it, a later proof of loss submitted to OFB in the amount of $566,470 was functionally identical to the $566,000 in contract damages awarded by the jury. We find this sufficient in this case to satisfy the requirements of § 3629(B).
CONCLUSION
¶60 As is clear from the record and the parties' briefing, this was a difficult case replete with factual questions and credibility issues. Such issues are properly reserved for a jury in our system. A jury heard the arguments and testimony of the parties on these questions during a prolonged trial. "In an action at law, a jury verdict is conclusive as to all disputed facts and all conflicting statements, and where there is any competent evidence reasonably tending to support the verdict of the jury, this Court will not disturb the jury's verdict or the trial court's judgment based thereon." Florafax International, Inc. v. GTE Market Resources, Inc., 1997 OK 7, ¶ 3, 933 P.2d 282. "Where such competent evidence exists, and no prejudicial errors are shown in the trial court's instructions to the jury or rulings on legal questions presented during trial, the verdict will not be disturbed on appeal." Id. See also C&H Power Line Constr. Co. v. Enter. Products Operating, LLC, 2016 OK 102, ¶ 16, 386 P.3d 1027. "The sufficiency of the evidence to sustain a judgment in an action of legal cognizance is determined by an appellate court in light of the evidence tending to support it, together with every reasonable inference deducible therefrom, rejecting all evidence adduced by the adverse party which conflicts with it." Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 22, 121 P.3d 1080. While many facts were highly disputed, we find competent evidence reasonably tending to support the verdict of the jury, and no error of law in this matter.
¶61 AFFIRMED.
REIF, S.J. (sitting by designation), and WISEMAN, C.J., concur.