Case Title: MCDONALD v. SCHREINER

Citation: 

Docket Number: 95657

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2001-07-03T00:00:00Z

Document:
MCDONALD v. SCHREINER  MCDONALD v. SCHREINER 2001 OK 58 28 P.3d 574 72 OBJ 1959 Case Number: 95657 Decided: 07/03/2001 ALBERT C. MCDONALD, JR., Plaintiff-Appellant v. CARL S. SCHREINER III, D.D.S. and CARL S. SCHREINER III, D.D.S., INC., Defendants CONTINENTAL CASUALTY COMPANY, a foreign corporation, Garnishee-Appellee [28 P.3d 575] CERTIFIED QUESTIONS FROM A FEDERAL COURT ¶0 CERTIFIED QUESTIONS ANSWERED Scott G. Robelen and Shawn D. Fulkerson, Oklahoma City, Oklahoma, for the plaintiff-appellant. W. Michael Hill and Roger N. Butler, Jr., Secrest, Hill & Folluo, Tulsa, Oklahoma, for garnishee-appellee. OPALA, J. ¶1 In conformity to the Uniform Certification of Questions of Law Act, (1) Under Oklahoma law, where a professional liability insurance policy specifies coverage in terms of a stated dollar amount plus "claim expenses" (defined in turn as including "fees, costs and expenses which result from the investigation, adjustment, defense and appeal of a claim"), is prejudgment interest that accrues while the insurer decides to defend, rather than negotiate and pay, a claim considered a "claim expense"? If the answer to question (1) is no, then: (2) Does Oklahoma law and public policy nevertheless require a professional liability[28 P.3d 576] insurer to pay prejudgment interest in an amount in excess of the policy's liability limit? ¶2 As we understand the first question, it calls for an answer to whether prejudgment interest can be considered a "claim expense" within the meaning of the defendant's insurance policy when the insurer controls the course of the litigation. We answer in the affirmative. The provisions of § 727(E) allow prejudgment interest to be recovered upon personal injury damages. I THE ANATOMY OF FEDERAL LITIGATION ¶3 Albert C. McDonald ("McDonald") was given a $1,135,000.00 state-court judgment against Carl S. Schreiner III, a dentist, and his business ("Schreiner") for malpractice that occurred in 1998. The judgment also provides for recovery of $237,300.00 in prejudgment interest authorized by the terms of 12 O.S. 1991 §727(E). Continental Casualty Company ("Continental") insured Schreiner for professional liability. ¶4 The district court treated McDonald's response (and objection to garnishee's answer) as a quest for summary judgment. It concluded that, under the terms of the policy, prejudgment interest does not qualify as a claim expense. Summary judgment went to Continental and McDonald appealed. McDonald's quest for review by the United States Court of Appeals for the Tenth Circuit seeks that court's pronouncement declaring prejudgment interest to be a "claim expense" that arises from the defense conduct, for the expenses of which Continental undertook to indemnify the insured beyond the policy's liability coverage limit. II THE NATURE OF THIS COURT'S FUNCTION WHEN ANSWERING QUESTIONS FROM A FEDERAL COURT ¶5 While in answering the queries posed by a federal court the parameters of state-law claims or defenses identified by the submitted questions may be tested, it is not this court's province to intrude (by its responses) upon the certifying court's decision-making process. III PREJUDGMENT INTEREST FALLS WITHIN THE INSURER'S DEFINITION OF A CLAIM EXPENSE ¶7 When statutorily authorized, prejudgment interest is an item of recovery that constitutes an integral part of the judgment debtor's total adjudged liability that is recovered. It stands in the law as an item of damages owed for the delayed satisfaction of an obligation on which it accrues.We have the right and will defend any claim 1. do this even if any of the charges of the claim are groundless, false, or fraudulent; 2. investigate any claim as we feel appropriate 3. not settle any claim without your consent. 14 ¶11 Continental argues prejudgment interest that is in excess of the policy's liability limit is not a claim expense and points out that the policy does not in haec verba list prejudgment interest as a claim expense. While the quantum of prejudgment interest does depend on the date judgment is given, the amount of that recovery component is solely within the insurer's power to control. It would not arise but for Continental's decisions as unquestionable dominus litis.17 Shifting to the insured the attendant financial burden of waging litigation the insurer undertook to conduct in the defense of the claim would contravene the clear language of the policy. IV SUMMARY ¶12 In answer to the first question we declare that, under Oklahoma law, prejudgment[ 28 P.3d 579 ] interest may be regarded as a "claim expense" within the terms of the policy in suit. It arises from the investigation, defense, and appeal of a lawsuit, whose conduct is controlled solely by the insurer. We need not address the second question. ¶13 Hargrave, C. J. and Watt, V.C.J., Opala, Kauger, Summers and Winchester, JJ., concur; ¶14 Lavender, J., concurs in result. ¶15 Boudreau, J., dissents. ¶16 Hodges, J., disqualified. FOOT