Case Title: WAGNON v. STATE FARM FIRE AND CASUALTY CO.

Citation: 

Docket Number: 89362

State: oklahoma

Court: Oklahoma Supreme Court

Date: 1997-12-23T00:00:00Z

Document:
WAGNON v. STATE FARM FIRE AND CASUALTY CO.  WAGNON v. STATE FARM FIRE AND CASUALTY CO. 1997 OK 160 951 P.2d 641 69 OBJ 49 Case Number: 89362 Decided: 12/23/1997 Modified: 04/03/1998 Supreme Court of Oklahoma CHARLES WAGNON and LORALEE WAGNON, husband and wife, Plaintiffs-Appellees-Cross-Appellants, vs. STATE FARM FIRE AND CASUALTY COMPANY, Defendant- Appellant-Cross- Appellee. CERTIFIED QUESTION OF LAW FROM THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ¶0 The plaintiffs, Charles Wagnon and Loralee Wagnon, filed a theft claim with [951 P.2d 641] their insurer, the defendant, State Farm Fire and Casualty Company. The insurer denied the claim. The plaintiffs filed suit in the District Court of Tulsa County, State of Oklahoma, alleging breach of contract and bad faith denial of their insurance claim. The insurer removed the action to federal court. The insurer moved for summary judgment on the ground that the petition of the plaintiffs was filed after the one-year limitation provided in the contract, but the federal district court denied the motion. After a bench trial, the court awarded the plaintiffs $12,899.68 on their breach of contract claim, plus statutory prejudgment interest, and attorney fees and costs if timely requested. On the claim of bad faith and punitive damages, the federal court found for the insurer. Both plaintiffs and insurer appealed the judgment to the United States Court of Appeals for the Tenth Circuit. That court certified a question of state law to the Supreme Court of Oklahoma. The question certified seeks to determine the legality of the one-year limitation on the filing of a suit against the insurer. CERTIFIED QUESTION ANSWERED. Steven L. Sessinghaus Colorado Springs, Colorado For Plaintiffs-Appellees, Neal E. Stauffer Kent B. Rainey Anthony J. Jorgenson STAUFFER, RAINEY, GUDGEL & HATHCOAT, P.C. Tulsa, Oklahoma For Defendant-Appellant. ALMA WILSON, Justice: ¶1 Charles and Loralee Wagnon sued State Farm Fire and Casualty Company in the District Court of Tulsa County, State of Oklahoma, for breach of contract and bad faith after State Farm denied their insurance claim. The insurer, State Farm, removed the case to the United States District Court for the Northern District of Oklahoma. The federal court, in a non-jury trial, found for the Wagnons on the breach of contract claim, awarding $12,899.68 for their loss, but granted judgment to the insurer on the bad faith claim. Both parties appealed to the United States Court of Appeals for the Tenth Circuit. That court, pursuant to 20 O.S.1991, §§1601-1611, has certified a question of law concerning whether theft coverage in the Wagnons' homeowners/renters' insurance policy is subject to the one-year statute of limitations prescribed for fire insurance policies in 36 O.S.1991, § 4803(G).1 We answer that theft coverage is not subject to the one-year statute of limitations prescribed for fire insurance policies under § 4803(G).2 ¶2 The following facts are provided by the Tenth Circuit court. The Wagnons entered into a one-year insurance contract that protected their personal property against loss from multiple perils including fire, lightning, and theft. The policy provided that any suit against the insurer "must be started within one year after the date of loss or damage." Three months after entering into the contract, the Wagnons filed a claim alleging loss from a burglary occurring on April 4, 1992. The insurer denied coverage based on misrepresentations by the Wagnons. On April 4, 1994, the Wagnons sued the insurer for breach of contract and bad faith. The insurer moved for summary judgment on the breach of contract claim based on the one-year provision in the policy and the one-year limitation on actions provided in 36 O.S.1991, § 4803(G). The federal district court denied the motion, concluding that the one-year limitation in the Wagnons' policy was invalid. The court then determined the amount of the Wagnons' loss under the policy and awarded that amount on the breach of contract action. [951 P.2d 643] ¶3 State Farm begins its argument by stating that a policy of insurance insuring against the peril of fire must conform to the standard fire policy and any endorsements to that policy are subject to the statute of limitations provision contained therein. An examination of the policy reveals that it bears little, if any, resemblance to the "Standard Fire Insurance Policy" found in 36 O.S.1991, §4803(G). The Wagnons' policy insures against accidental direct physical loss to property caused by seventeen perils including fire and theft. ¶4 Section 4803(F)(1) does provide for a form of policy to be approved by the Insurance Commissioner that does not correspond to the standard fire insurance policy as provided in this section, if the coverage of the approved policy is not less than that contained in the standard fire insurance policy with respect to the peril of fire. The Tenth Circuit Court of Appeals has not asked this Court to rule whether the policy itself violates § 4803, and we express no opinion concerning this issue. But we see no reason to characterize this policy as a "standard fire insurance policy," and thereby force all the other coverages for the perils included to fit within the statutory provisions for the standard policy found in § 4803. Even though other courts have observed that the term "fire insurance" may be a generic term, ¶5 While State Farm has attempted to sweep all perils under the umbrella of a "standard fire insurance policy," the Wagnons urge that there is an important statutory distinction between the peril of fire, and that of theft in the homeowners policy. The Wagnons observe that theft is defined as casualty insurance, and casualty insurance has its own statute of limitations. An examination of title 36 proves that this statement is correct. The definition is found in 36 O.S.1991, § 707, which provides in pertinent part: "'Casualty insurance' includes vehicle insurance as defined in Section 706 and accident and health insurance as defined in Section 703, of this article, and in addition includes . . . 3. Burglary and theft insurance, which is insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal, or concealment, or from any attempt at any of the foregoing. . . ." ¶6 Section 3617 provides that : "No policy delivered or issued for delivery in Oklahoma and covering a subject of insurance resident, located, or to be [951 P.2d 644] performed in Oklahoma, shall contain any condition, stipulation or agreement . . . (3) limiting the time within which an action may be brought to a period of less than two (2) years from the time the cause of action accrues in connection with all insurances other than property and marine and transportation insurances; in property and marine and transportation policies such time shall not be limited to less than one (1) year from the date of occurrence of the event resulting in the loss. Any such condition, stipulation or agreement shall be void, but such voidance shall not affect the validity of the other provisions of the policy." So a fire policy, being property insurance, ¶7 The Tenth Circuit cites three cases from other jurisdictions on the issue of whether the one-year statute of limitations for fire insurance is also applicable to theft insurance. In the first case, Grice v. Aetna Cas. & Sur. Co., ¶8 In the Louisiana case, the plaintiff sued Aetna when she was not reimbursed for the losses she claimed under her homeowners' policy when her home was burglarized. Aetna raised the issue of the failure of the plaintiff to commence the lawsuit within the twelve months after she had sustained her loss. Grice, 359 So. 2d at 1289. Louisiana, like Oklahoma, has a standard fire policy that is mandatory, and which contains a clause requiring a suit to be filed "within twelve months next after the inception of the loss." Grice, 359 So. 2d at 1289. The homeowners' policy insures against burglary and theft and provides other coverages in addition to the perils of fire and lightning covered by the standard fire insurance policy. Grice, 359 So. 2d at 1289. The plaintiff in Grice argued to the Supreme Court of Louisiana that the limitation had been less than twelve months because a provision of the standard fire policy requiring the insured to wait sixty days before filing a lawsuit, thereby reducing the time for suit to ten months. Grice, 359 So. 2d at 1290. But the court found that the provisions of the standard fire policy and the Louisiana statutes of limitation were both mandated by the legislature as part of the Insurance Code, and rejected the plaintiff's argument that the waiting period reduced [951 P.2d 645] the time for filing a lawsuit to less than twelve months. Grice, 359 So. 2d at 1291. The issues in Grice are distinguishable from those of the Wagnon's case. The plaintiff in Grice was not arguing that a longer statute of limitation should be applied, she argued that she was denied a full year because of the waiting period. ¶9 In the Washington decision, Simms, the Court of Appeals construed a Washington statute, RCW 48.18.200, that invalidates only those contract limitation clauses requiring suit to be brought in less than one year. Simms, 27 Wash. App. at 873-874, 621 P.2d at 156. But a major difference between this statute and Oklahoma's 36 O.S.1991, § 3617 is that in Washington no insurance contract could limit a right of action to a period of less than one year from the time "when the cause of action accrued," but in contracts of property insurance, the limitation "shall not be to a period of less than one year from the date of loss." Simms, 27 Wash. App. at 874, 621 P.2d at 156. The Washington court found that the plaintiff's claim for a theft loss sustained in February of 1977, when suit was filed against Allstate on June 22, 1979, was barred. This case has no application to the issue in the case at bar. ¶10 Of the three cases cited by Tenth Circuit, only the Arizona case of Kearney appears to have facts, statutes and issues similar to the case at bar. The plaintiff in that case sued Mid-Century Insurance Company, and Fire Insurance Exchange to recover on her claim for an $8,335.00 personal property loss from a burglarized home. The defendants' motion for summary judgment was granted based upon the plaintiff's failure to bring the action within the twelve-month period prescribed in the policy of insurance. The source of Oklahoma's article 48, title 36, is reported to be the Arizona Insurance Code, A.R.S. §§ 20-1501ff. [951 P.2d 646] ¶11 The Arizona court reasoned that if the loss of the plaintiff was construed as a casualty loss, then the limitation period set forth in the policy was void as being repugnant to § 20-1115, and the suit had to be reinstated as having been timely filed. Kearney, 22 Ariz.App. at 191, 526 P.2d at 170. The court concluded from the statutes that property insurance was not intended to include casualty insurance. Kearney, 22 Ariz.App. at 192, 526 P.2d at 171. Like 36 O.S.1991, § 4801, Arizona's statute, A.R.S. § 20-1501 of their article 7 entitled "Property Insurance," provides: "This article shall not apply to vehicle, casualty, inland marine or ocean marine insurance, or reinsurance." ¶12 The Arizona court observed that where two statutes, one specific and one general, relate to the same subject, the specific statute controls and is regarded as an exception to the terms of the general statute, because the legislature is assumed not to have intended conflict. Kearney, 22 Ariz.App. at 192, 526 P.2d at 172. This Court has also held that in the construction of statutes, "Laws addressing a specific situation are applied to the exclusion of more general laws." Lindsey v. Kingfisher Bank & Trust Co., 832 P.2d 1 , 3 (Okla. 1992). The Arizona court further cited the rule that the defense of the statute of limitations, while legitimate, is not favored by the courts, and where there is doubt as to which of two statutes apply, the longer period is generally used. Kearney, 22 Ariz.App. at 193-94, 526 P.2d at 172-73, citing O'Malley v. Sims, 51 Ariz. 155, 75 P.2d 50, 54 (1938). The O'Malley case was cited with approval in Williams v. Lee Way Motor Freight, 688 P.2d 1294 , 1297 (Okla. 1984). ¶13 The insurer, State Farm, criticizes the Kearney case, and states that the case does not address the applicability of A.R.S. § 20-1507(B), which mirrors 36 O.S.1991, § 4803(C). The second paragraph of § 4803(C) provides: "Such other perils or coverages may include those excluded in the standard fire insurance policy, and may include any of the perils or coverages permitted to be insured against or issued by property and casualty insurers. Such forms of contracts, riders and endorsements may contain provisions and stipulations inconsistent with such standard fire insurance policy, if said provisions and stipulations are applicable only to such additional coverage or to the additional peril or perils insured against." But we are not convinced that simply because the insurer is permitted to include coverage for perils listed under casualty insurance, that the legislature has intended the specific statute of limitations for casualty perils be ignored. If the mandates of 36 O.S.1991, § 3617 can be so easily circumvented, why would the legislature even provide for two separate statutes of limitation? CERTIFIED QUESTION ANSWERED. ¶14 KAUGER, C.J., HODGES, LAVENDER, OPALA, and WILSON, JJ., concur. ¶15 SUMMERS, V.C.J., SIMMS, HARGRAVE, and WATT, JJ., dissent. FOOT