Case Title: Taylor v. State Farm Fire and Casualty Co.

Citation: 

Docket Number: 89677

State: oklahoma

Court: Oklahoma Supreme Court

Date: 1999-05-18T00:00:00Z

Document:
Taylor v. State Farm Fire and Casualty Co.  Taylor v. State Farm Fire and Casualty Co. 1999 OK 44 981 P.2d 1253 70 OBJ 1664 Case Number: 89677 Decided: 05/18/1999 Modified: 06/10/1999 Supreme Court of Oklahoma DAVID G. TAYLOR and JESSICA TAYLOR, Plaintiffs/Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant/Appellant. CERTIFIED QUESTIONS FROM A FEDERAL COURT. ¶0 Insureds brought an action against their insurer in the United States District Court for the Northern District of Oklahoma to recover under a homeowner's policy for hail-related damage to their roof and for bad-faith refusal to settle that loss. The district court (a summarily ruled in favor of the insurer on the contract theory of liability; (b allowed the trial to proceed on the tort theory; (b entered judgment on jury verdict for the insureds on the ex delicto theory of liability and (c granted insureds, under the authority of CERTIFIED QUESTIONS ANSWERED. Joseph F. Clark, Jr., Tulsa, Oklahoma, for the appellees. W. R. Cathcart and Virginia Cathcart Holleman, Cathcart, Gofton & Fraley, Oklahoma City, Oklahoma, for the appellant. OPALA, J. ¶1 In conformity to the Uniform Certification of Questions of Law Act, (1) To what extent, if any, does Brashier v. Farmers Insurance Co. . . . (2) Following Brashier, are insurance bad faith claimants proceeding under Oklahoma law precluded from recovering attorney's fee and prejudgment interest in cases in which a claim is predicated on tort rather than contract? ¶2 As we understand the first question, it calls for an answer to whether Brashier construes the terms of ¶3 As we understand the second question, it asks that we answer whether Brashier may be construed to bar the § 3629 recovery of counsel-fee award and prejudgment interest in actions prosecuted solely on the theory of insurer's bad-faith refusal to settle. We declare that Brashier does not bar a counsel-fee award in tort claims for bad-faith refusal to settle a property loss. A prevailing party's counsel fee also may be viewed as an element of the insured's recovery for the insurer's bad-faith refusal to settle the claim. In short, it does not rest solely on the § 3629 authority. I THE ANATOMY OF FEDERAL LITIGATION ¶4 A hail storm damaged David and Jessica Taylor's [Taylors] roof in April 1992. At the time their residence was covered by a homeowner's policy issued by State Farm Fire and Casualty Company [State Farm]. The parties differed on the extent and on the cost of repair. ¶5 Suit was brought in March 1994 on ex contractu and ex delicto theories of liability. The Taylors sought recovery (a) on the homeowner's policy for loss to the roof and (b) for State Farm's alleged breach of its implied duty of good faith and fair dealing by refusing to settle the claim. The district court summarily ruled out as time-barred the contract theory of liability, but allowed the trial to proceed on the tort theory. ¶6 State Farm's quest for review in the U.S. Court of Appeals for the Tenth Circuit is confined to corrective relief from the award of attorney's fee, costs and prejudgment interest. According to State Farm, the terms of § 3629 do not support the challenged recovery absent the insureds' victory on their contract claim. The certifying court notes that the parties disagree on whether Thompson's vitality has been undermined by the teachings of Brashier. It is this dispute between the litigants that appears to form the basis of the federal court certification. II THE NATURE OF THIS COURT'S FUNCTION WHEN ANSWERING QUESTIONS FROM A FEDERAL COURT ¶7 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. ¶8 Because this case is not before us for decision, we refrain, as we must, from applying the declared state-law responses to the facts in the federal-court litigation, which are tendered for review by the certifying court either in the form of evidence adduced at trial or in acceptable probative substitutes (the so-called "evidentiary materials"). III BRASHIER'S TEACHINGS AND THEIR HISTORICAL ANTECEDENTS A. Insured Loss Recovery under Ex Contractu And Ex Delicto Theories ¶9 While numerous items of damage may result from one injurious occurrence, the party who seeks to recover for an [981 P.2d 1258] insured loss has but a single cause of action, although its claim may be advanced concurrently on ex contractu and ex delicto theories.B. The Teachings of Brashier ¶10 The issue in Brashier23 was whether, in light of § 3629's explicit exclusion from its purview of UM losses,24 the victorious UM plaintiff was nonetheless entitled to an attorney's fee as a common-law element of his bad-faith recovery. Concluding that §3629 did not explicitly abrogate the pre-existing common law, the court allowed a counsel-fee award as an item of recoverable harm. The Brashier pronouncement stands confined to UM claims. It resulted from the legislative failure explicitly to address in § 3629 the continued viability of pre-existing common-law authority. IV THE EFFECT OF BRASHIER ON THIS LITIGATION INSOFAR AS THE INSUREDS SEEK A COUNSEL-FEE AWARD A. A Counsel-Fee Award Under ¶11 The law yields two sources of authority for counsel-fee allowance in bad-faith tort claims - the text of § 362925 and the common-law jurisprudence (under the teachings of Christian).26 Section 3629 provides, among others, for the prevailing party's recovery of counsel fee in an action for the insured loss recovery. Counsel-fee award under § 3629 depends not on the theory of liability imposed but on the recovery of the insured loss as the prevailing party's core element of reparations. Ever since this court's pronouncement in Oliver's Sports Center, Inc. v. Nat'l Standard Ins. Co.,27 §3629 has been held to authorize counsel-fee awards in both contract and tort claims [981 P.2d 1259] against the insurer, so long as the insured loss constitutes the core element of the awarded recovery.28 ¶12 While in Brashier the insured loss lay at the core of bad-faith recovery, it was for a coverage (UM) that was explicitly excluded from the purview of § 3629. Brashier declares that UM-loss recovery in bad-faith claims qualifies for a counsel-fee award under the teachings of Christian. B. Counsel-Fee Award As An Element of Damages In A Bad-Faith Claim ¶13 The remedy of bad-faith refusal to settle a claim rests on the insurer's implied-in-law duty to act in good faith and to deal fairly with the insured. ¶14 Brashier addresses itself only to claims based on bad-faith refusal to pay a UM loss. No other class of insurance recovery is implicated by its teachings. What Brashier settles is that, although a party prevailing in a claim for bad-faith refusal to settle a UM loss may not be allowed an award of counsel fee under the authority of § 3629, an attorney's fee is recoverable by the prevailing party as a recognized common-law element of damage. In short, Brashier teaches that the UM coverage exclusion from the purview of §3629 falls short of abrogating the common law of Christian. V THE EFFECT OF BRASHIER ON THIS LITIGATION INSOFAR AS THE INSUREDS SEEK PREJUDGMENT INTEREST ¶15 Brashier does not reach the issue whether prejudgment interest may be added - from the time of the claim's accrual to the date of judgment - on the amount of recovery for an insured property loss. The award of prejudgment interest in Brashier rests on Any person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in that person [981 P.2d 1260] upon a particular day, is entitled also to recover interest thereon from that day. (emphasis added). A. The Common-Law Antecedents of § 6 ¶16 Interest was permitted at common law on a debtor's failure to repay a loan according to the contract terms. ¶17 Prejudgment interest on an insured property-loss recovery is governed by the legislative approval of the applicable common law which is declared in §6. ¶18 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. B. § 3629 and § 6 are In Pari Materia ¶19 Different statutes on the same subject are generally to be viewed as in pari materia and must be construed as a harmonious whole. ¶20 When construed together with § 6, the purview of § 3629 is restricted to those property-loss recoveries in which the insured loss was for a liquidated amount or for an amount that could be made ascertainable by reference to well-established market values. Before prejudgment interest is one's due, it must be determined that, at the time proof of loss was denied, the quantum of the loss could be ascertained by reference to market values. C. Pre-Existing Common Law Cannot Be Abrogated Without Explicit Legislative Direction ¶21 Any notion that § 3629 was intended to give every prevailing party in a suit for recovery of the insured property loss the benefit of prejudgment interest would not only repeal § 6 - an enactment long in force - but would also abrogate, without any semblance of legislative authority, pre-existing common law that stands declared by that section. By the mandate of 12 O.S.1991 § 2 the common law remains in full force unless a statute explicitly provides to the contrary. Legislative abrogation of the common law [ 981 P.2d 1262 ] may not be effected by mere implication.53 It must be clearly and plainly expressed.54 ¶22 If the amount due for the Taylors' loss is found to have been "fairly ascertainable" in value when their proof of loss was denied, prejudgment interest will accrue on the amount of the recovered property loss that was insured. VI SUMMARY ¶23 In answer to question one we declare Oklahoma law to be that for actions prosecuted in tort to recover for the insurer's bad-faith refusal to settle, Brashier bars neither an award of attorney's fee nor of prejudgment interest which stands authorized by the terms of ¶24 In answer to question two we declare Oklahoma law to be that Brashier does not bar a § 3629 recovery of counsel-fee award in a common-law tort action for bad-faith refusal to settle a claim (other than one for UM loss). Counsel-fee allowance, which may also be awarded as an element of the insured's damages for the insurer's bad-faith refusal to pay a claim, does not hence rest solely on the authority of § 3629. Prejudgment interest on the insured property loss recovered in a bad-faith-refusal action is authorized by §3629(B), to be construed together with § 6, as an additional item of damages to the insured, whenever the insured is the prevailing party and the insured loss was for a liquidated amount or for an amount capable of ascertainment by reference to well-established market values. ¶25 CERTIFIED QUESTIONS ANSWERED. ¶26 HARGRAVE, V.C.J., HODGES, LAVENDER, OPALA, WILSON, KAUGER and WATT, JJ., concur; ¶27 SUMMERS, C. J., concurs in part and dissents in part; ¶ 28 SIMMS, J., dissents. FOOT