Title: EQUITY INSURANCE COMPANY v. ST. CLAIR

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

EQUITY INSURANCE COMPANY v. ST. CLAIR  EQUITY INSURANCE COMPANY v. ST. CLAIR 2008 OK 79 196 P.3d 981 Case Number: 105261 Decided: 09/16/2008 THE SUPREME COURT OF THE STATE OF OKLAHOMA Equity Insurance Company Plaintiff/Appellee v. Jesse St. Clair; Deborah St. Clair; David Steelman; and the Estate of Floyd Steelman, Deceased Defendants/Co-Appellants On Appeal from the District Court in Cleveland County William C. Hetherington, Jr., Judge ¶0 Insurer brought a declaratory judgment action to determine the rights and obligations of the parties in an automobile insurance policy. The district court, which granted summary judgment for the insurer, held the insurance policy had been properly canceled for nonpayment of the premium. Defendants bring an appeal from the district court's judgment, which stands retained for this court's disposition. THE TRIAL COURT'S SUMMARY DISPOSITION OF THE ACTION IN FAVOR OF INSURANCE COMPANY IS REVERSED AND THE CAUSE IS REMANDED FOR FURTHER PROCEEDINGS TO BE CONSISTENT WITH THIS COURT'S PRONOUNCEMENT Robert W. Hayden and Anthony W. Speck, Oklahoma City, for Plaintiff/Appellee Karen Keith, Tulsa, Oklahoma, for Defendants/Co-Appellants Richard A. Pizzo, Tulsa, Oklahoma, for Defendants/Co-Appellants OPALA, J. ¶1 Two questions are posed in this controversy for our review: (1) Is Equity Insurance Company's policy provision that deals with cancellation for nonpayment of a premium ambiguous? If so, did defendant tender proof that would raise a question of fact as to when notice of the policy's cancellation must be submitted to the insured? (2) Do the terms of the Oklahoma Consumer Credit Protection Code, 14A O.S. 2001 § 4-304,2 apply to insurance agreements in which installment payments for coverage are acceptable? We answer the first question in the negative but reverse the trial court's judgment on other grounds. Because our answer to the first question is dispositive of the controversy, it is not necessary to reach for review the second question tendered. I. THE ANATOMY OF LITIGATION ¶2 Equity Insurance Company (Equity or insurer) issued a six-month policy insuring the vehicle to be driven by Jesse St. Clair (defendant who, with his mother Deborah St. Clair, will be referred to here as St. Clair or insured). The policy's term was to begin on 20 June 2005 and end on 20 December of that year.3 Equity permits policy premiums to be paid monthly. Its monthly invoice reveals inter alia (1) the insured may pay the entire premium due (which is shown on the statement) or may pay it in monthly installments (the installment's amount to be paid is provided in the statement); (2) for those who choose the latter payment method, an installment fee of $9.00 is charged and added and (3) the date payment is due.4 A significant portion of the statement is devoted to the provisions for cancellation of the policy for nonpayment of the premium.5 The invoice provides that the policy will be canceled automatically on a specified date and time if the premium payment is not postmarked prior to the cancellation date provided in the invoice.6 ¶3 The pertinent facts are not disputed by the parties. St. Clair timely paid the monthly premium installments for the months of July and August. Although a September invoice was sent to him by Equity, St. Clair neither made a premium payment for that month nor any time thereafter. Equity cancelled the policy on 27 September 2005 at 12:01 a.m in accordance with the terms of the monthly billing statement.7 No additional notice of the policy's cancellation was ever provided by Equity to St. Clair. ¶4 On 17 December 2005 Jesse St. Clair was involved in a vehicular accident, injuring himself and two passengers (David Steelman and Floyd Steelman, the latter of whom was fatally injured). St. Clair made a claim for benefits under the policy. Insured urges the policy remained in effect because Equity failed to give notice of its intent to effect cancellation in accordance with the policy's terms. Equity sought declaratory relief urging that the policy was effectively cancelled and it hence had no other obligation under the contract.8 The trial judge granted summary judgment to Equity. St. Clair appeals from the trial court's disposition for the insurer. II. EQUITY INSURANCE COMPANY v. CITY OF JENKS IS DISPOSITIVE OF TODAY'S CAUSE ¶5 This court's pronouncement in Equity Insurance Company v. City of Jenks9 is dispositive of St. Clair's quest for reversal of the summary ruling. That opinion, promulgated earlier this term, dealt with the same insurer, the identical policy cancellation provision, and a similar set of facts.10 It teaches Equity's monthly billing statement, which included notice that the policy may be cancelled in the event of insured's failure timely to pay the premium due, was insufficient to give notice of cancellation under the terms of that policy.11 The court explained this was so because (1) notice of a policy's cancellation cannot be given before the occurrence of the event that triggers the insurer's option to cancel12 and (2) notice of the policy's cancellation must be clear and unequivocal.13 Under the terms of Equity's policy its statement in the invoice concerning the policy's cancellation for nonpayment of the premium before the payment came due was hence ineffective. Likewise, Equity's anticipatory statement in the invoice that the policy may be cancelled upon an insured's failure to pay the premium due, constituted neither a clear nor an unequivocal in praesenti14 cancellation of the policy.15 ¶6 St. Clair urges the policy's cancellation provision for nonpayment of premiums is ambiguous at best. Although this argument was not urged by the parties in City of Jenks, dictum contained in that case reveals the contract was not likely viewed as ambiguous.16 Equity's monthly premium invoice cum notice of cancellation in the event of nonpayment of a premium was not sufficient as in praesenti notice of the policy's cancellation. In accordance with the rationale in City of Jenks, the trial court's summary judgment for Equity must be reversed as contrary to law. Our conclusion makes it unnecessary also to reach for review the second question - whether the terms of the Oklahoma Consumer Credit Protection Code, 14A O.S. 2001 § 4-304, apply to this controversy. III. SUMMARY ¶7 The court's earlier pronouncement in Equity Insurance Company v. City of Jenks is dispositive of the quest for reversal. To effectively cancel its automobile insurance policy for nonpayment of a premium in accordance with the policy terms, Equity must provide an insured at least a ten-day notice of its clear, unequivocal in praesenti act of canceling the policy following the insured's failure timely to pay the premium that was due. The trial court's disposition of the action by summary judgment for the insurer is reversed and the cause remanded for further proceedings to be consistent with today's pronouncement. ¶8 ALL JUSTICES CONCUR FOOT