Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-06312/USCOURTS-ca10-89-06312-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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PUBLISH 

FI LEO 

Uoited Stat~ Coi,m of Appeals 

Tenth Circuit 

NOV 2 9 1990 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

ALLSTATE INSURANCE COMPANY, 

Plaintiff-Appellee, 

v. 

ALFRED LEE BROWN; WILLIAM CHASE BROWN; 

KENDALL BROWN; EDWARD STONECIPHER; 

MARY STONECIPHER; STATE OF OKLAHOMA; 

DEPARTMENT OF HUMAN SERVICES/OKLAHOMA 

TEACHING HOSPITAL, 

Defendants, 

and 

HOOSHMAND NIROUMAND, individually and 

parent and next friend of DAVID 

NIROUMAND, NASIM NIROUMAND and 

NUSHIN NIROUMAND, minors; EHTERAN 

RADFAR; MAHMOUD RADFAR; KHADIJEH 

SAMANDIZADEH, 

Defendants-Appellants. 

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ALLSTATE INSURANCE COMPANY, ) 

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Plaintiff-Appellee, ) 

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V • ) 

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ALFRED LEE BROWN; KENDALL BROWN, ) 

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Defendants-Appellants, ) 

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and ) 

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WILLIAM CHASE BROWN; HOOSHMAND ) 

NIROUMAND, individually and as parent ) 

and next friend of DAVID NIROUMAND, ) 

NASIM NIROUMAND and NUSHIN NIROUMAND, ) 

minors; EHTERAN RADFAR; MAHMOUD RADFAR; ) 

KHADIJEH SAMANDIZADEH; EDWARD ) 

ROBERT L. HOECKER 

Clerk 

No. 89-6312 

No. 89-6326 

Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 1 
STONECIPHER; MARY STONECIPHER; STATE OF) 

OKLAHOMA; DEPARTMENT OF HUMAN SERVICES, ) 

) 

Defendants. ) 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. 88-1499-T)) 

Redmond P. Kemether, Robert E. Walker, Inc., Oklahoma City, 

Oklahoma, on the brief for Defendants-Appellants Hooshmand, Nasim, 

and Nushin Niroumand, Ehteran and Mahmoud Radfar, and Khadijah 

Samandizadeh. 

Robert T. Keel, Keel and Kulmacz, Oklahoma City, Oklahoma, for 

Defendants-Appellants Alfred Lee and Kendell Brown. 

George D. Davis and Ronald L. Walker (Michael 

brief) of McKinney, Stringer & Webster, 

Oklahoma, for Plaintiff-Appellee. 

w. Brewer on the 

P.C., Oklahoma City, 

Before McKAY, LOGAN, and ANDERSON, Circuit Judges. 

PER CURIAM. 

This declaratory judgment action was brought in the District 

Court for the Western District of Oklahoma by Allstate Insurance 

Company (Allstate) against its named insured, Alfred Lee Brown, 

and Alfred's two sons, William Chase Brown, and Kendall Brown (the 

Brown appellants), and against parties who were allegedly injured 

by a car driven by William Chase Brown (the Niroumand appellants). 

Allstate's complaint prayed for a declaration that it had no duty 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 2 
to defend, indemnify or pay the claims of ctny of the defendants. 

Vol. I, Doc. 1 at 3. 

Alfred Lee Brown was the named insured under an automobile 

liability policy issued by Allstate. The Allstate policy 

specifically covered Alfred Brown's 1981 Ford Mustang and his 1975 

Ford LTD. Alfred Brown's son, KendalJ_, who was stationed with the 

military in Korea, had left his 1974 Mercury Cougar with his 

father for storage. The Allstate policy did not specifically 

cover Kendall's car as a "described vehicle." Alfred's other son, 

William, a minor, used the Cougar belonging to his brother and was 

involved in an accident in which the Niroumand appellants were 

allegedly injured. The Niroumand appellants sued the Brown 

appellants in the District Court of Oklahoma County for personal 

injuries and property damage. The Brown appellants gave notice of 

a claim and requested that Allstate defend and indemnify them. 

After agreeing to defend the state court action, Allstate 

instituted this declaratory judgment action in federal court. 

The federal district court granted Allstate's motion for 

summary judgment finding that "Allstate is not obligated to 

indemnify Alfred Brown for any claims resulting from William 

Brown's March 7, 1988, accident and is not obligated to pay the 

. 1 

other defendants' claims against him arising from the accident." 

Order of August 29, 1989 at 4. In an earlier order, the district 

court denied the Niroumand appellants' motion to certify questions 

1 

that 

at 9. 

As discussed below, Allstate eventually abandoned its claim 

it had no duty to defend Alfred Brown. Vol. I, Doc. 46, 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 3 
of law to the Oklahoma Supreme Court. Allstate Insurance Co. v. 

Brown, No. CIV-88-1499-T, order at 5 (May 4, 1989). 

On appeal, the Niroumand appellants argue (1) that the 

district court erred in refusing to certify certain questions as 

requested, ( 2) that it erred in deciding what they contend are 

questions of fact which were the subject matter of a pending 

Oklahoma state court action, and ( 3) that because a material 

question of fact exists as to whether William Brown had his 

brother's implied permission to use the car, summary judgment was 

inappropriate. 

The Brown appellants argue in turn (1) that it was not 

necessary for Alfred Brown to be driving the vehicle in order to 

have coverage; (2) that Okla. Stat. tit. 23, §10 (1981 & Supp. 

1986) imputes the negligence of William Brown to his father, thus 

requiring that Allstate defend and indemnify the father; (3) that 

the policy requires Allstate to defend its named insured if he is 

sued as a result of an auto accident, even if the suit is 

groundless and false and that it requires Allstate to pay all 

damages the insured is legally obligated to pay; (4) that Alfred 

Brown is entitled to attorney's fees for defense of the 

declaratory judgment action; (5) that a question of fact exists 

regarding negligent entrustment; (6) that the district court erred 

in deciding questions of fact and in hearing a declaratory 

judgment action, given the pendency of the Oklahoma state court 

action; and (7) that a guardian ad litem should have been 

appointed for William Brown and that service of process on him was 

inadequate. We address these issues in order and apply a de novo 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 4 
standard of review. See Ewing v. Amoco Oil Co., 823 F.2d 1432, 

1437 (10th Cir. 1987). 

THE NIROUMAND APPELLANTS 

Certification to Oklahoma Supreme Court 

In denying the Niroumand appellants' request to certify, the 

district court stated that "certification is not appropriate on 

any of the questions presented by this case." Vol. I, Doc. 81 at 

5. The decision to certify rests in the sound discretion of the 

federal district court. Lehman Bros. v. Schein, 416 U.S. 386, 391 

(1974). Certification is particularly appropriate where the legal 

question at issue is novel and the applicable state law is 

unsettled. The appellants point to no issues raised in this 

case which implicate either unsettled or novel aspects of Oklahoma 

law. The district court, therefore, was well within its 

discretion to refuse defendants' request, and their motion to 

certify filed in this court is hereby denied. 

Need for Stay of Federal Action 

The Niroumand appellants argue that the district court should 

have stayed the federal court action pending the outcome of the 

state court trial because the issue of permissive use of the 

automobile by William Brown was an issue in both courts. 

Niroumand Brief at 7. However, the appellants never filed a 

motion to stay the federal action with the district court. The 

closest appellants came to requesting this type of relief is in 

their brief objecting to Allstate's motion for summary judgment, 

where they argue that the permission issue is a question of fact 

which should be decided in state court. Vol. 1, Doc. 35 at 4. 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 5 
Even if the motion had been properly made, however, the district 

court would have been fully justified in rejecting it. The 

decision of whether to stay an action, like the decision regarding 

certification, rests in the sound discretion of the district 

court. State Farm Mut. Auto. Ins. Co. v. Scholes, 601 F.2d 1151, 

1154 (10th Cir. 1979) (quoting Will v. Calvert Fire Ins. Co., 

437 U.S. 655, 662-63 (1978)). One of the factors to be considered 

in exercising this discretion is "whether the claims of all 

parties in interest can satisfactorily be adjudicated in [the 

state court] proceeding." Id. at 1155 (quoting Brillhart v. 

Excess Ins. Co., 316 U.S. 491, 495 (1942). The federal action 

here seeks a declaratory judgment 

under a liability insurance policy. 

Oklahoma courts are prevented from 

regarding rights and duties 

By statute, however, the 

rendering a declaratory 

judgment "concerning obligations alleged to arise under policies 

of insurance covering liability or indemnity against liability for 

[tortious injuries to persons or to property]." Okla. Stat. tit. 

12, § 1651 (1981 & Supp. 1986). The claim of Allstate, therefore, 

regarding its obligations under its policy with Alfred Brown could 

not be satisfactorily adjudicated in the Oklahoma state court, 

thus making the relief requested by the Niroumand appellants 

inappropriate. 

Issue of Fact Regarding Implied Permission 

Finally, the Niroumand appellants argue that because there is 

an issue of fact as to whether William Brown had implied 

permission to use his brother's automobile at the time of the 

collision, the district court erred in granting summary judgment. 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 6 
Summary judgment is appropriate only where no issues of material 

fact exist and the moving party is entitled to judgment as a 

matter of law. Fed. R. Civ. P. 56(c). The relevant question for 

the trial judge is whether the evidence is so one-sided that a 

reasonable jury could only arrive at one conclusion. 

v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In 

See Anderson 

this case, 

there are three people whose testimony regarding the issue of 

permission is relevant: Kendall Brown, the owner of the car, 

Alfred Brown, his father, and William Brown, the driver. All of 

these witnesses, including William Brown himself, deny that 

William had any sort of permission to use his brother's car. See 

Telephone Deposition of Kendall Brown, Vol. I, Doc. 26, Exhibit E 

at 14; Deposition of Alfred Brown, Vol. I, Doc. 26, Exhibit D at 

20; Deposition of William Brown, Vol. I, Doc. 26, Exhibit F at 

7-8. Given this deposition testimony, the trial court was correct 

in determining that there was no credible evidence from which a 

reasonable person could conclude that William Brown had any kind 

of permission, implied or otherwise, to drive his brother's car. 

Appellants argue that implied permission is sufficient to 

provide coverage under Oklahoma's compulsory liability insurance 

statutes. As noted above, however, no fact issue exists even as 

to implied permission. Appellants cite Young v. Mid-Continent 

Casualty Co., 743 P.2d 1084 (Okla. 1987), which struck down an 

exclusionary clause limiting the liability of an insurer to an 

innocent victim of the negligent operation of an insured vehicle. 

Id. at 1088. In Young, however, the vehicle was clearly an 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 7 
insured auto maintained by the insured in compliance with the 

compulsory liability insurance requirements. See id. at 1085. 

Oklahoma's compulsory liability insurance statutes require 

that all vehicle owners maintain liability insurance or other 

authorized security at the minimum statutory amounts, unless the 

vehicle is exempt by statute. Equity Mut. Ins. Co. v. Spring 

Valley Wholesale Nursery, Inc., 747 P.2d 947, 951 (Okla. 1987). 

"In addition, all operators of motor vehicles are required to 

maintain liability coverage unless such coverage, which does not 

exclude the operator as an insured, is provided by the owner." 

(footnote omitted). These statutes clearly place the 

obligation to insure on the owner, and in some cases on the 

operator, of a motor vehicle. They do not operate to require an 

insurance company to provide coverage which is clearly outside the 

terms of its policy. 

THE BROWN APPELLANTS 

We now turn to the arguments of the Brown appellants. Part I 

of the policy, dealing with bodily injury and property damage, 

provides in pertinent part: 

Allstate will pay for all damages an insured pe~son is 

legally obligated to pay--because of bodily injury or 

property damage meaning: 

1. bodily injury, sickness, disease or death to any 

person, including loss of services; and 

2. damage to or destruction of property, including loss 

of use. 

Under these coverages, your policy protects an insured 

person from claims for accidents arising out of the 

ownership, maintenance or use, loading or unloading of 

an insured auto. 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 8 
We will defend an insured person sued as the result of 

an auto accident, even if the suit is groundless or 

false. 

The policy goes on to define insured persons: 

1. While using your insured auto: 

a) you, 

b) any resident, and 

c) any other person using it with your permission. 

2. While using a non-owned auto: 

a) you, 

b) any resident relative using a four wheel private 

passenger auto or utility auto. 

Insured Autos are defined in pertinent part as: 

A non-owned auto used by you or a resident relative with 

the owner's permission. 

Vol. I, Doc. 26, Exhibit Cat 5 (emphasis in original). As with 

all cases involving the construction of an insurance policy, it is 

critical to keep the policy language in mind as we examine the 

case law cited by the parties. 

Need for Alfred Brown to be Driving 

The Brown appellants first argue that it was not necessary 

for Alfred Brown to actually be driving the car for him to qualify 

as a user. They point to technical differences between the words 

"use" and "operate" and argue that only the word "operate" 

requires that a person actually be physically manipulating the 

car. While we agree that there are circumstances in which the 

terms may not be interchangeable, even were we to accept 

appellants' construction of the term "use" we would have to at 

least be able to find that William's actions with regard to the 

car served some purpose to benefit Alfred Brown or furthered some 

purpose of which he approved. See Indemnity Ins. Co. v. 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 9 
Metropolitan Casualty Ins. Co., 33 N.J. 507, 166 A.2d 355, 358-59 

(1960). Appellants have identified no evidence of any such 

purpose. 

In support of their contention that Alfred Brown need not 

have actually been driving the car at the time of the accident to 

be covered, appellants cite Government Employees Insurance Co. v. 

Kinyon, 119 Cal. App. 3d 213, 173 Cal. Rptr. 805, 812 (1981). In 

Kinyon the California Court of Appeals determined that a nonowned 

automobile clause did not require that the named insured have 

permission in order for coverage to exist for an accident in which 

the named insured's son was driving a nonowned auto. Id. The 

policy at issue in Kinyon, however, required the company to pay on 

behalf of the insured all damages arising out of the use of the 

owned automobile or any nonowned automobile. Id. No permissive 

use restriction as to the named insured was present. Id. That 

language is significantly broader than the policy language in this 

case. Here the policy protects an insured person from claims 

arising out of the use of an "insured auto." "Insured auto" is 

defined, inter alia, as "[a] non-owned auto used by you or a 

resident relative with the owner's permission." The difference in 

policy language in this case distinguishes it from Kinyon. 

Statutory Imputation of Negligence 

Closely tied to the Brown appellants' argument regarding the 

irrelevance of physical use of the car by Alfred Brown is their 

argument that, by virtue of Oklahoma Stat. tit. 23, § 10, Alfred 

Brown is liable for the delinquent act of his son and therefore 

Allstate has a duty to indemnify. The statute provides: 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 10 
The state or any county, city, town, municipal 

corporation or school district, or any person, 

corporation or organization, shall be entitled to 

recover damages in a court of competent jurisdiction 

from the parents of any minor under the age of eighteen 

(18) years, living with the parents at the time of the 

act, who shall commit any criminal or delinquent act 

resulting in bodily injury to any person or damage to or 

larceny of any property, real, personal or mixed, 

belonging to the state or a county, city, town, 

municipal corporation, school district, person, 

corporation or organization. The amount of damages 

awarded shall not exceed Two Thousand Five Hundred 

Dollars ($2,500.00). 

Appellants argue that, for purposes of liability, this 

statute "vicariously makes Brown the driver/user of the non owned 

auto, the same as if Brown were physically driving." Reply Brief 

of Brown Appellants at. 9. Thus, according to the Brown 

appellants, Alfred Brown's liability for his son's misdeeds 

somehow results in Alfred's becoming the user of the automobile. 

We think this construction of the statute is too broad. 

While the statute does provide that an entity injured by the 

criminal or delinquent conduct of a minor can recover damages up 

to $2500 from the parents of the minor, the plain language of the 

statute is far from establishing that the parent is constructively 

deemed to have committed the same acts as his or her child. We 

also find no authority in Oklahoma stretching the effect of the 

statute to this degree. Our reasoning is supported by Memorial 

Lawn Cemeteries Association, Inc. v. Carr, 540 P.2d 1156, 1158 

(Okla. 1975), in which the Oklahoma Supreme Court held that the 

vicarious liability imposed by Okla. Stat. tit. 23, § 10 did not 

constitute the constructive commission of a tortious act within 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 11 
Kansas, thus permitting the Oklahoma resident parents of a minor 

who had caused property damage in Kansas to be served under the 

Kansas "long-arm" statute. Similarly, we do not believe that the 

vicarious liability created by the Oklahoma statute can serve to 

constitute constructive use for purposes of Alfred Brown's policy. 

The appellants cite cases from other jurisdictions which 

involve different policy language and different statutes. In 

United Services Automobile Association v. Crandall, 95 Nev. 334, 

594 P.2d 704 (1979), the policy promised to pay '"all sums which 

the insured shall become legally obligated to pay as damages 

. arising out of the ... use of . any non-owned 

automobile.'" Id. at 705. A statute imputed any negligence or 

willful misconduct of a minor while driving a motor vehicle to the 

person who had signed the application of the minor for a driver's 

license. Id. at 705 n.1. The Nevada Supreme Court held that the 

policy language, when combined with the operation of the statute, 

afforded coverage to the insured father for his daughter's 

negligent use of a nonowned automobile. Id. at 706. The policy 

at issue here, however, limits coverage to damages arising from 

the use of an insured auto, which is later defined to be a 

nonowned auto used by the insured or a resident relative with the 

owner's permission. There was no such limitation in the Crandall 

policy. Id. There coverage was provided for all nonowned autos, 

permission notwithstanding. 

The case of Wolford v. Wolford, 662 S.W.2d 835 (Ky. 1984), 

involved a statute similar to the Nevada statute that also imputed 

the negligence of the minor driver to the father who had signed 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 12 
the son's application for a driver's license. Id. at 837. The 

case is distinguishable from this one, however, because the car 

involved was the father's car and was therefore covered by the 

policy. Id. at 838. The car involved here was not owned by the 

named insured and was not specifically listed in the policy as an 

insured auto. 

In Rogers v. MFA Mutual Insurance Co., 262 Ark. 55, 554 

S.W.2d 327 (1977)(en bane), the court held that the statute 

imputing the negligence of a minor to the person who has signed 

the minor's driver's license application "places a parent in the 

position of an actual user of an automobile any time the parent 

knowingly permits a minor to drive an automobile upon a highway." 

Id. at 330 (emphasis added). Coverage for nonowned automobiles 

was contingent on permission, or a reasonable belief of 

permission, from the owner. Id. at 329. The driver had 

permission to drive her mother's car. The court held, under these 

facts and because of the operation of the statute, that the 

father's insurance provided coverage. The case is distinguishable 

because the parents' permission imputed statutory liability to 

them, and the use with permission brought the car under the 

definition of a covered nonowned auto. 

Duty to Defend 

Appellants' third contention is that Allstate has a duty to 

defend an insured person sued as a result of an auto accident, 

even if the suit is groundless and false, and that it also is 

obligated to pay all damages an insured is legally obligated to 

pay. Allstate's policy does provide that it will "defend an 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 13 
insured person sued as the result of an auto accident, even if the 

suit is groundless or false." We assume this is the reason 

Allstate maintained the defense for the Brown appellants in the 

state court action. Because that defense was made, appellants 

have no complaint against Allstate on that score. 

Appellants attempt to argue that the terms of the policy also 

provide coverage for Alfred Brown. They do so by quoting 

selectively from the policy. At page 12 of appellants' opening 

brief, counsel quotes Part I, page 5 of the policy, to wit: 

Allstate will pay for all damages an insured person is 

legally obligated to pay---because of bodily injury and 

property damage ... We will defend an insured person 

sued as the result of an auto accident, even if the suit 

is groundless or false ... 

The paragraph counsel chose to omit is the following: 

Under these coverages, your policy protects an insured 

person from claims for accidents arising out of the 

ownership, maintenance or use, loading or unloading of 

an insured auto. 

The provisions of an insurance policy, like those of any other 

contract, must be read together. Catts Co. v. Gulf Ins. Co., 

723 F.2d 1494, 1501 (10th Cir. 1983) (applying Oklahoma law). 

When read in its entirety, it is clear that protection runs only 

to an insured person and only for insured autos. 

Allstate has fulfilled its obligation to defend appellants in 

the state court action. Whether it will have to provide coverage 

for any liability arising from that suit is the subject of the 

declaratory judgment action and this appeal. Appellants' argument 

here, therefore, merely restates prior coverage arguments and 

fails for the same reasons. 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 14 
Costs and Fees for Declaratory Judgment Action 

Appellant's demand for attorney's fees and costs incurred in 

defending this action is not well taken. While fees are available 

to the insured in a declaratory judgment action brought by the 

insurer, see,~, Upland Mut. Ins., Inc. v. Noel, 214 Kan. 145, 

519 P.2d 737, 742 (1974); Glens Falls Ins. Co. v. United States 

Fire Ins. Co., 41 A.D.2d 869, 342 N.Y.S.2d 624, 627 (N.Y.App.Div. 

1973); cf. Montgomery Ward & Co. v. Pacific Indem. Co., 557 F.2d 

51, 60 (3d Cir. 1977) (fees to insured appropriate where insurance 

company would have been required to defend had the underlying 

action not settled), we have found no authority granting such 

fees to the losing party. Mighty Midgets, Inc. v. Centennial Ins. 

Co., 47 N.Y.2d 12, 416 N.Y.S,2d 559, 389 N.E.2d 1080, 1085 (1979), 

does not apply to the facts of this case. There the court denied 

attorney's fees to the insured because he had been the plaintiff 

in the declaratory judgment action. The cases cited in 

Mighty Midgets to support dictum that an insured can recover fees 

are consistent with our holding that such an insured must be the 

prevailing party in the declaratory judgment action. See id. 

Appellants suggest that the costs incurred in detending the 

declaratory judgment action should be considered expenses incurred 

at the request of Allstate. At page 5, under Part I, Allstate 

promises: 

When we defend an insured person under this part, we 

will pay: 

1. . other reasonable expenses incurred at our 

request. 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 15 
Appellants cite Upland, 519 P.2d at 739, 743, arguing that the 

Kansas Supreme Court had awarded fees under a similar clause. The 

clause in Upland, however, was broader that the one here and could 

be read to apply to the fees and costs stemming from a declaratory 

judgment action. See id. at 739. Here, the reference to expenses 

incurred at Allstate's request is a subpart to a section 

describing what the 

person under Part I. 

underlying liability 

company will pay when it defends an insured 

That defense refers to the defense of the 

action. There is nothing in Part I that 

refers to or contemplates a declaratory action to determine 

coverage under the policy, and thus, the requested expenses 

portion of the policy cannot refer to those costs. 

The only meritorious· portion of appellants' argument 

regarding attorney's fees is the claim for fees resulting from 

Allstate's initial refusal in the declaratory judgment action to 

defend Brown in the state court action. Contrary to Allstate's 

assertions to this court, twice in its complaint it claimed to 

have no duty to defend. Vol. I., Doc. 1 at 3. Allstate did not 

relinquish this position until it responded to appellants' cross 

motion for summary judgment, where it argued that it was 

"maintaining" its position that it had not denied its obligation 

to defend Alfred Brown. Vol. I, Doc. 75, at 1-2. 

When an insurer breaches its contract to defend, it is liable 

to its insured for damages caused by such breach. State Farm Mut. 

Auto. Ins. Co. v. Skaggs, 251 F.2d 356, 359 (10th Cir. 1957) 

(applying Oklahoma law}, Here, however, while Allstate's 

complaint and motion for summary judgment denied a duty to defend, 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 16 
Allstate, in fact, was providing a defense. The Niroumand 

appellants filed their action for damages in the state court on 

May 10, 1988. Vol. I, Doc. 39 at 2. On May 22, 1988, Alfred 

Brown received a letter from Allstate informing him that it would 

defend Brown in the state court action. Id. On June 23, 1988, 

the attorney retained by Allstate to defend Brown filed a general 

denial answer in state court. Allstate did not file this 

declaratory judgment action until August 29, 1988, well after it 

had begun its defense of Brown in the underlying liability action. 

Given this action by Allstate, the district court was within its 

discretion in denying attorney's fees to Brown. 

Question of Fact Regarding Negligent Entrustment 

Appellants argue that outstanding questions of fact regarding 

negligent entrustment exist precluding the grant of summary 

judgment. While negligent entrustment may be relevant in the 

underlying liability suit as a theory upon which the victims can 

recover, the facts supporting that theory are irrelevant to the 

question presented to the district court, namely, do the 

appellants have coverage under this policy. The theory upon which 

the injured parties may or may not prevail at trial in the state 

court was irrelevant to the district court's determination of 

whether Allstate was liable under its policy. 

Procedure with Regard to William Brown 

The Brown appellants argue that the trial court should have 

appointed a guardian ad litem for William Brown, a minor. Okla. 

Stat. Ann. tit. 12, § 2017(C) (West 1980 & Supp. 1990), provides 

that "[t]he court shall appoint a guardian ad litem for an infant 

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Appellate Case: 89-6312 Document: 01019956493 Date Filed: 11/29/1990 Page: 17 
or incompetent person not otherwise represented in an action or 

shall make such other order as it deems proper for the protection 

of the infant or incompetent person." We read this language to 

commit the matter of the appointment of a guardian ad litem to the 

discretion of the district court. See Westcott v. United States 

Fidelity & Guar. Co., 158 F.2d 20, 22 (4th Cir. 1946) (construing 

identical language in Fed. R. Civ. P. 17: "[w]e cannot agree 

thus 

that the word 'or' 'in the last sentence really means 'and,' 

making the appointment of a guardian ad litem mandatory.") 

We have seen no evidence indicating any abuse of this discretion. 

Finally appellants contend that William Brown was improperly 

served. This argument is without merit. Pursuant to Rule 4 of 

the Federal Rules of Civil Procedure and Okla. Stat. Ann. tit. 12, 

§ 2004(C)(l) and (C)(2) (West 1980 & Supp. 1990), service by 

certified mail was proper. 

Appellants' final argument regarding the need for the 

district court to stay its proceedings in favor of the parallel 

state action is rejected as discussed above. 

The judgment of the United States District Court for the 

Western District of Oklahoma is AFFIRMED. 

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