Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-04-05106/USCOURTS-ca10-04-05106-0/pdf.json

Parties Involved:
American Home Assurance Company
Appellee
Donald M. Noone
Not Party
Randy Papa
Appellant

Document Text:

FILED 

United States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

May 26, 2005 

PATRICK FISHER 

Clerk 

RANDY PAPA, 

Plaintiff-Appellant, 

V. 

DONALD M. NOONE, 

Defendant, 

AMERICAN HOME ASSURANCE 

COMPANY, 

Defendant-Appellee, 

AMERICAN HOME ASSURANCE 

COMPANY, 

Plaintiff in Intervention, 

V. 

DONALD M. NOONE, 

Defendant in Intervention. 

No. 04-5106 

(D.C. No. CV-03-326-H(M)) 

(N.D. Okla.) 

ORDER AND JUDGMENT* 

Before EBEL, McCONNELL, and TYMKOVICH, Circuit Judges. 

• This order and judgment is not binding precedent, except under the 

doctrines of law of the case, res judicata, and collateral estoppel. The court 

generally disfavors the citation of orders and judgments; nevertheless, an order 

and judgment may be cited under the terms and conditions of I 0th Cir. R. 36.3. 

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After examining the briefs and appellate record, this panel has determined 

unanimously that oral argument would not materially assist the determination of 

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.l(G). The case is 

therefore ordered submitted without oral argument. 

Plaintiff Randy Papa, a resident of Louisiana, appeals the district court's 

grant of summary judgment in favor of defendant American Home Assurance 

Company, an Illinois corporation (AHA). on his complaint alleging wrongful 

denial of insurance coverage. Papa brought suit in Oklahoma state court, and 

AHA removed the action to the federal court. Exercising diversity jurisdiction 

and considering cross motions for summary judgment, the district court ruled that 

Texas law governed the interpretation of the insurance policy, and that under 

Texas law, Papa was not entitled to coverage. We affirm. 

I. 

The material facts are undisputed. Papa was injured in a car accident on 

July 11, 200 I in Tulsa, Oklahoma, caused by the negligence of defendant Donald 

Noone. Noone's liability insurance was insufficient to compensate Papa for his 

injuries. At the time of his accident, Papa was driving an Avis rental car, and he 

was acting in the course and scope of his employment with S&B Engineers and 

Constructors, Ltd., headquartered in Houston, Texas (S&B). S&B had a 

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commercial automobile insurance policy issued by AHA (the S&B policy). It is 

undisputed that the S&B policy was negotiated, issued, and delivered in Texas. 

Papa alleges that he is entitled to uninsured/underinsured (UN/UIM) 

motorist coverage under the S&B policy. AHA denied coverage, stating that the 

S&B policy limits UM/UIM coverage to automobiles owned by S&B and garaged 

in a state where uninsured motorists coverage may not legally be rejected by the 

insured. Because the rental car was neither owned by S&B nor garaged in a state 

where UM/UIM coverage is compulsory, AHA contends Papa is not entitled to 

UM/UIM coverage under the S&B policy. 

Both parties moved for summary judgment. Papa argues the S&B policy is 

governed by Louisiana law, and that under the laws of that state, the UM/UIM 

limitation in the S&B policy is illusory and void. AHA argues the S&B policy is 

governed by Texas law, where the policy was issued, and that the UM/UIM 

limitation is valid under Texas law, as well as the laws of Louisiana and the 

forum state, Oklahoma. 

The district court correctly applied Oklahoma choice-of-law principles to 

determine which jurisdiction governed the interpretation of the S&B policy. See 

BancOklahoma Mortgage Corp. v. Capital Title Co., 194 F .3d 1089, 1103 (I 0th 

Cir. 1999) (holding that forum state's choice-of-law principles control in diversity 

actions). It ruled that under these principles, Texas law governed the 

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interpretation of the S&B policy because both parties to the policy, S&B and 

AHA, were located in Texas and the policy was negotiated and issued in Texas. 

It alternatively ruled that, even were Louisiana law to govern the S&B policy, 

Papa was clearly not entitled to UM/UIM coverage thereunder. 

II. 

On appeal, Papa contends the district court erroneously applied the 

choice-of-law principles and that Louisiana, rather than Texas, law should control 

the outcome of this case. We review the district court's choice-of-law ruling de 

novo. Olcott v. Delaware Flood Co., 76 F .3d 1538, 1544 (10th Cir. 1996). 

Under Oklahoma's choice-of-law rules, "[t]he validity, interpretation, 

application and effect of the provisions of a motor vehicle insurance contract 

should be determined in accordance with the laws of the state in which the 

contract was made .... " Bohannan v. Allstate Ins. Co., 820 P.2d 787, 797 (Okla. 

1991 ). There are two exceptions: one, if those provisions are contrary to the 

public policy of Oklahoma, id., which Papa does not assert, or two, if the facts 

demonstrate that another jurisdiction has the most significant relationship with the 

subject matter and the parties, id., which he does assert. 

Papa argues that, even though the S&B policy was entered into in Texas 

where both parties to the contract were located, Louisiana has the most significant 

relationship with the subject matter and the parties. He bases this argument on 

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the fact that he is a Louisiana resident, that the only car listed as a covered 

automobile in the S&B policy was garaged in Louisiana, and that the S&B policy 

contains an endorsement that modifies the policy to comply with Louisiana law in 

the event the covered vehicle in question is garaged in Louisiana. 

Oklahoma courts have rejected similar, even stronger, arguments, 

concluding that in the area of UM/UIM insurance coverage, which is heavily 

regulated by state statutes, the location of the insured automobile is not of great 

significance. Rather, the place of performance and the place of contracting are of 

greater significance, which preserves the insurance benefits contracted for and 

paid for pursuant to the law of the contracting state. Bohannan, 820 P .2d at 796; 

Herren v. Farm Bureau Mut. Ins. Co., 26 P.3d 120, 123 (Okla. Civ. App. 2001). 

Here, the vehicle involved in the accident was not garaged in, and had no contacts 

with, Louisiana. We agree with the district court that the mere existence of a 

Louisiana endorsement in the S&B policy is irrelevant, because no vehicle 

garaged in, or having contacts with, Louisiana is at issue. 

Papa argues that even if Texas law governed, Texas would apply the laws 

of Louisiana. His circular argument is premised on Texas decisions that have 

applied the law of the state having the most significant relationship with the 

parties and the contract at issue. As we have held, Texas, not Louisiana, has the 

most significant relationship with the parties and the S&B policy. 

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We conclude that the district court correctly ruled that Texas, the place 

where the S&B policy was negotiated and entered into, and where both parties to 

the policy were located, has the most significant relationship to the subject matter 

and the parties, and that its law, therefore, governs the interpretation of the S&B 

policy. 1 Papa does not contend that the limitation on UM/UIM coverage in the 

S&B policy is in any way violative of, or unenforceable under, Texas law or that 

he otherwise is entitled to UM/UIM coverage under Texas law. We accordingly 

agree with the district court that Papa failed to demonstrate that he is entitled to 

UM/UIM coverage under the S&B policy. 

III. 

Papa next asserts that, despite the district court's ruling regarding coverage 

under the S&B policy, he is still entitled to pursue his bad faith claim. He alleges 

that AHA agents wrongfully failed to furnish him with a copy of the S&B policy. 

Under Texas law, "there can be no claim for bad faith when an insurer has 

promptly denied a claim that is in fact not covered." Republic Ins. Co. v. Stoker, 

903 S. W.2d 33 8, 341 (Tex. 1995). The Republic court did state that it would not 

'·exclude ... the possibility that in denying the claim, the insurer may commit 

some act, so extreme, that would cause injury independent of [the policy] claim." 

Having so concluded. we need not address the district court's alternative 

ruling that, even under Louisiana law, Papa would not be entitled to UM/UIM 

coverage under the unambiguous terms of the S&B policy. 

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Id. We can find no Texas authority, however, for Papa's proposition that the 

mere failure to provide a claimant with a copy of the policy is an act so extreme 

as to establish a bad faith tort claim when, as here, there is a reasonable basis for 

denying benefits to the claimant under the policy. Furthermore, Papa presented 

no evidence that the manner in which his claim was handled caused him any 

injury or damages independent of the denial of policy benefits. See Provident 

Am. Ins. Co. v. Castaneda, 988 S. W.2d 189, 198 (Tex. 1998) (holding that bad 

faith claims based on the handling and investigation of a claim must cause injury 

independent of the denial of policy benefits). We conclude that Papa failed to 

demonstrate that AHA acted in bad faith in handling or investigating his claim or 

in denying or delaying any benefits to him. 

The judgment of the district court is AFFIRMED. 

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Entered for the Court 

Timothy M. Tymkovich 

Circuit Judge 

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