Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-02553/USCOURTS-ca10-88-02553-0/pdf.json

Parties Involved:
Ray Rush
Appellee
Shellie Rush
Appellee
The Travelers Indemnity Company
Appellant

Document Text:

ROBERT L. HOECKER 

CLERK 

_ ~uiteb jtates filourt of J\ppeals 

TENTH CIRCUIT 

OFFICE OF THE CLERK 

C404 UNITED STATES COURTHOUSE 

DENVER, COLORADO 80294 

December·22, 1989 

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION 

TELEPHONE 

(303) 844·3157 

CFTSl 564·3157 

RE: 88-2505 and 88-2553, Ray Rush, Shellie Rush v. The Travelers 

lndemnity Company 

On page 4 of the opinion issued on December 8, 1989, we are 

changing "def-endants have" to "defendant has" in the first sentence 

not part of the quote. 

Attached is a new page 4 to be substituted for page 4 in the 

opinion which was sent to you on December 8, 1989. 

Very truly yours, 

ROBERT L. HOECKER 

By: 

) 

x/; 1 r,it,(A I\ OJt . Patrick Fisher 

Chief Deputy Clerk· 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 1
Appellate Case: 88

2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 2
"each accident" is the total limit of the company's liability for all damages· because of bodily injury 

sustained by two or more persons a.s the result of any 

one accident, provided that if the minimum limits of 

liability for bodily injury designated in the financial 

responsibility law of the state in which the accident 

occurred are greater than the applicable limits stated 

in the declarations, the limit of the company's 

liability under Coverage D with respect to such accident 

shall be such limits set forth in such law. 

(Emphasis added.) 

Defendant has argued before the district court and on appeal that 

an endorsement ·in the policy "replaces" Paragraph 17 and requires 

application of Oklahoma's minimum requirement. This endorsement 

provides in pertinent part: 

1. UNINSURED MOTORISTS COVERAGE 

(Damages for Bodily Injury· Caused by Uninsured 

Highway Vehicles) 

The company will pay in accordance with Title 36 

Oklahoma Statutes all sums which the insured or his 

legal representative shall be legally entitled to 

recover as damages from the owner or operator of an 

uninsured highway vehicle because of bodily injury 

caused by accident and a~ising out of the ownership, maintenance or use of such uninsured highway vehicle: 

provided, for the purposes of this coverage, 

determination as to whether the insured or such 

representative is legally entitled to recover such 

damages, and if so the amount thereof, shall be made by 

agreement between the insured or such representative and 

the company or, if they fail to agree, by arbitration. 

No judgment against any person or organization alleged 

to be legally responsible for the bodily injury shall be 

conclusive, as between the insured and the company, of 

the issues of liability of such person or organization 

or of the amount of damages to which. the insured is 

legally entitled unless the insured has given the 

company adequate notice of the filing and pendency of 

the action by the insured against the uninsured 

motorist. 

Under Oklahoma law, an insurance policy and its endorsement 

should be construed harmoniously to give effect to each, see 

Springfield Fire~ Marine Insurance Co. v. Dickey, 174 P. 235, 238 

4 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 3
Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 4
PUBLISH 

FI LED 

Uoitcd States Coore of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

DEC 8 1989 

ROBERT L. HOECKER 

Clerk 

RAY RUSH; SHELLIE RUSH, 

Plaintiffs-Appellants, 

Cross-Appellees, 

v. 

THE TRAVELERS INDEMNITY COMPANY, 

a corporation, 

Defendant-Appellee, 

Cross-Appellant. 

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Nos. 88-2505 

& 

88-2553 

APPEALS FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF OKLAHOMA 

(D.C. No. 88-030-C) 

Submitted on the briefs: 

s. Daniel George, Sallisaw, Oklahoma, for Plaintiffs-Appellants, 

Cross-Appellees. 

R. Hayden Downie of Main & Downie, P.C., Tulsa, Oklahoma, for 

Defendant-Appellee, Cross-Appellant. 

Before McKAY, SEYMOUR, and TACHA, Circuit Judges. 

PER CURIAM. 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 5
After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of these appeals. See Fed. R. App. P. 

34(a); 10th Cir. R. ~4.1.9. The cases are therefore ordered 

submitted without oral argument. 

Ray Rush and Shellie Rush (plaintiffs) are Oklahoma residents 

insured under an automobile policy purchased from the Trav~lers 

Indemnity Company (defendant). The policy was issued and executed 

in Oklahoma and ·covered two vehicles. On July 24, 1986, one of 

the plaintiffs (Shellie· Rush) was injured in a collision between 

her vehicle and another vehicle in Arkansas. Plaintiffs filed 

this diversity action in the United States District Court for the 

Eastern District of Oklahoma alleging bad faith and also seeking 

to recover benefits under the uninsured motorist coverage included 

in the policy. Defendant did not dispute its liability under the 

policy, but it did rely on certain provisions of the policy to 

dispute the amount plaintiffs were entitled to recover. 

On cross motions for summary judgment, the dis.tr ict court 

determined that the terms of the policy required application of 

Arkansas's minimum requirements for uninsured motorist coverage, 

as _opposed to Oklahoma's, to establish the amount of defendant's 

liability. The district court further concluded that plaintiffs 

could not increase their recovery by "stacking" their uninsured 

motorist coverage as permitted _by Oklahoma law. Finally, the 

district court rejected the bad faith claim. Both parties have 

appealed, with defendant challenging the district court's 

application of Arkansas's ·minimum requirements· for uninsured 

2 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 6
motorist coverage and plaintiffs seeking review of the district 

court's refusal to permit stacking. 

Resolution of this case turns on the interpretation of 

plaintiffs' insurance policy. The threshold question is what 

state's law governs the interpretation. It is well established 

that -the conflict of laws rules of the forum state, Oklahoma, must 

be applied to determine the applicable law. See Klaxon Co. v. 

Stentor Elec. Mfg. Co., 313 U.S. 487, 491 (1941). Under 

Oklahoma's conflict of laws rules, matters bearing upon the 

interpretation of an insurance policy are ordinarily determined by 

the law of the place where the policy was issued and executed. 

See Rhody v. State Farm Mut. Ins. Co., 771 F.2d 1416, 1418-20 

(10th Cir. 1985). Since plaintiffs' insurance policy was issued 

and executed in Oklahoma, the law of Oklahoma governs its 

interpretation. 

It is undisputed by the parties that, at the time of the 

accident, the required minimum uninsured motorist coverage for 

bodily injury or death of one person in one accident was $25,000 

under Arkansas law, see Ark. Stat. Ann. § 66-4003 (Supp. 1985), 

and $10,000 under Oklahoma law, see Okla. Stat. tit. 36, § 3636 

(1981). The district court's conclusion that plaintiffs were 

entitled to the higher minimum required under Arkansas law was 

premised on Paragraph 17 of the policy, which provides in 

pertinent part: 

(a) The limit of liability for uninsured motorists to 

"each person" is the limit of the company's liability 

for all damages because of bodily injury sustained by 

one person as the result of any one_accident and subject 

to the above: provision respecting each person,· the limit 

of liability stated in the declaration as applicable to 

3 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 7
"each accident" is the total limit of the company's 

liability for all damages because of bodily injury 

sustained by two or more persons as the result of any 

one accident, provided that if the minimum limits of 

liability for bodily injury designated in the financial 

responsibility law of the state in which the accident 

occurred are greater than the apelicable limits stated 

in the declarations, the limit of the company's 

liability under Coverage D with respect to such accident 

shall be such limits set forth in such law. 

(Emphasis added.) 

Defendants have argued before the district court and on appeal 

that an endorsement in the policy "replaces" Paragraph 17 and 

requires application of Oklahoma's minimum requirement. This 

endorsement provides in pertinent part: 

l. UNINSURED MOTORISTS COVERAGE 

(Damages for Bodily Injury Caused by Uninsured 

Highway Vehicles) 

The company will pay in accordance with Title 36 

Oklahoma Statutes all sums which the insured or his 

legal representative shall be legally entitled to 

recover as damages from the owner or operator of an 

uninsured highway vehicle because of bodily 'injury 

caused by accident and arising out of the ownership, 

maintenance or use of such uninsured highway vehicle; 

provided, for the purposes of this coverage, 

determination as to whether the insured or such 

representative is legally entitled to recover such 

damages, and if so the amount thereof, shall be made by 

agreement between the insured or such representative and 

the company or, if they fail to agree, by arbitration. 

No judgment against any person or organization alleged 

to be legally responsible for the bodily injury shall be 

conclusive, as between the insured and the company, of 

the issues of liability of such person or organization 

or of the amount of damages to which the insured is 

legally entitled unless the insured has given the 

company adequate notice of the filing and pendency of 

the action by· the insured against the uninsured 

motorist. 

Under Oklahoma law, an insurance policy and its endorsement 

should be construed harmoniously to give effect to each, see 

-Springfield Fire &nMarine Insurance Co. v~ Dickey, 174 P. 235, 238 

4 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 8
( 

(Okla. 1918), but when an endorsement conflicts with the general 

provisions of an insurance policy, the endorsement will prevail 

and the policy will be effective as altered by the endorsement, 

see Timmons v. Royal Globe Insurance Co., 653 P.2d 907, 913 (Okla. 

1982). Given the unambiguous language in the endorsement and 

Paragraph 17, we see no conflict between the two. The endorsement 

simply indicates that the policy wi~l provide uninsured ·motorist 

coverage in accordance with the mandatory requirements of the 

Oklahoma uninsured motorist statute. See Okla. Stat. Ann. tit. 

36, § 3636. Indeed, any provision in the insurance policy which 

would have purported to limit or dilute the provisions of the 

uninsured motorist statute would have been void and unenforceable. 

Brown v. United Servs. Auto. Ass'n, 684 P.2d 1195, 1198 (Okla. 

1984). Paragraph 17, on the other hand, simply states that 

defendant's liability will be greater if, as in this case, the 

minimum requirements for uninsured motorist coverage in the state 

of the accident are greater than the requirements under Oklahoma 

law. Both provisions can be read cooperatively. Consequently, 

the district court's decision to give effect to Paragraph 17 was 

correct. 

While we agree with the district court regarding plaintiffs' 

entitlement to the $25,000 minimum coverage required under 

Arkansas law, we disagree with the district court's conclusion 

that plaintiffs may not increase that amount by stacking their 

uninsured motorist coverage. Stacking, as provided for under 

Oklahoma law, permits the total amount of uninsured motorist 

coverage:a1lowed· for all vehicles listed:in an insu~~nce policy to 

5 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 9
be applied to the damages resulting from an accident involving 

only one of the vehicles. Rhody, 771 F.2d at 1418. Plaintiffs 

argued to the district court that, although Paragraph 17 

references Arkansas law to assign a .dollar amount to their 

uninsured motorist coverage, Oklahoma law governs the 

interpretation of their policy as a whole and, therefore, under 

Oklahoma law they should ~e permitted to stack the uninsured 

coverage and recover $50,000, the total amount of coverage 

provided for the two vehicles listed in their policy. The 

district court disagreed, holding that Paragraph 17, aside from 

incorporating Arkansas's $25,000 minimum coverage, also served to 

require interpretation of the policy as a whole under Arkansas 

law, which, it was presumed, did not provide for stacking. 

Without addressing whether or not Arkansas law makes any 

provision for stacking, we conclude that the district court's 

determination was erroneous because in order for Paragraph 17 to 

require application of law other than Oklahoma's to interpret the 

policy as a whole and determine the proceeds of plaintiffs' 

uninsured motorist coverage, it must constitute a "specific 

manifestation of [the parties' J intent to be bound by the 

[uninsured motorist] laws of a particular jurisdiction." Id. at 

1420. We are not persuaded that Paragraph 17 is such an explicit 

designation of governing law. Paragraph 17 says nothing about the 

laws of any jurisdiction governing interpretation of the uninsured 

motorist provisions or the policy as a whole. Instead, it simply 

provides a mechanical means for assigning a dollar amount to a 

specific term· in the·policy. Similarly, we find bb indication, 

6 

Appellate Case: 88-2553 Document: 010110282903 Date Filed: 12/22/1989 Page: 10
( express or implied, in any other portions of the record that the 

parties intended to be bound by the laws of a particular 

jurisdiction. Therefore, the law of Oklahoma, including its 

provisions for stacking, applies to determine defendant's 

liability to plaintiffs. 

Accordingly, the judgment of the district court is VACATED, 

and the case is REMANDED with directions to enter judgment in 

plaintiffs' favor in the amount of $50,000. 

7 

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