* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 2 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

CAPITOL INDEMNITY CORPORATION,

Plaintiff-Appellant,

v. LARRY MITCHELL LOWE and CYNTHIA DIANE LOWE, individually, as husband and wife, and as parents and next friends of CARRA MICHELLE LOWE,

Defendants-Appellees, and JAMES S. WOODS and TOM HILL, individually and d/b/a BOA PRIVATE INVESTIGATION AGENCY, Defendants. No. 98-6011 (D.C. No. CIV-96-596-R) (W.D. Okla.)

ORDER AND JUDGMENT *

Before BALDOCK, EBEL, and MURPHY , Circuit Judges.-2-

After examining the briefs and appellate record, th is panel has determined unanimously to grant the parties' request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument. Plaintiff Capitol Indemnity Corporation (Capitol) b rought this diversity action under 28 U.S.C. § 2201 seeking a judgment de claring that the insurance policy issued to defendants James S. Woods and Tom Hill, doing business as BOA Investigative Agency (BOA), was either rescindable ab initio or canceled before BOA allegedly injured defendants Larry Mitch ell Lowe, Cynthia Diane Lowe, and Carra Michelle Lowe (the Lowes). The dis trict court granted summary judgment in favor of the Lowes, and Capitol appeals . “Reviewing the district court’s grant of summary judgment and its interpret ation of the insurance policy de novo,” MGA Ins. Co. v. Fisher-Roundtree , Nos. 97-6391 & 97-6414, 1998 WL 758395, *1 (10th Cir. Oct. 30, 1998), we affirm.

BACKGROUND In Oklahoma, private investigator licenses are issu ed by the Council on Law Enforcement Education and Training (CLEET). See Okla. Stat. tit. 59, § 1750.5(A). CLEET will not issue a license withou t a showing that the applicant-3-

has minimum general liability insurance coverage ora surety bond that protects the public by allowing recovery for “actionable inj uries, loss, or damage as a result of the willful, or wrongful acts or omissions” of the licensee. See id

. § 1750.5(J)(1). The statutorily required insurance policy or bond may “not be modified or canceled” unless ten days’ prior writte n notice is given to CLEET. Id . § 1750.5(J)(4). In order to meet this requirement, BOA applied for a Capitol liability policy, through Anderson Road Insurance Company, anindependent broker. Oklahoma General Agency (OGA), Capitol’s general ag ent in Oklahoma, approved the application and issued a policy on beh alf of Capitol, with an effective date of July 1, 1993. The Anderson Road I nsurance Agency issued a “Certificate of Insurance” to CLEET, showing that B OA had a Capitol policy in the amount of $100,000 and stating, in conformity w ith Okla. Stat. tit. 59, § 1750.5(J)(4), that the issuing company may not cancel the policy except upon ten days written notice to CLEET. The terms of th e policy, however, prescribed cancellation by mailing written notice to the named insured thirty days before the effective date of cancellation. On August 23, 1993, OGA sent a cancellation notice to BOA that the policy was canceled, effective September 27, 1993, based o n an increased hazard related-4-

to bodyguard service and subcontracted work. CLEET was not provided with notice of cancellation. On June 1, 1994, BOA conducted a raid at the home o f the Lowes. Alleging that they had received injuries and sustai ned damages as a result of the raid, the Lowes filed suit in state district court. Capitol then filed this declaratory judgment action against the Lowes, Woods, Hill, and BOA, seeking a determination that Capitol was entitled to rescind the policy, based on alleged misrepresentations made by the insureds or, alternatively, that Capitol had effectively canceled the policy before the Lowes’ c laims arose. Capitol and the Lowes moved for summary judgment. In an order file d October 3, 1997, the district court entered summary judgment in favor of the Lowes and against Capitol. Concerning Capitol’s claim for rescission, the district court recognized that an insurer is entitled to avoid its obligations und er an insurance policy if the applicant made material misrepresentations in the application. See Burgess v. Farmers New World Life Ins. Co. , 12 F.3d 992, 993 (10th Cir. 1993). It concluded, however, that reasonable factfinders cou ld differ as to whether the alleged misrepresentations were material. Moreover , the court determined that any such rescission could not affect the Lowes because it is well-settled that, as applied to a third-party claimant, an insurer canno t retroactively avoid coverage-5-

under a compulsory insurance or financial responsibility law. See, e.g. , Van Horn v. Atlantic Mut. Ins. Co. , 641 A.2d 195, 203-07 (Md. 1994); Ferrell v. Columbia
Mut. Cas. Ins. Co. , 816 S.W.2d 593, 595-96 (Ark. 1991). Accordingly, the court denied Capitol’s motion for summary judgment. With regard to the Lowes’ motion, the district court applied another established rule: where statutory provisions requi re notice to a government agency before cancellation of a policy, an attempte d cancellation which does not comply with the notice provisions is ineffective, at least against third parties seeking to recover against the insured. See, e.g. , Commercial Standard Ins. Co. v.
Garrett , 70 F.2d 969, 975-76 (10th Cir. 1934) (holding ora l notice of cancellation inadequate where an administrative rule, made in co nformity with an Oklahoma statute, required written notice); see also Lee R. Russ & Thomas F. Segalla, Couch on Insurance, § 31:19 (3d ed. 1997) (setting out the general rule that “[w]here statutory provisions require notice to a g overnment agency in order to effect a cancellation of a policy, such notice mustbe given to effect a cancellation, and conversely there is no cancellati on where notice is given merely in accordance with the provisions of the policy”). The court, therefore, determined that OGA’s attempt at cancellation was i neffective because CLEET had never received the written notice required by O kla. Stat. tit. 59, § 1750.5(J)(4). It granted the Lowes’ motion for s ummary judgment and, later,-6-

granted Capitol’s request for entry of final judgment, see Fed. R. Civ. P. 54(b). This appeal followed.

DISCUSSION On appeal, Capitol argues that the district court e rred in its basic determination that the Capitol policy is “compulsory insurance,” and, consequently, reached flawed conclusions concerning the impermissibility of rescission and the need to comply with statutory cancellation requirements. After reviewing the record, the case law, and the relevan t statutes, we agree with the analysis set out in the district court’s thoughtful order. Capitol’s argument that the policy is not “compulso ry insurance” may be quickly discounted. “A compulsory insurance statut e in effect declares a minimum standard which must be observed. . . .” Rohlman v. Hawkeye-Security
Ins. Co. , 502 N.W.2d 310, 315 n.10 (Mich. 1993). Section 1 750.5(J)(2) requires Oklahoma-licensed investigators to carry a minimum amount of insurance coverage. Although the term “compulsory insurance ” is frequently applied to mandated coverage for motor vehicles, it is not confined to that use. See MGA
Ins. Co. , 1998 WL 758395, at *3 (“[W]e see no indication th at Oklahoma treats compulsory insurance requirements mandated as part of a permitting scheme [regarding the retail sale of liquified petroleum] any differently from those imposed for motor vehicle liability coverage. . . . ”). Additionally, the fact that-7-

BOA could have satisfied licensing requirements with a bond, rather than insurance, is of no consequence to the determination. See Halpin v. American Family Mut. Ins. Co. , 823 S.W.2d 479, 481 (Mo. 1992); see also Allstate Ins. Co.
v. Brown , 920 F.2d 664, 668 (10th Cir. 1990) (“Oklahoma’s c ompulsory liability insurance statutes require that all vehicle owners maintain liability insurance or other authorized security. . . .”). Plainly, the l iability insurance policy covering BOA is required under a compulsory insurance statut e. Because of the compulsory nature of the insurance, Capitol is not entitled to rescind its policy as to the Lowes, who are thir d-party claimants. To the extent that Capitol argues that it has shown entitlement t o rescind as to Woods, Hill, and BOA, we note that the district court denied Capitol ’s motion for summary judgment on this issue. “Denial of [a] summary jud gment motion is not properly appealable.” Roberts v. Roadway Express, Inc. , 149 F.3d 1098, 1103 (10th Cir. 1998). Finally, we reject Capitol’s contention that it had canceled the policy before the Lowes’ claims arose. By statute, this policy m ay not be modified or canceled without prior written notice to CLEET. See Okla. Stat. tit. 59, § 1750.5(J)(4). The statutory requirement is “incorporated into the policy as a matter of law and override[s] any conflicting policy provision.” MGA Ins. Co. , 1998 WL 758395, *4.-8-

[It is] reasonable to place the notice burden on th e [insurance] carrier since it is clearly in the carrier’s best interest to give notice. Otherwise the carrier runs the risk of continuing t o be liable under the policy. There is also the consideration that t he carrier will know exactly when the [cancellation] occurs and can promptly give notice to protect itself, whereas an insured may not be im mediately aware of the lapse. Jarboe v. Shelter Ins. Co. , 819 S.W.2d 9, 11 (Ark. 1991). Here, it is undisputed that CLEET was not notified of Capitol’s intended cancellation, by either Capitol or BOA. The distri ct court correctly concluded that the attempted cancellation was ineffective.

CONCLUSION For these reasons, we AFFIRM the district court’s o rder granting the Lowes' motion for summary judgment and denying Capi tol's motion for summary judgment against the Lowes.

Entered for the Court

David M. Ebel Circuit Judge