FILED

United States Court of Appeals

Tenth Circuit

January 21, 2014

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

ARSHAD YOUSUF, M.D.,

Plaintiff,

PHYSICIANS LIABILITY INSURANCE

COMPANY,

Intervenor-PlaintiffAppellee/Cross-Appellant,

v.

GEORGE COHLMIA, M.D.;

CARDIOVASCULAR SURGICAL

SPECIALISTS CORP.,

Defendants.

________________________

AMERICAN NATIONAL PROPERTY

AND CASUALTY COMPANY,

Garnishee-Appellant/

Cross-Appellee.

Nos. 12-5034, 12-5038

Appeal from the United States District Court

for the Northern District of Oklahoma

(D.C. No. 4:09-CV-00545-TCK-TLW)

Nevin R. Kirkland (David H. Cole with him on the briefs) of Edmonds Cole Law

Firm, PC, Oklahoma City, Oklahoma, for Appellant/Cross-Appellee.
Robert N. Naifeh, Jr. (Sarah Lee Gossett Parrish with him on the briefs) of

Derryberry & Naifeh, LLP, Oklahoma City, Oklahoma, for Appellee/CrossAppellant.

Before TYMKOVICH, SEYMOUR, and GORSUCH, Circuit Judges.

SEYMOUR, Circuit Judge.

American National Property and Casualty Company (ANPAC) appeals from

the district court’s grant of summary judgment in favor of Physicians Liability

Insurance Company (PLICO) in a dispute regarding ANPAC’s breach of its duty

to defend a co-insured. PLICO cross-appeals the district court’s denial of its

motion for prejudgment interest. We AFFIRM.

I

In November 2004, Dr. Ashard Yousuf sued Dr. George Cohlmia and

Cardiovascular Surgical Specialists Corporation (CVSS) in Oklahoma state court

for defamation, tortious interference with business relations/contract, intentional

infliction of emotional distress/outrage, negligence, and breach of contract. Dr.

Yousuf alleged that Dr. Cohlmia made a series of false statements to local media

disparaging Dr. Yousuf’s professional reputation. Dr. Cohlmia denied that the

statements he made were false. 

Dr. Yousuf and Dr. Cohlmia were both board certified surgeons in Tulsa,

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Oklahoma, who were granted privileges by Hillcrest Medical Center (HMC) to

practice cardio-thoracic surgery. Dr. Yousuf alleged that Dr. Cohlmia wrote a

defamatory letter about him to the Board of Directors of the hospital, that the

contents of the letter were false or made with reckless disregard of whether or not

they were false, and that Dr. Cohlmia intentionally disseminated the contents of

the letter to the news media in order to damage Dr. Yousuf’s reputation and

occupation as a surgeon. He further alleged that even after the HMC Professional

Affairs Committee determined that Dr. Cohlmia’s allegetions were unfounded,

Dr. Cohlmia continued to repeat the defamatory statements to the media with

reckless disregard for their truth, and that Dr. Cohlmia’s conduct damaged Dr.

Yousuf’s professional reputation and caused a decline in referrals to him. 

CVSS held a professional liability policy with PLICO and two identical

general commercial liability policies with ANPAC (one for each business

location), each of which covered Dr. Cohlmia as an additional insured. Dr.

Cohlmia demanded that both insurers provide for his defense, pursuant to their

respective policies. PLICO agreed to defend the lawsuit under a reservation of

rights and requested ANPAC to share in the defense. ANPAC refused,

contending its policy did not cover the alleged wrongdoing and that it owed no

duty to defend. ANPAC further claimed that even if it erred in refusing to defend

Dr. Cohlmia, PLICO had no right to indemnification or contribution for the

defense costs it incurred. 

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Before trial, Dr. Yousuf abandoned his claim for defamation and later

withdrew his claims for breach of contract and intentional infliction of emotional

distress, leaving the jury to consider only his allegations of negligence and

intentional interference with business relations. Although Dr. Cohlmia’s counsel

requested special verdict forms, Dr. Yousuf objected and the court instead

provided a general verdict form that did not allow for the jury to allocate the

verdict between Dr. Yousuf’s two theories of recovery. In February 2006, the

jury returned a general verdict against Dr. Cohlmia in the amount of $5,000,000. 

Despite finding that Dr. Cohlmia acted intentionally and with malice, the jury

declined to award punitive damages.

Upon entry of the judgment, Dr. Yousuf commenced a garnishment action

against PLICO in state court to collect the judgment against Dr. Cohlmia, and

Dr. Cohlmia commenced an action to compel PLICO to pay the judgment

rendered against him. The court granted summary judgment to PLICO in both

actions, holding that PLICO’s policy did not cover the torts inflicted on Dr.

Yousuf and that PLICO therefore had no obligation to pay the judgment.1

 PLICO

continued to defend the action on appeal, subject to a reservation of rights, and it

again demanded that ANPAC share in the defense. It also requested ANPAC to

reimburse it for one-half of the defense costs incurred during the trial. ANPAC

1 It is undisputed that PLICO’s policy excluded coverage for an insured’s

intentional conduct.

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again refused.

The matter now before us stems from the subsequent garnishment action

brought in state court by Dr. Yousuf against ANPAC, contending that his

judgment against Dr. Cohlmia was covered by ANPAC’s policy because it

covered intentional acts. ANPAC removed the action to federal district court. 

PLICO thereafter filed a motion to intervene, which was granted by the district

court. Seeking to recover its defense costs from ANPAC, PLICO asked the

district court to find, as a matter of law, that ANPAC’s policies provide coverage

for the underlying judgment against Dr. Cohlmia. ANPAC, for its part,

maintained that the damages awarded to Dr. Yousuf were not covered by its

policy and that it had no duty to defend Dr. Cohlmia in the underlying action. 

Both parties moved for summary judgment. In the meantime, Dr.

Cohlmia’s appeal from the underlying jury verdict was consolidated in the

Oklahoma Court of Civil Appeals with his appeal from the determination that

PLICO was not obligated to pay the judgment against him, as well as

Dr. Yousuf’s related appeal. After briefs were submitted in the present action,

the Oklahoma Court of Civil Appeals reversed the underlying state court

judgment due to an erroneous jury instruction on intentional interference with

business relations, and remanded the matter for a new trial. In the consolidated

appeals, it vacated the determinations that PLICO’s policy did not cover Dr.

Cohlmia’s torts against Dr. Yousuf. The Oklahoma Supreme Court denied

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certiorari review. The district court in this case then correctly determined that it

could no longer decide Dr. Yousuf’s garnishment claim against ANPAC, which

hinged on the now-vacated judgment against Dr. Cohlmia, but that it could still

decide whether ANPAC had breached its duty to defend Dr. Cohlmia and whether

PLICO could recover from ANPAC all or a portion of the costs it had already

incurred in Dr. Cohlmia’s defense. 

The district court granted summary judgment in favor of PLICO,

concluding that under Oklahoma law ANPAC had a duty to defend Dr. Cohlmia in

the underlying action and that ANPAC was liable for fifty percent of PLICO’s

costs of defending Dr. Cohlmia thus far, under a theory of subrogation. The court

held that while PLICO’s policy provided coverage for negligence but not for

intentional torts, it nevertheless specifically committed PLICO to defend “any

claim for damages if said damages are in consequence of the performance of a

criminal act or willful tort or sexual act,” Aplt. App., vol. II at 328, even though

any losses from such conduct would not be indemnified under the policy. With

respect to ANPAC’s policy, the district court held that it provided primary

coverage for intentional torts, including intentional interference with business

relations, but that it provided only excess coverage for negligence. It further held

that both insurers had an equal duty to defend Dr. Cohlmia against Dr. Yousuf’s

allegations. 

Regarding whether ANPAC could be held liable to reimburse PLICO for its

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share of Dr. Cohlmia’s defense costs, the district court concluded that the

doctrines of both contractual and equitable subrogation support PLICO’s claim. 

The court determined that because PLICO’s claim “rests primarily on contractual

subrogation,” Oklahoma’s five-year statute of limitations for written contracts

applied, rather than the three-year statute of limitations for equitable subrogation. 

Yousuf v. Cohlmia, 718 F. Supp. 2d 1279, 1298 (N.D. Okla. 2010). Since both

insurers had a duty to defend Dr. Cohlmia and the jury did not indicate the basis

of the verdict, the court concluded that defense costs should be evenly divided

between the insurers.

Once summary judgment for PLICO was granted, PLICO and ANPAC

negotiated an agreement regarding the costs and fees PLICO had incurred

defending Dr. Cohlmia, stipulating that ANPAC’s portion was $206,698.78. This

amount represents one-half of the total attorney fees and costs, less an agreed

five-percent reduction. PLICO then moved for prejudgment interest in the

amount of $149,110.57, contending that the district court was required to include

prejudgment interest of fifteen percent per year from the date of the judgment

pursuant to title 36, section 3629(B) of the Oklahoma Statutes. ANPAC opposed

the motion and the matter was submitted to a magistrate judge for a report and

recommendation. The magistrate judge recommended prejudgment interest be

denied on two grounds. First, he considered himself bound by Regional Air, Inc.

v. Canal Insurance Co., 639 F.3d 1229 (10th Cir. 2011), in which we held that

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prejudgment interest under section 3629 applies only to “verdicts” rendered by

juries, not to summary judgments entered by the court. Second, he concluded that

the attorney’s fees at issue were not liquidated, certain, or reasonably

ascertainable, precluding prejudgment interest under Oklahoma law. The district

court affirmed, denying PLICO’s motion for prejudgment interest. 

On appeal, ANPAC asserts that it had no duty to defend Dr. Cohlmia

because the district court erred in concluding ANPAC’s policy covers the claims

alleged by Dr. Yousuf in the underlying action. ANPAC also contends that an

equitable subrogation claim is untimely and, in any event, PLICO’s contractual

subrogation claim for defense costs cannot succeed because the duty to defend an

insured is individual to each insurer under Oklahoma law. PLICO cross-appeals

the district court’s denial of prejudgment interest, arguing that we should overturn

Regional Air based on an earlier decision by the Oklahoma Supreme Court, Dulan

v. Johnston, 687 P.2d 1045 (Okla. 1984), and that the costs and fees it incurred

defending Dr. Cohlmia are liquidated.

II

We review a grant of summary judgment de novo, drawing all reasonable

inferences and resolving all factual disputes in favor of the non-moving party. 

Piercy v. Maketa, 480 F.3d 1192, 1197 (10th Cir. 2007). Summary judgment is

warranted only if “there is no genuine dispute as to any material fact and the

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movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). We

review the district court’s decision on prejudgment interest for abuse of

discretion. Driver Music Co. v. Commercial Union Ins. Cos., 94 F.3d 1428, 1433

(10th Cir. 1996). “However, any statutory interpretation or legal analysis

underlying such an award is reviewed de novo.” Id. We apply substantive

Oklahoma law in this diversity action. 

A. ANPAC’s Duty to Defend

The duty of an insurer to defend its insured under Oklahoma law “is

separate from, and broader than, the duty to indemnify . . . .” First Bank of

Turley v. Fid. & Deposit Ins. Co. of Md., 928 P.2d 298, 303 (Okla. 1996). “An

insurer has a duty to defend an insured whenever it ascertains the presence of

facts that give rise to the potential of liability under the policy.” Id. (emphasis in

original). Thus, in order to determine whether ANPAC had a duty to defend Dr.

Cohlmia, we must ascertain whether the conduct alleged in the underlying suit

gave rise to the potential of liability under ANPAC’s policies covering Dr.

Cohlmia.

The Oklahoma Supreme Court has held that “the duty of an excess insurer

to participate in the insured’s defense is triggered only by exhaustion of the

primary policy.” U.S. Fid. & Guar. Co. v. Federated Rural Elec. Ins. Corp., 37

P.3d 828, 832-33 (Okla. 2001). ANPAC’s policies covering Dr. Cohlmia provide:

“If there is other insurance covering the same loss or damage, we will pay only

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for the amount of covered loss or damage in excess of the amount due from that

other insurance, whether you can collect on it or not.” Aplt. App., vol. II at 429. 

PLICO’s policy, on the other hand, contains a “pro rata” clause regarding other

insurance coverage. Id. at 331. We therefore agree with the district court that

“ANPAC is an excess insurer with regard to [Dr. Yousuf’s] claim for negligence,”

and that ANPAC’s duty to defend based on the negligence claim was not

triggered because PLICO did not exhaust its policy limits. Yousuf, 718 F. Supp.

2d at 1297-98. 

But PLICO contends the claim for intentional interference with business

relations is another matter. It is undisputed that PLICO’s policy does not cover

any intentional conduct, including knowingly engaging in intentional interference

with business relations. Therefore, if ANPAC’s policy does cover the intentional

misconduct alleged by Dr. Yousuf, ANPAC would become the primary insurer

with respect to that claim and would have had an equal duty to defend Dr.

Cohlmia in the state court action. 

Under Oklahoma law, the interpretation of insurance contracts is “a matter

of law for the Court to determine . . . .” Dodson v. St. Paul Ins. Co., 812 P.2d

372, 376 (Okla. 1991). Terms in the policy that are “unambiguous, clear, and

consistent, are accepted in their plain and ordinary sense, and the contract will be

enforced to carry out the intention of the parties as it existed at the time the

contract was negotiated.” Id. On the other hand, if the meaning of a term is

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ambiguous or in conflict with other provisions, the policy will be interpreted

“most favorably to the insured and against the insurance carrier.” Id. at 377; see

also Spears v. Shelter Mut. Ins. Co., 73 P.3d 865, 868 (Okla. 2003) (“[I]nsurance

contracts are contracts of adhesion because of the uneven bargaining position of

the parties. Consequently, in the event of ambiguity or conflict in the policy

provisions, a policy of insurance is to be construed strictly against the insurer and

in favor of the insured.” (internal citations, quotations, and alterations omitted)). 

ANPAC’s two identical policies covering Dr. Cohlmia state that ANPAC

“will pay on behalf of the insured all sums which the insured shall become legally

obligated to pay as damages because of bodily injury, property damage, or

personal injury caused by an occurrence to which this insurance applies.” Aplt.

App., vol. II at 418 (emphasis omitted). The term “occurrence” is defined in the

policies as “an accident, including continuous or repeated exposure to conditions

which results in bodily injury or property damage neither expected nor intended

from the standpoint of the insured and with respect to personal injury, the

commission of an offense, or a series of similar or related offenses.” Id. at 426

(emphasis omitted). “Personal injury” is defined to mean:

injury which arises out of one or more of the following offenses

committed in the conduct of the named insured’s business:

a. false arrest, detention or imprisonment, or malicious

prosecution;

b. the publication or utterance of a libel or slander or of other

defamatory or disparaging material, or a publication or

utterance in violation of an individual’s right of privacy . . . .

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Id. at 426-27 (emphasis added). In the underlying suit, the damages that Dr.

Yousuf alleged he suffered fall into this definition of “personal injury” because

they arose from the publication or utterance of disparaging material.

As the district court noted, the tort of interference with business relations is

also sometimes called disparagement. Yousuf, 718 F. Supp. 2d at 1286. We held

in Bankwest v. Fidelity & Deposit Co. of Maryland, 63 F.3d 974 (10th Cir. 1995),

under Kansas law, that policy language virtually identical to the provision at issue

here provided coverage for the tort of interference with business relations. Id.

(“[W]e conclude that [the policy term covering ‘the offense’ of] ‘the publication

of . . . other defamatory or disparaging material’ is susceptible of a construction

supporting coverage of the [Plaintiff’s] claim that [Defendant] interfered with

their contractual and business relations . . . .”); see also McCormack Baron Mgmt.

Servs., Inc. v. Am. Guar. & Liab. Ins. Co., 989 S.W.2d 168, 171 (Mo. 1999)

(holding that commercial general liability policy providing coverage for “personal

injury” stemming from “disparagement” includes claim for tortious interference

with contractual relationships); Forbes Inc. v. Granada Biosciences, Inc., 124

S.W.3d 167, 170 (Tex. 2003) (“A business disparagement claim is similar in

many respects to a defamation action. The two torts differ in that defamation

actions chiefly serve to protect the personal reputation of the injured party, while

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a business disparagement claim protects economic interests.”2

 (internal citation

omitted)). 

We similarly conclude that the provision in ANPAC’s policy providing

coverage for “personal injury” resulting from “the publication or utterances of a

libel or slander or of other defamatory or disparaging material” is broad enough to

encompass the tort of intentional interference with business relations. ANPAC

has provided no authority to convince us that Oklahoma courts would hold

otherwise.

B. Public Policy Concerns

ANPAC contends that such an interpretation is against public policy

because it extends coverage to include intentional wrongdoing. We are not

convinced. First, we note that ANPAC’s policies covering Dr. Cohlmia

specifically provide coverage, in no uncertain terms, for injuries arising from

conduct that constitutes several intentional torts. As discussed above, while

ANPAC’s policies preclude coverage for intentional conduct resulting in bodily

injury or property damage, they do not exclude intentional wrongdoing that

2 In Oklahoma, in order to prove tortious interference with a business or

contractual relationship, a plaintiff must show: “(1) he or she had a business or

contractual right that was interfered with; (2) the interference was malicious and

wrongful and was not justified, privileged, or excused; and (3) damage was

proximately sustained as a result of the interference.” Cohlmia v. St. John Med.

Ctr., 693 F.3d 1269, 1285 (10th Cir. 2012) (citing Mac Adjustment, Inc. v. Prop.

Loss Research Bureau, 595 P.2d 427, 427 (Okla. 1979)); see also Wilspec Techs.,

Inc. v. Dunan Holding Grp. Co., 204 P.3d 69, 74 (Okla. 2009). 

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results in “personal injury.” See Aplt. App., vol. II at 426. 

The policies define an “occurrence” in the context of bodily injury or

property damage as “an accident” that is “neither expected nor intended from the

standpoint of the insured.” Id. (emphasis omitted). The term “occurrence” for

purposes of personal injury, on the other hand, is defined as “the commission of

an offense.” Id. “Personal injury” is then defined to specifically include injury

resulting from a number of “offenses” that can be intentional torts, including

“false arrest, detention or imprisonment, or malicious prosecution . . . the

publication or utterances of a libel or slander or of other defamatory or

disparaging material, or a publication or utterance in violation of an individual’s

right of privacy,” as well as “wrongful entry or eviction, or other invasion of the

right of private occupancy.” Id. at 426-27. Under Oklahoma law, “[p]arties to

[an] insurance contract are at liberty to contract for insurance to cover such risks

as they see fit and are bound by terms of contract and courts will not undertake to

rewrite the terms thereof.” Dodson, 812 P.2d at 376 (quoting Wiley v. Travelers

Ins. Co., 534 P.2d 1293, 1295 (Okla. 1974)). We accordingly are required to

“give a reasonable effect to all of [an insurance contract’s] provisions, if

possible.” Id.

ANPAC cites two insurance treatises as well as several cases from various

states for the proposition that it is against public policy to extend insurance

coverage to intentional wrongdoing. See, e.g., 1 ALLAN D. WINDT, INSURANCE

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CLAIMS AND DISPUTES § 6:19 (5th ed. 2012) (“There are cases from numerous

states broadly stating that coverage for intentional wrongdoing is against public

policy.”); 6 LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE § 101:22

(3d ed. 2012) [hereinafter COUCH] (“In general, it is against public policy for an

insurance contract to provide coverage for the intentional or willful misconduct of

an insured.”); Gearing v. Nationwide Ins. Co., 665 N.E.2d 1115, 1118 (Ohio

1996) (“[P]ublic policy generally prohibits obtaining insurance to cover damages

caused by intentional torts.”). 

These authorities are distinguishable for several reasons. First, they

address the public policy concerns regarding an insurer indemnifying an insured

for intentional tortious conduct; they do not stand for the proposition that it is

against public policy for an insurer to defend an insured against allegations of

intentional acts when its policy specifically provides coverage. In contrast to a

general rule condemning indemnification for intentional wrongdoing, the case law

addressing an insurer’s duty to defend makes clear that it is not against public

policy to defend an insured against claims for intentional or reckless conduct. 

See Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 779 N.E.2d 167,

171-72 (N.Y. 2002) (insurer had duty to defend defamation claim despite public

policy against insuring intentional wrongdoing); Burnham Shoes, Inc. v. W. Am.

Ins. Co., 504 So.2d 238, 241 (Ala. 1987) (no violation of public policy for insurer

to defend claims of intentional misconduct even where indemnification of such

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conduct would be prohibited as contrary to public policy), abrogated on different

grounds by Williamson v. Indianapolis Life Ins. Co., 741 So.2d 1057 (Ala. 1999). 

Therefore, even if indemnity coverage for intentional wrongdoing is prohibited by

public policy, ANPAC still breached its duty to defend Dr. Cohlmia in the

underlying action.

ANPAC also cites Pendergraft v. Commercial Standard Fire & Marine Co.,

342 F.2d 427 (10th Cir. 1965) (interpreting Oklahoma law), and Penley v. Gulf

Insurance Co., 414 P.2d 305 (Okla. 1966), asserting these cases demonstrate that

Oklahoma prohibits providing coverage for intentional wrongdoing. Neither case

supports ANPAC’s argument. Pendergraft concerned “bodily injury” coverage

under a homeowner’s liability policy, and, as here, the policy specifically

excluded coverage for damages caused intentionally. Moreover, the insured’s

conduct there involved a criminal assault. See 342 F.2d at 428. The court in

Penley construed “property damage” in an automobile liability policy which only

covered damages “caused by accident.” See 414 P.2d at 307. Neither

Pendergraft nor Penley, nor any other case we have found applying Oklahoma

law, actually prohibited insurance coverage of intentional wrongdoing as against

public policy.

Moreover, exceptions to the general rule exist even in jurisdictions that

generally prohibit coverage of intentional wrongdoing as against public policy. 

As explained in one of the insurance treatises cited by ANPAC: 

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Even though it may be against public policy to insure for an

insured’s intentional or willful conduct, some jurisdictions may find

coverage for the conduct when the policy language specifically

provides coverage for that conduct; a statute allows insurance for

intentional conduct; or the court finds that the public interest in

having victims compensated for their injuries, outweighs public

interest in forcing the willful wrongdoer to pay the consequences of

the misconduct.

COUCH § 101:24 (footnotes omitted); see, e.g., New Madrid Cnty. Reorganized

Sch. Dist. No. 1 v. Cont’l Cas. Co., 904 F.2d 1236, 1242-43 (8th Cir. 1990)

(rejecting argument that Missouri’s public policy prohibits coverage of intentional

wrongdoing where policy did not contain intentional-acts exclusion); St. Paul

Fire & Marine Ins. Co. v. Jacobson, 826 F. Supp. 155, 163-65 (E.D. Va. 1993)

(rejecting argument that public policy barred recovery where policy contained no

intentional-acts exclusion, and finding policy coverage). 

Even assuming Oklahoma would generally prohibit indemnity coverage for

intentional wrongdoing, the instant matter presents a strong case for allowing an

exception to that general rule. ANPAC’s policies covering Dr. Cohlmia

specifically provide indemnification for certain intentional misconduct, and there

is no evidence that the availability of insurance coverage induced Dr. Cohlmia to

engage in intentional misconduct. Furthermore, the interest in compensating an

innocent third party, Dr. Yousuf, outweighs the concern that Dr. Cohlmia would

unjustly benefit from this coverage. As explained by the Iowa Supreme Court in

Grinnell Mutual Reinsurance Co. v. Jungling, “the ultimate and primary

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beneficiaries of [allowing] coverage [for intentional wrongdoing] will be innocent

third parties,” and the insurer is “in a far better position than anyone to protect

itself by including an intentional-acts-exclusion provision” in the policy. 654

N.W.2d 530, 541 (Iowa 2002); see also N. Bank v. Cincinnati Ins. Co., 125 F.3d

983, 986-87 (6th Cir. 1997) (where an umbrella insurance policy included

coverage of intentional torts in definition of “personal injury” but excluded

coverage for intentional torts in definition of “occurrences,” court held policy

provided coverage under Michigan law because of the ambiguity and despite

public policy concerns); W. Protectors Ins. Co. v. Shaffer, 624 F. Supp. 2d 1292,

1301 (W.D. Wash. 2009) (upholding coverage, under Washington law, where

homeowner’s policies specifically provided coverage for invasion of privacy

(which state recognized as intentional tort) despite intentional-act exclusion). 

Accordingly, we agree with the district court that public policy does not

excuse ANPAC’s breach of its duty to defend Dr. Cohlmia. 

C. Policy Exclusions

ANPAC further contends it did not have a duty to defend Dr. Cohlmia

because coverage for the tortious acts alleged by Dr. Yousuf was specifically

excluded by the terms of its policies. The relevant “Business Liability

Exclusions” provided that the policies do not apply:

17. to personal injury arising out of the willful violation of a penal

statute or ordinance committed by or with knowledge or consent of

any insured.

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18. to personal injury arising out of any publication or utterance

described in item b. of the Definition of personal injury . . . 

b. concerning any organization or business enterprise or its

products or services made by or at the direction of any insured

with knowledge of the falsity thereof.

Aplt. App., vol. II at 422 (emphasis omitted). 

We first address exclusion 17. ANPAC concedes that Dr. Cohlmia has not

been charged criminally based on the alleged wrongdoing in this case, but insists

that no criminal prosecution is necessary so long as the underlying actions from

which the injury arose constitute the willful violation of a penal statute. In

support of this proposition, ANPAC cites National Fire Insurance Co. of Hartford

v. NWM-Oklahoma, LLC, Inc., 546 F. Supp. 2d 1238 (W.D. Okla. 2008). In that

case, the court held that a civil action based in part on the violation of a federal

criminal statute, 18 U.S.C. § 2510 et seq. (the federal wiretap act), was excluded

from coverage as a willful violation of a penal statute, despite the fact that no

criminal charges had been brought. Id. at 1248-49. In reaching this conclusion,

the court noted that numerous other courts hearing civil claims based on

violations of the federal wiretap act and similar state wiretap statutes had

determined that such claims fall within policy exclusions for willful violation of a

penal statute whether or not criminal prosecution had been pursued. Id. Here,

however, no claim was alleged based on the violation of a criminal statute that

also provides civil remedies. 

Moreover, as the district court observed, in contrast to the claims in

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National Fire, the allegations of negligence and intentional interference with

business relations in this case do not “arise from acts that necessarily establish a

willful violation of the penal statutes for libel and slander.”3

 Yousuf, 718 F. Supp.

2d at 1292. Furthermore, in examining the policies’ language, which explicitly

provides coverage for personal injury for “the publication or utterance of a libel

or slander. . .,” it would be “inconsistent” and would “render[] the coverage

provisions illusory” to then exclude coverage based on the willful violation of

Oklahoma’s libel or slander penal statutes. See Yousuf, 718 F. Supp. 2d at 1291.

We therefore decline to extend exclusion 17 to this context. 

The argument that exclusion 18 precludes coverage of Dr. Yousuf’s claims

is unavailing simply because Dr. Yousuf is not an “organization or business

enterprise” as required by the plain language of the exclusion. ANPAC never

contends that Dr. Yousuf is anything but a person, nor does it cite any authority to

support the contention that because Dr. Yousuf brought a claim for intentional

interference with business relations he must be considered a business enterprise. 

In Oklahoma, the tort of intentional interference with business or contractual

relations does not require either party to be a business enterprise. See, e.g.,

3

 To state a claim for tortious interference with a business relationship, a

plaintiff must show that “the interference was malicious,” among other things. 

Waggoner v. Town & Country Mobile Homes, Inc., 808 P.2d 649, 654 (Okla.

1990) (emphasis added). But “malice” is defined as “an unreasonable and

wrongful act done intentionally, without just cause or excuse.” Id. This element

is not the same as showing that the defendant willfully violated a penal statute. 

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Cohlmia, 693 F.3d at 1285-86 (noting Dr. Cohlmia’s claim for tortious

interference with his contracts with patients and Blue Cross/Blue Shield survived

motion to dismiss, id. at 1276, and affirming grant of summary judgment based on

lack of evidence of damage proximately caused by loss of Dr. Cohlmia’s

privileges at one of four hospitals) (interpreting Oklahoma law); Niemeyer v. U.S.

Fid. & Guar. Co., 789 P.2d 1318, 1320-21 (Okla. 1990) (holding action for

tortious interference of contract between individual person and a business

sufficiently pled).

Even assuming the policy language is ambiguous, under Oklahoma’s

reasonable expectations doctrine “the meaning of the language is not what the

drafter intended it to mean, but what a reasonable person in the position of the

insured would have understood it to mean.” Spears, 73 P.3d at 868. Although the

policy does not define “organization” or “business enterprise,” it clearly

distinguishes between a person and an organization three times in the “Business

Liability Exclusions” section alone. See Aplt. App., vol. II at 420-422 (exclusion

8 precludes coverage for “bodily injury or property damage for which the insured

or their indemnitee may be held liable: a. as a person or organization engaged in

the business of manufacturing . . .”; exclusion 15 excludes from exclusion the

“loss of use from other tangible property resulting from . . . physical injury to or

destruction of the named insureds products or work performed by . . . the named

insured after such products or work have been put to use by any person or

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organization other than an insured”; exclusion 11 distinguishes between a

“partnership or joint venture” and “any partner or member thereof” (emphasis

added)). Moreover, an “organization” ordinarily means “a group of persons

organized for some end or work,” Random House Unabridged Dictionary 648 (2d

ed. 1993) (emphasis added); an “enterprise” is “a company organized for

commercial purposes; business firm,” id. at 1364.

Under Oklahoma law, “ambiguities are construed most strongly against the

insurer; and . . . in cases of doubt, words of inclusion are liberally applied in

favor of the insured and words of exclusion are strictly construed against the

insurer.” Max True Plastering Co. v. U.S. Fid. & Guar. Co., 912 P.2d 861, 865

(Okla. 1996). Exclusion 18 must be construed in favor of the insured and thus

does not preclude coverage of Dr. Yousuf as an individual medical professional. 

Alternatively, exclusion 18 precludes personal injuries arising out of a

publication or utterance “made by or at the direction of any insured with

knowledge of the falsity thereof.” ANPAC asserts that its insured, Dr. Cohlmia,

knew his statements were false when he made them. Aplt. Br. at 21. But

ANPAC’s focus on the jury’s findings (and its implicit finding of knowledge of

falsity) is misplaced. An “insurer’s defense duty is determined on the basis of

information gleaned from the petition (and other pleadings), from the insured and

from other sources available to the insurer at the time the defense is demanded

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(or tendered) rather than by the outcome of the third-party action.”4

 First Bank of

Turley, 928 P.2d at 303-04 (emphasis in original). “The insurer has the duty to

look behind the third party’s allegations to analyze whether coverage is possible.” 

Id. at 303 n.15 (emphasis omitted) (“The duty to defend cannot be limited by the

precise language of the pleadings.”). The amended petition alleged:

6. The contents of the . . . letter were false when they were made and

Cohlmia . . . knew they were false at the time he wrote the letter and

disseminated the same to . . . the news media, with reckless disregard

of whether the statements made were false or not. 

7. Cohlmia/CVSS intentionally and negligently disseminated

the . . . letter to news outlets . . . when he knew the statements

contained in the . . . letter were false and/or with reckless disregard

of whether they were false or not. . . .

13. Cohlmia/CVSS made these statements and published them with

the knowledge they were false and/or with reckless disregard of

whether they were false or not. 

Aplt. App., vol. II at 370-71. The inclusion of the possibility that the statements

were made with reckless disregard of the truth and the insured’s own denial of the

statements’ falsity are sufficient to avoid exclusion 18 and trigger potential

liability under the ANPAC policies. 

In sum, given the allegations of Dr. Yousuf and the language of the

ANPAC policies, Dr. Cohlmia had a right to expect ANPAC to defend him. 

ANPAC does not dispute that Dr. Cohlmia and PLICO notified it of the suit and

4 Moreover, the judgment in Dr. Yousuf’s action against Dr. Cohlmia was

reversed on appeal and remanded for a new trial, Aplt. App., vol. III at 689,

voiding the jury’s findings.

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set forth plausible arguments that Dr. Yousuf’s allegations, if proven, could give

rise to damages covered by the ANPAC policies. ANPAC’s counsel admitted as

much in a May 14, 2007 letter to PLICO’s counsel, which stated that the claims

against Dr. Cohlmia “could conceivably fall under the terms of the business

liability coverage as discussed in Bankwest,” but went on to argue that coverage

was actually excluded for a variety of reasons. Aplt. App., vol. II at 317. We

agree with the district court that there is no genuine issue of material fact

regarding ANPAC’S breach of its duty to defend. Under Oklahoma law, 

[a]n insurer who disputes the insured’s demand to defend has three

options. It can (1) seek declaratory relief that would define the

insurer’s rights and obligations; (2) defend the insured under a

reservation of rights, or (3) refuse to take any action at the peril of

being later found in breach of its duty to defend. 

First Bank of Turley, 928 P.2d at 304-05 (footnote omitted). ANPAC chose to

pursue the third option at its peril. 

D. ANPAC’s Liability to PLICO

Having established that ANPAC breached its duty to defend Dr. Cohlmia,

we turn to the question of whether PLICO can compel ANPAC to reimburse some

or all of the costs it incurred during its initial defense of Dr. Cohlmia. The

district court held that by defending Dr. Cohlmia under a reservation of rights,

PLICO’s policy enabled it to step into the shoes of its insured to recover one-half

of its defense costs under a theory of subrogation. See Jorksi Mill & Elevator Co.

v. Farmers Elevator Mut. Ins. Co., 404 F.2d 143, 147 (10th Cir. 1968)

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(“Subrogation is the substitution of one person in the place of another with

reference to a lawful claim, demand or right.”). We agree.

The district court determined that “[t]he doctrines of contractual and

equitable subrogation support PLICO’s claim for reimbursement.” Yousuf, 718

F. Supp. 2d at 1296. The Oklahoma Supreme Court explained the difference

between these two doctrines in Brown v. Patel, 157 P.3d 117 (Okla. 2007):

Conventional (or contractual) subrogation is created by an

agreement or contract between parties granting the right to pursue

reimbursement from a third party in exchange for payment of a

loss. Equitable subrogation allows a party who has paid to stand in

the shoes of the party to whom the amount was owed and proceed

against the third party primarily responsible for the amount paid. 

In both circumstances the subrogation is based upon payment. 

Id. at 125 (citations omitted); see also U.S. Fid. & Guar. Co. v. Federated Rural

Elec. Ins. Corp., 37 P.3d 828, 831 (Okla. 2001) (“Equitable subrogation . . . arises

by implication in equity to prevent an injustice. The . . . doctrine is based on the

relationship of the parties and equitable principles of establishing substantial

justice, and it is broad enough to include every instance where one person who is

not a mere volunteer, pays a debt for which another is primarily answerable, and

which in equity and good conscience should have been discharged by the latter.”). 

Although the facts of this case would arguably support recovery under both

contractual and equitable subrogation, an equitable subrogation claim is subject to

a three-year statute of limitations under Oklahoma law and thus is time-barred. 

See Republican Underwriters Ins. Co. v. Fire Ins. Exch., 655 P.2d 544, 546 (Okla.

-25-
1982) (three-year statute of limitations for unwritten, implied-in-law contracts

applies to claims of equitable subrogation). A contractual subrogation claim,

however, is governed by Oklahoma’s five-year statute of limitations for written

contracts and is not untimely.5

 See Paul Holt Drilling, Inc. v. Liberty Mut. Ins.

Co., 664 F.2d 252, 253, 255 (10th Cir. 1981) (applying Oklahoma’s five-year

statute of limitations where insured brought suit against insurer alleging breach of

contract for failure to defend); see also id. at 255-56 (“[T]he insurer’s continued

refusal to defend the insureds constituted a series of breaches of its contractual

obligations. As the limitations period runs with each breach, the insureds are

only precluded from recovering those litigation expenses incurred prior to

limitations period, here, five years.”).

With respect to contractual subrogation, the clause in PLICO’s policy

covering Dr. Cohlmia provided, in relevant part: “In the event of any payment

under this policy, the company shall be subrogated to all the Insured’s rights of

recovery therefor against any person or organization . . . .” Aplt. App., vol. II at

332. PLICO paid for the costs of defending Dr. Cohlmia and thereby gained

Dr. Cohlmia’s cause of action against ANPAC for breach of its duty to defend

him. 

5

 Assuming PLICO’s cause of action accrued when ANPAC rejected

PLICO’s demands to share in the costs of defense on June 29, 2005, PLICO filed

its Complaint in Intervention on October 15, 2009, well within the five-year

statute of limitations for contractual subrogation. 

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The district court reasoned that PLICO could only be reimbursed for onehalf of its defense costs rather than the full amount because its policy obligated

PLICO to defend both negligent and willful torts committed by its insured, even

though its policy only provided indemnity for non-intentional acts. The court

determined that “both PLICO and ANPAC were obligated to defend the

negligence as well as the intentional interference with business relationship

claims” and, accordingly, concluded that ANPAC and PLICO should each bear

one-half of the costs of Dr. Cohlmia’s defense. Yousuf, 718 F. Supp. 2d at 1295-

96, 1298. 

ANPAC argues that United States Fidelity & Guaranty Co. v. Tri-State

Insurance Co., 285 F.2d 579 (10th Cir. 1960), dictates a contrary result. In TriState, we held under Oklahoma law that as between two primary insurers, each

with an equal duty to defend a claim against their common insured, “[t]he duty to

defend is personal to each insurer” and a “carrier is not entitled to divide the duty

nor require contribution from another absent a specific contractual right.” Id. at

582. ANPAC’s reliance on Tri-State is misplaced because the plaintiff insurance

company in that case did not assert a contractual subrogation claim but was

instead seeking equitable contribution, a remedy not sought by PLICO in this

case. See id. (“[N]o contractual relationship existed between Tri-State and

U.S.F. & G. and the latter does not claim by subrogation.” (emphasis added)). 

Accordingly, Tri-State does not control our decision here. 

-27-
PLICO’s policy covering Dr. Cohlmia clearly gives it a right of contractual

subrogation. ANPAC has provided no Oklahoma case suggesting that right does

not extend to defense costs. We therefore affirm the district court’s grant of

summary judgment requiring ANPAC to reimburse PLICO for one-half of its

defense costs.

III

PLICO has cross-appealed, contending the district court erred by failing to

award prejudgment interest on the defense costs ANPAC was ordered to

reimburse. We review the district court’s decision for abuse of discretion but

consider any legal question de novo. Driver Music Co., 94 F.3d at 1433. In a

diversity case, “[t]he issue of possible entitlement to prejudgment interest is

governed by state law.” McNickle v. Bankers Life & Cas. Co., 888 F.2d 678, 680

(10th Cir. 1989). 

Our analysis of whether prejudgment interest is warranted in this case

begins with title 36, section 3629(B) of the Oklahoma Statutes, which provides in

part: “If the insured is the prevailing party, the court in rendering judgment shall

add interest on the verdict at the rate of fifteen percent (15%) per year from the

date the loss was payable pursuant to the provisions of the contract to the date of

the verdict.” § 3629(B). PLICO claims that because reimbursement was ordered

under a theory of subrogation, it has effectively stepped into Dr. Cohlmia’s shoes

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as an insured prevailing party and is entitled to prejudgment interest pursuant to

this statute. ANPAC maintains the district court was correct in concluding that

prejudgment interest is barred in this instance under our decision in Regional Air

because PLICO prevailed on a summary judgment rather than a jury verdict, and

also because prejudgment interest is unavailable in Oklahoma where the damages

are not certain, liquidated, or reasonably ascertainable. 

In Regional Air, applying Oklahoma law, we held that prejudgment interest

pursuant to section 3629(B) is only awardable on a “verdict”—the decision of a

jury—and is not available for the broader category of a “judgment,” which

encompasses “all final determinations of rights, however obtained.” 639 F.3d at

1237-38. PLICO acknowledges that because there was no jury verdict in this

case, its claim for prejudgment interest must fail if Regional Air controls. But it

contends that in Regional Air we overlooked a controlling Oklahoma case, Dulan

v. Johnston, 687 P.2d 1045 (Okla. 1984). 

In Dulan, the Oklahoma Supreme Court considered title 12, section 727 of

the Oklahoma Statutes, a statute that governed prejudgment interest until 2005

and provided in relevant part:

All judgments of courts of record except the Worker’s

Compensation Court shall bear interest at the rate of fifteen

percent (15%) per year, . . . from the date of rendition, provided

that:

2. When a verdict for damages by reason of personal injuries is

accepted by the trial court, the court shall add interest on said

verdict at the rate of fifteen percent (15%) per year from the date

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the suit was commenced to date of verdict . . . . 

Dulan, 687 P.2d at 1047 (emphasis and omission in original) (quoting OKLA.

STAT. ANN. tit. 12, § 727). There, the trial court awarded prejudgment interest on

a confession of judgment. The defendant appealed, contending that no

prejudgment interest was warranted because without a jury trial no “verdict” had

been entered in the case. Id. The Oklahoma Supreme Court affirmed the trial

court’s award of prejudgment interest, stating that the defendant’s argument was

“wholly without merit” because “there is clearly no difference in legal effect

between a judgment entered by confession and a judgment entered on a verdict

after a trial by a jury.” Id. 

Dulan can thus be fairly characterized as holding that, under Oklahoma

law, a statute providing for prejudgment interest for a prevailing party on a

“verdict” is not limited to verdicts reached after a jury trial but applies equally to

judgments entered pursuant to a confession of judgment, a stipulation, a summary

judgment, or any other final determination of rights. Because the task of a federal

court sitting in diversity is “not to reach our own judgment regarding the

substance of the common law, but simply to ascertain and apply the state law . . .

we must defer to the most recent decisions of the state’s highest court.” Kokins v.

Teleflex, Inc., 621 F.3d 1290, 1295 (10th Cir. 2010) (internal quotation marks,

citations, and alterations omitted). The relevant language of the statute in Dulan

is essentially identical to the statute at issue in the case before us, § 3629(B). 

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It is apparent from our decision in Regional Air that the parties did not cite

Dulan to us. While this panel may not overrule a prior panel of this court, we

“may overrule a point of law established by a prior panel after obtaining

authorization from all active judges on the court.” United States v. Meyers, 200

F.3d 715, 721 (10th Cir. 2000). Having done so,6

 we overrule Regional Air on its

interpretation of the Oklahoma statute providing for prejudgment interest. We

hold that PLICO’s claim for prejudgment interest is not defeated simply because

the judgment was entered pursuant to summary judgment rather than a jury

verdict. 

Nevertheless, under title 23, section 6 of the Oklahoma Statutes a

prevailing party is not entitled to prejudgment interest “unless the amount of

recovery is liquidated or capable of ascertainment by calculation or resort to wellestablished market values.” Withrow v. Red Eagle Oil Co., 755 P.2d 622, 625

(Okla. 1988); see also Taylor v. State Farm Fire & Cas. Co., 981 P.2d 1253,

1260-61 (Okla. 1999) (prejudgment interest under section 3629 is collectable only

when authorized pursuant to title 23, section 6 of the Oklahoma Statutes). We

will reverse a district court’s finding that damages were not certain only if clearly

6

 This opinion has been circulated to the en banc court whose members

have unanimously agreed to our specific overruling of Regional Air to the extent

it holds, contrary to controlling Oklahoma case law as set forth supra, that

prejudgment interest may only be afforded under title 36, section 3629(B) of the

Oklahoma Statutes if the judgment was entered pursuant to a jury verdict awarded

to prevailing parties.

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erroneous. Transpower Constructors v. Grand River Dam Auth., 905 F.2d 1413,

1422 (10th Cir. 1990). 

Under Oklahoma law, a dispute over whether a party is entitled to recover

an amount that is calculable based on undisputed evidence does not render the

amount uncertain or unascertainable. See Stickney v. Kan. City Life Ins. Co., 149

P.3d 1048, 1054-55 (Okla. Civ. App. 2006). Instead, the question here is

whether the defense costs awarded to PLICO, which consist entirely of attorney

fees, were certain and ascertainable. 

We addressed a similar question in United States v. Hardage, 985 F.2d

1427 (10th Cir. 1993). In Hardage, the district court had included prejudgment

interest on an award of joint defense attorney fees that were recoverable pursuant

to an indemnity agreement. Id. at 1436. Because Oklahoma requires a court to

conduct an inquiry into the reasonableness of legal expenses before they can be

awarded, we held that such expenses are not liquidated and prejudgment interest

is therefore not awardable on such damages. Id. at 1437-38. 

The Oklahoma Supreme Court cited Hardage for this proposition and

applied the same principle in Pierce Couch Hendrickson Baysinger & Green v.

Freede, 936 P.2d 906 (Okla. 1997), a dispute between a law firm and a client over

unpaid legal fees. Id. at 907. In that case, the court held that “[l]ike the attorney

fees in Hardage, the expenses in the present case were subject to the fact-finders

[sic] determination of reasonableness. Thus, they were not liquidated and not

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subject to prejudgment interest.” Id. at 914. 

In the context of an insurer breaching its duty to defend an insured, the

Oklahoma Supreme Court has similarly made clear that only reasonable attorney

fees are recoverable. In First Bank of Turley, the court held that “[i]f a duty to

defend was the insured’s due under the insurance contract, an insurer’s refusal to

defend was in breach of that obligation, which renders the insurer liable for all

reasonable expenses incurred by an insured in defense of a third-party action.” 

928 P.2d at 305 (emphasis added, original emphasis omitted); see also Iowa Home

Mut. Cas. Co. v. Mussett, 342 P.2d 553, Syll. 3, 558 (Okla. 1959) (where insurer

breached duty to defend insured, insured may “recover all damages sustained by

him because of such breach and in such action may recover as an element of

damages reasonable attorney fees incurred in defense of said claim . . . .”

(emphasis added)). In light of the above precedent, it is clear that attorney fees in

this context are subject to a reasonableness determination by the fact finder and

thus are not liquidated as required under Oklahoma law for an award of

prejudgment interest. 

In an attempt to avoid this conclusion, PLICO contends that because it

agreed with ANPAC on a stipulated amount of damages, no reasonableness

inquiry was necessary and the stipulated amount should be considered liquidated. 

But there is no evidence here that by stipulating to the amount of damages,

ANPAC was waiving the requirement of reasonableness. To the contrary, the

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motions submitted by the parties requesting additional time to reach an agreement

show that the purpose of the stipulation was to avoid an evidentiary hearing on

the matter, not to render the damages liquidated. It also makes practical sense not

to interpret a stipulation of damages as a waiver of the reasonableness

requirement because a contrary rule would penalize a defendant for stipulating

and encourage needless court involvement where the parties would otherwise be

capable of reaching an agreement. The district court did not clearly err in

determining that the parties’ stipulation did not render the damages suffered by

PLICO liquidated or certain for purposes of awarding prejudgment interest.

IV

For the reasons stated above, we AFFIRM the district court’s grant of

summary judgment and its order for ANPAC to pay one-half of PLICO’s defense

costs. We also AFFIRM the district court’s denial of prejudgment interest on

these damages.

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