*This order and judgment is not binding precedent, except under the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 10th Cir. R. 36.3.

F I L E D

United States Court of Appeals

Tenth Circuit

JUL 9 1997

PATRICK FISHER

Clerk

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

PEGGY J. BRIDGES,

Plaintiff-Appellant,

v.

FARMERS INSURANCE GROUP OF

COMPANIES, an unincorporated

association; FARMERS INSURANCE

COMPANY, INC.; FARMERS

INSURANCE EXCHANGE;

FARMERS GROUP, INC., foreign

insurance corporations,

Defendants-Appellees.

No. 95-6317

(W. District of Oklahoma)

(D.C. No. CIV-94-535-L)

ORDER AND JUDGMENT*

Before ANDERSON, HENRY, and MURPHY, Circuit Judges. 

This is a diversity case. The Appellant, Peggy J. Bridges, appeals the

district court's summary judgment holding that Farmers Insurance Company
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("Farmers") did not act in bad faith in performing its obligations for underinsured

motorist coverage. This court exercises jurisdiction pursuant to 28 U.S.C. § 1291

and affirms.

I. FACTUAL BACKGROUND

On March 12, 1991, Bridges was a passenger in a vehicle driven by Debbie

Inga when the vehicle was struck from behind by another vehicle. At the time of

the accident, Bridges had a contract of insurance with Farmers which included

medical payments ("med-pay") coverage and underinsured motorist ("UM")

coverage. As a result of the accident, Bridges allegedly suffered neck and back

injuries, as well as aggravation of a pre-existing epigastric problem. Bridges also

claimed lost earnings.

The course of communication between Bridges and Farmers following the

accident in 1991 is of primary importance for analyzing Bridges’ bad faith claim. 

On April 4, Bridges' attorney mailed a letter to Farmers, enclosing a collision

report and Bridges' medical bills. The letter informed Farmers of the accident,

noted that Farmers was Bridges' UM and med-pay insurance carrier, and stated

that "there could very well be underinsurance in this case." The letter also stated

that Bridges was submitting "medical bills for medical coverage payment at this

time."
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On April 8, Farmers’ representative and Bridges' attorney had a telephone

conversation. Farmers and Bridges have differing accounts of what was said in

that conversation. Farmers asserts that the attorney indicated that Bridges was

making only a med-pay claim. Bridges, on the other hand, asserts that her

attorney indicated that she was making a UM as well as a med-pay claim. Bridges

cites to the affidavit of her attorney in which he indicates that he "had a phone

conversation with a Farmers claims representative in which [he] advised that

[Bridges was] making claim for bodily injury under [her] underinsured motorist

coverages"; that he was "also asking for payments under . . . medical coverages";

and that he "did not tell the Farmers claims representative that [] Bridges was

making claim only under med-pay."

On April 11, Farmers authored a letter to Bridges' attorney. The letter

states, "We received notice of a claim involving injury to Peggy Bridges and

Debbie Inga. Upon contact, you indicated that West General was handling the

claim due to the liability of their insured. If at any time coverage on the

tortfeasor is in doubt, or injuries will exceed their limits, please notify Farmers

Insurance Company immediately."

On April 18, Bridges' attorney authored a letter to Farmers, submitting

"medical bills for payment." The list of medical expenses presented began with

the heading, "Peggy J. Bridges: $2,000/each - Medical Pay Coverage." Over the
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next two months, Farmers received various documents regarding Bridges' medical

treatment and bills. The documents included several notations that insurance

limits had been exhausted.

On June 5, Bridges' attorney and a Farmers claims representative again

spoke by telephone. Bridges stresses the following portions of the conversation,

as recounted in her attorney's affidavit: the attorney advised Farmers that Bridges'

claim was “definitely a [UM] claim,” as medical bills had already exceeded

$ 7,000, while the tortfeasor's West General liability policy was thought to cover

only up to $10,000; the attorney informed Farmers that Bridges was having

difficulties, including financial difficulties, in obtaining medical treatment; the

attorney also attempted to get the Farmers representative to advance portions of

the UM coverage, but she refused, instead inquiring about what the tortfeasor's

liability carrier was going to do. Bridges' attorney's affidavit also reveals that

Farmers' representative "seemed willing to talk but wanted to know what

[Bridges'] offer was and what [West General] was going to do; that Farmers'

representative "indicated she wanted a total demand and asked [Bridges' attorney]

to send her one; that Bridges' attorney told Farmers' representative he did not

“have all of the damage information available yet"; and that the representative

told the attorney "to send it . . . when [he] got it."
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The next contact between Bridges and Farmers did not occur until October

9, 1991, when Bridges' attorney mailed a settlement brochure and a letter making

a $45,000 offer, with thirty days to accept or face a lawsuit. The brochure

contained various medical documents regarding Bridges' medical history and

condition. Farmers claims that the medical records and other documents

contained in the brochure demonstrated that “Bridges' alleged injuries were highly

suspect, her lost wages claim was inflated, and her $45,000 settlement demand

was significantly excessive.” Appellee Br. at 3.

Specifically, Farmers points out that Bridges claimed fifty percent of

$2,115.50 in medical bills for treatment of an epigastric problem, though she had

a long history of stomach problems, including ulcers beginning at age seventeen. 

Farmers references documents showing that a biopsy taken after the date of the

accident revealed that Bridges suffered from a bacterial infection related to her

stomach problems, and that she was treated with an antibiotic. Farmers points to

Bridges' history of back problems as suggesting that Bridges' claim for medical

expenses arising from treatment of her back injury was questionable. 

Additionally, Farmers refers to documents in the settlement brochure which

suggest that Bridges was in fact working during the period she claimed she was

unable to work.
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On December 23, 1991, Bridges sued Farmers. After the case was removed

to federal court, the district court granted Farmers’ motion for summary judgment. 

The court acknowledged there were factual disputes (1) as to whether a UM claim

was made in the springtime or not until the October 12 settlement brochure; and

(2) as to the amount of Bridges' damages as set forth in the settlement brochure. 

It held, however, that these factual disputes did not preclude summary judgment

because Farmers reasonably withheld payment of UM benefits based upon these

legitimate disputes.

The Appellant presents two issues on appeal: “1. Whether the Trial Court

erred in finding the existence of a legitimate dispute over the amount of

Plaintiff’s claim under the circumstances. 2. Whether the Trial Court erred in

finding there was a ‘legitimate litigable dispute’ as to when an underinsured

motorist claim was presented.” Appellant Br. at 1.

II. LEGAL STANDARDS AND APPLICATION

This court reviews the district court’s grant of summary judgment de novo. 

See Regional Bank of Colorado v. St. Paul Fire & Marine Ins. Co., 35 F.3d 494,

496 (10th Cir. 1994). Summary judgment is appropriate only where the

pleadings, admissions, and affidavits show there is no genuine issue as to any

material fact and the moving party is entitled to judgment as a matter of law. See

Fed. R. Civ. P. 56(c); Regional Bank of Colorado, 35 F.3d at 496. When applying
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the summary judgment standard, the court is to "examine the factual record and

reasonable inferences therefrom in the light most favorable to the party opposing

summary judgment." Applied Genetics Int’l Inc. v. First Affiliated Sec., Inc., 912

F.2d 1238, 1241 (10th Cir. 1990).

The insurer bears an implied duty to deal fairly and to act in good faith

toward the insured. See Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1436

(10th Cir. 1993); Christian v. American Home Assurance Co., 577 P.2d 899, 904

(Okla. 1978). The insurer does not commit bad faith, however, merely by

refusing to pay or by litigating a claim, as long as there is a legitimate dispute as

to coverage or as to the amount of the claim, and as long as the insurer's position

is reasonable. See Oulds, 6 F.3d at 1436; see also Thompson v. Shelter Mut. Ins.,

875 F.2d 1460, 1462 (10th Cir. 1989). “Until the facts, when construed most

favorably against the insurer, have established what might reasonably be

perceived as tortious conduct on the part of the insurer, the legal gate to

submission of the issue to the jury remains closed.” Oulds, 6 F.3d at 1437.

As to Bridges’ first issue, the trial court did not err in finding the existence

of a legitimate dispute over the amount of Bridges’ claim under the

circumstances. Bridges’ settlement brochure raised numerous questions which

created a legitimate dispute as to the amount of Bridges’ claim. These include

questions directed to the origins of Bridges’ stomach and back problems, as well
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as to the length of time Bridges was actually unable to work. No inference of bad

faith arises from such legitimate questions and disputes. Oulds, 6 F.3d at 1442. 

As to Bridges’ second issue, there is a dispute whether Bridges made a UM

claim to Farmers before the October settlement brochure, either in April or June. 

That dispute, however, is not one of material fact. Assuming that such a UM

claim was made in April or June, the facts reveal nothing in Farmers’ response to

such alleged claim from which a reasonable inference of bad faith could be

drawn. Instead, the facts, as construed in Bridges’ favor, reveal a dialogue

between the insurer and the insured regarding the possibility of UM payments, a

request by the insurer that the insured inform it of the claim amount, and the

eventual presentment of such amount by Bridges in the October settlement

brochure. Bridges’ suggests this court infer that Farmers was motivated to delay,

awaiting a settlement with the tortfeasor’s carrier. This suggestion, however, is

not a substitute for evidence that Farmers failed to timely and appropriately

respond to the actual statements, inquiries, and submissions from Bridges’

attorney.

Accordingly, this court AFFIRMS the summary judgment.

ENTERED FOR THE COURT,

Michael R. Murphy

Circuit Judge