Title: Coates v. Progressive Direct Ins. Co.
Citation: 2022 OK 45
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: May 3, 2022

Coates v. Progressive Direct Ins. Co. Annotate this Case Justia Opinion Summary Plaintiff-appellant John Coates brought an action for breach of contract and breach of the duty of good faith and fair dealing against defendant-appellee Progressive Direct Insurance Company. Plaintiff was injured after a motorcycle collision; he was insured by Progressive under a motorcycle policy, an auto policy, and a policy providing UM coverage. Coates moved for partial summary judgment regarding his entitlement to uninsured/underinsured motorist benefits. Progressive moved for summary judgment regarding Coates' bad faith claim. Coates sought more time to conduct discovery to address Progressive's counterclaim on bad faith. The trial court granted Coates' Motion for Partial Summary Judgment, allowing his UM claim against Progressive. The trial court also granted Progressive's Motion for Summary Judgment, denying Coates' claim for breach of duty of good faith and fair dealing. The trial court denied Coates' Motion for Additional Time to Respond. After review of the parties’ arguments on appeal, the Oklahoma Supreme Court affirmed the trial court’s grant of partial summary judgment on Coates' UM claim. The Court reversed, however, the decisions granting Progressive's Motion for Summary Judgment and denying Coates additional time to respond to that motion. Read more Want to stay in the know about new opinions from the Oklahoma Supreme Court? Sign up for free summaries delivered directly to your inbox. Learn More › You already receive new opinion summaries from Oklahoma Supreme Court. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here . COATES v. PROGRESSIVE DIRECT INSURANCE CO. 2022 OK 45 Case Number: 119571 Decided: 05/03/2022 THE SUPREME COURT OF THE STATE OF OKLAHOMA NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL. JOHN RANDALL COATES Plaintiff/Appellant, Counter-Appellee, v. PROGRESSIVE DIRECT INSURANCE COMPANY, Defendant/Appellee, Counter-Appellant. Appeal from the District Court of Kay County Honorable Lee Turner, Trial Judge ¶0 John Randall Coates (Plaintiff/Appellant and Counter-Appellee) brought an action for breach of contract and breach of the duty of good faith and fair dealing against Progressive Direct Insurance Company (Defendant/Appellee and Counter-Appellant). A motorcycle collision in which motorcyclist Coates was injured is the basis of the actions. Coates was insured by Progressive under a motorcycle policy, an auto policy, and a policy providing UM coverage. Coates moved for partial summary judgment regarding his entitlement to uninsured/underinsured motorist benefits. Progressive moved for summary judgment regarding Coates' bad faith claim. Coates sought more time to conduct discovery to address Progressive's counterclaim on bad faith. The trial court granted Coates' Motion for Partial Summary Judgment, allowing his UM claim against Progressive. The trial court also granted Progressive's Motion for Summary Judgment, denying Coates' claim for breach of duty of good faith and fair dealing. The trial court denied Coates' Motion for Additional Time to Respond. We retained the appeal. We affirm the District Court's decision granting Coates' Motion for Partial Summary Judgment on the UM claim. We reverse the decisions granting Progressive's Motion for Summary Judgment and denying Coates additional time to respond to that motion. APPEAL PREVIOUSLY RETAINED; ORDER OF THE DISTRICT COURT AFFIRMED IN PART AND REVERSED IN PART Simone Fulmer Gaus, Harrison C. Lujan, Jacob L. Rowe, Andrea R. Rust, FULMER SILL, PLLC, Oklahoma City, Oklahoma, for Plaintiff/Appellant, Counter-Appellee. Brad L. Roberson, Dawn M. Goeres, ROBERSON, KOLKER, COOPER & GOERES, P.C., Edmond, Oklahoma, for Defendant/Appellee, Counter-Appellant. KUEHN, J.: ¶1 This case presents two questions: (1) is Appellee Progressive Direct Insurance Company required to pay Appellant Coates uninsured/underinsured motorist (UM) benefits, and (2) did Appellee breach a duty of good faith and fair dealing in refusing Coates' claim. We answer the first question "yes". We reverse the trial court's order denying time for discovery on the second question, and leave the initial resolution of that question to the trial court. FACTS AND PROCEDURAL HISTORY ¶2 On August 14, 2019, Coates, riding a 1964 Triumph Bonneville motorcycle, suffered serious injuries in a collision with a vehicle driven by Mary Toney. At the time of the crash, Coates was the named insured of two separate policies with Appellee Progressive. Coates insured the Triumph motorcycle with Progressive through Motorcycle Policy No. 9261634. He had, and rejected, the opportunity to purchase additional UM coverage under the Motorcycle Policy. ¶3 Coates also had Automobile Policy No. 927561880 with liability coverage for a Dodge Ram truck. At the time he bought the Auto Policy Coates also bought uninsured/underinsured motorist (UM) coverage for $25,000 for each person and $50,000 each accident. ¶4 After the collision, Coates submitted claims for UM coverage benefits to Progressive under both policies, but quickly agreed that there were no UM benefits connected with his Motorcycle Policy. Progressive rejected Coates' UM claim for coverage bought with the Auto Policy. Progressive claimed that the Auto Policy UM coverage did not apply to the motorcycle collision, because the motorcycle was not specifically included in the Auto Policy. ¶5 Coates filed suit against Progressive for breach of contract and breach of the duty of good faith and fair dealing.1 Coates soon after filed a motion for partial summary judgment regarding his entitlement to UM benefits from Progressive. Progressive filed a motion for summary judgment on both Coates' breach of contract and good faith claims. Coates asked the trial court for more time to respond to Progressive's motion to conduct further discovery. ¶6 A hearing on all motions was held, and during an unrecorded telephone conference, the trial court granted Coates' partial motion for summary judgment. The trial court on a later date, denied Coates' motion for more time to respond, granted Progressive's motion for summary judgment on the issue of good faith and fair dealing and denied any pending motions as moot.2 STANDARD OF REVIEW ¶7 Summary judgment claims turn on the law because there is no material factual dispute. While the trial court necessarily considers the facts in deciding such a claim, the actual question before the court is a pure matter of law. H2K Technologies v. WSP USA, 2021 OK 59, ¶ 6, __ P.3d __. Our review of this legal determination is de novo. Id. COATES IS ENTITLED TO UM BENEFITS UNDER THE AUTO POLICY I. UM Coverage is governed by public policy considerations. ¶8 "When interpreting automobile insurance contracts, the court strives to strike a balance between freedom of contract principles and the state's interest in protecting the public." Ball v. Wilshire Ins. Co., 2009 OK 38, ¶ 27, 221 P.3d 717 , 726. We look to see whether a provision "clearly tends to injure public health, morals or confidence in the administration of law, or if it undermines the security of individual rights with respect to either personal liability or private property." Id. ¶9 UM coverage is recommended but not required. However, the Legislature has made it clear that, as a matter of public policy, insurers must offer UM coverage. 36 O.S. § 3636(B) Ch. 1, art. 36, https://govt.westlaw.com/okjc (2021). Insurers must provide UM coverage unless the insured, after being given the opportunity to buy it, affirmatively declines the coverage in writing. 36 O.S. § 3636(G). However, UM coverage is separate and distinct from liability coverage. Lane v. Progressive Northern Ins. Co., 2021 OK 40, ¶ 10, 494 P.3d 345, 349. Insurers must provide UM coverage in order to "protect the insured from the effects of personal injury resulting from an accident with an uninsured/underinsured motorist." Id., ¶ 13, 494 P.3d at 350 (quoting State Farm Auto Ins. Co. v. Greer, 1989 OK 110, ¶ 6, 777 P.2d 941 , 942). While one may buy UM coverage at the same time one buys a liability insurance policy, UM coverage does not cover motor vehicles. It covers people. Morris v. America First Ins. Co., 2010 OK 35, ¶ 10, 240 P.3d 661, 663. ¶10 The distinction in the subject of coverage -- vehicle versus person -- is essential. Every driver must carry liability insurance pursuant to 47 O.S. § 7-601, and therefore must buy it. To fully give effect to the Legislature's intention to encourage universal UM coverage, the ability to purchase UM coverage is simple. Under Section 3636, UM coverage must be offered simultaneously with the purchase of a liability policy. 36 O.S.Supp.2014, § 3636(A). But although the liability policy and the UM coverage are bought together, they do not run together. ¶11 As UM coverage is for persons and not specific vehicles, the coverage follows the person. "Follows the person" means that, if an insured person buys UM coverage when the coverage is offered, that UM coverage will apply to accidents and injuries to that person, regardless of whether a specific vehicle involved in an accident was insured under the liability policy bought at the same time. The only circumstance under which UM coverage does not apply is where an insured is injured while occupying a motor vehicle "owned by, or available for the regular use of, an insured, resident spouse, or resident relative", and that motor vehicle "is not insured by a motor vehicle insurance policy." 36 O.S.Supp.2014, § 3636(E). We have interpreted the term "motor vehicle policy" in that exclusion to include a policy for UM coverage. Morris, 2010 OK 35, ¶ 16, 240 P.3d at 664. ¶12 However, that interpretation is not exclusive. The plain language of the statute -- "a motor vehicle insurance policy" -- means what it says. It may include either, or both, liability and UM coverage. Both parties agree that the Triumph was covered by a liability policy. Therefore, since the UM coverage follows the person, and a liability policy was purchased, Progressive must offer some other justification for denying UM coverage. II. Progressive's policy exclusion. ¶13 Progressive argues that Section 3636(E) allows it to deny UM coverage to an insured who purchased UM coverage through another liability policy for another vehicle, regardless of whether the insured has UM coverage through another policy. Progressive argues that since Coates rejected UM coverage under the motorcycle policy, and he was injured while riding the motorcycle, this statutory exclusion applies. This reflects a significant misunderstanding of Section 3636(E). ¶14 Progressive based its denial of Coates' UM claim on exclusionary language it drafted in its Auto Policy under Part III, 1(b), exclusions to UM coverage. That provision states that UM coverage under the policy will not apply: "(1) to bodily injury sustained by any person while using or occupying: (b) a motor vehicle that is owned by or available for the regular use of you, a relative, or a rated resident. This exclusion does not apply: (i) to a covered auto that is insured under this Part III, or (ii) to a relative or rated resident who is insured for uninsured motorist coverage under any other motor vehicle insurance policy he or she has obtained."3 Exclusion 1(b) thus appears to exclude from UM coverage injuries which occur in the insured's own motor vehicle, even though the insured has paid for coverage, unless coverage for that particular vehicle listed in the liability policy was bought at the same time as the UM coverage. Put another way, Progressive has written an exclusion which follows the vehicle, not the person. ¶15 The United States District Court for the Northern District of Oklahoma considered this exclusion in Vickers v. Progressive Northern Insurance Company, 353 F.Supp.3d 1153 (N.D. Okla. 2018). While not binding on this Court, the Vickers general analysis of Exclusion 1(b) is persuasive.4 Vickers correctly emphasizes that, when considering whether a policy exclusion violates Section 3636(E), one controlling factor is whether an insured has had the opportunity to purchase his own UM coverage. Vickers, 353 F.Supp.3d at 1161. In Vickers, the insured was a resident relative driving a vehicle owned and insured for UM coverage by his father; the resident relative himself had no opportunity to purchase UM coverage and was therefore entitled to rely on the doctrine that UM coverage follows the person, not the vehicle. Id. Here, of course, the insured himself both purchased liability and UM coverage from Progressive and made the claim for UM coverage on his UM policy after he was injured in the collision. As per Vickers, UM coverage under Section 3636 is "for the protection of persons insured thereunder." Id. at 1161-62; 36 O.S. § 3636(B). ¶16 People who pay for UM coverage should get what they paid for. Lane, 2021 OK 40, ¶ 20, 494 P.3d at 353; Morris, 2010 OK 35, ¶ 19, 240 P.3d at 664.5 As the trial court remarked, Coates would be entitled to benefits from his UM coverage had he been hit by an underinsured motorist while walking, parked in a parking lot, or sitting on his porch. To find that Coates' UM coverage would apply in those circumstances, but not when he was riding his motorcycle, defies logic, common sense, and the law of Oklahoma. Insofar as Exclusion 1(b) prevents Coates from receiving the benefits he paid for, it violates Oklahoma public policy. III. Conclusion. ¶17 The facts underlying cases involving motor vehicle injuries and UM coverage are as numerous and varied as the number of vehicles and drivers in Oklahoma. Consequently, this Court has been called on to interpret Section 3636 in various complex situations involving drivers, passengers, owners, and multiple insurers. By contrast, Coates bought two liability insurance policies from Progressive, one for a motorcycle and one for a truck. He also bought a UM policy. He is entitled to the benefit of the UM coverage that he bought and paid for. COATES SHOULD HAVE THE OPPORTUNITY TO CONDUCT DISCOVERY ON HIS CLAIM THAT PROGRESSIVE ACTED IN BAD FAITH ¶18 As both parties agree, insurance companies have a duty to deal fairly and in good faith with their insured customers. Coates claimed below that Progressive's decision to deny his UM claim was made in bad faith and asked for time to conduct discovery on this issue. Coates sought discovery of documents and records that might show Progressive's internal decision-making process, specifically including whether Progressive relied on the internal guidelines for Exclusion 1(b) described above in n.3. The trial court denied Coates' request for a continuance to conduct discovery and granted Progressive's motion for summary judgment on the issue of good faith. Coates claims on appeal that both decisions were in error. ¶19 To succeed in bringing a bad faith claim, Coates must show (a) he was entitled to coverage under the insurance policy; (b) Progressive's failure to pay the claim was unreasonable under the circumstances; (c) Progressive did not deal with Coates fairly and in good faith; and (4) Progressive's violation of the duty of good faith and fair dealing was the direct cause of Coates' injury. Ball v. Wilshire Ins. Co., 2009 OK 38, ¶ 21, 221 P.3d 717 , 724. In considering a claim that an insurer acted in bad faith, we determine whether the insurer, at the time the claim was made, had a good faith belief that there was a justifiable reason for withholding payment under the policy. Id., ¶ 22, 221 P.3d at 725. The mere fact that an insurer denies or litigates a claim will not show bad faith. Barnes v. Oklahoma Farm Bureau Mut. Ins. Co., 2000 OK 55, ¶ 20, 11 P.3d 162 , 170-71. ¶20 Coates essentially argues that the law was clearly on his side, Progressive knew it, and Progressive delayed, rejected, and litigated his claim to avoid paying benefits to which he was entitled. This Court, the Court of Civil Appeals, and various federal courts have in the past reviewed the effect of Section 3636(E) on various aspects of Progressive's Exclusion 1(b). These opinions are often complicated and based on extremely specific facts. While some cases involve Exclusion 1(b), and some involve similar (though not identical) facts, no controlling case had at the time Progressive rejected Coates' claim, resolved this issue. Vickers, 353 F.Supp.3d at 1164; Ball, 2009 OK 38, ¶ 36, 221 P.3d at 730; Barnes, 2000 OK 55, ¶ 32, 11 P.3d at 174. ¶21 However, this does not end our analysis. Coates also argues that, had he had the opportunity for discovery, he might have found evidence that Progressive's particular conduct toward Coates was deliberately made in bad faith. Coates filed his original petition against Progressive in the district court on February 5, 2020, and Progressive filed its motion for summary judgment on June 10, 2020. Coates filed his motion requesting more time to respond to that motion, and to conduct discovery, on July 9, 2020. That is, the case had been at issue for only a few months, subject to COVID-19 pandemic closings and special procedures. No pretrial conferences or other deadlines had been scheduled, there had been no discovery, and the first hearing in the case was held on the day the motion was filed. After the filing of this motion, there were further unavoidable pandemic-related delays in the case, and the next full hearing was on October 8, 2020. It was at this time that the trial court determined that Progressive did not act in bad faith, given the lack of clear guidance from case law, and denied the motion for continuance and discovery as moot. ¶22 This decision was an abuse of discretion. Summary judgment is appropriate where there is no contested issue of material fact. Coates consistently contested the facts surrounding Progressive's summary judgment motion on the bad faith claim. He asked for a reasonable amount of time to conduct discovery to support his argument that Progressive acted in bad faith. Here, the case had been pending for a short period of time. No formal discovery had occurred. As required by both statute and district court rules, Coates' counsel provided an affidavit asking for discovery on particular issues and items directly related to the issue of bad faith. 12 O.S. § 2056(F); Rules of the District Courts of Oklahoma, 12 O.S. Ch. 2 App. R. 13(d). This procedure allows the parties to present enough information for the trial court to intelligently exercise its discretion in granting or denying summary judgment. While there was no controlling case favoring Coates' UM claim, there was enough uncertainty in the case law and, as the trial court ultimately concluded, enough law supporting Coates' position, to warrant inquiry into Progressive's actual decision to deny this claim. ¶23 Without expressing an opinion on the issue of whether Progressive acted in bad faith at the time it denied Coates' claim, we find that the trial court abused its discretion in refusing Coates' request for a continuance to conduct discovery on the issues of good faith and fair dealing. APPEAL PREVIOUSLY RETAINED; ORDER OF THE DISTRICT COURT AFFIRMED IN PART AND REVERSED IN PART. CONCUR: Kauger, Edmondson, Combs, Gurich and Kuehn, JJ. CONCUR IN PART and DISSENT IN PART: Darby, C.J., and Winchester (by separate opinion) and Rowe, JJ. DISSENT: Kane, V.C.J. (by separate opinion) FOOT