Opinion ID: 169860
Heading Depth: 4
Heading Rank: 1

Heading: Sham or Irrelevant Evidence

Text: a) Lawyer-Shopping Roesler argues evidence of bad faith can be inferred from TIG’s “lawyershopping” based on Jeff M cDonald’s request that Barrecca hire Sellman shortly after Dorfman rendered his informal opinion. Roesler alleges it established an inference TIG went to Sellman because it did not like Dorfman’s advice. There is no evidence supporting such an inference. Uncontested evidence established Dorfman was retained to opine solely on the policy coverage issue, not rescission. His informal opinion arrived via e-mail to W illiams on August 23, 2002. 10 W illiams forwarded the e-mail to M cDonald the same day. Dorfman’s informal opinion, rendered before knowledge of Roesler’s explanation, stated he believed the Burton suit was excluded from opinion. M oreover, the evidence consistently revealed TIG’s claims department employees provided input but the underwriters made the decision to rescind Roesler’s policy after Sellman provided her legal opinion. 10 Every witness with knowledge of the matter so testified. In addition, Dorfman’s final opinion, sent on September 12, 2002, specifically recognized he had not been retained to opine on rescission. Indeed, even though he recommended more investigation before refusing to cover the claim, he further stated: “There are also grounds to consider a policy rescission based on the same failure to disclose this C section delivery as a potential claim at the time of application for coverage. W e can address this separately should you wish to assess this further.” (R. Vol. VI at 1750a.) The fact that Dorfman commented on rescission does not lead to an inference he was retained to provide an opinion on the matter. -15- coverage under the prior knowledge exclusion, and separately, there may be grounds for rescission of the policy based upon material nondisclosure.” (R . Vol. VI at 1800a.) H e recommended further investigation. Uncontradicted testimony further established it was at this point TIG hired Sellman to address the rescission issue. Thus, at the time TIG hired Sellman, Dorfman was recommending coverage be denied. It was only after Sellman was retained that Dorfman learned of Roesler’s September 4, 2002, explanation. W hile Dorfman changed his opinion regarding the prior knowledge exclusion, there is no evidence TIG contacted Sellman to report Dorfman’s final conclusions or gave any other direction to Sellman’s formal opinion, sent the day after Dorfman’s. Indeed, Sellman agreed Roesler offered a “plausible” position as to his prior knowledge of a lawsuit against him. However, Sellman concluded Roesler’s admission he knew of Burton’s injuries before he completed his application was sufficient evidence of misrepresentation as to Bullet Point 6. (R. Vol. VI at 1757a.) The timing and substance of the two legal opinions provide no basis for Roesler’s insinuation TIG went “lawyer-shopping” in bad faith or that the two legal opinions were contradictory. b) Knowledge of Brain Injury Roesler also argues TIG’s bad faith is demonstrated by its failure to resolve whether Roesler knew Tala B urton suffered brain injuries prior to completing his application for insurance. The evidence allows no question of fact on this issue. -16- W illiams’ notes specifically state Roesler told her he learned of Tala Burton’s injuries when he heard about the lawsuit against the doctor and the hospital. M ulhern’s notes do not contradict this statement, but merely state Roesler told her he learned of the injuries at “the time of the lawsuit.” 11 In fact, Roesler never denied this knowledge. W hen asked at trial why he answ ered Bullet Point 6 in the negative, Roesler did not say he did not know about Tala Burton’s injuries. Rather, he explained he believed the question asked whether his administration of anesthesia caused Tala B urton’s brain damage and, because he did not believe it did, he did not mention the incident. Given the uncontested evidence, all reasonable inferences necessarily lead to the conclusion Roesler learned about Tala Burton’s neurological injuries, at the latest, in August 2001. Therefore, there can be no inference TIG acted in bad faith by declining to further investigate this issue. c) Post-Litigation Conduct Roesler argues TIG’s post-litigation conduct – the post-rescission Reservation of Rights letter, reinstatement of the policy and the offer of a tail policy – is evidence of bad faith. He asserts this evidence was appropriately 11 Plaintiff’s counsel deftly managed to confuse M ulhern during crossexamination by insisting her failure to note which specific lawsuit Roesler was referring to during their conversation (the one against the hospital or the later suit against Roesler) raised a question of fact as to when Roesler knew of Burton’s injuries. However, M ulhern consistently testified Roesler told her he knew of Burton’s injuries at the time of the law suit against the doctor and the hospital. -17- considered by the jury “in determining the reasonableness of TIG’s initial decision to rescind the policy in light of its attempt after litigation to somehow ‘cure’ its conduct.” (A ppellee’s Br. at 44.) These post-litigation activities have no relevance to TIG’s alleged bad faith. Hale v. A.G. Ins. Co., 138 P.3d 567, 571-72 (Okla. Civ. App. 2006) (“[T]he analysis in bad faith cases indicates the cutoff for relevant evidence is the date of payment or denial of the claim.”). The duty of good faith and fair dealing exists during the time the claim is being reviewed. Once a lawsuit is filed, to hold an insurer’s acceptable litigation tactics as evidence of bad faith would be to deny the insurer a complete defense. See Timberlake Const. Co. v. U.S. Fid. & Guar. Co., 71 F.3d 335, 340 (10th Cir. 1995) (“[s]uch evidence should rarely, if ever, be allowed to serve as proof of bad faith.”). “[A]llowing litigation conduct to serve as evidence of bad faith w ould undermine an insurer’s right to contest questionable claims and to defend itself against such claims resulting in a chilling effect on insurers, which could unfairly penalize them by inhibiting their law yers from zealously and effectively representing their clients within the bounds permitted by law.” Sims v. Travelers Ins. Co., 16 P.3d 468, 471 (Okla. Civ. App. 2000). Even if the post-litigation events are considered, there is no inference of bad faith. TIG readily admitted the decision to reinstate Roesler’s policy was intended to mitigate damages and, as such, is not evidence of prior bad faith. A s -18- to the January 2003, reservation of rights letter, Barreca testified she sent the letter by mistake. Even so, at the time the letter was sent, the underlying suit had already been resolved and nothing could be gained by this mistake. d) Attorney O pinion Letters Finally, Roesler repeatedly insinuated at trial that TIG’s failure to provide him the letters from Dorfman and Sellman with the letter of the rescission is evidence of bad faith. For example, in the examination of Jeff M cDonald, the following colloquy occurred: Q. Are you proud that your company has taken the position that they’re proud of how they treated [Roesler] because they treated him in good faith? A. I, I’m aware that we don’t feel we’ve acted in bad faith here. Q. W ell, if your company is satisfied they’ve treated him fairly, don’t you think one of the things they should do is be proud to show M r. Roesler those two legal opinions from the beginning? TIG Counsel: Objection, your honor, argumentative and object under Timberlake. Court: Overruled.