Opinion ID: 6218074
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: Ms. Brooks argues that the district court erred by misinterpreting Phillips.3 We agree with the district court in finding that Phillips does not apply to Ms. Brooks’s case. Under Oklahoma law, if an insured settles with and releases a wrongdoer from liability for a loss before payment of the loss has been made by the insurer, the insurer’s right of subrogation against the wrongdoer is thereby destroyed. Also as a general rule an insured who deprives insurer, by settlement and release, of its right of subrogation against the wrongdoer thereby provides insurer with a complete defense to an action on the policy. Porter v. MFA Mut. Ins. Co., 643 P.2d 302, 305 (Okla. 1982) (footnotes omitted); see also Okla. Stat. tit. 36, § 3636(F)(1)-(2); Brambl v. GEICO General Ins. Co., No. 10-CV-474-TCK-PJC, 2011 WL 5326076, at -3 (N.D. Okla. Nov. 4, 2011) (“[T]he insured’s voluntary settlement with the tortfeasor destroys the UM carrier’s subrogation rights and operates as a forfeiture of any UM Case coverage.”). Thus, an insured who enters into a settlement with a tortfeasor, without notice to his own insurance company, forfeits any underinsured motorist coverage. By settling, the insured destroys the 3 Ms. Brooks also argued that the district court improperly found that she had knowledge of the policy when she did not know the relevant policy provision. This argument simply reframes Ms. Brooks’s argument under Phillips. Both turn on whether specific and actual notice is required. Because Ms. Brooks’s Phillips argument fails, her argument that the district court improperly found an essential fact also fails. 4 Appellate Case: 21-6052 Document: 010110643610 Date Filed: 02/10/2022 Page: 5 insurer’s right of subrogation, or ability to sue in the shoes of the insured.4 Under Porter, because Ms. Brooks entered into two settlements with the tortfeasor’s insurers and did not give notice to Philadelphia, she forfeited her claims under the Philadelphia policy. But in Phillips v. New Hampshire Insurance Co., 263 F.3d 1215, 1222 (10th Cir. 2001), we identified an exception to the Porter rule that settlement without notice voids an insurer’s duty to pay. There, the insured did not know whether her employer had an insurance policy on the vehicle. Nonetheless, she requested production of any automobile insurance policies that the employer had. The employer did not respond to her interrogatories, and it failed to produce the insurance agreement until seven months after the insured had already entered into a settlement agreement. In Phillips, we held that an insured who was not able to obtain information, despite her best efforts, about whether the vehicle was insured or which insurance company covered the vehicle was not bound by Porter. Id. (defining a “knowing” insured as one who “knew at the time the release was signed that he/she was impairing any prospective subrogation rights of his/her insurer”). Only after Phillips had already 4 Ms. Brooks also contends there was no prejudice to Philadelphia due to the destruction of its subrogation rights. She cites Phillips for this argument. In Phillips, the tortfeasor was judgment-proof, so the court noted that even if the insured had given notice, there was no indication that the insurance company could have collected. But Oklahoma courts have presumed that a tortfeasor has some assets, unless that presumption is contested or rebutted. See, e.g., Porter v. MFA Mut. Ins. Co., 643 P.2d 302, 305 (Okla. 1982) (finding that barring the insurer “from exercising its lawful right of recourse” against the tortfeasor prejudices the insurer, without discussion of whether the tortfeasor had any assets). Here, there is no argument that the tortfeasor is judgmentproof. Thus, it was not error to find that Philadelphia was prejudiced by its inability to sue. 5 Appellate Case: 21-6052 Document: 010110643610 Date Filed: 02/10/2022 Page: 6 settled did her employer finally respond that the vehicle was insured. Id. (“Ms. Phillips executed the release before even obtaining NHIC’s identity or a copy of the policy.”). Because Phillips had no way of finding out whether the vehicle had insurance coverage, the Phillips court found that her settlement could not have been a knowing and voluntary breach of her notice obligation. Further, she had no way of providing the insurance company with notice of the settlement, as required by Oklahoma law. Thus, she did not forfeit her insurance coverage when she settled with the tortfeasor before she could have possibly known about the existence of the insurance policy. Ms. Brooks entered into two settlement agreements without notice to Philadelphia. Under Porter, this negates Philadelphia’s duty to pay her claim. 643 P.2d at 305. Ms. Brooks argues her settlements fall under the Phillips exception, since she did not have actual notice of the underinsured motorist coverage. The district court found that Ms. Brooks was aware of the policy’s existence: The Collision Report was generated from an investigation made at the scene and identified Philadelphia as the insurer of Ms. Brooks’s work vehicle. She thus had actual notice of a potentially applicable insurance policy. Ms. Brooks, moreover, does not deny that she had actual knowledge of the identity of the insurer, Philadelphia, and the policy number. She argues instead that she was not aware of the “details.” App. Br. at 9. Ms. Brooks could have obtained the policy provisions by contacting Philadelphia—which her counsel eventually did. She claims her initial failure to obtain this information makes her settlements unknowing under the logic of Phillips. We disagree. In Phillips, the insured used her best efforts but was not able to obtain her 6 Appellate Case: 21-6052 Document: 010110643610 Date Filed: 02/10/2022 Page: 7 policy in the face of recalcitrance by her employer. We emphasized that the insured “requested information about, and production of, any automobile insurance policies her employer had in force, but her employer did not respond [until after the settlement].” Phillips, 263 F.3d at 1218. Here, Ms. Brooks knew of the policy but did not procure and read its provisions until after the settlements. Ms. Brooks could have obtained the specific information by reaching out to Philadelphia, as her counsel eventually did. Ms. Brooks, unlike Phillips, could have obtained all the necessary information with a modicum of due diligence. Thus, her settlement was knowing and voluntary as explained in Phillips. Ms. Brooks does not fall under an exception to the general rule that her settlement voids Philadelphia’s duty to pay. For the reasons stated above, the district court correctly denied Ms. Brooks’s motion to reconsider. Thus, we AFFIRM the decision of the district court. Entered for the Court Timothy M. Tymkovich