Opinion ID: 157891
Heading Depth: 2
Heading Rank: 2

Heading: Oklahoma State Law

Text: 12 Relying on Cisneros v. UNUM Life Insurance Co. of America, 134 F.3d 939 (9th Cir.1998), petition for cert. filed, 66 U.S.L.W. 3773 (U.S. May 20, 1998) (No. 97-18), Dang asks this court to apply California's notice-prejudice rule to his claim. 3 Under similar circumstances to those presented here, the Cisneros court held that California's notice-prejudice rule was not preempted by ERISA and remanded the plaintiff's claim for a determination of prejudice. See id. at 948. Although we agree with the Ninth Circuit's decision in Cisneros, Oklahoma also has a notice-prejudice rule obviating our need to address Dang's invitation to adopt California law. 13 In Dixon v. State Mutual Insurance Co., 34 Okla. 624, 126 P. 794 (Okla.1912), the Oklahoma Supreme Court considered the refusal of the defendant insurance company to cover the insured's fire loss due to the insured's late notice of claim. The court held that [u]nless time was made of the essence of the contract, the [insurance] company cannot escape liability for the loss, except it appears that they were injured by the failure of the insured to comply with the letter of the contract as to time for giving notice and making proof. Id. at 795. As stated, this rule mirror's the California version. The Dixon court, however, added an additional element to the Oklahoma version of the rule, holding that the insured's failure to provide proof of loss within the policy limits did not operate to forfeit his claim because, although the policy notice provisions provided time limits for furnishing notice and proof of claim, it did not impose a forfeiture for failure to comply with the time limits. See id. at 796; see also Continental Cas. Co. v. Beaty, 455 P.2d 684, 688 (Okla.1969) ([U]nless failure to comply with the provision for notice expressly is made a ground of forfeiture the insurer cannot avoid liability, except for prejudice resulting from insured's failure to comply with the letter of the contract concerning notice and proof of loss.). 14 This court, in Federal Deposit Insurance Corp. v. Kansas Bankers Surety Co., 963 F.2d 289 (10th Cir.1992), considered the FDIC's appeal of the district court's judgment in favor of the defendant surety company based on the failure of several failed banks to give timely notice of their claims. Applying Oklahoma law, this court determined that, because the parties had made their intent to make time of the essence clear in the contract and had fully set forth the consequences of untimely notice, the surety company did not need to show prejudice, and the claims of the FDIC were correctly denied. See id. at 294. 15 In denying Dang's request to apply the California notice-prejudice rule as federal common law, the district court noted that Tennessee, the 'governing jurisdiction' in this case, has not adopted the 'notice-prejudice' rule. Appellant's App. at 335 (footnote omitted). In a footnote, the court stated that, even if Oklahoma law was applicable, Dang would not be entitled to benefits because [n]o prejudice is required if the relevant policy provides for forfeiture of benefits as a result of an untimely claim. Id. at 335 n. 4 (citing Eastland Mortgage Co. v. Verex Assurance, Inc., Nos. 91-6368, 92-6045, 1992 WL 339068, at 3 (10th Cir. Nov.17, 1992) (unpublished order and judgment)). We determine that both of the court's observations are incorrect in this context. 16 The title page of the UNUM policy refers to Tennessee as the Governing Jurisdiction. Appellant's App. at 203. The policy does not, however, elaborate any further on this reference or include a choice of law provision in the event of litigation. Consequently, we determine that the district court's cursory reference to Tennessee as the Governing Jurisdiction does not serve to delineate Tennessee as the choice of law forum in this matter. 17 A federal court adjudicating state law claims must apply the forum state's choice of law principles. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Under Oklahoma law, a contract is to be interpreted according to the law and usage of the place where it is to be performed, or if it does not indicate a place of performance, according to the law of the place it was made. Devery Implement Co. v. J.I. Case Co., 944 F.2d 724, 727 (10th Cir.1991) (further quotation omitted). Although not specifically stated in UNUM's policy, Oklahoma as the intended location of performance was apparent from the terms of the contract. See id. We therefore conclude that Oklahoma law governs. 18 The district court's alternate finding that Dang would not be entitled to benefits under Oklahoma law is based on an incorrect reading of the policy. It is clear that the notice provisions in UNUM's policy express a definite time limit for compliance. Contrary to the district court's premise, however, the provision fails to impose forfeiture of benefits or other adverse consequence for an insured's failure to comply with the time limits. 4 See Continental Casualty, 455 P.2d at 688 (holding that unless failure timely to file notice expressly is made a ground of forfeiture, the insurer cannot avoid liability absent a showing of prejudice) (emphasis added). Therefore, we conclude that in light of the lack of forfeiture language in the policy, UNUM cannot deny Dang's application for benefits based on late notice absent a showing of prejudice. This, however, does not end our inquiry. It must now be determined whether Oklahoma's notice-prejudice law is preempted by ERISA.