Court Opinion

ID: 9471580
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:36:01.449423+00
Date Added: 2024-06-11T17:42:28.579370
License: Public Domain

McKAY, Circuit Judge,
dissenting:
This is a case in which the trial court granted a directed verdict. If there were any issues of fact, that verdict cannot stand. The issues are only two: (1) whether the policy of insurance covers the kind of interest the plaintiff had in the steel at issue; and (2)'whether there was evidence from which the jury could have concluded that the company waived the requirement for monthly listing of inventories. Since I read the law and facts as requiring affirmative answers to both questions, I must respectfully dissent.
Coverage — The district court held that the policy did not cover the steel at issue since Catts had sold it and had no title to it when it disappeared. The policy provides as follows: “THIS POLICY ATTACHES: From the time such property becomes at the risk of the Assured and covers continuously thereafter during transit, while awaiting installation, during installation and until the interest of the Assured ceases ....” Record, vol. 1, at 94 (emphasis add*1503ed). Gulf and the trial court have both assumed that Catts’ interest in the steel ceased when Catts sold it and title passed to the buyer. Apparently the majority concedes that this conclusion was erroneous. Ante at 1499-1500. Catts claims, and Gulf does not deny, that Catts had a security interest in the steel at the time it disappeared.1 Under Oklahoma law, a seller’s security interest is an insurable property interest. See Okl.Stat.Ann. tit. 12A, § 2-501 (West 1963). Since there is no reason to read “interest” in this insurance policy as meaning “title” rather than insurable interest, this policy, by its own terms, extended coverage to Catts’ retained security interest in the steel.2
Reporting — Catts admits that it did not properly report the steel in its monthly reports. However, it argues that the trial court erred in holding that Gulf, as a matter of law, could .not have waived or be estopped to assert the reporting requirement. The policy required Catts to report each month the total amount of steel to be insured that month. Catts claims that Gulf’s agent told Catts that once a particular load of steel was reported for a single month, the reported steel would be covered so long as Catts retained an interest in it. Thus, the argument goes, Gulf is precluded by the doctrines of waiver and estoppel from relying on Catts’ underreporting its inventory.
The courts are split on whether an insurance company can waive or be estopped to assert a policy’s monthly reporting requirements. Compare Mountain View Sports Center, Inc. v. Commercial Union Assurance Co., 599 P.2d 1382 (Alaska 1979), with Commonwealth Ins. Co. v. O. Henry Tent & Awning Co., 287 F.2d 316 (7th Cir.), cert. denied, 368 U.S. 826, 82 S.Ct. 45, 7 L.Ed.2d 29 (1961). The rationale of the cases holding waiver and estoppel legally precluded is that such a waiver would expand a policy’s coverage. In those jurisdictions, while an insurance company can waive a policy’s requirements that would otherwise result in forfeiture of coverage already contemplated by the policy, it cannot, through waiver or estoppel, expand the policy’s coverage. See, e.g., Northern Assurance Co. of America v. Stan-Ann Oil Co., 603 S.W.2d 218, 223 (Tex.Civ.App.1979). The Oklahoma courts have not adopted or rejected this limitation on waiver by or estoppel of insurance companies. See Security Ins. Co. v. Greer, 437 P.2d 243, 246 (Okl.1968). This court, although not explicitly addressing the forfeiture-coverage distinction, has construed Oklahoma law as allowing insurance companies to waive monthly reporting provisions in insurance policies. See American Eagle Fire Ins. Co. v. Burdine, 200 F.2d 26 (10th Cir.1952).3 Since there is no indication that Oklahoma law on this issue has changed since American Eagle was decided, there is no reason to question this court’s earlier judgment. An appeal to the notion in some of our cases that the local trial judges’ views lends a special sanctity to his inter*1504pretations of local law, even ignoring that its rationalization was never sound and is now more than ever untenable, is inappropriate in this case where its application flies in the face of our own prior mark on this issue. It would make this court’s determination of legal issues in diversity cases little more than a will-o’-the-wisp. Accordingly, I conclude that the trial court erred in holding that an insurance company cannot waive or be estopped to assert a monthly reporting provision in an insurance policy.
Under Oklahoma law, the existence of waiver or estoppel is a question of fact. See L.C. Jones Trucking Co. v. Cargill, 282 P.2d 753 (Okl.1955) (estoppel); Continental Ins. Co. of New York v. Hall, 192 Okl. 570, 137 P.2d 908 (1943) (waiver). In the instant case, Mr. Catts’ testimony, when viewed most favorably to Catts, could support a finding of waiver or estoppel or both. I would remand for trial to the jury on the waiver issue.

. Catts, in its contracts with the purchaser of the steel, reserved the right to “pick-up from the site materials previously delivered and not paid for.” Record, vol. 1, at 52-54. Under Oklahoma law, such reservations constitute a security interest. Okla.Stat.Ann. tit. 12A, § 2—401(1) (West 1963); see O’Dell v. Kunkel’s, Inc., 581 P.2d 878 (Okl.1978).

. Gulf also argues that even if Catts had an insurable interest in the steel as required by the policy, the steel nevertheless was not covered since the policy expressly excluded coverage of “[a]ccounts, bills, deeds, currency, money, notes or securities.” Although difficult to divine, Gulfs argument, apparently, is that after Catts sold the steel, it retained only an unpaid debt, which was no more than an account or a note. This argument ignores the fact that Catts’ security interest was a distinct property interest in the steel itself; Catts’ claim is not that the policy covered the buyer’s debt, but that it covered the security interest that Catts lost when the steel disappeared.

. The policy in American Eagle provided that if the insured failed to file his monthly reports, the last filed report would govern. In the instant case, the policy does not state the consequences of a failure to file a report. However, this difference does not affect the impact of American Eagle on the instant case. At most, the absence of a clause specifying the consequences for a failure to report renders it more clearly an act resulting in forfeiture of the policy, which can uniformly be waived, rather than an alteration of its coverage, which is subject to waiver or estoppel in only some jurisdictions. See Hanover Ins. Co. v. McLoney, 205 F.Supp. 49 (E.D.Ky.1962).