Court Opinion

ID: 9796763
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:04:25.940079+00
Date Added: 2024-06-11T08:51:31.126864
License: Public Domain

WINCHESTER, C.J.,
dissenting.
1 1 In this case, there is no evidence of bad faith or any act supporting a finding that Smalygo's reliance on the proof of coverage was not in good faith.1 While perhaps it would have been good business judgment for Smalygo to repeat his request for proof of coverage after a certain period of time during the subcontractor's performance of work, what the law requires in this instance and what might constitute good business judgment are distinct. In regard to the term "good faith" this Court has in the past observed, "Acting in good faith and using poor business judgment are not mutually exclusive." Martin v. Johnson, 1998 OK 127, ¶ 33, 975 P.2d 889, 897. The plain language of the statute is particularly instructive here, as the statutory term "rely" is defined as "to place or have faith or confidence," and its synonyms include "depend," and "trust."2 In this case, Smalygo testified he trusted his subcontractor, Murphy. The express terms of the statute authorize principal employers to place trust upon proof of valid insurance coverage and enjoy insulation from liability if such trust is placed in good faith. Since the record reveals no set of facts that might otherwise lead to a finding that Smalygo's reliance upon the subcontractor's proof of coverage was in any way unjustified, unreasonable or in bad faith, Smalygo complied with the statute in his request for and reliance upon proof of coverage, which the subcontractor unfortunately failed to maintain. The subcontractor's failure does not equate to bad faith on the part of Smalygo.
*561T2 The majority notes these facts: that the subcontractor provided written proof of valid current coverage, that no document was submitted to the court as evidence of when the subcontractor's original contract was to expire, only a document showing when it actually expired. The Court's opinion further observes that the subcontractor did not notify Smalygo of the termination of the insurance coverage and was even unsure of the term of his policy. The Court includes the fact that Smalygo testified that he had known the subcontractor for "quite a few years," and he relied upon the fact that the subcontractor had given proof of coverage to him, and he trusted him to maintain that coverage. After reviewing this evidence in its opinion, the Court sets a standard that "the concept of subjective honesty combined with objective reasonableness is found in an insurer's 'implied-in-law duty' to act in good faith and deal fairly with the insured to ensure that the policy benefits are received." See, Christian v. Am. Home Assurance Co., 1977 OK 141, ¶ 8, 577 P.2d 899, 901. Focusing on the portion of the test involving "subjective honesty combined with objective reasonableness," the evidence reveals no objective evidence of subjective dishonesty and so I would conclude there is no violation of the duty to act in good faith and deal fairly with the insured.
T3 The critical undisputed facts here are that proof of current and valid insurance coverage was provided to Smalygo prior to commencement of work and based on that proof and his prior dealings with the subeon-tractor, he relied on that proof of coverage. In doing so he complied in all respects with the express statutory procedure. If the legislature had intended to establish a mandate that principal employers continually supervise and monitor their subcontractors' insurance coverage and payment of insurance premiums and/or periodically re-confirm coverage in order to enjoy immunity from suit, the statute would have been drafted in such a way to provide such directive.

. I have previously expressed my views on this Court's construction of "bad faith" in Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 11, 121 P.3d. 1080, 1113 (Winchester, V.C.J., dissenting).

. The American Heritage Dictionary of the English Language 1475 (4th ed.2000).