Court Opinion

ID: 168443
Source: CourtListenerOpinion
Date Created: 2010-08-14 16:29:42+00
Date Added: 2024-06-11T09:58:33.277505
License: Public Domain

F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                     UNITED STATES CO URT O F APPEALS
                                                                    December 5, 2006
                            FO R TH E TENTH CIRCUIT                Elisabeth A. Shumaker
                                                                       Clerk of Court

    CLARA A. SIM S, an individual,

                Plaintiff-Appellee,

    v.                                                   No. 05-5109
                                                   (D.C. No. 02-CV-583-K)
    GREAT A M ERICA N LIFE                               (N.D. Okla.)
    INSU RANCE CO., sued as: The Great
    American Life Insurance Company,

                Defendant-Appellant.

                             OR D ER AND JUDGM ENT *

Before T YM KOV IC H, M cKA Y, and BALDOCK , Circuit Judges.

         Clara Sims brought a petition seeking damages for breach of contract and

bad faith against Great American Life Insurance Company (Great American),

after Great American refused to pay life insurance proceeds following the death

of M s. Sims’ husband. A jury awarded M s. Sims $300,000 in actual damages on

*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
her breach of contract claim, and $600,000 in actual damages and $500,000 in

punitive damages on her bad faith claim. Great American appealed the judgment

in favor of M s. Sims entered on the jury verdict.

      In the meantime, M s. Sims moved in the district court for attorney’s fees

pursuant to Okla. Stat. tit. 36, § 3629(B). Section 3629(B) provides that “[u]pon

a judgment rendered to either party” on a claim for insurance benefits, “costs and

attorney fees shall be allowable to the prevailing party.” M s. Sims contended that

she was entitled to an award of attorney’s fees on both her breach of contract and

bad faith claims, and sought a total award of $189,362 in fees. 1 Great American

objected to her request for an award of that portion of the fees she had expended

to obtain a verdict on her bad faith claim, contending that either the bad faith

recovery was a double recovery of her insured loss, or that the “core element” of

her damages, giving rise to the award under § 3629(B), was not present in the tort

claim. See Taylor v. State Farm Fire & Cas. Co., 981 P.2d 1253, 1256

(Okla. 1999) (“Recovery authorized by § 3629(B) embraces both contract- and

tort-related theories of liability so long as the ‘core element’ of the damages

sought and awarded is composed of the insured loss.”) (emphasis in original).

      A magistrate judge assigned to the issue of attorney’s fees prepared a report

and recommendation proposing that M s. Sims be aw arded $171,456 as a

1
      In her district court reply brief on the fee issue, M s. Sims adjusted the
overall amount sought to $187,439.50.

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reasonable attorney’s fee under § 3629(B). This figure included fees attributable

to the bad faith claim. The magistrate judge, however, disallowed certain fees for

other reasons, and reduced the amount requested by M s. Sims. In its objections to

this report, Great American again contended that M s. Sims w as not entitled to

fees for prevailing on the bad faith claim. The district court rejected Great

American’s argument concerning fees for the tort claim, sustained in part

M s. Sims’ objections to the magistrate’s recommendations, and entered a fee

award in the amount of $176,378.60. Great American appealed.

      On November 7, 2006, acting on Great American’s merits appeal, this court

entered an opinion reversing the underlying judgment in part. Sims v. Great Am .

Life Ins. Co., ___ F.3d ___, No. 04-5135, 2006 W L 3200866 (10th Cir. Nov. 7,

2006). W hile the panel upheld the award of damages for breach of contract, see

id. at *21, it reversed the district court’s denial of judgment as a matter of law on

the bad faith claim, reasoning that insufficient evidence of bad faith had been

presented to sustain the jury’s verdict on that claim. Id. at *18-*20. The panel

also reversed the punitive damages award, holding that it could not stand absent a

finding of bad faith, and that in any event, Great American’s conduct did not

demonstrate the kind of fraud or evil intent required to sustain a punitive damages

award. Id. at *20. M s. Sims is therefore no longer the “prevailing party” as to

the bad faith claim.

                                          -3-
         There remains the issue of how to adjust the attorney’s fee award for

M s. Sims’ appellate loss on the bad faith claim. Great American refers us to an

itemization it presented to the district court, in which it concluded that the

attorney’s fees related to the bad faith claim amounted to $19,749. It requests

that we simply modify the award by subtracting that amount. W e conclude,

however, that we should instead remand for further district court scrutiny of this

issue.

         Oklahoma law permits only those attorney’s fees that reasonably

contributed to the recovery of M s. Sims’ insured loss. See Taylor, 981 P.2d at

1256 (stating recovery of attorney’s fees under § 3629(B) “embraces both

contract- and tort-related theories of liability so long as the ‘core element’ of the

damages [recovered] is composed of the insured loss.”); see also Badillo v. M id

Century Ins. Co., 121 P.3d 1080, 1107 (Okla. 2005) (discussing “insured loss”

and “core element” concepts). Although M s. Sims cannot recover attorney’s fees

for work related solely to her failed bad faith claim, the bad faith and contract

claims overlap to an extent. In order to prove her bad faith claim, M s. Sims had

to establish that the insurance contract was breached. See Christian v. Am. Home

Assurance Co., 577 P.2d 899, 905 (Okla. 1977). W e therefore conclude that the

district court need disallow only those attorney’s fees related specifically to the

issue of whether Great American acted in bad faith in failing to pay her claim, as

the resolution of that issue did not contribute to recovery of the insured loss.

                                           -4-
      W e therefore VACATE the district court’s award of attorney’s fees in favor

of M s. Sims, and REM AND for recalculation of the fees to be awarded, in light of

our opinion in Sim s and the foregoing discussion.

                                                     Entered for the Court

                                                     Timothy M . Tymkovich
                                                     Circuit Judge

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