Court Opinion

ID: 5133111
Source: CourtListenerOpinion
Date Created: 2021-12-09 15:00:46.241898+00
Date Added: 2024-06-11T08:23:34.009160
License: Public Domain

Appellate Case: 19-6127     Document: 010110616733   Date Filed: 12/09/2021   Page: 1
                                                                             FILED
                                                                 United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                    Tenth Circuit

                              FOR THE TENTH CIRCUIT                   December 9, 2021
                          _________________________________
                                                                     Christopher M. Wolpert
                                                                         Clerk of Court
  TALLIE MCKINNEY,

        Plaintiff - Appellee,

  v.                                                     No. 19-6127
                                                 (D.C. No. 5:18-CV-00767-HE)
  PROGRESSIVE DIRECT INSURANCE                           (W.D. Okla.)
  COMPANY, a/k/a Progressive,

        Defendant - Appellant,

  and

  CSAA GENERAL INSURANCE
  COMPANY, d/b/a AAA Insurance,

        Defendant.

  –––––––––––––––––––––––––––––––––––

  TALLIE MCKINNEY,

        Plaintiff - Appellant,

  v.

  CSAA GENERAL INSURANCE                                 No. 19-6130
  COMPANY, d/b/a AAA Insurance,                  (D.C. No. 5:18-CV-00767-HE)
                                                         (W.D. Okla.)
        Defendant - Appellee,

  and

  PROGRESSIVE DIRECT INSURANCE
  COMPANY, d/b/a Progressive,

        Defendant.
                          _________________________________
Appellate Case: 19-6127    Document: 010110616733        Date Filed: 12/09/2021    Page: 2

                              ORDER AND JUDGMENT*
                          _________________________________

 Before MATHESON, BRISCOE, and PHILLIPS, Circuit Judges.
                   _________________________________

       Defendant Progressive Direct Insurance Company (Progressive) appeals the

 district court’s denial of its motion for summary judgment. Plaintiff Tallie

 McKinney (McKinney) appeals the district court’s grant of summary judgment in

 favor of defendant CSAA General Insurance Company (CSAA). These interrelated

 appeals arose from the same district court case and are resolved together here. The

 district court did not err in denying Progressive’s motion for summary judgment or in

 granting CSAA’s motion for summary judgment. Accordingly, we AFFIRM.

                                            I

       McKinney was a passenger in a car driven by Sierra Shannon. Shannon

 caused a single-car accident, and McKinney sustained injuries. Shannon and the car

 were covered by an insurance policy with Progressive, and McKinney was covered

 by an insurance policy with CSAA. The Progressive policy provided bodily injury

 liability coverage with a limit of $100,000.00 per person and $300,000.00 per

 accident, and uninsured or underinsured motorist (“UM”) coverage, also with a limit

 of $100,000.00 per person and $300,000.00 per accident. Progressive paid

 McKinney the $100,000.00 limit in liability coverage but refused to pay anything

       *
          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.
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Appellate Case: 19-6127   Document: 010110616733       Date Filed: 12/09/2021    Page: 3

 under the UM coverage provision, asserting McKinney was subject to an exclusion in

 the UM coverage. CSAA obtained some medical records and evaluated McKinney’s

 claim. CSAA employee Brett Greiwe averred that CSAA used a medical

 authorization to obtain McKinney’s medical records in its investigation of her claim.

 It assessed the amount of medical expenses paid at $33,482.881 and determined her

 range of general damages was $75,000.00–$85,000.00. Thus, it valued her total

 claim at $108,482.88–$118,482.88. As Progressive had already paid $100,000.00,

 CSAA offered $8,482.88 but conditioned payment on McKinney signing a release.

 McKinney rejected the offer without a counteroffer or any attempt to discuss the

 evaluation.

       McKinney sued Progressive and CSAA in Oklahoma state court, and the case

 was removed to the Western District of Oklahoma pursuant to diversity jurisdiction.

 McKinney asserted breach of contract against Progressive, arguing the UM exclusion

 was not valid under Oklahoma law and that she was entitled to recover under the UM

 coverage. She asserted bad faith against CSAA, claiming it improperly low-balled its

 offer and did not tender partial payment. After the suit was filed, CSAA re-evaluated

 McKinney’s claim at $133,888.04–$158,888.04 and offered McKinney $33,888.04,

 but McKinney never responded to the new offer. The insurance companies moved

       1
         There is some uncertainty as to the precise value of McKinney’s medical
 expenses at that time. Compare CSAA JA at 88 (averring CSAA evaluated total
 verified medical expenses at $33,482.88), with CSAA JA at 143 (listing total amount
 of medical expenses paid at $32,763.70). Despite these inconsistencies, the numbers
 are close, and well below the $100,000.00 already paid by Progressive, so the precise
 value does not affect our analysis of the bad faith claim.
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 for summary judgment. The district court denied Progressive’s motion, finding its

 UM exclusion void under Oklahoma public policy, and allowing a trial on the

 contract claim. The district court granted CSAA’s motion, dismissing the bad faith

 claim. A jury then found for McKinney on the contract claim and assessed her

 damages at $325,000.00, which the district court reduced to $225,000.00 given

 Progressive’s previous payment of $100,000.00 in liability coverage.

       Progressive appeals the district court’s denial of its motion for summary

 judgment on McKinney’s breach of contract claim, and McKinney appeals the

 district court’s grant of summary judgment to CSAA on McKinney’s bad faith claim.

                                            II

       We “review[] a district court’s decision on a summary judgment motion de

 novo, applying the standard set out in Rule 56(a) of the Federal Rules of Civil

 Procedure.” Reorganized FLI, Inc. v. Williams Cos., Inc., 1 F.4th 1214, 1218 (10th

 Cir. 2021). “Under that standard, a ‘court shall grant summary judgment if the

 movant shows that there is no genuine dispute as to any material fact and the movant

 is entitled to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(a)).

                                            A

       The district court’s denial of Progressive’s motion for summary judgment on

 McKinney’s breach of contract claim is affirmed because the UM exclusion in

 Progressive’s policy is void as a matter of law, and UM coverage therefore applies to

 McKinney. In another case involving an identical UM provision, the Oklahoma

 Supreme Court responded to a certified question and resolved this issue. See Lane v.

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Appellate Case: 19-6127    Document: 010110616733         Date Filed: 12/09/2021     Page: 5

 Progressive N. Ins. Co., No. 19-6085, 2021 WL 4592266 (10th Cir. Oct. 6, 2021)

 (unpub.); Lane v. Progressive N. Ins. Co., 494 P.3d 345 (Okla. 2021). McKinney and

 Progressive both acknowledge that the issue here is indistinguishable from the issue

 in Lane. See McKinney Aplt. Br. at vii; Progressive Aple. Br. at 1. We agree, noting

 that both cases deal with identical policies and involve “Class 2” insureds

 (individuals who are covered by virtue of their presence in the covered vehicle).

       In Lane, the district court granted summary judgment to Progressive,

 upholding the same broad UM exclusion at issue here. A panel of this court certified

 a question to the Oklahoma Supreme Court, asking whether the public policy

 underlying Oklahoma’s UM insurance statute, Okla. Stat. tit. 36, § 3636, prohibits

 Progressive’s UM exclusion. The Oklahoma Supreme Court concluded it did. The

 Court held that “Progressive’s UM Exclusion violates public policy because an

 insurer in Oklahoma cannot deprive its policyholder of uninsured-motorist coverage

 for which a premium has been paid through an exclusion that effectively erases its

 policyholder’s choice to purchase that coverage in the first place.” Lane, 494 P.3d at

 346. It therefore voided the exclusion, effectively removing it from the policy. Id. at

 353. After resolution of the certified question, this court reversed the district court’s

 grant of summary judgment. See Lane, 2021 WL 4592266 at *2. As Lane is

 indistinguishable from this case, we affirm the district court’s grant of summary

 judgment.

       Additionally, we reject Progressive’s argument that, if the UM exclusion is

 voided, it can still limit coverage to $25,000.00. Lane is dispositive of this issue

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 even though the parties arguably framed it separately from the certified question in

 Lane. Progressive cites cases that read a limit of $25,000.00 of UM coverage into

 policies, but they are distinguishable. Those cases deal with whether UM coverage is

 imputed into policies that violate Oklahoma law by not including adequate UM

 coverage. See, e.g., May v. Nat’l Union Fire Ins. Co. of Pittsburgh, 918 P.2d 43, 44

 (Okla. 1996). Here, the policy includes a per-person limit of $100,000.00 in UM

 coverage, for which a premium was paid. Rather than simply lift the void UM

 exclusion out of the policy, Progressive asks us to treat the policy as if UM coverage

 was not included in the first place. But the Oklahoma Supreme Court was clear that

 Progressive customers cannot be deprived of the benefit of their bargain by a broad

 UM exclusion. See Lane, 494 P.3d at 351. And the coverage bargained and paid for

 here was up to $100,000.00 per person. Simply voiding the UM exclusion and then

 reading the policy, the limit under the UM coverage is $100,000.00 per person.

 Accordingly, the district court’s denial of Progressive’s motion for summary

 judgment is affirmed.

                                           B

       The district court’s grant of summary judgment to CSAA on McKinney’s bad

 faith claim is also affirmed. To establish a claim of bad faith under Oklahoma law, a

 plaintiff “must present evidence from which a reasonable jury could conclude that the

 insurer did not have a reasonable good faith belief for withholding payment of the

 insured’s claim.” Shotts v. GEICO Gen. Ins. Co., 943 F.3d 1304, 1314 (10th Cir.

 2019) (quoting Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1436 (10th Cir.

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 1993)). Where there is a “legitimate dispute” about the amount of coverage, an

 inference of bad faith does not arise. Id. at 1316. If such a dispute exists, courts

 “grant judgment for the insurer unless the insured can offer additional evidence of

 bad faith.” Id. McKinney has not presented a dispute of material fact, and CSAA is

 entitled to summary judgment.

       McKinney argues that CSAA acted in bad faith because its investigation of her

 claim was inadequate and it did not promptly pay the undisputed portion of the claim.

 Specifically, McKinney asserts that: (1) a reasonable jury could conclude that CSAA

 could have, but did not, request medical bills from providers; (2) a reasonable jury

 could (and did) conclude that McKinney’s injuries exceeded the available liability

 insurance; and (3) a reasonable jury could conclude that the failure to pay any UM

 benefits at all was in bad faith. These arguments are unpersuasive.

       First, CSAA submitted an affidavit saying it used the medical authorization to

 obtain medical information from providers, so CSAA presented at least some

 evidence that it conducted a reasonable investigation of the claim. McKinney

 nevertheless contends that the affidavit does not support CSAA’s assertion that its

 investigation was reasonable because it is unclear how CSAA used the authorization.

 McKinney concedes that she “has not presented evidence to dispute Greiwe’s

 affidavit, and as such cannot dispute that CSAA ‘used’ the medical authorization.”

 McKinney Reply at 2. She suggests that a later, higher evaluation indicates that the

 initial evaluation was based on incomplete records. But she offers no proof that

 CSAA’s new evaluation relied on information that was available to CSAA at the time

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 of the first evaluation and that CSAA should have, but failed to, obtain or consider

 this information. Indeed, she does not identify what these excluded materials might

 be. While the reasonability of CSAA’s investigation is within the province of the

 jury, McKinney offers nothing but speculation that the initial evaluation was

 unreasonable. As such, McKinney’s contention that CSAA did not adequately use

 the authorization remains little more than an unsupported hunch.

       Second, McKinney does not support her assertion that CSAA’s low offer itself

 demonstrates bad faith. The offer may have been low, but McKinney offers no

 indication that it was so low as to show bad faith. She cites no precedent indicating

 how low an offer must be to constitute bad faith. She does not cite any precedent

 indicating that a low offer can itself be evidence of bad faith. Admittedly, even

 CSAA’s post-suit valuation is far from the jury’s eventual valuation, but nothing in

 the record, and certainly nothing in the record at the time the district court granted

 summary judgment, indicates CSAA deliberately lowballed the offer. CSAA

 presented an affidavit showing some evidence that the claim was investigated and

 evaluated, and its offer was in-line with that evaluation. Neither McKinney’s opinion

 nor the jury’s conclusion that the offer was low, without more, could lead a

 reasonable juror to conclude that CSAA lowballed its offer in bad faith.

       Third, CSAA argues that McKinney abandoned her bad faith failure to pay

 argument, and McKinney does not contest this in reply. Nevertheless, as McKinney

 mentions the argument in her opening brief, we address the claim. Greiwe averred

 that CSAA evaluated McKinney’s medical bills at less than the amount recovered

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 from Progressive. Under Oklahoma law, refusal to tender partial payments of UM

 benefits without a release does not constitute bad faith if: (1) economic or special

 damages have been recovered through liability insurance; (2) the UM insurer has

 promptly investigated and valued the claim; (3) the total amount of noneconomic or

 general damages is legitimately disputed; and (4) an agreement or judgment does not

 set the value of the insured’s damages. Gov’t Emps. Ins. Co. v. Quine, 264 P.3d

 1245, 1251 (Okla. 2011). CSAA refused to tender payment without a release, but as

 noted above, there is no dispute of fact that: CSAA believed McKinney made full

 recovery on her medical bills; CSAA investigated and valued the claim; there was a

 legitimate dispute about the value of the claim; and, at the time, no agreement or

 judgment valued McKinney’s damages. Therefore, as a matter of law, CSAA’s

 refusal to tender payment without a release does not in and of itself constitute bad

 faith.

          The judgment of the district court is AFFIRMED.

                                             Entered for the Court

                                             Mary Beck Briscoe
                                             Circuit Judge

                                            9