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Brown v. Patel v. Commercial Union Ins. Co 2007 OK 16


No. 102,402



An insured brought an action against an alleged tortfeasor. The insured’s uninsured motorist carrier/workers’ compensation carrier intervened. Insured objected to the intervention and alleged that the nonpayment of workers’ compensation benefits, non-payment for subrogation, and insurer’s assertion of claims also asserted by the alleged tortfeasor showed bad faith conduct on the part of the insurer towards its insured. Intervenor/insurer sought summary judgment on insured’s bad-faith claim and the Honorable Donald L. Worthington, District Judge, granted the motion for summary judgment. Subsequent to a defendant’s verdict and judgment thereon, the insured appealed the order granting summary judgment to insurer. We granted the insurer’s motion to retain the appeal. We hold that an uninsured motorist insurer may, under certain circumstances, intervene in the action brought by its insured against an alleged tortfeasor, and that a judgment for the alleged tortfeasor does not relieve the insurer of all bad faith claims relating to its handling of the uninsured motorist claim.



Joe E. White, Jr., Charles C. Weddle III, White Law Firm, Oklahoma City, Oklahoma and William J. Baker, Hert, Baker & Koemel, Stillwater, Oklahoma, for Plaintiff/Appellant.

Loyal J. Roach, Steven V. Buckman and Diane M. Black, Buckman and Roach, Tulsa, Oklahoma, for Intervenors/Appellees.


¶ 1 The issues in this appeal are (1) whether a UM insurer may, without either denying or granting a UM claim, seek intervention in the action brought by its insured against the alleged tortfeasor and assert both potential subrogation rights and the defenses raised by of the tortfeasor; and (2) whether a subsequent judgment for the tortfeasor necessarily relieves the UM carrier of any bad-faith liability arising from its handling of the UM claim. We hold that a UM insurer may, in certain circumstances, intervene in the action brought by its insured against the alleged tortfeasor and assert certain defenses, and that a subsequent judgment for the tortfeasor does not relieve the insurer of all possible bad-faith claims based upon the insurer’s handling of the UM claim.


¶ 2 Brown and Patel were involved in a motor vehicle collision. Brown1 brought an action against Patel in the District Court and Patel answered. Brown also notified his uninsured motorist carrier, One Beacon Insurance Group (OneBeacon), of his legal action. The uninsured/underinsured motorist coverage in this controversy was also part of a policy providing workers’ compensation coverage for Brown.

¶ 3 OneBeacon Insurance Group was granted leave to intervene via two different motions, once in the name of One Beacon and once in the name of Commercial Union Insurance Company. The first in time, Commercial Union’s petition to intervene, was based upon the carrier’s status as Brown’s UM carrier. Approximately four months later, OneBeacon filed a petition to intervene alleging that it had paid $2,841.45 for Brown’s medical expenses as a result of a workers’ compensation policy. Brown answered and, while admitting that OneBeacon was his workers’ compensation insurance carrier and that he had filed a Form 3 seeking workers’ compensation benefits, denied that OneBeacon had paid $2,841.45 for his medical expenses. Commercial Union Insurance Company had previously changed its name to One Beacon and we treat the intervenors as a single entity, OneBeacon, for the purpose of this opinion.2

¶ 4 Brown’s allegation of OneBeacon’s bad faith centers on one of the petitions to intervene. This petition combined (1) a petition for intervention that adopted allegations from Brown’s petition, asserted a potential subrogation interest and sought a determination of the rights of OneBeacon; (2) an answer that denied certain allegations of Brown’s petition, adopted Patel’s defenses and requested that Brown’s petition be dismissed; and (3) a cross-petition that asserted a cross-claim against Patel and requested a judgment against Patel for any amount OneBeacon would be required to pay Brown.3

¶ 5 Brown filed an amended petition that added claims against OneBeacon. Brown alleged that (1) OneBeacon was his uninsured/underinsured carrier; (2) in the year 2000, Brown had put the carrier “on notice of the claim for underinsured motorist benefits and medical pay benefits” and (3) his insurer had breached its duty to deal fairly and in good faith.

¶ 6 One Beacon filed a motion for summary judgment, Brown responded and OneBeacon replied. The motion for summary judgment states that OneBeacon did not commit bad faith because (1) An uninsured/underinsured obligation was never “triggered” because Brown’s damages were below Patel’s (alleged tortfeasor’s) $300,000.00 insurance coverage, (2) One Beacon’s employees reasonably questioned the causation of Brown’s claim and (3) OneBeacon’s employees reasonably questioned the value of Brown’s claim.

¶ 7 Brown responded and stated that One Beacon did not question the cause of Brown’s injuries prior to OneBeacon’s intervention. Brown argued that OneBeacon was not sued for bad faith in evaluating the amount of Brown’s claims. Instead, he argued that OneBeacon’s conduct showed bad faith when it (1) intervened and asserted a subrogation claim against Patel, and thus adopted Brown’s allegation’s that his injuries were in excess of $300,000 and (2) asserted a subrogation interest while “actively defending Patel.” Plaintiffs’ Brief at p. 22. Brown’s complaint is that OneBeacon never denied or granted the claim, but sought intervention to assert judicial remedies based upon both granting and denying the claim.

¶ 8 The District Court granted the motion for summary judgment. A verdict was returned for Defendant Patel, judgment entered on that verdict, and then Brown appealed the summary judgment granted to OneBeacon. This Court retained the appeal. OneBeacon filed motions for oral argument and permission to file appellate briefs in addition to those that were before the trial court.4 Oral argument and additional briefs would not materially assist the Court, and the motions for oral argument and additional briefing are denied.


¶ 9 Generally, an implied duty of an insurer to act in good faith and deal fairly with its insured is imposed by law upon the insurer-insured relationship, and a breach of that duty arises from a breach of the insurance contract where the breach occurs in a manner constituting a lack of good faith; i.e., constituting bad faith. Christian v. American Home Assurance Company, 1977 OK 141,577 P.2d 899,901-902,904-905.5 In our case today, Brown has not included the insurance contract as part of the record on appeal. Brown does not reference any express language of the insurance contract as the basis for an obligation that has been allegedly breached in a bad-faith manner.

¶ 10 Of course, a part of every contract in this state is the law applicable to that contract. Public Service Co. of Oklahoma v. State ex rel. Oklahoma Corp. Com’n, 2005 OK 47, ¶ 54, 115 P.3d 861,884. Contracts of insurance are no exception to this rule, and this Court has recognized the well-known principle that provisions of an insurance contract may arise from statute as opposed to the express writing contained in the document agreed to by the parties.6 Similarly, we recently explained that a bad-faith action could be based upon an insurer’s refusal to satisfy statutory obligations imposed upon or resulting from the insurance contract. Sizemore v. Continental Cas. Co., 2006 OK 36, ~ 15. 142 P.3d 47 (refusal to pay workers’ compensation award).7 In our case today, Brown does not point to the breach of a statutory duty imposed by law upon the insurer-insured relationship.

¶ 11 The bad-faith action may also be based upon an insurer’s failure to perform an act that is derivative or secondary in nature; that is, an insurer’s duty that owes its existence to a preexisting implied contractual,8 or statutory, or status-based duty arising from the insurer-insured relationship. For example, a duty to timely and properly investigate an insurance claim is intrinsic to an insurer’s contractual duty to timely pay a valid claim.9 Similarly, bad-faith actions have been based upon an insurer’s failure to follow judicial construction of insurance contracts10 or available applicable law, 11 as well as upon duties that are necessary for an insurer’s timely determination of a claim.

¶ 12 In our case today, this latter category of derivative or secondary duties is raised by Brown, in that he asserts bad faith is shown by OneBeacon’s litigation efforts to both press a subrogation claim while denying that such a claim exists, all without either granting or denying a UM claim. Specifically, Brown asserts that OneBeacon acted in bad faith by intervening in Brown’s action against Patel and asserting a subrogation claim against Patel and adopting Plaintiffs’ allegations, and secondly, that One Beacon acted in bad faith by asserting a subrogation interest “as a ruse to actually harm” Brown by OneBeacon’s litigation conduct in defending Patel. Brown also asserts in his brief that he has not sued One Beacon for bad faith in evaluating the amount of his claim. Brown contends questions of disputed fact exist regarding the reasonableness of One Beacon’s

litigation conduct in light of its claims file showing a claim and the tortfeasor’s liability.

¶ 13 OneBeacon asserts a right to intervene, and that an exercise of this right cannot be the basis for a breach of a duty owed to Brown. In other words, it argues that the outer limit of the duty to act in good faith and deal fairly cannot expand so as to prohibit OneBeacon’s right to intervene. OneBeacon’s view of the controversy presents the scope of an insurer’s duty, a question of law.12 The trial court granted summary judgment to OneBeacon, and we review de novo the questions of law presented.13

¶ 14 In Keel v. MFA Ins. Co., 1976 OK 86, 553 P.2d 153, we said that an insured who has a claim against an uninsured motorist has the options to (1) file an action directly against his insurance company without joining the uninsured motorist as a party defendant and litigate all of the issues of liability and damages in that one action; (2) file an action joining both the uninsured motorist and the insurance company as party defendants and litigate all issues of liability and damages in one action; (3) file an action against the uninsured motorist without joining the insurance company as a party defendant, but give adequate notice of the filing and pendency of such action to the insurance company so they take whatever action they desire, including intervention; and (4) file an action against the uninsured motorist and give no notice to the insurance company, Id. 553 P.2d at 158.

¶15 The third option in Keel expressly allows the insurance company to intervene in the insured’s action against an uninsured motorist We subsequently relied upon Keel and held that a UM insurer was a proper defendant in an insured’s action against an alleged tortfeasor. Tidmore v. Fullman, 1982 OK 73, 646 P.2d 1278, 1281-1282, Brown argues that an insurer may exercise a Keel-intervention, but only upon payment to the insured and creating a subrogation right that is enforceable by intervention, Brown argues that prior to payment on the policy OneBeacon’s subrogation interest is too speculative to support a motion to intervene.

¶16 After Keel we adopted a procedure for intervention based upon its federal counterpart, 12 O.S.A. § 2024 (West 1993), (Committee Comment to Section 2024), Intervention may be classified as either intervention of right or permissive intervention, Title 12, Section 2024, provides in part:

A INTERVENTION OF RIGHT. Upon timely application anyone shall be permitted to intervene in an action:

1. When a statute confers an unconditional right to intervene; or

2. When the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest

B. PERMISSIVE INTERVENTION, Upon timely application anyone may be permitted to intervene in an action:

1. When a statute confers a conditional right to intervene; or

2. When an applicant’s claim or defense and the main action have a question of law or fact in common.

Intervention of right pursuant to § 2024(A)(1) may occur when a statute confers an unconditional right to intervene, OneBeacon pled that it was entitled to intervene pursuant to 85 O.S. § 44 because it had expended $2,841 A5 in medical expenses and reimbursements for workers’ compensation benefits, This Court has recognized the statutory right of an employer or insurance carrier, having paid workers’ compensation benefits, to intervene in an action against a third-party tortfeasor. Nicholas v, Morgan, 2002 OK 88, ¶¶ 20-21, 58 P,3d 775, 782, However, Brown’s allegations against OneBeacon do not relate to One Beacon’s status as a workers’ compensation carrier, but rather OneBeacon’s conduct as his UM carrier.

¶ 17 One Beacon argues for a right of intervention pursuant to § 2024(A)(2) based upon its status as Brown’s UM Carrier. Section 2024(A)(2) states that intervention of right occurs when “the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest.” The language of § 2024(A)(2) is also found in its federal counterpart, and we may look to the federal court interpretation when we apply similar language from our pleading code.14

Federal courts have construed this language as embodying four requirements for the motion to intervene: (1) the motion to intervene must be timely; (2) the intervenor must claim a significant protectable interest relating to the property or transaction that is the subject of the action; (3) the disposition of the action may, as a practical matter, impair or impede the applicant’s ability to protect its interest; and (4) the existing parties may not adequately represent the applicant’s interest.15 These are occasionally referred to as the requirements of timeliness, interest, impairment of interest, and adequacy of representation. Jones v. Prince George’s County, Maryland, 358 U.S.App.D.C. 276, 348 F.3d 1014, 1018 (D.C.Cir. 2003).

¶ 18 OneBeacon’s potential subrogation interest against Patel is of the same nature as Brown’s asserted claim against Patel. Generally, intervention as of a right will be denied when a party to a controversy adequately represents the interest of the intervenor.16 The Tenth Circuit has explained that it has “held that representation is adequate ¿when the objective of the applicant for intervention is identical to that of one of the parties.¿”17 One federal court has explained that a different motive to litigate will not, by itself, show an inadequate representation of the intervenor’s interest.

A putative intervenor does not have an interest not adequately represented by a party to a lawsuit simply because it has a motive to litigate that is different from the motive of an existing party. So long as the party has demonstrated sufficient motivation to litigate vigorously and to present all colorable contentions, a district judge does not exceed the bounds of discretion by concluding that the interests of the intervenor are adequately represented.

Natural Resources Defense Council, Inc. v. New York State Dept. of Environmental Conservation, 834 F.2d 60, 61-62 (2d Cir. 1987)

OneBeacon’s motion to intervene based upon subrogation was not based upon allegations that Brown’s litigation conduct was less than vigorous.

¶ 19 We also note that an intervenor’s interest must be “significantly protectable” or “direct, substantial, [and] legally protectable.”18 An interest that is remote from the subject matter of the proceeding, or that is contingent upon the occurrence of a sequence of events before it becomes colorable, will not satisfy the rule for intervention as of right.19 One federal court noted that the amount of authority was not overwhelming, but it indicated that an insurer may not intervene as a matter of right when the insurer’s liability is contingent upon a future judgment between other parties. Nieto v. Kapoor, 61 F.Supp.2d,1177,1192 -1193 (D.N.M. 1999), affirmed, 268 F.3d 1208 (10th Cir. 2001). Accord, In re Kaiser Steel Corp., 998 F.2d 783, 791 (10th Cir. 1993), (the mere existence of a third person’s contingent interest in the outcome of pending litigation is insufficient to warrant intervention of right).

¶ 20 Conventional (or contractual) subrogation is created by an agreement or contract between parties granting the right to pursue reimbursement from a third party in exchange for payment of a loss. U. S. Fidelity and Guar. Co. v. Federated Rural Elec. Ins. Corp., 2001 OK 81, ¶ 9, 37 P.3d 828, 831. Equitable subrogation allows a party who has paid to stand in the shoes of the party to whom the amount was owed and proceed against the third party primarily responsible for the amount paid. Id. at ¶ 10. In both circumstances the subrogation is based upon payment.

¶ 21 An insurer’s payment on a policy of insurance clearly creates a subrogation .interest for the purpose of intervention.20 If OneBeacon, as a UM carrier, desired to litigate a subrogation interest against Patel in Brown’s action against Patel and intervene as a matter of right pursuant to 12 O.S.§ 2024(A)(2), then OneBeacon was required to make payment to Brown prior to its intervention.21 We agree with Brown that a potential subrogation interest against an insured’s alleged tortfeasor, by itself, is too remote to justify an insurer’s right to intervene as a matter of right.


¶ 22 We arrive at a slightly different conclusion when we examine an insurer’s interest to intervene for the purpose of denying coverage of the policy based upon either an element of its insured’s cause of action or an element of the alleged tortfeasor’s defense. A plaintiff’s uninsured motorist insurer may possess an interest that coincides with the defendant. The insurer may want the defendant/uninsured motorist to contest fault and damages.

¶ 23 Courts in several states have allowed an uninsured motorist carrier to intervene in a tort action between its insured an uninsured tortfeasor. Lima v. Chambers, 657 P.2d 279, 281, 35 A.L.R. 4th 747 (Utah 1982). In Lima, the court said, “The overwhelming majority of courts have allowed an uninsured motorist insurance carrier to intervene in a tort action between its insured and an uninsured tortfeasor.” Id. 657 P.2d at 281. It further said that the questions litigated in the action between the insured and the uninsured tortfeasor, for liability and damages, are the identical issues which determine liability of the UM insurer to perform its contractual duty to pay the insured. Id. 657 P.2d at 282, quoting, Heisner v. Jones, 184 Neb. 602, 169 N.W.2d 606, 611 (1969).

¶ 24 The Lima court next examined whether the insurer’s interest would be adequately represented in the particular controversy. The court noted that the uninsured motorist admitted liability, lacked the assistance of counsel, and proposed to litigate the issue of damages pro se. Lima, 657 P .2d at 283. The court also noted that the uninsured motorist did not appear to be concerned with minimizing damages, but “in bringing the whole matter to a close as soon as possible.” Id. Although the legal interests of an UM insurer seeking to deny coverage and the tortfeasor appeared on the surface to be identical, they were divergent in practice because of the tortfeasor’s litigation conduct. The court concluded that the insurer’s interest to deny coverage was not adequately represented. Id. at 284.22 The court also concluded, without deciding any res judicata and collateral estoppel issues, that a UM insurer is or may be bound by the tort judgment within the meaning of language of its intervention rule. Id.23 Thus, an intervening insurer has been allowed to litigate tort issues in uninsured motorist cases where its interest was not adequately advanced by the tortfeasor. See Chatterton v. Walker, 938 P.2d 255, 258- 259 (Utah 1997) (applying the four requirements for intervention).

¶ 25 One Beacon’s intervention for the purpose of contesting the cause of Brown’s injuries or the amount of his damages was not based upon the inability of, or any lack in, Patel’s defense to Brown’s claims. Patel admitted liability at trial, but the admission is consistent with One Beacon’s claims file and OneBeacon has not asserted that Patel’s admission was inappropriate. Patel successfully litigated his side and a judgment on a defendant’s verdict was entered for Patel. OneBeacon did not utilize the four-step analysis of § 2024(A)(2). Nothing in the record on appeal shows that OneBeacon had a right to intervene pursuant to § 2024(A)(2).


¶ 26 Legitimate disagreements can arise concerning the amount of coverage, cause of loss, and breach of policy conditions, and the tort of bad faith does not prevent the insurer from resisting payment or resorting to a judicial forum to resolve a legitimate dispute. Skinner v. John Deere Ins. Co., 2000 OK 18, ‘II 16, 998 P.2d 1219, 1223; Ballinger v. Security Connecticut Life Ins. Co., 1993 OK 69, 862 P.2d 68, 70; Christian v. American Home Assurance Company, 1977 OK 141, 577 P.2d at 904 – 905. In Skinner we indicated that an automobile insurer did not act in bad faith in filing interpleader and declaratory judgment action in federal court.24 The duty to deal fairly and in good faith does not restrict an insurer’s right to reasonably resist payment or resort to a judicial forum to resolve a legitimate dispute. Id. at ‘II 16, 998 P.2d 1219.

¶27 In Keel v. MFA Ins. Co., 1976 OK 86, 553 P.2d 153, we explained that courts favor intervention and joinder of party defendants as a convenient or pragmatic method of settling controversies relating to the same subject matter. Id. 553 P .2d at 158. Although a UM insurer may not be able to show an intervention as a matter of right due to the circumstances in a particular controversy, the insurer may still seek permissive intervention to litigate the insurer’s interests when an underlying question of fact or law is common to both an alleged tortfeasor’s defense and an insurer’s interests; i.e., “When an applicant’s claim or defense and the main action have a question of law or fact in common.” 12 O.S.Supp.2005 § 2024(B)(2).

¶28 OneBeacon also argues for a UM insurer’s right to intervene in an action by its insured against an alleged tortfeasor when the insurer seeks only to monitor the action. Intervention for the purpose of monitoring serves the insurer’s purpose of determining whether the alleged tortfeasor is appropriately defending the action during the course of the litigation. OneBeacon argues for the right to seek permissive intervention, and if subsequent litigation circumstances would justify an intervention as a matter of right pursuant to the four-step analysis of § 2024(A)(2), then the insurer could present its interests on the tort issues between the insured and the alleged tortfeasor. We agree with OneBeacon that courts favor intervention and joinder of party defendants as a convenient or pragmatic method of settling controversies relating to the same subject matter. We also conclude that § 2024 specifies when intervention is permissible.

¶29 In Landrum v. National Union Insurance Co., 1996 OK 18, 912 P.2d 324, we recognized that the right to intervene does not bring with it the right to participate in every aspect of a controversy, and we observed that in its comments to 12 O.S. Supp.1984 § 2024, the Civil Procedure Committee of the Oklahoma Bar Association said, “The court can take any appropriate steps to prevent the intervenor from prejudicing the trial of the action.” Id. at 1112,912 P.2d at 328. In Stringfellow v, Concerned Neighbors in Action, 480 U.S. 370,378, 107 S.Ct. 1177, 94 L.Ed.2d 389 (1987), the High Court observed that a grant of permissive intervention, even though subject to conditions, is not treated as a complete denial of the right to participate when the intervenor is given access to discovery information and allowed to participate to the extent not duplicative of other parties.

¶30 A UM insurer has a right to judicially contest the conditions that would give rise to an obligation to pay UM insurance. Skinner v. John Deere Ins. Co., supra. When a UM Insurer does not satisfy the conditions of intervention as a matter of right pursuant to § 2024(A), it may seek § 2024(B) permissive intervention in the cause of action brought by its insured against the alleged tortfeasor based upon its assertion of contesting coverage due to an element of the tort cause of action or a defense thereto. If permissive intervention is granted a district court may make the intervention subject to conditions that prevent prejudicing the parties.


¶31 Brown asserts that the bad-faith action against OneBeacon must be adjudicated by a jury. Brown must point to some act or conduct of One Beacon as the basis for the bad-faith claim. Brown asserts that OneBeacon’s intervention is bad faith because it asserted a subrogation right when none existed, it adopted Patel’s defenses, and OneBeacon’s valuation of Brown’s claim was less than the insurance available to Patel.

¶32 The district court granted the motion to intervene. Brown asserts that “One Beacon set themselves up as an adversary instead of being on Brown’s side, all of which is unreasonable and unjustified.” Brown’s Brief at 10. A UM insurer possesses a right to contest the “insured’s side” and doing so, by itself, is not per se unreasonable. This is so because of the insurer’s right to contest an insured’s clam. Skinner, supra, and Ballinger, supra. Thus, intervention by a UM insurer is not by itself a violation of its duty to act in good faith towards its insured. On the other hand, the fact that an insurer was granted leave to intervene does not insulate that activity from a bad-faith action. An insurer may engage in certain litigation conduct pursuant to a procedural right and yet by that act violate its duty to an insured. Badillo v. Mid Century Insurance Co., 2005 OK 48, 121 P.3d 1080.25

¶33 A distinguishing characteristic for a bad-faith action is the particular duty owed to its insured that has been breached by the insurer. I n the controversy before us, the essence of Brown’s bad-faith claim is not merely that One Beacon filed its petition to intervene without sufficient legal reasons for doing so; but that by maintaining mutually inconsistent subrogation claims and adopting Patel’s defenses, OneBeacon was continuing to maintain a fence-sitting position two years after the claimed injury, neither denying or approving a UM claim; in sum, that OneBeacon abrogated a duty to timely

investigate and either to pay Brown and seek subrogation or to deny the claim.

¶34 Brown’s brief states the issues for the purpose of responding to OneBeacon’s summary judgment request:

The issue(s) in this case are (1) OneBeacon asserting a subrogation claim against Patel and adopting Plaintiffs’ allegations, essentially admitting Plaintiffs’ claims are in excess of $300,000; (2) OneBeacon has falsely and wrongfully asserted such subrogation interest herein as a ruse to actually harm its insureds by actively defending Patel.

Brown’s Brief at pg. 22.

In support of this characterization Brown argues that One Beacon had almost two years to investigate Brown’s claim prior to the intervention, and that OneBeacon’s claims manager stated that “We filed intervention so we could find out what his injuries were and we could evaluate his claim to determine whether now we have a UM claim or not.” Brown’s Brief at 21. Brown asserts that One Beacon never questioned the cause of Brown’s injuries prior, to the intervention. Id. at 22. Brown asserts that OneBeacon’s claims manager and a legal opinion provided to OneBeacon prior to the intervention agreed that One Beacon had no subrogation rights until it made a payment to Brown. Id. at 3, 11, 33-35. Brown asserts that

Throughout the claims file, OneBeacon noted that Mr. Patel was 100% at fault, never questioning the same. Further, OneBeacon’s claims adjusters evaluated Brown’s bodily injury, noting his bodily injuries, pain, suffering, and medical bills were causally related. OneBeacon never took statements of its insured, the eyewitnesses, the adverse driver (Mr. Patel), or the police officer. One Beacon never requested that a medical examination be performed. In over a year and a half, OneBeacon never questioned medical causation in the file.

Brown’s Brief at 3.

Brown also asserts that One Beacon had no written guidelines, claims manual, or training regarding how to evaluate damages. ld. at 8, 38. And again, “It is OneBeacon’s responsibility to investigate and evaluate the claims. OneBeacon is abdicating its responsibilities and asking the Court and jury to be part of its claims department … ”

Brown’s Brief at 5.

¶35 One Beacon asserts that it has a right to litigate contested claims, a right to intervene and that the jury’s verdict for Patel forecloses, as a matter of law, any bad-faith claim. It argues that an insurer’s methods in investigating and litigating a UM claim may be conclusively justified if a court subsequently determines that no UM payment is owed. In other words, it seeks for a “means justified by ends” rule of law for an UM insurer’s handling of UM claims. A related complaint is made by Brown concerning One Beacon’s use of information that OneBeacon did not possess until after OneBeacon’s intervention. Evidence relating to facts that One Beacon did not have or rely on until after the time period in question, that is, from the time of OneBeacon’s notice of the collision until the intervention, is not relevant to an adjudication of a bad-faith claim concerning the intervention. Newport v. USAA, 2000 OK 59, ¶ 10, ¶¶ 36-37, 11 P.3d 190, 195, 200 (an insurer’s good faith belief is measured by facts known, or relied on, by the insurer at the time of the conduct challenged as showing bad faith on the part of the insurer).26

¶36 An insured in an action of this nature is required to show that (1) he or she was covered under an automobile liability insurance policy issued by the insurer and that the insurer was required to take reasonable actions in handling the UM claim, (2) the actions of the insurer were unreasonable under the circumstances, (3) the insurer failed to deal fairly and act in good faith toward the insured in handling the UM claim, and (4) the breach or violation of the duty of good faith and fair dealing was the direct cause of any damages sustained by the insured, Badillo v, Mid Century Insurance Co” 2005 OK 48, ¶ 25, 121 P,3d 1080, 1093, We have explained that the essence of an action for breach of the duty of good faith and fair dealing is the insurer’s unreasonable, bad-faith conduct, and that if there is conflicting evidence from which different inferences may be drawn regarding the reasonableness of insurer’s conduct, then what is reasonable is always a question to be determined by the trier of fact by a consideration of the circumstances in each case, Badillo, at ¶ 28, 121 P,3d at 1093, A central issue in any analysis to determine whether breach has occurred is gauging whether the insurer had a good faith belief in some justifiable reason for the actions it took or omitted to take that are claimed violative of the duty of good faith and fair dealing, Badillo, at ¶ 28, 121 P,3d at 1093-1094.

¶37 In two opinions applying Oklahoma law the Tenth Circuit Court has stated that an insurer does not breach the duty of good faith to pay a claim “by litigating a dispute with its insured if there is a ‘legitimate dispute’ as to coverage or amount of the claim, and the insurer’s position is ‘reasonable and legitimate.”’ Vining on Behalf of Vining v. Enterprise Financial Group, Inc” 148 F,3d 1206, 1213 (10th Cir. 1998), quoting, Oulds v. Principal Mut. Life Ins, Co., 6 F ,3d 1431, 1436 (10th Cir. 1993), The Oulds opinion relied upon Thompson v. Shelter Mut. Ins.875 F,2d 1460, 1462 (10th Cir.1989) and Manis v. Hartford Fire Ins, Co” 1984 OK 25,681 P,2d 760, Oulds, 6 F,3d at 1436, In Manis we recognized an insurer’s right to contest a claim based upon reasonable and legitimate actions, Manis, 681 P,2d at 762, We have often repeated this rule, See, e.g. Skinner, supra, and Ballinger, supra,

¶38 OneBeacon contested Brown’s claim when it intervened and asserted Patel’s defenses against Brown in Brown’s action against Patel. It sought a legal adjudication that Brown’s claim was not covered by the policy, One Beacon, as an insurer, possessed a procedural right to take such action, but for the purpose of the bad-faith action the question remains whether such conduct was legitimate and reasonable.

¶39 Summary judgment is appropriate where it appears there is no substantial controversy as to any material fact and one party is entitled to judgment as a matter of law. Baker v. Saint Francis Hosp., 2005 OK 36, ¶ 6, 126 P.3d 602, 604. When we examine the pleadings, depositions, affidavits and other evidentiary materials submitted by the parties on the motion for summary adjudication, all inferences and conclusions to be drawn must be viewed in a light most favorable to the party opposing the motion. Baker v. Saint Francis Hosp., at ¶ 6, 126 P.3d at 604; Pickens v. Tulsa Metropolitan Ministry, 1997 OK 152, 951 P.2d 1079, 1082.

¶40 The facts presented by the parties conflict on why One Beacon filed its petition for intervention. The facts presented by Brown, viewed in a light most favorable to Brown, reveal a claims file showing a value of Brown’s UM claim; that his injuries were caused by the motor vehicle collision involving Patel; that no, or least a very minimal, investigation was performed by One Beacon during the two years before it intervened in Brown’s action; that the major concern expressed by One Beacon in its claims file was whether OneBeacon needed to file an action against Patel to preserve subrogation rights; the amount of reserve OneBeacon needed for the UM claim; and OneBeacon’s
representative stating that intervention was made to evaluate the UM claim. Brown’s asserted facts do not agree with One Beacon’s assertions that it was concerned prior to intervention whether Brown’s claim was covered by the policy. A substantial question of material fact exists regarding the reasons for the petition for intervention, or legal action, OneBeacon instituted against Brown. The district court’s order granting summary judgment to OneBeacon must thus be reversed.27 The matter is remanded to the District Court for further proceedings consistent with this opinion.


¶42 KAUGER, J., Concurs in result.

¶43 WINCHESTER, C.J., Concurs in part, dissents in part.

¶44 aHARGRAVE, TAYLOR, JJ., Dissents.

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