Bituminous Casualty Corp. v. Pollard

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT January 25, 2013
Elisabeth A. Shumaker
Clerk of Court
BITUMINOUS CASUALTY
CORPORATION,
Plaintiff-Appellee,
v. No. 12-6010
(D.C. No. 5:10-CV-00379-M)
GEORGE POLLARD, (W.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT*
Before MATHESON, Circuit Judge, PORFILIO, Senior Circuit Judge, and
BALDOCK, Circuit Judge.
George Pollard was injured in an accident while working for North Star Well
Services, Inc. (North Star). North Star’s commercial automobile policy (Policy)
issued by Bituminous Casualty Corporation (Bituminous) included an Oklahoma
Uninsured Motorist Coverage Endorsement (UM Endorsement) governed by
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 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 This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral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.
Okla. Stat. tit. 36, § 3636. After the accident, Mr. Pollard submitted a claim for
uninsured motorist (UM) coverage under the UM Endorsement. Bituminous denied
the claim and filed this action against him seeking a declaration of the rights and
obligations of the parties under the UM Endorsement. Mr. Pollard filed a
counterclaim alleging breach of its duty of good faith and fair dealing. The district
court granted summary judgment in favor of Bituminous on all claims. Mr. Pollard
filed a timely notice of appeal. Exercising jurisdiction under 28 U.S.C. § 1291, we
affirm.
I. BACKGROUND
A. The Accident
The parties stipulated to the following facts1 describing the circumstances of
Mr. Pollard’s accident. On June 24, 2008, North Star dispatched Mr. Pollard and his
crew to work on a well. Mr. Pollard drove a workover rig to the well site. The
workover rig was a “covered auto” under the Policy.
The workover rig has an attached derrick that is 96-feet tall when fully raised.
The rig serves two functions: (1) driving with the derrick down and (2) supporting
work at well sites with the derrick raised. These two functions cannot occur at the
same time. When Mr. Pollard drove the workover rig to the well site, the derrick
rested on top of the single-passenger truck cab with its top half telescoped down into
1
The parties filed a joint stipulation of undisputed facts in the district court,
which they represented as the only facts material to a determination of the coverage
issues. See Aplt. App. at 1367-70.
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its bottom half. Upon arrival at the well site, the crew converted the workover rig
from a vehicle into a fixed derrick to work on the well. Mr. Pollard backed the rig to
within several feet of the well hole. He set the emergency brake and the well site
brakes in the cab of the rig. He left the engine running and, after exiting the cab,
switched a lever on the side of the rig from “road gear” to “rig gear” to change the
transmission from powering the wheels to powering the hydraulics for the derrick and
winch drums.
The crew next unwrapped the “guide wires” (more commonly known as “guy
wires” or steel safety cables) connected to the top of the derrick. They lowered
hydraulic leveling jacks on the back of the workover rig to the ground to lift the back
of the truck. This step stabilized the rig and kept it from turning over once the
derrick was raised.
After hydraulically raising the derrick into a vertical position, the crew then
raised it to its full 96-foot height, using latches to hold the top section in place. The
crew secured and tightened the guide wires extending from the top of the derrick to
“dead men” (steel anchors permanently buried in the ground) to keep the rig from
falling over. Two of the four legs of the derrick were connected to and rested upon
swivels on the back of the workover rig, while the other two legs ended in jacks,
which rested on boards placed on the ground. When the workover rig was fully
“rigged up,” it could not be moved.
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Although the workover rig was ready to service the well, the crew could not
begin their work because the horse head end of the pump jack’s walking beam was
down and blocking the well hole. Mr. Pollard climbed on top of the pump jack’s
gearbox and attached a cable and chain from the workover rig’s utility winch to the
pump jack’s counterweights, which were in the up position, to pull them down and
raise the end of the pump jack that was blocking the well hole. While Mr. Pollard
was standing on the pump jack’s gearbox and holding the winch line in place, the
counterweights fell. The pump jack’s equalizing arm struck him on the head.
B. Mr. Pollard’s UM Claim and the District Court Proceedings
After receiving workers’ compensation (WC) benefits from Bituminous for his
injury, Mr. Pollard submitted a UM claim in August 2009. Bituminous denied his
claim and filed this action against him. Mr. Pollard filed a counterclaim, contending
that Bituminous breached its duty of good faith and fair dealing by failing to
reasonably and fairly investigate, evaluate, and pay his claim.
The parties disputed whether Mr. Pollard was an insured under the UM
Endorsement, which defined “[i]nsured” to include anyone “occupying” a “covered
auto.” Aplt. App. at 10 (quotations omitted). The UM Endorsement defined
“occupying” to mean “in, upon, getting in, on, out or off.” Id. at 12. Mr. Pollard
maintained that he was occupying a covered auto—the workover rig—at the time of
the accident because he was holding onto and using its winch line. Bituminous
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countered that Mr. Pollard was not “occupying” the workover rig as the term
“occupying” is defined in the UM Endorsement.
Assuming Mr. Pollard was insured, the parties also disputed whether he was
otherwise entitled to coverage for his injury under the UM Endorsement. He claimed
that (1) his injury arose out of the workover rig; (2) the rig was an uninsured motor
vehicle;2 and (3) the operator or the owner of the rig was at fault. He advanced three
theories regarding who was at fault for his injury. First, he claimed that his
co-worker negligently operated the workover rig, specifically the rig’s winch line.
Second, he alleged that North Star, the owner of the workover rig, was negligent in
instructing him on how to use the rig. Third, he contended that North Star was also
negligent in maintaining the rig by failing to repair hooks designed to hold a safety
harness that would have prevented him from falling. For its part, Bituminous did not
dispute Mr. Pollard’s contention that the workover rig was both a “covered auto” and
an uninsured motor vehicle. But Bituminous maintained there was no coverage under
the UM Endorsement because Mr. Pollard’s injury did not arise from the use of a
motor vehicle in its transportation mode.
2
Mr. Pollard maintains that the workover rig was uninsured because his
negligent co-worker was “immune from tort liability under the worker’s
compensation exclusive remedy doctrine.” Aplt. Opening Br. at 5 (citing Torres v.
Kan. City Fire & Marine Ins. Co., 849 P.2d 407 (Okla. 1993)). He also contends that
“North Star . . . was either uninsured by virtue of the worker’s compensation
exclusive remedy, or underinsured if exclusive remedy does not apply.” Id. at 38.
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The parties filed cross motions for summary judgment on the coverage issues,
and Bituminous also moved for summary judgment on Mr. Pollard’s bad-faith claim.
The district court initially granted summary judgment in favor of Bituminous only on
the bad-faith claim. It reasoned that there was a legitimate dispute between the
parties as to whether Mr. Pollard was covered under the UM Endorsement and that he
failed to establish conduct by Bituminous that could reasonably be determined as
tortious. It denied summary judgment on the coverage questions based on disputed
fact issues.
After that ruling, the parties submitted their stipulation of facts, and the district
court determined that the UM Endorsement did not cover Mr. Pollard. The court
concluded that, at the time of the accident, Mr. Pollard was not “occupying” the
workover rig because the “accident occurred not while he was in, upon, getting in,
on, out or off the insured workover rig but while he was standing on the gearbox of
the pumpjack.” Id. at 1374. It further concluded that “when the accident occurred
the insured workover rig had been completely converted from its transportation mode
into its well servicing mode and could not be moved.” Id. The district court held
that, because Mr. Pollard was not occupying the workover rig, and because the
workover rig was not in a transportation mode, he was not entitled to coverage under
the UM Endorsement. The court therefore entered summary judgment in favor of
Bituminous on the coverage issues.
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II. DISCUSSION
“We review the district court’s summary judgment order de novo, and apply
the same legal standards as the district court.” Ribeau v. Katt, 681 F.3d 1190, 1194
(10th Cir. 2012) (quotation omitted). “The 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.” Fed. R. Civ. P. 56(a). Our review of the
district court’s interpretation of Oklahoma law is de novo. Cooper v. Cent. & Sw.
Servs., 271 F.3d 1247, 1251 (10th Cir. 2001). We must “ascertain and apply
Oklahoma law with the objective that the result obtained in federal court should be
the result that would be reached in an Oklahoma court. In so doing, we must apply
the most recent statement of state law by the state’s highest court.” Id. (citation and
quotations omitted). “When the highest state court has not ruled on a question of
state law, our task is to predict how that court would rule on the issue.” Lampkin v.
Little, 286 F.3d 1206, 1210 (10th Cir. 2002).
A. Statutory Requirements for UM Coverage
Section 3636 of Title 36 of the Oklahoma Statutes “mandates UM coverage to
protect insured persons from monetary loss due to personal injury resulting from an
accident caused by another who carries no liability insurance.” Ply v. Nat’l Union
Fire Ins. Co. of Pittsburgh, P.A., 81 P.3d 643, 647 (Okla. 2003). Section 3636
provides, in relevant part:
A. No policy insuring against loss resulting from liability imposed by
law for bodily injury or death suffered by any person arising out of the
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ownership, maintenance or use of a motor vehicle shall be issued,
delivered, renewed, or extended in this state with respect to a motor
vehicle registered or principally garaged in this state unless the policy
includes the coverage described in subsection B of this section.
B. The policy referred to in subsection A of this section shall provide
coverage therein or supplemental thereto for the protection of persons
insured thereunder who are legally entitled to recover damages from
owners or operators of uninsured motor vehicles . . . because of bodily
injury, sickness or disease, including death resulting therefrom.
The Supreme Court of Oklahoma has construed § 3636 as mandating UM coverage
when:
1) the injured person is an insured under the UM provisions of a policy;
2) the injury to the insured has been caused by an accident; 3) the injury
to the insured has arisen out of the ownership, maintenance or use of a
motor vehicle; and 4) the injured insured is legally entitled to recover
damages from the owner or operator of the uninsured motor vehicle.
Ply, 81 P.3d at 647 (footnotes and quotations omitted). That court has further stated
that “a two-prong test is necessary to determine whether an injury is within the UM
coverage contemplated by § 3636: 1) is a use of the vehicle connected to the injury;
and, 2) is that use related to the transportation nature of the vehicle.” Safeco Ins. Co.
of Am. v. Sanders, 803 P.2d 688, 692 (Okla. 1990). We refer to this test as the
“transportation-use requirement.”
B. Mr. Pollard’s Appeal Issues
Mr. Pollard contends that he was an insured under the UM Endorsement
because he was “occupying” the workover rig when the accident occurred. He also
argues that the transportation-use requirement applies only to the extent that his UM
claim is based on operator (i.e., his co-worker’s) negligence and does not apply to his
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UM claim based on owner (i.e., North Star’s) negligence. He further asserts that the
workover rig was in a transportation mode when he was injured because it was being
used for its inherent and intended function—the servicing of a well. Finally,
Mr. Pollard argues that the district court erred in granting summary judgment for
Bituminous on his bad faith claim.
In the following three subsections, we hold that the district court did not err in
granting summary judgment to Bituminous. First, the transportation-use requirement
applies to both owner-fault and operator-fault UM claims. Second, the workover rig
was not in use as a motor vehicle at the time of the accident. Due to our conclusions
on the transportation-use issues, we need not decide whether Mr. Pollard was
occupying the workover rig at the time of the accident. Third, the district court did
not err in granting Bituminous summary judgment on Mr. Pollard’s bad faith claim.
1. Does the Transportation-Use Requirement Apply to UM Claims
Based on Owner Fault?
Mr. Pollard contends that the transportation-use requirement does not preclude
his UM claim. He notes that, under § 3636(A), the insured’s injury may arise out of
the “ownership, maintenance, or use of a motor vehicle.” (emphasis added). In
addition, a UM claim may be based on either owner fault or operator fault. See
§ 3636(B); see also Ply, 81 P.3d at 648 (construing the phrase “legally entitled to
recover” in § 3636(B) as “refer[ring] to issues of fault.”). Mr. Pollard maintains that
the transportation-use requirement applies only when the insured’s injury arises out
of the use of a motor vehicle, as opposed to the ownership or maintenance of the
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vehicle, and only if the UM claim is based on operator fault, as opposed to owner
fault. He further asserts that the transportation-use requirement is limited to
determining whether an individual—here his co-worker—was an “operator” of an
uninsured motor vehicle under § 3636(B). Mr. Pollard therefore contends that the
district court erred in applying the transportation-use requirement to the extent his
UM claim is based on North Star’s negligence.
We agree with Mr. Pollard that, under § 3636(A), the transportation-use
requirement applies to a UM claim alleging an injury that arose out of the “use” of a
motor vehicle. We need not decide whether the requirement applies to an injury
arising solely out of the ownership or the maintenance of a motor vehicle because
Mr. Pollard did not make such a claim in this case. Although he does allege that his
injury is based upon the ownership and/or the maintenance of the workover rig, he
claims that he was injured while using the workover rig. His injury therefore
allegedly arose out of the use of that vehicle. See Sanders, 803 P.2d at 692 (“[I]f the
facts establish that a motor vehicle or any part of the motor vehicle is the dangerous
instrument which starts the chain of events leading to the injury, the injury arises out
of the use of the motor vehicle, as contemplated by . . . § 3636.”)
We disagree with Mr. Pollard that the transportation-use requirement only
applies when an insured is legally entitled to recover damages from the operator, as
opposed to the owner, of an uninsured motor vehicle under § 3636(B). Although the
Oklahoma Supreme Court has not applied the transportation-use requirement in a
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case involving a UM claim based solely on owner fault,3 its rationale in adopting the
requirement does not distinguish between claims alleging operator or owner fault.
The court first applied the transportation-use requirement in Sanders, which
involved the abduction and murder of two people. See 803 P.2d at 689. The
abductors encountered the victims sitting in a parked car, forced them into the trunk
of the car, drove it, parked it, and set it on fire with the victims still locked in the
trunk. Id. The victims’ personal representatives submitted claims for UM coverage
under the policy insuring the car, id., on the theory that the abductors were uninsured
operators of that vehicle, see id. at 695-96. The insurer of the car denied the claims
and filed a declaratory judgment action in federal district court. Id. at 689. That
court certified several questions to the Oklahoma Supreme Court, “present[ing] first
impression issues as to whether loss (personal injury or death) is sufficiently related
to the use of a motor vehicle by an uninsured operator to come within UM coverage
as contemplated by . . . § 3636.” Id. at 689-90.
The first three certified questions in Sanders asked whether (1) the murders
arose out of the use of a motor vehicle as contemplated by § 3636; (2) there was a
causal connection between the murders and the use of the vehicle; and (3) the
3
In Ply, the injured party seeking UM coverage claimed that the owner of an
uninsured vehicle was at fault. See 81 P.3d at 645. But the Oklahoma Supreme
Court did not address whether the transportation-use requirement was satisfied—or
even whether it applied—because those issues were not within the scope of the
certified question the court was considering. The court stated that “[t]he certified
question assumes that Ply’s injury is causally connected to use of a motor vehicle in
its transportation nature.” Id. at 647 n.9.
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abductors’ acts severed any causal link. Id. at 690. The court noted that it had not
yet “established a causal connection test for [UM] coverage.” Id. Nor had it decided
the meaning of “arising out of the ownership, maintenance or use of a motor
vehicle,” as that phrase is used in § 3636(A). Id. (quotation omitted). But the court
had construed that same phrase as used in liability insurance policies. In that context
it had established a “chain of events test . . . for deciding whether the facts show that
an injury arises out of the ownership, maintenance or use of a motor vehicle.” Id.
at 691. Under that test, “if the facts establish that a motor vehicle or any part of the
motor vehicle is the dangerous instrument which starts the chain of events leading to
the injury, the injury arises out of the use of the motor vehicle.” Id. at 692.
After the Oklahoma Supreme Court determined in Sanders that this
chain-of-events test also applies under § 3636, see id., it said that, “in ascertaining
the scope of the mandated UM coverage, ‘arising out of the use of a motor vehicle’
and ‘caused by’ or causal connection are not synonymous.” Id. at 691. It concluded
that “a two-prong test is necessary to determine whether an injury is within the UM
coverage contemplated by § 3636.” Id. at 692. That test, the transportation-use
requirement, asks: “1) is a use of the vehicle connected to the injury; and, 2) is that
use related to the transportation nature of the vehicle”? Id.
The court’s rationale for adopting this transportation-use requirement belies
Mr. Pollard’s contention that it only applies when the insured’s claim is based on an
operator’s negligent use of an uninsured vehicle. The court stated,
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[T]he legislative mandate in § 3636 is that UM coverage shall include
injury for which the owner or operator of an uninsured motor vehicle is
liable. For purposes of UM coverage, the broad spectrum of factual
sequences within ‘arising out of the ownership, maintenance or use of a
motor vehicle’ is limited by § 3636 to factual sequences involving an
uninsured motorist.
Id. at 691 (emphasis added). The court also looked to the Oklahoma legislature’s use
of the phrase “uninsured motorist” in the bills enacting UM coverage as indicating
“an intent that the injury be connected to a motorist’s use of a vehicle.” Id. at 692.
Then, citing § 3636(B), the court stated, “The requirement . . . that the insured be
legally entitled to recover damages from the owner or operator of an uninsured
motor vehicle implies an intent that there be a connection between the motoring or
transportation use (use related to the inherent nature of a motor vehicle) by an
uninsured motorist and the injury to the insured.” Id. (emphasis added). We find no
indication in the court’s reasoning that the transportation-use requirement does not
apply to UM claims based on owner fault.
Nor is the transportation-use requirement applied solely to determine whether
an individual was an “operator” of an uninsured motor vehicle under § 3636(B), as
Mr. Pollard contends. To be sure, the final certified question in Sanders asked
whether the abductors were “operators” of an uninsured motor vehicle. See id. at 689
(quotation omitted). And the court incorporated the transportation-use requirement
into its definition of “operator” as being “any person who is engaged in activity
related to the transportation nature of the vehicle.” Id. at 696. But the court
previously explained that the transportation-use requirement was necessary to
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determine under § 3636 whether an injury was causally connected to an uninsured
motor vehicle. See id. at 691-94. And before addressing whether the abductors in
Sanders were “operators,” the court had already concluded that their act of setting the
car on fire was “so contrary to [the] transportation nature of the vehicle that, as a
matter of law, . . . [the] injury resulting therefrom [was] not within the UM coverage
mandated by § 3636.” Id. at 695. Therefore, its subsequent holding that the
abductors were not operators of the uninsured motor vehicle was not, as Mr. Pollard
asserts, the dispositive issue that prevented UM coverage in Sanders.
We conclude that the transportation-use requirement adopted by the Oklahoma
Supreme Court in Sanders applies to a UM claim alleging an injury that arose out of
the use of a motor vehicle, including when the injury also arose out of the ownership
and/or maintenance of the vehicle, as Mr. Pollard alleged. And the requirement
applies regardless of whether the insured is legally entitled to recover damages from
the owner or the operator of the uninsured motor vehicle under § 3636(B). To be
entitled to coverage under the UM Endorsement, Mr. Pollard was therefore required
to show (1) that a use of the workover rig was connected to his injury and (2) that use
was related to the transportation nature of the workover rig. See Sanders, 803 P.2d at
692.
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2. Did the District Court Err in Concluding that the Workover Rig
Was Not Being Used in a Transportation Mode at the Time of the
Accident?
Mr. Pollard contends that the workover rig was being used in a transportation
mode at the time of the accident because the winch portion of the rig was being used
for its inherent function. We disagree. The steps taken by Mr. Pollard and his crew
to transform the workover rig from a motor vehicle into a fixed derrick severed any
causal connection between the transportation nature of the workover rig and
Mr. Pollard’s injury. Accordingly, his injury was not within the coverage mandated
by § 3636, and he was not covered under the UM Endorsement.
a. The Transportation-Use Requirement in Sanders and Mayer
The Oklahoma Supreme Court stated in Sanders that “‘transportation use’
cannot be conclusively defined,” and “whether a use of an uninsured motor vehicle is
related to the transportation nature of the vehicle is necessarily a question of fact to
be determined in each case.” 803 P.2d at 693. But the court nonetheless concluded,
as a matter of law, that “the acts of cutting the fuel line and igniting the fuel after the
car was parked, which caused the car to burn, are so contrary to [the] transportation
nature of the vehicle that . . . these events are not related to its transportation nature.”
Id. at 695.
The Oklahoma Supreme Court reached a similar holding in Mayer v. State
Farm Mutual Automobile Insurance Co., 944 P.2d 288 (Okla. 1997). In that case, the
plaintiff was injured by the truck bomb detonated adjacent to the Alfred P. Murrah
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Federal Building in Oklahoma City in 1995. See id. at 289. He sought UM coverage
under his own automobile policy on the theory that the truck containing the bomb
was an uninsured motor vehicle. The trial court granted summary judgment in favor
of the insurer, and the plaintiff appealed. See id.Citing Sanders’ two-prong causal-connection test, the Oklahoma Supreme
Court explained in Mayer that “[s]ubsection B of § 3636 has been understood to give
indication of an intent that there be a causal connection between the vehicle’s
inherent function as a means of transportation and the accidental injuries which are
the subject of suit.” Id. at 290 & n.7 (italics omitted). The plaintiff argued that the
criminal act of using a truck as a launching pad for a bomb was “inextricably
connected to the ‘use’ of the uninsured truck. But for the vehicle (which the assailant
drove to the site) [the plaintiff’s] injuries would not have occurred.” Id. at 290. The
court disagreed, stating that this contention “utterly ignores the law’s requirement
that the uninsured vehicle be in use as a motor vehicle at the time of injury.” Id. at
291 (italics omitted).
In applying the transportation-use requirement to the facts presented in Mayer,
the Oklahoma Supreme Court observed that, at the time of the explosion, the criminal
actor had ceased driving and had parked the truck. Id. Moreover, “[t]he only
claimed transportation connection [was] the uninsured vehicle’s antecedent use to
transport the explosive materials close to the chosen target.” Id. The court also
noted that the “intentional act of the perpetrator did not call for the use of
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transportation during the commission of the crime,” and the vehicle’s employment as
a weapon was “completely incongruous with its transportation function and without a
causal link to locomotion.” Id. (italics omitted). The court concluded that “[t]he
site’s destruction by the truck’s contents occurred after the vehicle’s transportation
use had been abandoned.” Id. And, similar to its holding in Sanders, the court held
that the criminal act of using the truck as a bomb “severed from the ensuing
explosion the requisite transportation nexus to the vehicle.” Id. The Mayer court
held that the “causal connection between the injuries and the truck’s function as a
method of transport [was] absent.” Id.
The Oklahoma Supreme Court concluded in Sanders and Mayer that criminal
acts involving motor vehicles were wholly contrary to the transportation nature of the
vehicles. Our task is to predict how the Oklahoma Supreme Court would rule on the
issue presented here. See Lampkin, 286 F.3d at 1210. We conclude it would hold
that the workover rig was not being used in a transportation mode at the time of
Mr. Pollard’s injury.
b. Mr. Pollard’s Accident and Transportation Mode
After Mr. Pollard drove the workover rig to the well site and parked it, he
switched the vehicle’s transmission so that it powered only the hydraulics for the
derrick and winch drum rather than the truck’s wheels. The workover rig was then
converted from a motor vehicle into a stationary 96-foot derrick. It was held in place
by leveling jacks on the back of the truck that were lowered to the ground and by
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guide wires extending from the top of the derrick that were fastened to steel anchors
in the ground. The parties stipulated that when the workover rig was fully “rigged
up” in this manner, it was not just a momentarily stationary vehicle. When
Mr. Pollard was injured, the workover rig could not be moved. Cf. Willard v. Kelley,
803 P.2d 1124, 1131 (Okla. 1990) (noting that a car in gear with the engine running
was in transportation mode even though it was not moving when the injury occurred).
The workover rig was therefore not “in use as a motor vehicle at the time of injury.”
Mayer, 944 P.2d at 291 (italics omitted).
Mr. Pollard argues that because the workover rig was being used for one of its
inherent and intended functions at the time of the accident, the district court erred in
concluding that it was not being used in a transportation mode. He maintains that the
use of the workover rig to service a well is part of its transportation nature because
the vehicle must be driven from location to location for that purpose. He cites
Casualty Reciprocal Exchange v. Waggoner Drilling Co., 340 P.2d 490 (Okla. 1959).
In Waggoner, a trucking company was hired to dismantle, move, and reassemble an
oil well drilling rig. Id. at 492. An accident occurred after the rig was transported to
and unloaded at the new location about a quarter of a mile off of the highway. Id.More specifically,
[t]he substructure of the rig was in place. The mast was in position to
be raised. A line was run from the mast over an A-frame and to a winch
on a . . . truck. . . . While the mast was being raised by the . . . winch
into an upright position . . . , the drive chain on the . . . truck . . . broke,
and the mast fell to the ground resulting in the property damages in
question.
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Id.The truck’s liability insurer appealed a judgment against it for the property
damages. See id. at 492-93. The insurer argued that the accident, which occurred off
of the highway, “did not result from an operation or use of the truck on the highway,”
as required by the applicable statute and policy terms. Id. at 493. The Oklahoma
Supreme Court disagreed, finding
that the trucking company was employed to and did transport an oil well
drilling rig and that the disassembling, loading, unloading, and
reassembling of the oil rig and transporting it from one lease to another
constituted one continuous act of transportation, and though the vehicle
was off the highway at the time of the resulting damage, the operation
or use of the vehicle in reassembling the oil well rig was incident to the
transportation of the rig and had a proximate and necessary connection
with the operation and use of the vehicle upon the highway within the
meaning of [the applicable statute].
Id. at 494 (emphasis added).
Mr. Pollard contends that the use of the workover rig in this case was likewise
“one continuous act of transportation,” id., but Waggoner is distinguishable. First,
the case involved property-damage liability rather than UM coverage. Second, the
court construed a statutory requirement that is different from the terms of § 3636.
Third, and most important, the facts regarding the use of the truck in Waggoner are
distinguishable. In that case, the reassembly of the oil well drilling rig off of the
highway “was incident to the transportation of the rig” and therefore had a
“proximate and necessary connection with the operation and use of the vehicle upon
the highway.” Waggoner, 340 P.2d at 494. Here, in contrast, the conversion of the
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workover rig into a fixed derrick to service a well was not incidental to the rig’s
previous use as a motor vehicle. As the court explained in Mayer, the pertinent
question for UM coverage is not whether a vehicle was being used for any intended
function, but whether there was a causal connection between the accidental injury
and “the vehicle’s inherent function as a means of transportation.” 944 P.2d at 290
(additional italics omitted). Once the workover rig was rigged up and immovable,
the crew’s work involving the rig did not call for the use of transportation, and the
rig’s antecedent function as a means of transportation had therefore ceased. See id. at
291. Consequently, there was no causal connection between Mr. Pollard’s injuries
and the workover rig’s function as a method of transport. See id.
Because transportation use of the uninsured vehicle is a necessary element of
Mr. Pollard’s claim for UM coverage, and because he failed to satisfy that
requirement, we need not address the district court’s alternative basis for granting
summary judgment in favor of Bituminous on the coverage issues. Accordingly, we
do not decide whether Mr. Pollard was “occupying” the workover rig at the time of
the accident. We affirm the district court’s grant of summary judgment in favor of
Bituminous because the workover rig was not in a transportation mode when
Mr. Pollard was injured. He is therefore not entitled to coverage under the UM
Endorsement.
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3. Did the District Court Err in Granting Summary Judgment in
Favor of Bituminous on Mr. Pollard’s Bad-Faith Claim?
Oklahoma law recognizes an insurer’s implied duty “to act in good faith and
deal fairly with its insured.” Brown v. Patel, 157 P.3d 117, 121 (Okla. 2007).
“Whether an insurer’s actions reasonably give rise to an inference of bad faith must
be determined in light of all facts known or knowable concerning the claim at the
time [the claimant] requested the company to perform its contractual obligation.”
Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1439 (10th Cir. 1993) (quotation
omitted). “A jury question arises only where the relevant facts are in dispute or
where the undisputed facts permit differing inferences as to the reasonableness and
good faith of the insurer’s conduct.” Timberlake Constr. Co. v. U.S. Fid. & Guar.
Co., 71 F.3d 335, 344 (10th Cir. 1995) (quotation omitted). To avoid summary
judgment on his bad-faith claim, Mr. Pollard was required to present evidence
sufficient to establish “what might reasonably be perceived as tortious conduct on the
part of the insurer.” Flores v. Monumental Life Ins. Co., 620 F.3d 1248, 1256
(10th Cir. 2010) (quotation omitted).
The Oklahoma Supreme Court has stated the elements of a bad-faith claim
against an insurer as follows:
(1) claimant was entitled to coverage under the insurance policy at
issue; (2) the insurer had no reasonable basis for delaying payment;
(3) the insurer did not deal fairly and in good faith with the claimant;
and (4) the insurer’s violation of its duty of good faith and fair dealing
was the direct cause of the claimant’s injury.
Ball v. Wilshire Ins. Co., 221 P.3d 717, 724 (Okla. 2009).
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Bituminous argues that Mr. Pollard’s bad-faith claim fails on the first element
because he cannot show that he was entitled to coverage under the UM Endorsement.
Citing Brown, Mr. Pollard counters that a court’s determination that no UM payment
is owed does not foreclose a bad-faith claim. In Brown, the claimant brought an
action against the alleged tortfeasor and put his UM carrier on notice. See 157 P.3d
at 120. The insurer adopted a fence-sitting position, neither denying nor paying the
UM claim, and it intervened in the claimant’s action against the tortfeasor, asserting
inconsistent positions supportive of both parties’ positions. See id. The claimant
then asserted a bad-faith claim against the insurer. See id. at 120-21. The insurer
argued on appeal that the claimant’s bad-faith claim failed because the jury had
returned a verdict in favor of the alleged tortfeasor. See id. at 129. The Oklahoma
Supreme Court disagreed and reversed a grant of summary judgment against the
claimant, holding that “[a] substantial question of material fact exist[ed]” regarding
the insurer’s reasons for intervening in the claimant’s action. See id. at 130. The
court stated 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.”
Id. at 120.
The Oklahoma Supreme Court has not decided whether to apply the holding in
Brown beyond the facts presented in that case. See Oldenkamp v. United Am. Ins.
Co., 619 F.3d 1243, 1249 n.3 (10th Cir. 2010). We need not determine the reach of
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Brown because we conclude that the district court correctly entered summary
judgment in favor of Bituminous on Mr. Pollard’s bad-faith claim. See id.a. Was There a Legitimate Dispute Regarding Bituminous’s
Grounds for Denying Mr. Pollard’s UM Coverage Claim?
“The critical question in a bad faith tort claim is whether the insurer had a
good faith belief, at the time its performance was requested, that it had a justifiable
reason for withholding or delaying payment under the policy.” Ball, 221 P.3d at 725
(quotation and brackets omitted). “If there is a legitimate dispute concerning
coverage or no conclusive precedential legal authority requiring coverage,
withholding or delaying payment is not unreasonable or in bad faith.” Id.
Mr. Pollard put Bituminous on notice of his UM claim in August 2009.
Bituminous denied the claim via a letter from its counsel to Mr. Pollard’s counsel on
February 19, 2010. Bituminous initially asserted in that letter that Mr. Pollard was
not an insured under the UM Endorsement.4 As we indicated earlier, the UM
Endorsement defined “[i]nsured” to include anyone “occupying” a “covered auto,”
Aplt. App. at 10 (quotations omitted), and it defined “occupying” to mean “in, upon,
4
Mr. Pollard contends that this was Bituminous’s sole basis to deny his claim,
but the letter reflects that Bituminous stated a second and third bases for denial: that
Mr. Pollard was not legally entitled to recover from an owner or operator of an
uninsured motor vehicle, and that his injury did not result from the ownership,
maintenance, or use of an uninsured motor vehicle. The third basis cited by
Bituminous may have encompassed the transportation-use requirement, although
Bituminous did not specifically refer in its letter to the workover rig not being in a
transportation mode. We need not resolve that issue because Bituminous’s denial of
Mr. Pollard’s claim on the first basis was reasonable.
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getting in, on, out or off,” id. at 12. Mr. Pollard’s theory is that “occupying” should
be broadly construed. And because he was holding a winch line attached to the
workover rig at the time of the accident, he maintains that he was “on” or “upon” the
vehicle and therefore “occupying” it. Bituminous argues that Mr. Pollard’s
construction of “occupying” is strained because it is undisputed that he was standing
on, working on, and injured by, the pump jack. Bituminous disagrees with his
assertion that he was “on” or “upon” the workover rig simply by virtue of holding a
winch line that was attached to the vehicle located some distance away.
Mr. Pollard must show there was no legitimate dispute with respect to this
issue. He has not. First, no Oklahoma Supreme Court case clearly resolves the issue.
See Ball, 221 P.3d at 730 (holding there was no controlling legal authority where the
Supreme Court had not specifically addressed the relevant coverage issue).5 Second,
the question is not resolved by the clear reading of any statute, existing case law, or
the provisions of the UM Endorsement. Cf. Barnes v. Okla. Farm Bureau Mut. Ins.
Co., 11 P.3d 162, 174 (Okla. 2000) (upholding jury verdict in favor of insured on
bad-faith claim where UM insurer’s legal position based on counsel’s advice “was
contrary to the unmistakable meaning of the relevant provision(s) of § 3636”; was “at
5
In his supplemental brief, Mr. Pollard invited this court to certify to the
Oklahoma Supreme Court the question whether he was “occupying” the Workover
Rig at the time of the accident, implicitly acknowledging the lack of controlling
precedent from that court on the issue.
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odds with existing case law”; and was “inconsistent with a provision of the insurance
policy”).
Mr. Pollard relies primarily on Wickham v. Equity Fire & Casualty Co.,
889 P.2d 1258 (Okla. App. 1994), in which the Oklahoma Court of Appeals
addressed the meaning of similar policy language defining “[o]ccupying” as “in, on,
getting in or on, or getting off or out of.” Id. at 1260 (quotations omitted). It held
the term “occupying” was “broad enough to include a person . . . who had looked
through the trunk [of the covered vehicle] for tools, who was performing repairs on
the vehicle, and who was situated next to the vehicle, tightening a lug nut on the
wheel.” Id. at 1261. Although that court concluded that “occupying” should be
broadly construed, it “decline[d] to adopt any bright-line test to determine whether
someone occupied a vehicle for purposes of UM coverage.” Id. It held instead “that
the determination of whether the policy definition of ‘occupying’ is satisfied should
be left to a case-by-case analysis, depending on the circumstances of the accident, the
use of the vehicle, the relevant terms of the coverage at issue, and any underlying
public policy considerations.” Id.The parties disagree whether the facts of Wickham are distinguishable from the
facts presented here. But it is not necessary for us to resolve whether Mr. Pollard
was “occupying” the workover rig to conclude that he has failed to show the absence
of a legitimate dispute. See Ball, 221 P.3d at 724 n.40 (“Where the tort claim is
factually based on a coverage dispute as to which no controlling legal authority
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provides an indisputable resolution, a determination of the coverage dispute is
unnecessary because the elements of unreasonableness and bad faith are not present
as a matter of law.”). We are not persuaded that resolution of the question of
Mr. Pollard’s status as an insured under the UM Endorsement “was so obvious and
inevitable” that Bituminous acted unreasonably in denying his claim. Flores,
620 F.3d at 1256.
b. Was There Other Evidence of Bad Faith Sufficient to Avoid
Summary Judgment?
Apart from whether there was a legitimate dispute about coverage, Mr. Pollard
maintains that Bituminous’s conduct was nonetheless indicative of bad faith. “An
insured may pursue a claim of bad faith even when the insurer has a legitimate
defense to coverage.” Timberlake Constr. Co., 71 F.3d at 343 (stating that “a
legitimate dispute as to coverage will not act as an impenetrable shield against a valid
claim of bad faith”). But “to pursue such a claim, the insured must present sufficient
evidence reasonably tending to show bad faith.” Id. (quotation omitted).
Mr. Pollard maintains that Bituminous’s investigation of his claim was
unreasonable because the insurer denied coverage without interviewing him or any of
the eye witnesses to the accident, relying instead on the limited information about the
accident in its WC claim file.6 He also points to evidence that Bituminous’s adjusters
6
The district court held that Bituminous’s investigation of Mr. Pollard’s
claim—specifically its reliance on the WC claim file—was reasonable because the
file notes reflected an adjuster’s telephone call to Mr. Pollard’s home two days after
(continued)
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lacked knowledge of Oklahoma’s claims-handling standards and its substantive law
on UM claims. He further argues that, although Bituminous determined immediately
that it would deny his claim, it delayed communicating its decision for several
months while conducting no further investigation. These contentions lack merit.
First, to sustain a claim of bad faith based on a failure to investigate,
Mr. Pollard must show “that material facts were overlooked or that a more thorough
investigation would have produced relevant information.” Timberlake Constr. Co.,
71 F.3d at 345. He asserts that a reasonable investigation would have put Bituminous
on notice, before denying his claim, that he was holding and working with the winch
line connected to the workover rig at the time of the accident. He also argues that
Bituminous would have learned of his contention that North Star was negligent in
instructing him on how to use the vehicle. But neither the fact of his using the winch
line nor his contention regarding North Star’s negligence would have altered
Bituminous’s reasonable basis for denying coverage: that he was not “occupying”
the workover rig. Mr. Pollard has not shown that a reasonable insurer, proceeding
under facts and circumstances that a proper investigation would have revealed, would
not have denied payment. See Oulds, 6 F.3d at 1442.
the accident as well as Mr. Pollard’s own description of the accident, and because
Bituminous had promptly begun payments on his WC claim. We affirm the district
court’s decision on other grounds, which we are free to do where the record is
sufficient to permit conclusions of law. See Gillogly v. Gen. Elec. Cap. Assur. Co.,
430 F.3d 1284, 1294 n.6 (10th Cir. 2005).
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Mr. Pollard’s contention that Bituminous acted in bad faith based upon its
adjusters’ lack of knowledge regarding the specifics of Oklahoma UM law is also
unavailing due to this court’s precedent. See Flores, 620 F.3d at 1256 (rejecting
bad-faith claim premised on insurer’s failure to train its employees on the specifics of
Oklahoma insurance law); Oldenkamp, 619 F.3d at 1249 (rejecting claim that
insurer’s coverage position based on the policy terms was not reasonable because its
representative was unaware of a relevant regulation).
Nor does the lapse between Mr. Pollard’s notice of his UM claim and
Bituminous’s denial support a finding of bad faith. He contends that Bituminous
delayed its response based on a need for further investigation, when in fact it did no
further investigation. But Bituminous informed him that its investigation involved
determining whether the UM coverage was applicable, and there is no dispute that
Bituminous did proceed to seek a coverage opinion from its counsel. Moreover, he
“must show that the alleged violation of the duty of good faith and fair dealing was
the direct cause of damages.” Id. at 1250. We note that Mr. Pollard did not submit
his UM claim until more than a year after the accident. He fails to show that he was
damaged by any delay in Bituminous’s communication of its denial of his claim.
Because Mr. Pollard failed to present evidence sufficient to establish “what
might reasonably be perceived as tortious conduct on the part of the insurer,” Flores,
620 F.3d at 1256 (quotation omitted), we affirm the district court’s grant of summary
judgment in favor of Bituminous on Mr. Pollard’s bad-faith claim.
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III. CONCLUSION
The judgment of the district court is affirmed.
ENTERED FOR THE COURT
Scott M. Matheson, Jr.
Circuit Judge
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