Southerland v. Granite State Insurance

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUN 11 2003
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
CHARLES RAYMOND
SOUTHERLAND,
Plaintiff-Appellant
Cross-Appellee, Nos. 02-7081, 02-7085
02-7093, 02-7098
v. (D.C. No. 99-CV-421-S)
(E.D. Okla.)
GRANITE STATE INSURANCE
COMPANY, a Pennsylvania
Corporation; AIG CLAIM SERVICES
INC., a Delaware Corporation; f/k/a,
American International Adjustment
Company Inc., NEW HAMPSHIRE
INSURANCE COMPANY; NEW
HAMPSHIRE INSURANCE GROUP
HOLDING CORP; AMERICAN
INTERNATIONAL GROUP,
Defendants-Appellees
Cross-Appellants.
ORDER AND JUDGMENT *
Before BRISCOE , PORFILIO , and ANDERSON , Circuit Judges.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). These cases are
therefore ordered submitted without oral argument.
The parties appeal several decisions the district court made in this diversity
action governed by Oklahoma law. This action stems from work-related injuries
Charles Southerland suffered in 1984, while he was working for Greenleaf
Nursery. The Nursery’s workers’ compensation insurer, Granite State Insurance
Company, through its claims adjuster, AIG Services, Inc. (collectively,
defendants), paid Southerland disability benefits, as well as all related medical
expenses, for over fifteen years. Although Southerland had never filed a workers’
compensation claim with the Oklahoma Workers’ Compensation Court,
defendants, during this fifteen-year period, mistakenly indicated in their files that
the court had adjudicated Southerland’s disability claim. When, in 1999,
defendants realized there had never been a court-ordered compensation award,
they stopped paying those benefits. Southerland then filed a claim for
compensation with the Workers’ Compensation Court and eventually reached a
court-approved settlement of his disability claim with defendants.
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These appeals stem from Southerland’s Oklahoma tort claims, challenging
defendants’ decision to stop paying him disability payments in 1999, after
discovering there was no court-ordered compensation award, despite having made
those payments for fifteen years without any court order. Southerland alleged that
defendants, in stopping these payments, acted in bad faith and intentionally
inflicted emotional distress. We affirm the district court’s decision granting
defendants summary judgment on both these tort claims, as well as the district
court’s decision dismissing Southerland’s amended complaint asserting these same
claims against several additional defendants. In doing so, we review the district
court’s summary judgment decision de novo . See Patton v. Denver Post Corp. ,
326 F.3d 1148, 1151 (10th Cir. 2003). Defendants will be entitled to summary
judgment only if “there is no genuine issue as to any material fact and . . . the
moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
At the time defendants stopped paying Southerland disability benefits, the
Oklahoma Workers’ Compensation Court had not yet entered any award. Although
the Oklahoma Supreme Court has “explicitly rejected the viability of a bad faith
claim against a workers compensation insurer for [such] pre-award conduct,”
Fehring v. State Insurance Fund , 19 P.3d 276, 284 n. 21 (Okla. 2001) (emphasis
added), the district court held that defendants, in this case, should be equitably
estopped from asserting that Southerland’s bad-faith claim was barred by the lack
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of a court-ordered compensation award, because defendants had already paid those
benefits for fifteen years without any court order. In appeal Nos. 02-7085 and
02-7098, defendants challenge the district court’s applying equitable estoppel
under these circumstances. Southerland counters that this court, in a prior appeal,
conclusively held that equitable estoppel does apply in this situation. We need not
address these arguments, however, because even if defendants are equitably
estopped from asserting that the lack of a court-ordered award precludes
Southerland’s bad-faith claim, the district court still appropriately awarded
defendants summary judgment on the merits of that claim. Southerland appeals
that summary-judgment determination in both appeal Nos. 02-7081 and 02-7093.
The Oklahoma Supreme “Court has not unequivocally sanctioned the
viability of a tort suit against a workers’ compensation insurer for . . . bad faith
post-award conduct.” Id. at 284 (addressing bad-faith claim for failing to pay
award in timely manner); see also Kuykendall v. Gulfstream Aerospace Techs. , 66
P.3d 374, 376-77 (Okla. 2002) (“No Oklahoma case holds that a workers’
compensation insurer has a duty of good faith in paying a workers’ compensation
award, the violation of which is a tort.”). However, for purposes of this appeal
only, we assume that Oklahoma courts would recognize such a bad-faith claim.
If the Oklahoma Supreme Court were to recognize such a claim,
Southerland, to recover, would have to establish that defendants “engaged in
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intentional, wilful, and malicious conduct.” Fehring , 19 P.3d at 284. 1
Southerland, however, failed to assert any evidence indicating defendants had
acted intentionally, maliciously, and wilfully in stopping the disability payments.
Rather, uncontroverted evidence indicates that defendants terminated
Southerland’s benefits because Oklahoma law did not require them to make those
payments without a court order. We, therefore, affirm the district court’s decision
granting defendants summary judgment on the bad-faith claim.
The district court also granted defendants summary judgment on
Southerland’s tort claim alleging they had intentionally caused Southerland
emotional distress. Under Oklahoma law, this “tort requires evidence of extreme
and outrageous conduct coupled with severe emotional distress.” Computer
Publ’ns, Inc. v. Welton , 49 P.3d 732, 735 (Okla. 2002). Further, defendants must
have intentionally or recklessly undertaken such extreme and outrageous conduct.
See id. Southerland, however, failed to present evidence indicating defendants
1
Southerland argues that, in this case, he need not establish that defendants
acted intentionally, wilfully, and maliciously because, unlike in Fehring, here
there has been no court-ordered compensation award. We need not address this
argument, however, because Southerland never raised it in the district court. See,
e.g., Quigley v. Rosenthal , 327 F.3d 1044, 1069 (10th Cir. 2003). In any event,
the Oklahoma Supreme Court has indicated that if it did recognize a bad-faith
claim against a workers’ compensation insurer, it would do so only where the
insurer’s conduct was intentional and wilful because only such conduct would
justify permitting a common-law claim in the context of workers’ compensation,
which is otherwise exclusively governed by Oklahoma’s statutory scheme. See
Fehring , 19 P.3d at 284-85.
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intentionally or recklessly acted in an extreme and outrageous manner. We,
therefore, affirm the district court’s decision granting defendants summary
judgment on this claim as well.
In light of those conclusions, we need not address defendants’ arguments
challenging several district court discovery orders related to their defenses to these
two tort claims. See also Cross-Appellants’ Opening Br. (Nos. 02-7085, 02-7098)
at 35, 63 (stating defendants appealed discovery orders if this court reversed
district court’s decision granting them summary judgment).
Finally, the district court had granted Southerland leave to amend his
complaint to add as defendants the New Hampshire Insurance Company, New
Hampshire Insurance Group Holding Corporation, and American International
Group, Inc. (collectively, additional defendants). Southerland asserted the same
tort claims against these additional defendants. After granting the original
defendants summary judgment, however, the district court dismissed Southerland’s
claims against these additional defendants. Southerland challenges that decision in
appeal No. 02-7093. The district court, however, did not err in dismissing those
claims. In light of that determination, we also need not address these additional
defendants’ cross-appeal, No. 02-7098, challenging the district court’s decision
permitting Southerland to amend his complaint to add these additional defendants
in the first place. See also id.
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The judgment of the district court is AFFIRMED.
Entered for the Court
Mary Beck Briscoe
Circuit Judge
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