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Sexton v. Continental Casualty Co.9/10/1991
The Honorable Thomas R. Brett, Judge of the U.S. District Court for the Northern District of Oklahoma, Certified to this court the following question:
"Whether an insurer's prior denial of the insured's uninsured motorist coverage claim operates to estop that insurer from later invoking the Porter doctrine's protection against the destruction of its subrogation rights."
We answer the question in the affirmative, and hold that when an insurer completely denies a claim for uninsured motorist (UM) coverage by its insured the insurer is estopped from later invoking the defense of loss of subrogation rights.
Continental Casualty Company issued a Business Auto Policy to Avis Rent-A-Car Systems, Inc. The policy insured Avis' fleet of rental vehicles for personal injury liability with limits of $100,000 per person and $300,000 per accident for the period of December 31, 1984, to December 31, 1985. Continental offered Avis uninsured motorist coverage and Avis signed a rejection of the coverage. Avis renewed the policy for the period of December 31, 1985, to December 31, 1986.
On January 5, 1986, Cecil Southern rented a car from Avis, with Donna Sexton, Barbara Howell, and another authorized as additional drivers. The rental agreement included liability insurance in the amounts of $100,000 per person and $300,000 per accident. The rental agreement also offered "Personal Accident Insurance" (medical pay) for an additional charge, and that additional insurance was accepted. Neither Continental nor Avis offered uninsured motorist insurance coverage to the authorized drivers.
The next day Barbara Howell was driving the rental car when a collision occurred, resulting in injuries to plaintiff Sexton and another passenger. The parties stipulated that the total damages of all claimants under the Continental policy exceeded the $300,000 liability coverage.
The injured parties agreed as to how to split the $300,000 from Continental. The Sextons made a claim upon Avis for uninsured motorist coverage, which Avis denied on the basis of its previous rejection of UM coverage. The Sextons also made a claim with Continental for UM coverage, which in turn denied the UM claim.
After Avis and Continental denied the Sextons' UM claims the Sexton's received $97,250 from the $300,000 upon signing a release prepared by an attorney retained by Avis. The release discharged driver Howell and Avis "from all actions, causes of action, claims, demands, damages, costs, loss of services, expenses and compensation, on account of, or in any way growing out of any and all known and unknown personal injuries and property damage resulting or to result from the accident." Avis acted on behalf of Continental in distributing the $300,000.
Donna and Robert Sexton also recovered $10,000 from Farmers & Merchants Insurance Company. This amount represented the liability coverage on Howell's personal vehicle. No stipulation or finding has been made as to whether the Sexton's damages exceed $107,250.
Twice before we have noted the existence of the question, but in neither case was it properly before us, and, as is our practice, we declined to address it hypothetically. See Uptegraft v. Home Ins. Co., 662 P.2d 681, 687 (Okl. 1983) and Frey v. Independence Fire & Cas. Co., 698 P.2d 17, 20 (Okla. 1985). Continental would have us today pass over it a third time, claiming there can be no UM coverage once the insured settled for less than liability policy limits. Resolution of the question Continental raises is not fairly comprised within the question certified for our decision. We thus decline to address it, and proceed to answe
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