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Sexton v. Continental Casualty Co.9/10/1991
either of two kinds: (1) legal or equitable, or (2) conventional subrogation. Lawyer's Title Guaranty Fund v. Sanders, 571 P.2d 454 (Okla. 1977). Legal or equitable subrogation is a creature of equity and does not depend upon a contract. Republic Underwriters v. Fire Ins. Exchange, 655 P.2d 544, 546 (Okla. 1982). Conventional subrogation "comes from a contract or agreement, expressed or implied." Lawyer's Title Guaranty Fund v. Sanders, supra at 456. The subrogation involved in this case is clearly of the conventional sort; it arises, if at all, from the contractual obligation of Continental. Continental chose to repudiate its alleged contractual obligation when it denied coverage to the Sextons. The Sextons, relying on Continental's representation that it had no liability, settled with the tortfeasor and her insurer, and gave the required releases. Such representation by Continental, accompanied by the detrimental reliance of the Sextons, created an estoppel when the Sextons later brought suit against Continental.
In Old Surety Life Insurance Co. v. Miller, 333 P.2d 504 (Okla. 1958), the Syllabus by our Court states in part:
Any course of action or conduct on the part of the insurance company which leads a party insured honestly to believe by that conforming thereto a forfeiture of his policy will not be incurred, followed by due conformity on the part of insured will estop the company from insisting upon the forfeiture, although it might be claimed under the express letter of the insurance contract. Id.
Continental, having earlier denied any contractual relationship with the Sextons for UM coverage, would like now to resurrect the insurance contract to claim loss of the subrogation rights it was given thereunder. The law does not accommodate such a change of position.
It is also worth noting that Avis, acting on behalf of the insurer, and after the insured had unsuccessfully presented a UM claim to both Avis and Continental, prepared the release which it now claims destroyed its subrogation rights. Here the insurer didn't sleep on its rights as in Selected Risks, supra, but rather, effectively destroyed its own subrogation rights by the release its attorney prepared. An insured does not have the duty to protect an insurer from itself.
The fact, however, that the UM carrier and the liability carrier were one and the same company here is not dispositive. Neither is the fact that the UM carrier's attorney prepared the release. The certified question is broader, and in our opinion, is deserving of an answer. The answer is this. When an insurer denies uninsured motorist coverage under a policy to its insured and the insured then settles with a third party the insurer may not thereafter complain of its loss of subrogation rights. Roberts v. Fireman's Insurance Co. of Newark, N.J., supra. It is estopped to do so. We conclude and hold that an insurer's complete denial of UM coverage to its insured estops that insurer from thereafter invoking the Porter defense of loss of subrogation rights arising from the settlement.
Certified Question Answered.
HODGES, V.C.J., and LAVENDER, DOOLIN, HARGRAVE, ALMA WILSON and KAUGER, JJ., concur.
OPALA, C.J., and SIMMS, J., concur in result.
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