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Badillo v. Mid Century Insurance Co.6/21/2005
evidence concerning Smith's alleged incapacity was admissible as relevant to the bias, motive and credibility of Burton, Forbes and Berry. As we understand their argument in this latter regard, it is that Smith's incapacity and what insurers characterize as the machinations the three attorneys and Young went through to create some semblance of authority in themselves to act on Smith's behalf, had relevance to their bias, motive and credibility, i.e., the evidence would have further supported the set-up defense.
Although the trial judge generally excluded evidence sought to be submitted on behalf of insurers concerning Smith's capacity or lack thereof based on the view insurers did not rely on any lack of capacity on Smith's part to justify any of their conduct relating to any discussions with the Young-hired attorneys concerning settlement or the statement request during the time frame those discussions actually occurred, the trial judge allowed extensive evidence in support of insurers' set-up defense. For example, evidence was presented to the jury that the power of attorney was not validly notarized; that neither Burton, Forbes nor Berry had actually spoken with Smith prior to April 17th; and that suit against insured was contemplated even before the statement request was made. There was also evidence submitted that Smith was in a semi-comatose state, at least, through on or about March 28, 2000.
We first note that insurers do not argue that Smith's asserted incapacity had anything to do with their refusal to provide insured for a statement and they do not claim Smith's purported incapacity may be used by them to excuse any unreasonable conduct on their part or any breach of the implied duty of good faith and fair dealing. Instead, as we understand their position, it is that the lack of capacity defense was relevant as to the essential element of causation and as to the bias, motive and credibility of the attorneys.
The trial court's exclusion of evidence concerning Smith's capacity is plainly consistent with Buzzard v. Farmers Ins. Co., Inc., 1991 OK 127, 824 P.2d 1105, 1109 and Newport v. USAA, 2000 OK 59, 34-37, 11 P.3d 190, 199-200, to the extent evidence of capacity or lack of authorization on the part of the Young-hired attorneys to act on Smith's behalf, would tend to excuse any unreasonable conduct on insurers' part or any breach by insurers of their duty of good faith and fair dealing toward insured. When presented with a claim, an insurer "must conduct an investigation reasonably appropriate under the circumstances. The knowledge and belief of the insurer during the time period the claim is being reviewed is the focus of a bad-faith claim." Buzzard v. Farmers Ins. Co., Inc., 824 P.2d at 1109. Nothing indicates insurers considered Smith's purported lack of capacity to execute a power of attorney or to agree to a settlement at the time the matter was being reviewed by them. Nor was any alleged lack of capacity or authorization raised by insurers as some type of obstacle in settlement negotiations/discussions with the attorneys that were acting on her behalf, nor as somehow sustaining the reasonableness of insurers' handling of the statement request or the ultimate decision not to produce insured for a statement without consulting him on the matter.
As to causation, even assuming Buzzard v. Farmers Ins. Co., Inc. and Newport would not render correct the trial court's ruling generally excluding evidence concerning Smith's capacity or lack thereof during the relevant time period, we believe no reversible error has been shown by insurers in any event; rather, any error was at most harmless. Title 12 O. S. 2001, ยง 2104(A) provides, " rror may not be predi
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