LANE v. PROGRESSIVE NORTHERN INSURANCE COMPANY (2020)

ORDER CERTIFYING QUESTION OF STATE LAW *

Plaintiffs Elissa Lane (“Lane”) and L.S., a minor (“Stone”) were injured in a single-car accident while riding as passengers in a vehicle driven by M.S., a non-party minor. Defendant Progressive Northern Insurance Company (“Progressive”) insured the vehicle under a policy issued to M.S.’s parents. The policy provided $100,000 per person/$300,000 per accident in liability coverage. The policy also provided $100,000 per person/$300,000 per accident in uninsured or underinsured motorist coverage (“UM coverage”). Both Lane and Stone recovered the $100,000 per person liability limit, but their injuries were substantial, and their damages exceeded $100,000. In light of their extensive injuries, Lane and Stone sought additional UM coverage. Progressive denied the claims relying on an exclusion in the policy (“the UM Exclusion”). The UM Exclusion provides that UM coverage will not apply “to bodily injury sustained by an insured person where liability coverage for bodily injury in an amount equal to or greater than the minimum limits of liability required by the motor vehicle financial responsibility law of Oklahoma is available for said bodily injury under Part I—Liability to Others[.]” Thus, the provision operates to exclude UM coverage when the insured receives liability coverage in an amount equal to or greater than the minimum limits of liability under Oklahoma law. Because Lane and Stone both recovered $100,000 under the policy's liability coverage—which is more than the Oklahoma minimum of $25,000—they were not entitled to recover any of the UM coverage, even though their injuries exceeded $100,000.

Following the denial of their claims, Lane and Stone sued Progressive for breach of contract and bad faith. Progressive moved for a judgment on the pleadings, arguing the denial of UM coverage was warranted based upon the UM Exclusion. In opposition to the motion, Lane and Stone argued Progressive's UM Exclusion is void as a matter of public policy under Oklahoma law. The district court granted Progressive's judgment on the pleadings, and Lane and Stone appealed. Although the parties did not seek certification before the district court, they now argue certification is appropriate. We agree. Because the disposition of this appeal turns on an important and unsettled issue of Oklahoma law, we exercise our discretion under Tenth Circuit Rule 27.4(A) and Rule 27.4(B) to certify the question presented below to the Oklahoma Supreme Court:

Does Progressive's UM Exclusion—which operates to deny uninsured motorist coverage to insureds who recover at least the statutorily mandated minimum in the form of liability coverage—contravene Oklahoma's Uninsured Motorist Statute, codified at Okla. Stat. tit. 36, § 3636?1

I.

“When state law permits, this court may: (1) certify a question arising under state law to that state's highest court according to that court's rules; and (2) abate the case in this court to await the state court's decision of the certified question.” 10th Cir. R. 27.4(A); see also 10th Cir. R. 27.4(B) (explaining this “court may certify on its own or on a party's motion”). As is relevant here, we may certify a question to the Oklahoma Supreme Court “if the answer may be determinative of an issue in pending litigation in the certifying court and there is no controlling decision of the Supreme Court or Court of Criminal Appeals, constitutional provision, or [Oklahoma] statute ․” Okla. Stat. tit. 20, § 1602.

The decision to certify a question of law lies within our sound discretion. Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir. 1988). While we have no desire to “trouble our sister state courts every time an arguably unsettled question of state law comes across our desks[,]” we will exercise our discretion and certify a question of state law “where the question before us (1) may be determinative of the case at hand and (2) is sufficiently novel that we feel uncomfortable attempting to decide it without further guidance.” Pino v. United States, 507 F.3d 1233, 1236 (10th Cir. 2007). By certifying a sufficiently novel and outcome-determinative question of state law, we “give meaning and respect to the federal character of our judicial system” and recognize “the judicial policy of a state should be decided when possible by state, not federal, courts.” Id.

II.

Bearing in mind Oklahoma's standards and our own federal jurisprudence, we submit that the question presented above warrants certification. First, the question is undoubtedly outcome-determinative. If the UM Exclusion is void as a matter of public policy, the district court erred in dismissing Lane and Stone's breach of contract claim. To the contrary, if the UM Exclusion is permitted under Oklahoma law, the district court must be affirmed. In either event, the validity of the UM Exclusion controls the outcome of this case.

The unsettled nature of the applicable state law is equally apparent. Tellingly, two federal district courts in the Western District of Oklahoma reached opposite conclusions on the question presented. In this case, the Honorable Stephen P. Friot held the UM Exclusion is valid under Oklahoma law, but in McKinney v. Progressive Direct Insurance Co., No. CIV-18-0767-HE, the Honorable Joe Heaton concluded the UM Exclusion is void against public policy.² Notably, both judges rightly acknowledged that no Oklahoma statute or case definitively answers the question.

Turning to that body of law, Oklahoma's Uninsured Motorist Statute sets forth general requirements for uninsured/underinsured motor vehicle coverage. See Okla. Stat. tit. 36, § 3636. Although the statute seems to contemplate some exclusions, it does not address whether an exclusion like Progressive's is permitted. See Okla. Stat. tit. 36, § 3636(H) (requiring insurers to provide insurance applicants with a notice stating in pertinent part, “Uninsured Motorist coverage, unless otherwise provided in your policy, pays for bodily injury damages to ․ other people riding in your car who are injured by: ․ (3) an insured motorist who does not have enough liability insurance to pay for bodily injury damages to any insured person.”) (emphasis added). Interpreting the statute, the Oklahoma Supreme Court has consistently held that “insurance policy provisions and definitions which purport to condition, limit or dilute the provisions of the uninsured motorist statute are void and unenforceable.” Brown v. United Servs. Auto. Ass'n, 684 P.2d 1195, 1198 (Okla. 1984). Nevertheless, the court has also recognized that “the legislative intent with respect to UM coverage ․ could arguably be satisfied with the acceptance of UM insurance with agreed-upon exclusions from coverage.” Ball v. Wilshire Ins. Co., 221 P.3d 717, 727 (Okla. 2009). At any rate, the Oklahoma Supreme Court acknowledges that “[c]ase-law development in the area of permissible UM exclusions is clearly limited in number and scope.” Id. at 729.

With respect to the UM Exclusion before this court, neither party cites an Oklahoma Supreme Court decision directly on point, and from our review, there are none. Thus, this case presents a dispositive and novel question of Oklahoma law, and “[i]n furtherance of the interests of comity and federalism that certification protects,” we respectfully request the Oklahoma Supreme Court exercise its discretion to provide authoritative guidance on this issue. Howard v. Zimmer, Inc., 711 F.3d 1148, 1152–53 (10th Cir. 2012) (citation omitted).

III.

Therefore, pursuant to Tenth Circuit Rule 27.4(A) and Okla. Stat. tit. 20, § 1602, the United States Court of Appeals for the Tenth Circuit hereby certifies the following question to the Oklahoma Supreme Court:

Does Progressive's UM Exclusion—which operates to deny uninsured motorist coverage to insureds who recover at least the statutorily mandated minimum in the form of liability coverage—contravene Oklahoma's Uninsured Motorist Statute, codified at Okla. Stat. tit. 36, § 3636?

The Oklahoma Supreme Court may, of course, reformulate this certified question of law as it deems appropriate. Okla. Stat. tit. 20, § 1604(3).

As required by Oklahoma statute, we include the following information with respect to the names and addresses of counsel of record:

On behalf of Plaintiff:

Margaret E. Travis & Rex Travis

Travis Law Office

500 Colcord Drive

P.O. Box 1336

Oklahoma City, OK 73101

And, on behalf of Defendant:

Brad L. Roberson & Dawn M. Goeres

Roberson, Kolker, Cooper & Goeres

16408 Muirfield Place

Edmond, OK 73013

See Okla. Stat. tit. 20, § 1604(4).

We direct the clerk of this court to transmit a copy of this certification order to counsel for all parties and forward a copy of this order, together with a copy of the parties’ briefs, to the Clerk of the Oklahoma Supreme Court. This appeal is therefore ordered ABATED pending the Oklahoma Supreme Court's consideration of this request and resolution of the certified question of state law.

FOOTNOTES

1.   At oral argument, counsel for Progressive urged the Court to narrow the certified question to encompass only class two insureds. We decline to do so but recognize that the Oklahoma Supreme Court has the discretion to reformulate the question as it deems appropriate.

2.   We note that McKinney is also on appeal before this Court. See McKinney v. Progressive Direct Insurance Co., NO. CIV-18-0767-HE, 2019 WL 2092578 (W.D. Okla. May 13, 2019), appeal docketed, No. 19-6127 (10th Cir. Aug. 29, 2019). Counsel for all parties in both cases is the same.

Bobby R. Baldock, Circuit Judge