MORGAN v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (2020)

CERTIFICATION OF QUESTIONS OF STATE LAW

The United States Court of Appeals for the Tenth Circuit submits this request to the Supreme Court of Oklahoma to exercise its discretion to accept the following certified questions of Oklahoma law in accordance with 10th Cir. R. 27.4 and Okla. Stat. tit. 20, § 1602. The answer to these questions should be determinative of this appeal now pending in this court. And we have not located any controlling precedent from the Supreme Court of Oklahoma. This court appreciates consideration of this request for certification.

I. The Questions

(1) Where a plaintiff is injured by entry of an adverse judgment that remains unstayed, is the injury sufficiently certain to support accrual of a tort cause of action based on that injury under Okla. Stat. tit. 12, § 95 before all appeals of the adverse judgment are exhausted?

(2) Does an action for breach of an insurance contract accrue at the moment of breach where a plaintiff is not injured by the breach until a later date?

The Supreme Court of Oklahoma may reformulate the questions. See Okla. Stat. tit. 20, §§ 1602.1, 1604(A)(3).

II. Factual and Procedural Background

This case stems from injuries George Morgan inflicted on Jesse Atkins while driving drunk. Morgan hit Atkins with his truck at more than 40 miles per hour, leaving Atkins severely injured. Atkins's resulting medical bills totaled more than $2 million.

State Farm provided liability insurance to Morgan at the time of the accident under a policy with a $100,000 limit. State Farm negotiated and executed a settlement with Atkins in April 2010 whereby State Farm paid its policy limit of $100,000 to Atkins and Atkins released his claims against Morgan.

In the same timeframe, Atkins pursued a workers’ compensation claim since he had been traveling for work when Morgan hit him. The workers’ compensation court issued a preliminary order for compensation and Atkins's workers’ compensation insurer began making payments to Atkins.

The workers’ compensation insurer's subrogee, New York Marine and General Insurance Company (NYM), then sued Morgan in Oklahoma state court in June 2011 for reimbursement of the amounts paid to Atkins. It served this suit on Morgan in January 2012. Morgan retained personal counsel to represent him in the action, but State Farm also provided counsel to Morgan and mounted a vigorous defense. Morgan and State Farm claimed that by releasing Morgan, Atkins severed any reimbursement claim NYM might have against Morgan due to NYM's status as Atkins's subrogee. The trial court denied State Farm's motion for summary judgment on this basis on November 22, 2013. Then on February 27, 2014, a jury returned a verdict in favor of NYM, finding that State Farm knew about NYM's potential claim but failed to apprise NYM of its pending settlement with Atkins. The Oklahoma Court of Civil Appeals affirmed on June 10, 2016, and the Supreme Court of Oklahoma denied certiorari on February 21, 2017.

Morgan then brought this suit against State Farm on May 23, 2017. He alleges State Farm's failure to secure NYM's release as part of its settlement with Atkins amounted to breach of contract and breach of the implied duty to deal fairly and in good faith. The district court found that Morgan's claims accrued in 2010 when State Farm negotiated the original settlement with Atkins and therefore concluded that the applicable two- and five-year statutes of limitations operated to bar Morgan's suit.¹

The parties agree that Okla. Stat. tit. 12, § 95 supplies the applicable limitations period for each of Morgan's causes of action and that Oklahoma law governs their accrual and any tolling of the statute of limitations. See, e.g., Burnham v. Humphrey Hosp. Reit Tr., Inc., 403 F.3d 709, 712 (10th Cir. 2005) (“A federal court sitting in diversity applies state law for statute of limitations purposes ․ [and] state law determines when an action is commenced for statute of limitations purposes.”).

The record in this appeal does not contain evidence supporting a finding that Morgan suffered an injury resulting from State Farm's actions before NYM secured a judgment against him in April 2014.

III. Reason for Certification

“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”).

Under Oklahoma law, we may certify a question to the Supreme Court of Oklahoma “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[,] ․ 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.

The two certified questions involve interpretation of Okla. Stat. tit. 12, § 95. Regarding the first certified question, Oklahoma case law provides that some tort claims do not accrue until “any injury to the plaintiff, for which an action could proceed, is certain and not merely speculative.” MBA Commercial Constr., Inc. v. Roy J. Hannaford Co., 818 P.2d 469, 470 (Okla. 1991). But we have not located any binding Oklahoma precedent clarifying whether an injury caused by entry of a judgment that remains subject to appeal is sufficiently certain to support accrual of a cause of action for breach of the duty implied in an insurance contract to deal fairly and in good faith.

Regarding the second certified question, binding Oklahoma precedent does not clarify whether the injury rule discussed above—namely, that a plaintiff suffer an injury that is certain and not speculative before a cause of action accrues—also applies to breach-of-contract claims. Language from one case suggests that it might not. See Wille v. GEICO Cas. Co., 2 P.3d 888, 888 (Okla. 2000) (noting that the statute of limitations for the recovery of uninsured motorist benefits “begins to run when the insurance contract is breached”). But the Wille court did not face the certified question. And the Supreme Court of Oklahoma later clarified that similar statements in prior cases did not undermine the rule that some tort claims do not accrue until the plaintiff suffers an injury that is certain and not speculative. See Brown v. Creek Cty. ex rel. Creek Cty. Bd. of Cty. Comm'rs, 164 P.3d 1073, 1075 (Okla. 2007) (holding that “a cause of action accrues when the claim may be maintained,” instead of “at the moment the elements of the breach arise”); see also MBA Commercial, 818 P.2d at 474 (“In order for a litigant to maintain a negligence action to a successful conclusion, the litigant must allege injury or damages that are certain and not speculative.”).

The certified questions raise unsettled issues of Oklahoma law and we have observed “the importance of allowing [state courts] to decide questions of state law and policy, and thus define state law.” State Farm Mut. Auto. Ins. v. Fisher, 609 F.3d 1051, 1058–59 (10th Cir. 2010). We therefore certify these questions to the Supreme Court of Oklahoma.

IV. Conclusion

This court certifies the above-articulated questions to the Supreme Court of Oklahoma. The clerk of this court is directed to transmit to the Supreme Court of Oklahoma a certified copy of this order and copies of the briefs and the record as filed in this court.

As required by Okla. Stat. tit. 20, § 1604(A)(4), we include the following information with respect to the names and addresses of counsel of record:

On behalf of Plaintiff-Appellant:

Mark E. Bialick & Ryan Deligans

Durbin, Larimore & Bialick

920 North Harvey Avenue

Oklahoma City, OK 73102

And, on behalf of Defendant-Appellee:

Galen Brittingham & John Scott Gladd

Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco

525 South Main, Suite 1500

Tulsa, OK 74103

The clerk of this court shall transmit a copy of this order to counsel for all parties to the proceedings in this court and to the clerk of the United States District Court for the Western District of Oklahoma, attention case No. 5:17-CV-00622-D. If the Supreme Court of Oklahoma agrees to accept these certified questions, any further proceedings shall be governed by the appellate rules and statutes governing litigants before that court.

This court greatly appreciates the consideration of this request for certification.

This appeal is ordered abated pending resolution of the questions certified herein.

FOOTNOTES

1.   While the district court concluded that the causes of action accrued in 2010, it also applied the discovery rule and equitable tolling to toll the limitations period until January 2012, when Morgan discovered that State Farm had not settled with the workers’ compensation insurer because NYM served its suit on him. Since Morgan did not file this suit until May 2017, the court concluded that both limitations periods barred the suit notwithstanding its application of tolling.

Joel M. Carson III, Circuit Judge