Progressive Northern Insurance v. Peavler

• Court: Court of Appeals for the Tenth Circuit
• Decided: November 13, 2019
• Docket: 18-7057
• Status: Unpublished

Opinion

FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT November 13, 2019 _________________________________ Elisabeth A. Shumaker Clerk of Court PROGRESSIVE NORTHERN INSURANCE COMPANY,

Plaintiff - Appellee,

v. No. 18-7057 (D.C. No. 6:17-CV-00229-JHP) WILMA CHARLIEN PEAVLER, as the (E.D. Okla.) Special Administrator for the Estate of Christopher Allen Richter,

Defendant - Appellant,

and

J&S EXCHANGE, INC.,

Defendant. _________________________________

ORDER AND JUDGMENT* _________________________________

Before HOLMES, O’BRIEN, and MATHESON, Circuit Judges. _________________________________

In this declaratory judgment action, Wilma Charlien Peavler, as Special

Administrator for the estate of Christopher Allen Richter, appeals the district court’s

* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. grant of summary judgment to Progressive Northern Insurance Company

(Progressive). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

I

This case stems from a fatal, single-vehicle accident. Ivan Fry was driving

Mr. Richter and another passenger, Zach Vasser, to a job site in his truck. Mr. Fry

and Mr. Richter were both employees of J&S Exchange, Inc. (J&S), which owned

tools and equipment in Mr. Fry’s truck. There was evidence that J&S directed

Mr. Fry to keep the tools in his truck and to drive Mr. Richter and Mr. Vasser to the

job site. On the way, Mr. Fry apparently lost control of the truck and crashed;

Mr. Richter died from his injuries. Both Mr. Fry and J&S were insured under

separate automobile insurance policies issued by Progressive.1

Ms. Peavler initiated a tort suit in Oklahoma state court against Mr. Fry and

J&S solely under a respondeat superior theory. She alleged J&S was vicariously

liable because Mr. Fry was acting in the scope of his employment at the time of the

accident. J&S moved to dismiss the suit, arguing that Ms. Peavler’s exclusive

remedy was a workers’ compensation claim under Oklahoma’s Administrative

Workers’ Compensation Act (AWCA). See Okla. Stat. tit. 85A, §§ 1-125. The

AWCA’s exclusive remedy provision states:

The rights and remedies granted to an employee subject to the provisions of the [AWCA] shall be exclusive of all other rights and

1 Progressive sought declaratory relief under both policies. The district court determined the Fry policy provided $25,000 of liability coverage and the J&S policy provided no uninsured/underinsured motorist or medical payments coverage. These conclusions are not challenged on appeal. 2 remedies of the employee . . . or anyone else claiming rights to recovery on behalf of the employee against the employer, or any . . . employee . . . of the employer on account of injury, illness, or death. Negligent acts of a co-employee may not be imputed to the employer.

Id., § 5(A); see Odom v. Penske Truck Leasing Co., 893 F.3d 739, 744 (10th Cir.

2018) (recognizing that AWCA’s exclusive-remedy provision provides a substantive

defense to civil liability). Although J&S pointed out that the AWCA specifically

barred Ms. Peavler’s respondeat superior theory, she asserted her suit was not

subject to the AWCA because Mr. Fry was acting in the scope of his employment,

but Mr. Richter was not. Under the AWCA, an employee traveling to and from his

place of work generally is not acting in the course and scope of his employment and

therefore does not have a compensable injury. See Okla. Stat. tit. 85A, §§ 2(9)(a),

2(13)(a). The state court denied J&S’s motion to dismiss and later denied its motion

for summary judgment.

While the state suit continued, Progressive initiated this declaratory judgment

action in federal court to determine its obligations under the J&S automobile policy.

Progressive argued that Ms. Peavler’s suit fell under the AWCA and coverage was

eliminated under an exclusion (Exclusion 3) in the J&S policy for “[a]ny obligation

for which an insured or an insurer of that insured, even if one does not exist, may be

held liable under workers’ compensation, unemployment compensation, disability

benefits law, or any similar law.” Aplt. App. at 122. Progressive reasoned that

Mr. Richter’s death was an obligation for which J&S may be held liable under

workers’ compensation law.

3 The district court, in a detailed, 53-page decision, granted summary judgment

to Progressive, ruling in part that it was appropriate to exercise jurisdiction in this

case notwithstanding the pendency of the state suit, and that Exclusion 3 applied

because Mr. Richter’s death was an obligation for which J&S “may be held liable

under workers[’] compensation law,” id. at 345 (ellipsis and internal quotation marks

omitted). Ms. Peavler challenges both rulings.

II

A. The District Court’s Exercise of Jurisdiction

We first consider the district court’s decision to exercise jurisdiction. “[T]he

Declaratory Judgment Act gave the federal courts competence to make a declaration

of rights; it did not impose a duty to do so.” State Farm Fire & Cas. Co. v. Mhoon,

31 F.3d 979, 982 (10th Cir. 1994) (internal quotation marks omitted). Accordingly,

“district courts possess discretion in determining whether and when to entertain an

action under the Declaratory Judgment Act, even when the suit otherwise satisfies

subject matter jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277,

282 (1995). In deciding whether to exercise jurisdiction, courts should consider

several factors, including “whether use of a declaratory action would increase friction

between our federal and state courts and improperly encroach upon state

jurisdiction.” Mhoon, 31 F.3d at 983 (internal quotation marks omitted). We do “not

engage in a de novo review of all the various fact-intensive and highly discretionary

factors involved. Instead, [we] only ask whether the trial court’s assessment of them

was so unsatisfactory as to amount to an abuse of discretion.” Id.

4 Ms. Peavler contends the district court’s exercise of jurisdiction creates

friction with the state court order denying J&S’s motion to dismiss. As the district

court explained, however, the state court ruling has no impact on the issues here.

This case concerns Progressive’s statutory and contractual duties to defend and

indemnify J&S; the state suit, by contrast, concerns J&S’s liability to Mr. Richter’s

estate under a respondeat superior theory. Both suits stem from the same underlying

facts, but the statutory and contractual issues here are distinct from the tort claims

before the state court. Of course, there might have been friction if, as Ms. Peavler

contends, the district court had conclusively determined that Mr. Richter was acting

in the scope of his employment; if he was, presumably Ms. Peavler would be bound

to the workers’ compensation remedy. But the district court repeatedly stated it was

not making that finding, see Aplt. App. at 338, 344. The court concluded only that

Mr. “Richter may have been acting in the course and scope of his employment,” id. at

338 (emphasis added), which triggered the exclusion. Under these circumstances, the

district court did not abuse its discretion in exercising jurisdiction over the

declaratory judgment action.

B. Merits

Turning to the merits of this dispute, “[w]e review summary judgment de novo

and apply the same legal standard as the district court.” Phila. Indem. Ins. Co. v.

Lexington Ins. Co., 845 F.3d 1330, 1336 (10th Cir. 2017). “A court ‘shall grant

summary judgment if the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.’” Id. (quoting

5 Fed. R. Civ. P. 56(a)). Because this declaratory judgment action is predicated on

diversity jurisdiction, see 28 U.S.C. § 1332, we apply the law of the forum state,

Oklahoma, Universal Underwriters Ins. Co. v. Winton, 818 F.3d 1103, 1105-06

(10th Cir. 2016).

“Under Oklahoma law, ‘an insurance policy is to be treated as a contract’ and

is ‘enforced according to its terms.’” Phila. Indem., 845 F.3d at 1337 (brackets

omitted) (quoting Equity Mut. Ins. Co. v. Spring Valley Wholesale Nursery, Inc.,

747 P.2d 947, 953 (Okla. 1987)). “The whole of a contract is to be taken together, so

as to give effect to every part, if reasonably practicable, each clause helping to

interpret the others.” Okla. Stat. tit. 15, § 157. “We accept the contract language in

its plain, ordinary, and popular sense.” Broom v. Wilson Paving & Excavating, Inc.,

356 P.3d 617, 628 (Okla. 2015) (brackets and internal quotation marks omitted).

Progressive stipulated the truck was an “insured auto” and J&S was an

insured. The district court observed, however, that Exclusion 3 eliminated coverage

for “[a]ny obligation for which” J&S “may be held liable under workers’

compensation . . . law.” Aplt. App. at 330 (emphasis omitted). Without deciding

whether Mr. Richter actually was or was not acting in the scope of his employment,

the court determined he may have been and, therefore, the exclusion applied because

J&S may be held liable under workers’ compensation law. We perceive no error.

The AWCA provides that the exclusive remedy against an employer for an

employee injured in the course and scope of his employment is a claim for workers’

compensation benefits. See Okla. Stat. tit. 85A, § 5(A). The AWCA specifically

6 bars respondeat superior theories, stating, “Negligent acts of a co-employee may not

be imputed to the employer.” Id. It also states that the statutory immunity is not

defeated by the denial of the employee’s claim for compensation or ineligibility for

benefits. See id. § 5(C) (“The immunity from civil liability described in subsection A

of [the statute] shall apply regardless of whether the injured employee is denied

compensation or deemed ineligible to receive compensation under this act.”).

Particularly relevant for our purposes, the AWCA defines “Course and scope

of employment” as:

an activity of any kind or character for which the employee was hired and that relates to and derives from the work, business, trade or profession of an employer, and is performed by an employee in the furtherance of the affairs or business of an employer. The term includes activities conducted on the premises of an employer or at other locations designated by an employer and travel by an employee in furtherance of the affairs of an employer that is specifically directed by the employer. This term does not include:

a. an employee’s transportation to and from his or her place of employment[.]

Id., § 2(13).

Given this definition and the broader statutory scheme, we have little difficulty

concluding that Mr. Richter’s death was an “obligation for which” J&S “may be held

liable under workers’ compensation . . . law.” Aplt. App. at 122.2 Ms. Peavler seeks

to recover for the death of an employee, Mr. Richter, by imputing the alleged

2 To the extent Ms. Peavler contends the exclusion is ambiguous, she failed to preserve this issue in the district court and offers no reason why we should consider it now. We decline to consider the issue. See Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1127-28 (10th Cir. 2011). 7 negligence of a fellow employee, Mr. Fry, to their employer, J&S. But the AWCA

expressly states that “[n]egligent acts of a co-employee may not be imputed to the

employer.” Okla. Stat. tit. 85A, § 5(A). Ms. Peavler attempts to avoid this result by

arguing that Mr. Richter was not acting in the scope of his employment, but this

argument does not clearly circumvent the AWCA. Although the AWCA defines

“[c]ourse and scope of employment” to exclude “an employee’s transportation to and

from his . . . place of work,” id., § 2(13)(a), Oklahoma courts have, under certain

circumstances, found that employees traveling to a work site, hauling material for the

benefit of an employer, were acting “in furtherance of the affairs of an employer” and

thus in the “[c]ourse and scope of employment.” See, e.g., Pina v. Am. Piping

Inspection, Inc., 419 P.3d 231, 237 & n.12 (Okla. 2018). Mr. Fry and Mr. Richter

were both J&S employees driving to J&S’s job site with J&S’s tools in the truck.

There was evidence that J&S directed Mr. Fry to keep the tools in his truck, bring

them to the job site, and drive Mr. Richter and Mr. Vasser to the job site.3 While

these circumstances may not establish that Mr. Fry and Mr. Richter were acting in the

scope of their employment, Oklahoma case law indicates they might have been, and

3 Ms. Peavler submitted this evidence—a transcript of Mr. Fry’s unsworn statement—to establish Mr. Fry’s directives. The district court ruled the evidence could be considered because it is not hearsay. Ms. Peavler now seems to dispute the court’s rationale, though her argument is unclear. See Aplt. Br. at 27-28. To the extent she contends this evidence was hearsay and should not have been considered, the invited-error doctrine bars her complaint. See United States v. Deberry, 430 F.3d 1294, 1302 (10th Cir. 2005). (“[T]he invited-error doctrine precludes a party from arguing that the district court erred in adopting a proposition that the party had urged the district court to adopt.”). 8 therefore J&S may be held liable under workers’ compensation law, which is all

Exclusion 3 requires.

Ms. Peavler offers a broad rebuttal that essentially contends she should not be

bound to Oklahoma’s statutory scheme. She begins by challenging the district

court’s observation that the Oklahoma Workers’ Compensation Commission (WCC)

has exclusive responsibility for finding whether or not Mr. Richter was acting in the

scope of his employment. See Aplt. Br. at 9-10. She says the WCC does not prevent

the judiciary from interpreting the AWCA and she should not be required to file a

workers’ compensation claim rather than a civil action, which would “raise questions

of equal protection, special legislation, and open access to courts,” id. at 13. She

cites multiple cases that purportedly recognize that courts can and do evaluate

whether injuries are compensable under the AWCA. See id. at 14-18. She therefore

concludes that she appropriately filed her tort suit in state court and that the district

court erred in faulting her for doing so. See id. at 18-20.

To the extent these arguments challenge the AWCA’s statutory scheme, they

are beyond the scope of this appeal. To the extent these arguments challenge

Exclusion 3 on public policy grounds, they are unavailing. Oklahoma’s Compulsory

Insurance Law mandates personal liability insurance, see Okla. Stat. tit 47,

§ 7-600(4), but not for injuries covered by workers’ compensation, see id., § 7-324(e)

(“Such motor vehicle liability policy need not insure any liability under any

workmen’s compensation law nor any liability on account of . . . death of an

employee of the insured while engaged in the employment . . . of the insured . . . .”).

9 This exception places the burden on employers to carry workers’ compensation

coverage for employment-related injuries. See Deffenbaugh v. Hudson, 791 P.2d 84,

86 (Okla. 1990) (recognizing automobile insurers are not obliged to protect their

insureds against losses that fall under the workers’ compensation scheme and that

“[t]he terms of [§ 7-324] clearly relieve insurers of any legal obligation to include in

the standard motor vehicle liability policy a provision for indemnity against

employment-related harm”). The rationale is that there is no need for double

coverage of employees already covered by workers’ compensation insurance. See

State Farm Mut. Auto. Ins. Co. v. Dyer, 19 F.3d 514, 524 (10th Cir. 1994) (holding,

under Wyoming law, that “[t]here is no imperative public policy need for automobile

liability insurance where the injured party is covered by worker’s compensation”);

8 Couch on Ins., § 115:13 (3d ed. June 2019 Update) (“Provisions excluding from

coverage of automobile liability policies liability for injury or death of the insured’s

employees attempt to limit the coverage of the policy by excluding the special

hazards incident to the master-servant relationship, coverage for which is usually

available through workers’ compensation or employer’s liability insurance.”). If an

employer does not carry workers’ compensation insurance, the employee may pursue

a civil action for damages. See Okla. Stat. tit. 85A, § 5(B)(1).

It is undisputed that J&S carried workers’ compensation insurance and that

Ms. Peavler never pursued a workers’ compensation claim. The AWCA therefore

provides her exclusive remedy for injuries sustained in the course and scope of

Mr. Richter’s employment. Whether he actually was acting in the scope of his

10 employment is an issue we need not decide because the plain language of Exclusion 3

applies so long as J&S “may be held liable under workers’ compensation . . . law.”

Aplt. App. at 122. Oklahoma law indicates that condition is satisfied.

III

Accordingly, the judgment of the district court is affirmed.

Entered for the Court

Jerome A. Holmes Circuit Judge