State Farm Mutual v. McCalister

• Court: Court of Appeals for the Tenth Circuit
• Decided: April 17, 1998
• Docket: 97-5002
• Status: Unpublished

Opinion

F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS APR 17 1998 TENTH CIRCUIT PATRICK FISHER Clerk

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY; STATE FARM FIRE AND CASUALTY COMPANY,

Plaintiffs-Appellants, No. 97-5002 (N. District of Oklahoma) v. (D.C. No. CV-96-892-C)

BILL McCALISTER, DEBBIE McCALISTER,

Defendants-Appellees.

ORDER AND JUDGMENT *

Before SEYMOUR, Chief Judge, LOGAN and MURPHY, Circuit Judges.

Plaintiffs State Farm Mutual Automobile Insurance Company and State

Farm Fire and Casualty Company (hereinafter collectively “State Farm”) appeal

the district court’s grant of summary judgment in favor of Bill and Debbie

McCalister. State Farm sued the McCalisters in September 1996, seeking a

* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. declaration that a series of settlements entered into by State Farm and the

McCalisters constituted a full and final settlement of all of the McCalisters’

claims for uninsured/underinsured motorist coverage. The district court rejected

State Farm’s contentions and concluded that the settlement agreements clearly and

unambiguously released State Farm from liability only under the specific policies

referenced in the settlement agreements. On appeal, State Farm asserts that the

district court erred when it refused to consider extrinsic evidence in interpreting

the settlement agreements, even though the agreements are unambiguous on their

faces. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.

This court reviews a decision granting summary judgment de novo, under

the same legal standard applicable in the district courts. See Miles v. Denver Pub.

Sch., 944 F.2d 773, 775 (10th Cir. 1991). Summary judgment is appropriate “if

the pleadings, depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment as a matter of

law.” Fed. R. Civ. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 247-48 (1986).

Because the parties are familiar with the facts surrounding this case and the

controlling issue on appeal is legal, this court sees no need to recite the facts

here. Relying on a 1973 decision of this court and a 1980 decision of the

-2- Oklahoma Supreme Court, State Farm contends that the district court was

obligated to review extrinsic evidence to determine the meaning of the settlement

agreements, even though those agreements are unambiguous on their faces. See

First Nat’l Bank v. Rozelle, 493 F.2d 1196, 1200 (10th Cir. 1973); Amoco Prod.

Co. v. Lindley, 609 P.2d 733, 741-42 (Okla. 1980). We agree that the referenced

cases appear to indicate that resort to extrinsic evidence is appropriate even when

the contract in question is unambiguous. The problem with State Farm’s reliance

on Rozelle and Amoco, however, is that the Oklahoma Supreme Court’s most

recent pronouncements on this issue clearly indicate that courts must not utilize

extrinsic evidence to interpret a contract when that contract is clear and

unambiguous on its face. For instance, the Oklahoma Supreme Court recently

held as follows:

Whether a contract is ambiguous so as to require extrinsic evidence to clarify the doubt is a question of law for the courts. If language of a contract is clear and free of ambiguity, the court is to interpret it as a matter of law. .... A contract must be considered as a whole so as to give effect to all its provisions without narrowly concentrating upon some clause or language taken out of context. The language in a contract is given its plain and ordinary meaning unless some technical term is used in a manner intended to convey a specific technical concept. The parol evidence rule teaches that unless fraud or mistake is involved, pre- contract negotiations and oral discussions are merged into, and superseded by, the terms of an executed writing. The practical construction of an agreement (to be derived from the acts and conduct of the parties) is an available tool only in case ambiguity appears to be present. Where, as here, a contract is complete in itself

-3- and, when viewed as a totality, is unambiguous, its language is the only legitimate evidence of what the parties intended. That intention cannot be determined from the surrounding circumstances, but must be gathered from a four-corners’ examination of the instrument.

Lewis v. Sac & Fox Tribe of Okla. Hous. Auth., 896 P.2d 503, 514 (Okla. 1994)

(footnotes omitted); see also Founders Bank & Trust Co. v. Upsher, 830 P.2d

1355, 1361-62 (Okla. 1992) (“Intent is to be gathered from the entire instrument.

Where the language is clear and explicit, there is no need to resort to extrinsic

evidence to ascertain its meaning. Where a contract is complete in itself but, as

viewed in its entirety is unambiguous, its language is the only legitimate evidence

of what the parties intended.” (footnotes omitted)).

In a diversity case, this court is required to apply the most recent statement

of state law by the state’s highest court. See Vitkus v. Beatrice Co., 127 F.3d 936,

941-42 (10th Cir. 1997); Black v. Baker Oil Tools, Inc., 107 F.3d 1457, 1464

(10th Cir. 1997). Accordingly, our disposition of the issue raised by State Farm is

controlled by Sac & Fox Tribe and Founders Bank, rather than the much older

cases cited in State Farm’s brief. Sac & Fox Tribe and Founders Bank indicate

that the district court did not err when it refused to consider extrinsic evidence to

vary the terms of the settlement agreements at issue. Furthermore, because the

settlement agreements were clear and unambiguous and resort to extrinsic

evidence was not necessary, the district court did not err in denying State Farm an

evidentiary hearing on the McCalisters’ summary judgment motion. Sac & Fox

-4- Tribe, 896 P.2d at 514 (“If language of a contract is clear and free of ambiguity,

the court is to interpret it as a matter of law.”).

Having resolved that the district court did not err in refusing to consider the

extrinsic evidence advanced by State Farm, we AFFIRM for substantially those

reasons expressed by the district court in its thorough Order dated December 3,

1996.

ENTERED FOR THE COURT:

Michael R. Murphy Circuit Judge

-5-