NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL
RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
¶1 The primary issues presented on appeal are: 1) whether a special
relationship existed between an insured entity and an independent adjuster hired
by the insurer, sufficient to subject the independent adjuster to the implied
covenant of good faith and fair dealing arising under the insurance contract;
and 2) whether an independent insurance adjuster owes a legal duty to the
insured such that it may be liable to the insured for negligence in its
adjustment of the claim. This Court determines the answer to both questions is
no.
I.
FACTS AND PROCEDURAL HISTORY
¶2 Trinity Baptist Church (Trinity) purchased an insurance policy for its
property from Brotherhood Mutual Insurance Company (Brotherhood)1, effective (as amended) from
July 1, 2009, through July 1, 2010. On December 24, 2009, a powerful winter
storm struck the Oklahoma City area, which Trinity alleged resulted in
significant damage to its church property due to accumulation of snow and ice on
its sanctuary building. Trinity filed a claim with Brotherhood on or about
January 12, 2010, asserting damage caused by the storm.
¶3 On January 15, 2010, Brotherhood retained Sooner Claims Services, Inc.
(Sooner), as an independent adjuster to investigate Trinity's claim, pursuant to
the provisions of a Limited Assignment sent to Sooner on the same day. The
Limited Assignment provided, among other things, that Sooner was: 1) not to make
coverage commitments to the insured; 2) not to send written correspondence to
the insured except as necessary to confirm appointments, collect necessary
documentation, or provide a complete estimate; 3) to personally inspect the
losses; and 4) provide a descriptive report to if a loss was possibly not
covered so that a Brotherhood adjuster could make a coverage determination.
¶4 Trinity disputes that Sooner stuck entirely to the terms of its Limited
Assignment over the course of its investigation, arguing that Sooner's
representative made coverage recommendations to Brotherhood in contravention of
the Limited Assignment.2 Regardless, Trinity agreed that Sooner had no
authority to make coverage determinations to it. Trinity also agreed that
Sooner's evaluations and estimates of damages were submitted directly to
Brotherhood and it was Brotherhood that determined what documentation generated
by Sooner would be provided to Trinity. Trinity also agreed that Sooner's
services were charged at Sooner's customary hourly rate and that Brotherhood
reimbursed Sooner for its expenses.
¶5 After a lengthy investigation and claims process, that came to involve
several other contractors and entities not party to the lawsuit, Trinity
eventually filed suit in the District Court of Oklahoma County on February 18,
2011. In its First Amended Petition, filed on March 9, 2011, Trinity asserted
bad faith and breach of contract claims against Brotherhood for its handling and
investigation of Trinity's claim. Trinity also alleged bad faith and negligence
on the part of Sooner Claims, alleging that Sooner: 1) assigned an adjuster to
Trinity's claim when it knew or should have known that the adjuster was
inadequately skilled for adjusting Trinity's type of commercial loss; 2) allowed
its adjuster to drag out adjustment for over one year; 3) allowed its adjuster
to "low ball" Trinity's loss on more than one occasion only to increase the
covered loss when Trinity objected and hired third-parties; and 4) allowed its
adjuster to engage in inadequate and incomplete adjustment of Trinity's loss, to
Trinity's detriment.
¶6 After discovery and other proceedings in the trial court, Sooner filed two
motions for summary judgment. In its First Motion for Summary Judgment, filed on
January 14, 2014, Sooner argued that it was entitled to judgment as a matter of
law because it owed no duty to Trinity that would subject it to liability for
bad faith or negligent adjustment of Trinity's claim. Sooner also filed a Motion
for Partial Summary Judgment on the Issue of Damages on January 21, 2014,
arguing: 1) as a corporation, Trinity could not maintain a claim for emotional
damages; and 2) Trinity could not establish any damages suffered as a result of
any act or omission of Sooner or its adjuster Steve Hall.
¶7 The trial court entered summary judgment for Sooner on August 4, 2014. The
trial court: 1) sustained Sooner's First Motion for Summary Judgment to the
extent Trinity was attempting to maintain a claim against Sooner for bad faith;
2) denied Sooner's First Motion for Summary Judgment with respect to Trinity's
claim of gross negligence; 3) Sustained Sooner's Motion for Partial Summary
Judgment on the Issue of Damages; and 4) dismissed all claims asserted by
Trinity against Sooner with prejudice.
¶8 Trinity filed its Petition in Error on July 25, 2014.3 Sooner filed a
Counter-Petition in Error on August 14, 2014, to address the trial court's
denial of its First Motion for Summary Judgment with respect to Trinity's claim
of gross negligence. Trinity filed a motion to retain its appeal for disposition
by this Court on July 25, 2014. We granted Trinity's motion to retain on August
15, 2014, and the cause as assigned to this office on August 19, 2014.
II.
Standard of Review
¶9 A moving party is entitled to summary judgment as a matter of law only
when the pleadings, affidavits, depositions, admissions or other evidentiary
materials establish no genuine issue of material fact exists and the moving
party is entitled to judgment as a matter of law. Miller v. David Grace,
Inc., 2009 OK 49, ¶10, 212 P.3d 1223; Wathor v.
Mutual Assurance Administrators, 2004 OK 2, ¶4, 87 P.3d 559. In reviewing the grant
or denial of summary judgment, this Court views all inferences and conclusions
to be drawn from the evidentiary materials in a light most favorable to the
nonmoving party. Miller, 2009
OK 49, ¶10; Wathor, 2004
OK 2, ¶4. Because a grant of summary judgment is purely a legal issue, this
Court's standard of review on appeal is de novo. Miller, 2009 OK 49, ¶10; Carmichael v.
Beller, 1996 OK 48, ¶2, 914 P.2d 1051.
III.
Sooner did not Owe Trinity a Duty of Good Faith and Fair
Dealing Because it
was a Stranger to the Insurance Contract and no
Special Relationship Existed
Between it and Trinity.
¶10 The trial court sustained in part and denied in part Sooner's First
Motion for Summary Judgment alleging that Sooner owed no legal duty to Trinity.
The trial court sustained Sooner's motion to the extent that Trinity was
attempting to maintain a claim against Sooner for bad faith. On appeal, Trinity
contends the trial court erred because under certain circumstances an
independent adjuster may owe a duty of good faith and fair dealing to
individuals insured by its client. Sooner asserts it owed no duty of good faith
and fair dealing to Trinity. We agree.
A. The general rule in Oklahoma is that only the insurer owes a duty of
good faith and fair dealing to its insured.
¶11 Oklahoma law recognizes an implied duty on the part of an insurer to deal
fairly and act in good with regard to its insured. Timmons v. Royal Globe
Ins. Co., 1982 OK 97, ¶12, 653 P.2d 907; Christian v.
American Home Assur. Co., 1977 OK
141, ¶25, 577 P.2d 899. In
Timmons, this Court examined whether this duty might be extended to cover
individuals who were not a party to the contract between the insurer and the
insured, and determined that it could not. 1982 OK 97, ¶¶16-17. Citing precedent
from California on which this Court's recognition of the implied covenant of
good faith and fair dealing was originally based, this Court in Timmons
determined that as non-insurer defendants were not parties to the agreement
for insurance, they could not be subject to an implied duty of good faith and
fair dealing:
In Christian, supra, this Court analyzed and quoted at
length from Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108
Cal.Rptr. 480, 510 P.2d 1032 (1973). Therein this Court termed
Gruenberg, supra, to be a "clear analysis"
of the implied duty of fair dealing and good faith at p. 904. Gruenberg,
supra, itself specifically examined the liability of an agent for
damages for violation of the implied covenant of fair dealing and good faith
inuring in a contract of insurance:
"Obviously, the non insurer defendants were not parties to the
agreement for insurance; therefore, they are not, as such, subject to an
implied duty of good faith and fair
dealing...."
Later the California Court dealt with this precise issue, Egan v.
Mutual of Omaha Ins. Co., 24 Cal.3d 809, 620 P.2d 141, 169 Cal.Rptr. 691
(1979), holding at 620 P.2d p. 149, 169 Cal.Rptr. p. 699:
"Segal and McEachen acted as Mutual's agents. As such they are not
parties to the insurance contract and not subject to the implied
covenant. Because the only ground for imposing liability on either Segal
or McEachen is breach of that promise, the judgments against them as
individuals cannot stand."
As this jurisdiction has embraced the implied covenant spoken to in
Gruenberg, supra, it is clear that the cause will not lie against
a stranger to the contract.
Timmons, 1982 OK 97, ¶17
(emphasis added).
B. An exception to the general rule exists when a non-party to the
insurance contract acts sufficiently like an insurer so that a special
relationship can be said to exist between the third-party and the
insured.
¶12 While the general rule is that the implied covenant of good faith and
fair dealing will not lie against third parties who are strangers to the
insurance contract, there are exceptions to the rule. See Badillo v. Mid
Century Ins. Co., 2005 OK
48, 121 P.3d 1080; Wathor
v. Mutual Assurance Administrators, Inc., 2004 OK 2, 87 P.3d 559; Wolf v. Prudential
Ins. Co. of America, 50 F.3d 793 (10th Cir. 1995). In Wolf v. Prudential
Ins. Co. of America, the United States Court of Appeals for the Tenth
Circuit determined that Timmons should not be dispositive in situations
involving third party entities, such as a plan administrator, with far more
involvement in the insurance process than the agent of the insurer in
Timmons. Wolf, 50 F.3d at 797. Rather, the Tenth Circuit
determined that lack of contractual privity alone was not a total bar, and "the
analysis should focus more on the factual question of whether the administrator
acts like an insurer such that there is a 'special relationship' between the
administrator and insured that could give rise to a duty of good faith."
Wolf, 50 F.3d at 797.
¶13 The Wolf court noted that the plan administrator in that cause had
a high degree of involvement with the insured and control over matters covered
by the insurance contract. 50 F.3d at 797-98. Specifically, the administrator:
1) investigated and serviced claims; 2) had primary control over benefit
determinations (including intermediate appeals); 3) received a percentage of the
premiums paid for participant coverage, which increased as losses decreased; and
4) assumed much of the risk for its determinations. Wolf, 50 F.3d at 798.
The court concluded the administrator
looks much like an insurer.. We therefore do not see Prudential as a
"stranger" to the insurance contracts in this case. It was contractually
obligated to administer the plans, and its contractual obligation directly
benefitted plaintiffs as third-party beneficiaries of its agreements with
the Annuity Board. The contractual obligation combines with the fact that
Prudential's benefit determinations could at least indirectly affect its
profits and losses to create a special relationship between Prudential and
plaintiffs. In other words, on the facts as presented by plaintiffs,
Prudential had the power, motive and opportunity to act
unscrupulously.
Wolf, 50 F.3d at 798.
¶14 This Court considered the Wolf decision in Wathor v. Mutual
Assurance Administrators, Inc., 2004 OK 2, 87 P.3d 559. This Court agreed with
the basic premise of Wolf and noted that the imposition of a nondelegable
duty on the insurer does not necessarily preclude an action by an insured
against a plan administrator for breach of an insurer's duty of good faith.
Wathor, 2004 OK 2, ¶9.
This Court determined:
In a situation where a plan administrator performs many of the tasks of
an insurance company, has a compensation package that is contingent on the
approval or denial of claims, and bears some of the financial risk of loss
for the claims, the administrator has a duty of good faith and fair dealing
to the insured.
Wathor, 2004 OK 2,
¶12. However, applying the rule of Wolf to the specific facts of
Wathor, we determined that the third-party administrator in Wathor
was not so entangled with the insured so as to create a special relationship
that would subject them to the duty of good faith and fair dealing.
Wathor, 2004 OK 2, ¶13.
Specifically, this Court determined:
[l]ike the plan administrator in Wolf, MAA unquestionably
performed some of the tasks of an insurance company in its claims handling
process. However, in contrast to the facts in Wolf, MAA's
compensation package was not tied to the approval or denial of claims but
was instead a flat fee based on the number of participants in the Plan.
Likewise, MAA did not share the risk of loss with the Plan if losses
increased to a certain level, and did not underwrite the entire risk if
losses got even higher. In other words, under the facts presented in this
case, MAA had neither the power, the motive, nor the opportunity to act
unscrupulously.
Wathor, 2004 OK 2,
¶13.
¶15 In Badillo v. Mid Century Insurance Co., 2005 OK 48, 121 P.3d 1080, this Court reached
the opposite conclusion and determined that a third party did owe the insured a
duty of good faith and fair dealing. That cause involved two affiliated
companies under the umbrella of the Farmers Insurance Group that were so similar
as to be nearly indistinguishable, though they nominally had separate functions.
See Badillo, 2005 OK 48,
¶¶5, 53-55. The trial court treated the two entities as one for purposes of
liability and ruled as a matter of law that they both owed the insured a duty of
good faith and fair dealing. Badillo, 2005 OK 48, ¶54. This Court
determined the trial court committed no error by treating the entities as
indistinguishable for purposes of the implied duty of good faith and fair
dealing, noting:
[w]e believe no reasonable person viewing the evidence, and the
reasonable inferences therefrom, could conclude anything other than FIE
acted as if it was the insurer in its handling of the Smith claim and that
it had a special relationship with insured such that it, like MCIC, was
subject to the duty of good faith and fair dealing toward
him.
Badillo, 2005 OK 48,
¶55.4
C. Sooner did not owe Trinity a duty of good faith and fair dealing as a
third-party insurance adjuster because it did not act sufficiently like an
insurer so as to create a special relationship with Trinity.
¶16 Wolf, Wathor, and Badillo all stand for the
proposition that this Court will only apply the duty of good faith and fair
dealing to a third party stranger to the insurance contract when the third party
acts so like an insurer that it develops a special relationship with the
insured, Badillo, 2005 OK
48, ¶5, essentially giving the third party the power, motive, and
opportunity to act unscrupulously. Wathor, 2004 OK 2, ¶13.
¶17 In its response to Sooner's motion for summary judgment, Trinity argued
that such a special relationship did exist, because it alleged Sooner was asked
to do more by Brotherhood than some insurers require from their independent
adjusters, including giving advice to Brotherhood on coverage determinations
recommending the setting of reserves.5 However, as this Court stated in Wathor,
merely performing some of the tasks of an insurance company in the claims
handling process is not sufficient to subject a third party to the duty of good
faith and fair dealing.6 Sooner was not a plan administrator with primary
control over benefit determinations and intermediate appeals. See Wathor,
2004 OK 2, ¶10; Wolf , 50
F.3d at 797-98. Sooner's compensation was not tied to premiums paid, nor did it
increase or decrease in relation to losses, and Sooner did not share the risk
with Brotherhood. See Wathor, 2004 OK 2, ¶10.
¶18 Trinity confuses the nature of the "special relationship" standard
elucidated in this Court's prior cases. For a non-party to the insurance
contract to be subjected to the duty of good faith and fair dealing, a special
relationship must arise between it and the insured. While Trinity alleges
that Sooner may have gone beyond the terms of its Limited Assignment, it is
evident from the record that Sooner did not step into Brotherhood's shoes for
purposes of interacting with Trinity such that it developed a special
relationship with Trinity on par with that shared by parties to an insurance
contract.
¶19 Sooner's authority with regard to Trinity was limited, and the facts of
this case are distinguishable from situations involving administrators where the
line dividing who is a third party and who is the insurer has blurred. All of
Trinity's allegations and the available record indicate that the scope of
Sooner's responsibilities may have been enlarged with respect to what
Brotherhood asked Sooner to do for it, not with regard to Sooner's relationship
with Trinity. Reviewing all inferences and conclusions to be drawn from the
underlying and uncontested facts in a light most favorable to Trinity, Sooner
was entitled to summary judgment as a matter of law on the grounds that it owed
no duty of good faith and fair dealing to Trinity.
IV.
Sooner Owed No Duty to Trinity Concerning its Adjustment of
Trinity's Claim
¶20 The trial court denied Sooner's First Motion for Summary Judgment with
respect to Trinity's claim of gross negligence against Sooner. In its
Counter-Petition in Error, Sooner asserts the trial court erred by denying in
part its First Motion for Summary Judgment and asserts it owed no duty to
Trinity that would subject it to a claim of gross negligence for the manner in
which it investigated and adjusted Trinity's claim. Whether an insured party can
maintain a separate tort action for negligence against an independent insurance
adjuster employed by the insurer is an issue of first impression for this
Court.
¶21 The threshold question in any action for negligence is the existence of a
duty. Wood v. Mercedes-Benz of Oklahoma City, 2014 OK 68, ¶7, --- P.3d ---;
Miller v. David Grace, Inc., 2009 OK 49, ¶11, 212 P.3d 1223; Bray v. St. John
Health Sys., Inc., 2008 OK
51, ¶6, 187 P.3d 721. The
existence of a legal duty is a question of law for the court. Wood, 2014 OK 68, ¶7; Miller, 2009 OK 49, ¶11. Where the
defendant did not owe a duty of care to the plaintiff, there can be no liability
for negligence as a matter of law. Lowery v. Echostar Satellite Corp., 2007 OK 38, ¶12, 160 P.3d 959; First Nat'l Bank
in Durant v. Honey Creek Entertainment Corp., 2002 OK 11, ¶20, 54 P.3d 100.
¶22 A legal duty is an expression of the sum total of those considerations of
policy which lead the law to say that the particular plaintiff is entitled to
protection. Iglehart v. Bd. of County Com'rs of Rogers County, 2002 OK 76, n. 17, 60 P.3d 497. While the question of
duty is usually presented in terms of a particular actor's obligation, this
Court has previously noted that the essential question is whether the
plaintiff's interests are entitled to protection against the defendant's
conduct. Morales v. City of Oklahoma City ex rel. Oklahoma City Police
Dept., 2010 OK 9; Wofford
v. Eastern State Hosp., 1990 OK
77, ¶10, 795 P.2d 516. The
foreseeability of harm to the potential plaintiffs as a result of an
individual's conduct is one of the most important considerations used to
determine the existence of a legal duty. Morales, 2010 OK 9, ¶21; Iglehart, 2002 OK 76, ¶10. However,
foreseeability is just one of many factors that this Court considers and other
factors include: 1) the degree of certainty of harm to the plaintiff; 2) the
moral blame attached to defendant's conduct; 3) the need to prevent future harm;
4) the extent of the burden to the defendant and consequences to the community
of imposing the duty on defendant; and 5) availability of insurance for the risk
involved. Morales, 2010 OK
9, n. 32; Lowery, 2007 OK
38, n. 4.
¶23 A majority of courts in other states have held that an insured cannot
maintain a separate tort action for negligence against an independent insurance
adjuster hired by the insurer because the independent adjuster owes the insured
no duty of care.7 A minority of state courts take the opposite
position and have determined that in similar factual circumstances an
independent adjuster does owe a duty of care to the insured to not be negligent
in its investigation or adjustment of the claim.8
A. In Brown v. State Farm and Casualty
Company, 2002 OK CIV
APP 107, 58 P.3d
217, the Court of Civil Appeals adopted the minority view that an
independent insurance adjuster hired by an insurer may owe a duty of care to the
insured.
¶24 Trinity encourages this Court to adopt the minority viewpoint that an
independent insurance adjuster hired by the insurer may owe a duty of care to
the insured, and relies heavily upon a decision by the Oklahoma Court of Civil
Appeals, Division III: Brown v. State Farm and Casualty Company,
2002 OK CIV APP 107, 58 P.3d 217 (cert. denied Oct. 15,
2002).9 In
that cause, the Court of Civil Appeals adopted the view of a minority of courts
in other states that independent insurance investigators owe a duty to the
insured as well as the insurer to conduct a fair and reasonable investigation of
an insurance claim. Brown, 2002 OK CIV APP 107, ¶19.
¶25 The court in Brown examined prior decisions of this Court
addressing the existence of a duty in negligence actions:
¶ 7 "Oklahoma courts have recognized that the existence of a duty depends
on the relationship between the parties and the general risks involved in
the common undertaking." Wofford, ¶ 10, 795 P.2d at 519. "Duty of
care is not a concept that arises only by statute.... Whenever a person is
placed in such a position with regard to another that it is obvious that if
he did not use due care in his own conduct he will cause injury to the
other, the duty at once arises to exercise care commensurate with the
situation in order to avoid such injury." Id.,citing Union Bank of Tucson
v. Griffin, 1989 OK 47, ¶
13;771;P.2d;219;222.
¶ 8 The most important consideration in establishing duty is
foreseeability. Wofford, ¶ 11, 795 P.2d at 519. "As a general rule,
'a defendant owes a duty of care to all persons who are foreseeably
endangered by his conduct with respect to all risks which make the conduct
unreasonably dangerous.' " Id., citing Tarasoff v. Regents of Univ. of
Cal., 17 Cal.3d 425, 131 Cal.Rptr. 14, 22;551;P.2d;334;342 (1976).
"Foreseeability as an element of duty establishes a 'zone of risk', that is,
whether the conduct 'creates a generalized and foreseeable risk of harming
others.' " Smith v. Speligene, 1999 OK CIV APP 95, ¶
11;990;P.2d;312;315, citing Delbrel v. Doenges Bros. Ford, Inc., 1996 OK 36, ¶
8;913;P.2d;1318;1321 and McCain v. Florida Power Corp., 593 So.2d
500, 503.
2002 OK CIV APP 107,
¶¶7-8.
The Brown court also discussed several prior decisions of this Court
examining what duty was owed, if any, by professionals to third parties in a
variety of factual settings that are distinguishable from the instant cause.10
Particularly persuasive to the Brown court was the decision of the New
Hampshire Supreme Court in Morvay v. Hanover Ins. Companies, 127 N.H.
723, 506 A.2d 333 (1986).11
B. The law in Oklahoma is in accord with the majority view that an
independent insurance adjuster hired by an insurer does not owe a duty of care
to the insured.
¶26 Sooner encourages this Court to adopt the view endorsed by the majority
of other states that have considered the issue, as well as by some federal
district courts in Oklahoma.12 In the unreported case Wallace v. Allstate Ins.
Co., No. CIV-12-0310-HE, 2012 WL 2060664 (W.D. Okla. June 7, 2012), the
United States District Court for the Western District of Oklahoma determined
that under Oklahoma law an independent insurance adjuster hired by an insurer to
investigate a claim does not owe a duty to the insured to conduct a fair and
reasonable investigation.
¶27 The court in Wallace noted that the decision of this Court relied
upon in Brown concerned an architect, bond counsel, and accounting firm,
all of whom were highly skilled professionals who could reasonably expect third
parties to rely upon their work. Wallace, 2012 WL 2060664, *1. The
Wallace court correctly noted that different circumstances apply where
insurance adjusters are concerned, stating:
[i]n the context of an insurance claim, it is "[t]he insurer [that]
contractually controls the responsibilities of its adjuster and retains the
ultimate power to deny coverage or pay a claim. Subjecting adjusters to
potential tort liability from insureds could create conflicting loyalties
with respect to the adjusters' contractual obligations, given that insureds
and insurers often disagree on the extent of coverage or the amount of
damages."Hamill v. Pawtucket Mut. Ins. Co., 892 A.2d 226, 257
(Vt.2005) (internal citation omitted).
Wallace, 2012 WL 2060664, *2.
Put more succinctly , "'[c]reating a separate duty from the adjuster to the
insured would thrust the adjuster into what could be an irreconcilable conflict
between such duty and the adjuster's contractual duty to follow the instructions
of its client, the insurer.'" Wallace, 2012 WL 2060664, *2 (quoting
Meineke v. GAB Business Servs., Inc., 991 P.2d 267, 271 (Az. Ct. App.
1999)).
¶28 While the decisions of this Court relied upon by the Court of Civil
Appeals in Brown correctly indicate that this Court does not consider
lack of contractual privity a bar to the existence of a legal duty for purposes
of negligence, the Wallace court is correct that public policy and other
factors besides foreseeability counsel against imposing a legal duty to the
insured with regards to negligence.13
¶29 The relationship between and insurer and its insured is defined and
governed by the insurance policy and its accompanying implied covenant of good
faith and fair dealing. Hamill v. Pawtucket Mut. Ins. Co., 2005 VT 133,
¶13, 892 A.2d 226. See Wathor, 2004 OK 2,¶¶6-7; Christian,
1977 OK 141, ¶24-25. This court
stated pointedly in Wathor that this duty is non-delegable and that an
insurer can be held liable for breach of the duty due to the actions of its
independent contractors or agents. 2004 OK 2, n. 6. The Court
stated:
[a]n insurer has a non-delegable duty of good faith while performing the
functions of claims management, adjustment and settlement. This duty
requires the insurer to take positive steps to adequately investigate,
evaluate, and respond to its insureds' claims. An insurer may employ an
agent or an independent contractor to perform these functions, but this does
not absolve the insurer of its own non-delegable duty. If the agent or
independent contractor fails to adequately perform the functions, the
insurer is liable, not under the doctrine of respondeat
superior, but because of its own failure to comply with its
non-delegable duty of good faith.
Wathor, 2004 OK 2, n.
6. See also Timmons, 1982 OK 97, ¶17 (acts of agents may
be material to a determination of the existence of a breach of an insurer's duty
of good faith and fair dealing).
¶30 Even if harm to the insured through an adjuster's negligence might be
foreseeable to the adjuster, from a policy standpoint it makes little sense to
hold that the adjuster has an independent duty when the insurer itself is
subject to liability for the adjuster's mishandling of claims in actions
alleging breach of contract and bad faith. The special relationship between the
insurer and insured, and the implied duty of good faith and fair dealing on the
part of the insurer, represent a unique factual departure from the decisions of
this Court relied upon by the Court of Civil Appeals in Brown, discussed
above.14 If
the insurer mishandles a claim due to the actions of its independent adjuster,
the insured may be entitled to recover compensatory damages for breach of
contract, or damages in tort if the insurer's actions rise to the level of bad
faith.
¶31 The existence of a separate legal duty on the part of the adjuster in
these circumstances would allow for potential double recovery, permitting the
insured to recover in tort both for breach of contract or breach of the duty of
good faith and fair dealing by the insurer--caused by an adjusters negligent
conduct--and from the adjuster for the same conduct. In the words of the Supreme
Court of Vermont in Hamill: "in most cases, imposing tort liability on
independent adjusters would create a redundancy unjustified by the inevitable
costs that eventually would be passed on to insureds." 2005 VT 133, ¶14 (citing
Sanchez v. Lindsey Morden Claims Services, Inc., 84 Cal.Rptr.2d 799,
802-03 (Cal. Ct. App. 1999)).15
V.
DAMAGES
¶32 The trial court sustained Sooner's Motion for Partial Summary Judgment on
the Issue of Damages. In its motion, Sooner argued that it was entitled to
judgment as a matter of law because: 1) a corporation cannot maintain a claim
for emotional damages; and 2) Trinity could not establish any damages as a
result of an act or omission of Sooner or its adjuster Steve Hall. As this Court
has determined that Sooner owed no legal duty to Trinity that would subject it
to liability in tort, either for bad faith or negligence, Sooner is entitled to
judgment as a matter of law and this Court need not address the issue of
damages. See Lowrey, 2007 OK
38, ¶12, 160 P.3d 959
("The existence of a duty of care is the threshold question in any negligence
action."); Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶25, 121 P.3d 1080 (noting the prima
facie case for breach of the duty of good faith and fair dealing requires
plaintiff establish the defendant owed them such a duty).
CONCLUSION
¶33 When possible an appellate court must hand down the judgment, which in
its opinion, the trial court should have rendered. Hall v. CEO Group,
Inc., 2014 OK 22, ¶17, 324 P.3d 399; Dixon v.
Bhuiyan, 2000 OK 56, ¶9, 10 P.3d 888. If the trial court
reached the correct result but for the wrong reasons, its judgment is not
subject to reversal. Hall, 2014 OK 22, ¶17; Dixon, 2000 OK 56, ¶9; In the Matter of
the Estate of Bartlett, 1984 OK
9, ¶4, 680 P.2d 369. Rather,
this Court is not bound by the trial court's reasoning and may affirm the
judgment below on a different legal rationale. Hall, 2014 OK 22, ¶17; Dixon, 2000 OK 56, ¶9; McMinn v. City of
Oklahoma City, 1997 OK
154, ¶11, 952 P.2d 517.
¶34 The trial court did not err by entering summary judgment in favor of
Sooner, though it did so on the basis of Sooner's damages claims rather than
Sooner's assertion that it owed Trinity no legal duty. This Court determines
that: 1) Sooner was not subject to the implied covenant of good faith and fair
dealing arising from the insurance contract between Trinity and Brotherhood; and
2) owed Trinity no legal duty that would allow Trinity to recover in tort for
any negligence in Sooner's investigation and adjustment of the claim.
Accordingly, the trial court's August 4, 2014, grant of summary judgment in
favor of Sooner is affirmed.
REIF, V.C.J., KAUGER, WATT, WINCHESTER, and COMBS, JJ., concur.
TAYLOR, J., concurs in result.
COLBERT, C.J., and EDMONDSON, J., concur in part and dissent in
part.
GURICH, J., not participating.