Wagnon v. State Farm Fire & Casualty Co.

1997 OK 160, 951 P.2d 641, 1997 WL 795768

• Court: Supreme Court of Oklahoma
• Decided: April 3, 1998
• Docket: 89362
• Status: Published

Opinions

ALMA WILSON, Justice:

¶ 1 Charles and Loralee Wagnon sued State Farm Fire and Casualty Company in the District Court of Tulsa County, State of Oklahoma, for breach of contract and bad faith after State Farm denied their insurance claim. The insurer, State Farm, removed the case to the United States Dis-triet Court for the Northern District of Oklahoma. The federal court, in a non-jury trial, found for the Wagnons on the breach of contract claim, awarding $12,899.68 for their loss, but granted judgment to the insurer on the bad faith claim. Both parties appealed to the United States Court of Appeals for the Tenth Circuit. That court, pursuant to 20 O.S.1991, §§ 1601-1611, has certified a question of law concerning whether theft coverage in the Wagnons’ homeowners/renters’ insurance policy is subject to the one-year statute of limitations prescribed for fire insurance policies in 36 O.S.1991, § 4803(G).¹ We answer that theft coverage is not subject to the one-year statute of limitations prescribed for fire insurance policies under § 4803(G).²

¶2 The following facts are provided by the Tenth Circuit court. The Wagnons entered into a one-year insurance contract that protected their personal property against loss from multiple perils including fire, lightning, and theft. The policy provided that any suit against the insurer “must be started within one year after the date of loss or damage.” Three months after entering into the contract, the Wagnons filed a claim alleging loss from a burglary occurring on April 4, 1992. The insurer denied coverage based on misrepresentations by the Wagnons. On April 4, 1994, the Wagnons sued the insurer for breach of contract and bad faith. The insurer moved for summary judgment on the breach of contract claim based on the one-year provision in the policy and the one-year limitation on actions provided in 36 O.S.1991, § 4803(G). The federal district court denied the motion, concluding that the one-year limitation in the Wagnons’ policy was invalid. The court then determined the amount of the Wagnons’ loss under the policy and awarded that amount on the breach of contract action.

¶3 State Farm begins its argument by stating that a policy of insurance insuring against the peril of fire must conform to the standard fire policy and any endorsements to that policy are subject to the statute of limitations provision contained therein. An examination of the policy reveals that it bears little, if any, resemblance to the “Standard Fire Insurance Policy” found in 36 O.S.1991, § 4803(G). The Wagnons’ policy insures against accidental direct physical loss to property caused by seventeen perils including fire and theft.³ Even when the Wagnons’ policy concerns the same subject as the standard fire insurance policy, the wording is different.⁴ Although the Wagnons’ homeowners policy may include coverage for fire, it is no more a standard fire policy than it is a theft policy, a vandalism policy, an eclo-sión policy, or any of the other named seventeen perils covered.

¶ 4 Section 4803(F)(1) does provide for a form of policy to .be approved by the Insurance Commissioner that does not correspond to the standard fire insurance policy as provided in this section, if the coverage of the approved policy is not less than that contained in the standard fire insurance policy with respect to the peril of fire. The Tenth Circuit Court of Appeals has not asked this Court to rule whether the policy itself violates § 4803, and we express no opinion concerning this issue. But we see no reason to characterize this policy as a “standard fire insurance policy,” and thereby force all the other coverages for the perils included to fit within the statutory provisions for the standard policy found in § 4803. Even though other courts have observed that the term “fire insurance” may be a generic term,⁵ we see no reason to entertain this legal fiction.

¶ 5 While State Farm has attempted to sweep all perils under the umbrella of a “standard fire insurance policy,” the Wag-nons urge that there is an important statutory distinction between the peril of fire, and that of theft in the homeowners policy. The Wagnons observe that theft is defined as. casualty insurance, and casualty insurance has its own statute of limitations. An examination of title 36 proves that this statement is correct. The definition is found in 36 O.S. 1991, § 707, which provides in pertinent part:

“‘Casualty insurance’ includes vehicle insurance as defined in Section 706 and accident and health insurance as defined in Section 703, of this article, and in addition includes ... 3. Burglary and theft insurance, which is insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal, or concealment, or from any attempt at any of the foregoing....”

¶ 6 Section 3617 provides that:

“No policy delivered or issued for delivery in Oklahoma and covering a subject of insurance resident, located, or to be performed in Oklahoma, shall contain any condition, stipulation or agreement ... (3) limiting the time within which an action may be brought to a period of less than two (2) years from the time the cause of action accrues in connection with all insurances other than property and marine and transportation insurances; in property and marine and transportation policies such time shall not be limited to less than one (1) year from the date of occurrence of the event resulting in the loss. Any such condition, stipulation or agreement shall be void, but such voidance shall not affect the validity of the other provisions of the policy.”

So a fire policy, being property insurance,⁶ can be limited to a one-year period in which to file an action. But theft is covered as casualty insurance, which according to § 3617, cannot be limited to less than two years for bringing a court action. In addition, § 4801(A) specifically excludes casualty insurance from application to article 48. The statutory standard fire contract, § 4803(G), in the section entitled “Perils not included,” specifically excludes theft from coverage. The Wagnons observe that casualty insurance has no specific statutory limitation and that either the five-year limitation period for contracts actions pursuant to 12 O.S.1991, § 95 (first) applies, or the two-year limit pursuant to 36 O.S.1991, § 3617 applies.

¶ 7 The Tenth Circuit cites three cases from other jurisdictions on the issue of whether the one-year statute of limitations for fire insurance is also applicable to theft insurance. In the first ease, Grice v. Aetna Cas. & Sur. Co.,7 the Louisiana Supreme Court held that where a homeowners’ policy is part of the same contract as the standard fire policy, the burglary and theft coverage of the homeowners’ policy will be governed by the same limitation as the standard fire policy. In the second ease, Simms v. Allstate Ins. Co.,8 the Washington Court of Appeals held that a theft loss covered by a homeowners’ policy that incorporated the one-year limitation on fire insurance was controlled by the property insurance statute of limitations rather than a limitation for insurance other than property. But unlike the Louisiana and Washington cases, the Arizona Court of Appeals in Kearney v. Mid-Century Ins. Co.,9 held that the one-year statute of limitations would not apply to theft coverage in a homeowner’s policy, because the coverage was casualty insurance, which by statute could not be limited to less than two years.

¶ 8 In the Louisiana case, the plaintiff sued Aetna when she was not reimbursed for the losses she claimed under her homeowners’ policy when her home was burglarized. Aetna raised the issue of the failure of the plaintiff to commence the lawsuit within the twelve months after she had sustained her loss. Grice, 359 So.2d at 1289. Louisiana, like Oklahoma, has a standard fire policy that is mandatory, and which contains a clause requiring a suit to be filed “within twelve months next after the inception of the loss.” Grice, 359 So.2d at 1289. The homeowners’ policy insures against burglary and theft and provides other coverages in addition to the perils of fire and lightning covered by the standard fire insurance policy. Grice, 359 So.2d at 1289. The plaintiff in Grice argued to the Supreme Court of Louisiana that the limitation had been less than twelve months because a provision of the standard fire policy requiring the insured to wait sixty days before filing a lawsuit, thereby reducing the time for suit to ten months. Grice, 359 So.2d at 1290. But the court found that the provisions of the standard fire policy and the Louisiana statutes of limitation were both mandated by the legislature as part of the Insurance Code, and rejected the plaintiffs argument that the waiting period reduced the time for filing a lawsuit to less than twelve months. Grice, 359 So.2d at 1291. The issues in Grice are distinguishable from those of the Wagnon’s case. The plaintiff in Grice was not arguing that a longer statute of limitation should be applied, she argued that she was denied a full year because of the waiting period.

¶ 9 In the Washington decision, Simms, the Court of Appeals construed a Washington statute, RCW 48.18.200, that invalidates only those contract limitation clauses requiring suit to be brought in less than one year. Simms, 27 Wash.App. at 873-874, 621 P.2d at 156. But a major difference between this statute and Oklahoma's 36 O.S.1991, § 3617 is that in Washington no insurance contract could limit a right of action to a period of less than one year from the time “when the cause of action accrued,” but in contracts of property insurance, the limitation “shall not be to a period of less than one year from the date of loss.” Simms, 27 Wash.App. at 874, 621 P.2d at 156. The Washington court found that the plaintiffs claim for a theft loss sustained in February of 1977, when suit was filed against Allstate on June 22, 1979, was barred. This ease has no application to the issue in the case at bar.

¶ 10 Of the three cases cited by Tenth Circuit, only the Arizona case of Kearney appears to have facts, statutes and issues similar to the case at bar. The plaintiff in that case sued Mid-Century Insurance Company, and Fire Insurance Exchange to recover on her claim for an $8,335.00 personal property loss from a burglarized home. The defendants’ motion for summary judgment was granted based upon the plaintiffs failure to bring the action within the twelve-month period prescribed in the policy of insurance. The source of Oklahoma’s article 48, title 36, is reported to be the Arizona Insurance Code, A.R.S. §§ 20-1501ff.¹⁰ Arizona’s insurance statutes quoted in Kearney are in substance identical to those of Oklahoma. Like 36 O.S.1991, § 3617, the Arizona statute, A.R.S. § 20-1115, provides that insurance policies shall not limit “the time within which an action may be brought to a period of less than two years from the time the cause of action accrues in connection with all insurances other than property and marine and transportation insurances.” That statute then continues, “In property and marine and transportation policies such time shall not be limited to less than one year from the date of occurrence of the event resulting in the loss.”¹¹ Like the case at bar, the plaintiff asserted that the theft coverage should not have been classified under property insurance, but under casualty insurance, so that the one-year limitation period should not have been applied. The Arizona statutes define casualty insurance to include burglary and theft insurance, just as 36 O.S.1991, § 707 does.¹² The Arizona statutes also define property insurance in the same way as 36 O.S.1991, § 704.¹³

¶ 11 The Arizona court reasoned that if the loss of the plaintiff was construed as a casualty loss, then the limitation period set forth in the policy was void as being repugnant to § 20-1115, and the suit had to be reinstated as having been timely filed. Kearney, 22 Ariz.App. at 191, 526 P.2d at 170. The court concluded from the statutes that property insurance was not intended to include casualty insurance. Kearney, 22 Ariz.App. at 192, 526 P.2d at 171. Like 36 O.S.1991, § 4801, Arizona’s statute, A.R.S. § 20-1501 of their article 7 entitled “Property Insurance,” provides: “This article shall not apply to vehicle, casualty, inland marine or ocean marine insurance, or reinsurance.”

¶ 12 The Arizona court observed that where two statutes, one specific and one general, relate to the same subject, the specific statute controls and is regarded as an exception to the terms of the general statute, because the legislature is assumed not to have intended conflict. Kearney, 22 Ariz. App. at 192, 526 P.2d at 172. This Court has also held that in the construction of statutes, “Laws addressing a specific situation are applied to the exclusion of more general laws.” Lindsey v. Kingfisher Bank & Trust Co., 832 P.2d 1, 3 (Okla.1992). The Arizona court further cited the rule that the defense of the statute of limitations, while legitimate, is not favored by the courts, and where there is doubt as to which of two statutes apply, the longer period is generally used. Kearney, 22 Ariz.App. at 193-94, 526 P.2d at 172-73, cit-mg O’Malley v. Sims, 51 Ariz. 155, 75 P.2d 50, 54 (1938). The O’Malley case was cited with approval in Williams v. Lee Way Motor Freight, 688 P.2d 1294, 1297 (Okla.1984).¹⁴

¶ 13 The insurer, State Farm, criticizes the Kearney case, and states that the case does not address the applicability of A.R.S. § 20-1507(B), which mirrors 36 O.S. 1991, § 4803(C). The second paragraph of § 4803(C) provides:

“Such other perils or coverages may include those excluded in the standard fire insurance policy, and may include any of the perils or coverages permitted to be insured against or issued by property and casualty insurers. Such forms of contracts, riders and endorsements may contain provisions and stipulations inconsistent with such standard fire insurance policy, if said provisions and stipulations are applicable only to such additional coverage or to the additional peril or perils insured against.”

But we are not convinced that simply because the insurer is permitted to include coverage for perils listed under casualty insurance, that the legislature has intended the specific statute of limitations for casualty perils be ignored. If the mandates of 36 O.S.1991, § 3617 can be so easily circumvented, why would the legislature even provide for two separate statutes of limitation?¹⁵ We resolve the doubt in favor of the longer statute of limitation. Theft is casualty insurance and even if it is included in a “fire insurance policy,” the statute of limitations for theft cannot be limited to less than two years, pursuant to 36 O.S.1991, § 3617. State Farm cannot, by labeling the homeowner’s policy a “fire insurance policy” circumvent the legislature’s specific. directive forbidding insurers from limiting filing suit on casualty policies to less than two years.

CERTIFIED QUESTION ANSWERED.

¶ 14 KAUGER, C.J., and HODGES, LAVENDER, OPALA and ALMA WILSON, JJ., concur. ¶ 15 SUMMERS, V.C.J., and SIMMS, HARGRAVE and WATT, JJ., dissent.

1 . The certified question was worded as follows: “Whether theft coverage in a homeowners/renters’ insurance policy, which also insures against loss by fire and lightning, is subject to the one-year statute of limitations prescribed for fire insurance policies under section 4803(G) of title 36 of the Oklahoma Statutes, in light of the restrictions found in title 36, section 3617 of the Oklahoma Statutes, when such coverage falls both within the definition of property insurance under tide 36, section 704 of the Oklahoma Statutes, and the definition of casualty insurance under title 36, section 707 of the Oklahoma Statutes.”

2 . Section 4803 was amended by 1992 Okla. Sess. Laws, ch. 75, § 1, effective Sept. 1, 1992. The amendment does not affect the issues before this Court.

3 .Those perils include: (1) Fire or lightning; (2) Windstorm or hail; (3) Explosion; (4) Riot or civil commotion; (5) Aircraft; (6) Vehicles; (7) Smoke; (8) Vandalism or malicious mischief; (9) Theft; (10) Falling objects; (11) Weight of ice, snow or sleet; (12) Sudden and accidental discharge or overflow of water or steam; (13) Sudden and accidental tearing asunder, cracking, burning or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective sprinkler system, or an appliance for heating water; (14) Freezing; (15) Sudden or accidental damage to electrical appliances; (16) Breakage of glass or safety glazing material which is part of a building, storm door or storm window, and covered as Building Additions and Alterations; (17) Breakage of glass, meaning damage to the personal property caused by breakage of glass constituting a part of any building on the residence premises, but excluding loss or damage to the glass.

4 . For instance, concerning the limitations provision that is the subject of this federal certified question, the statute provides: "No suit or action on this policy for the recovery of any claim shall he sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.” 36 O.S.1991, § 4803(G), (Second Page) ("Suit”). On page 11 of the policy, section 8 provides: "Suit against Us. No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the date of loss or damage.”

5 . Villa Clement, Inc. v. National Union Fire Ins. Co., 120 Wis.2d 140, 145, 353 N.W.2d 369, 371 (Wis.Ct.App.1984), citing Riteway Builders, Inc., v. First National Insurance Company of America,-22 Wis.2d 4 18, 126 N.W.2d 24 (1964).

6 .Title 36 O.S.1991, § 704 provides that: " 'Property insurance’ is insurance on real or personal property of every kind and interest therein, against loss or damage from any or all hazard or cause, and against loss consequential upon such loss or damage, other than noncon-tractual legal liability for any such loss or damage. Property insurance shall also include miscellaneous insurance as defined in paragraph 11 of section 707 of this article except as to any noncontractual liability coverage includable therein."

7 . 359 So.2d 1288 (La.1978).

8 . 27 Wash.App. 872, 621 P.2d 155 (1980).

9 . 22 Ariz.App. 190, 526 P.2d 169 (1974).

10 . See 36 O.S.A. §§ 4801ff. (West 1990), Historical and Statutory Notes.

11 . A.R.S. § 20 — 1115(A)(3) provides in full: "A. No policy delivered or issued for delivery in this state and covering a subject of insurance resident, located or to be performed in this state, shall contain any condition, stipulation or agreement: ... 3. Limiting the time within which an action may be brought to a period of less than two years from the time the cause of action accrues in connection with all insurances other than property and marine and transportation insurances. In property and marine and transportation policies such time shall be one year from the date of occurrence of the event resulting in the loss except that an insurer may extend such limitation beyond one year in its policy provisions.”

12 . A.R.S. § 20-252 provides in part: " ‘Casualty insurance’ includes vehicle insurance as defined in § 20-259, and in addition includes: ... 3. Burglary and theft insurance, which is insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation or wrongful conversion, disposal or concealment, or from any attempt at any of the foregoing, including supplemental coverages for medical, hospital, surgical and funeral benefits sustained by the named insured or other person as a result of bodily injury during the commission of a burglary, robbery or theft by another, and also insurance against loss of or damage to money, coins, bullion, securities, notes, drafts, acceptances or any other valuable papers and documents, resulting from any cause.”

13 .A.R.S. § 20-256 provides: " 'Property insurance’ is insurance on real or personal properly of every kind and interest therein, against loss or damage from any or all hazard or cause, and against loss consequential upon such loss or damage, other than noncontractual legal liability for any such loss or damage. Property insurance shall also include miscellaneous insurance as defined in paragraph 11 of § 20-252 except as to any noncontractual liability coverage includable therein.”

14 . In Williams, we held, "Generally, if there is a substantial question of which of two or more statutes of limitations should be applied, the doubt should be resolved in favor of the application of the statute which contains the longest limitation."

15 . The dissent treats all "Standard Fire Policies” as though they were the same. The holdings of the high courts of sister states with different statutory schemes has little applicability to the statutes of Oklahoma. Kearney is persuasive because its statutory scheme is similar to Oklahoma's, as is explained in the opinion. The dissent cites Coach House Inn, Inc. v. Great American Ins. Co., 54 Wis.2d 541, 196 N.W.2d 636 (1972), as a better reasoned opinion than Kearney. In the Coach House Inn case the plaintiff alleged it lost revenue during a period of civil disturbance, that such loss was covered by its multi-peril fire insurance policy, and that the twelve month limitation on filing suit found in the policy did not apply. The precise question answered was whether the provision being sued on (‘Interruption by Civil Authority') was a valid fire insurance provision, making the one year limitation applicable. The answer was based on construction of Wisconsin statutes dissimilar to those of Oklahoma. The case does not discuss separate definitions for property and casualty insurance with respectively separate statutory proscriptions on the time limitations placed in insurance contracts which limit the filing of actions, and so is distinguishable from the facts in the case at bar.