TOLMAN v. REASSURE AMERICA LIFE INSURANCE CO.

Citations: 391 P.3d 120; 2017 OK CIV APP 15; 2015 Okla. Civ. App. LEXIS 138; 2015 WL 13172708

Court: Court of Civil Appeals of Oklahoma; November 19, 2015; Oklahoma; State Appellate Court

Original Court Document: View Document

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Emery Zane Tolman filed a lawsuit against Reassure America Life Insurance Co. and Bank of the Lakes, following the death of his wife and subsequent issues with a $100,000 life insurance claim. The jury ruled in favor of Tolman on May 2, 2014, awarding him $450,000 in actual damages, with both Reassure and the Bank held equally liable. The jury found in favor of J.P. Morgan Chase, which had previously acquired Bank One, the drawee of the check issued by Reassure. Reassure's post-trial motion for judgment notwithstanding the verdict was denied, and prejudgment interest of $106,539.05 was awarded. Tolman had deposited the check on February 27, 2009, but the Bank teller suspected it to be fraudulent due to the non-existence of Bank One as an institution. Despite contacting Reassure, which failed to provide clarity or follow-up, the Bank reported Tolman to the police for allegedly presenting a fraudulent check, a claim disputed by a Chase representative at trial. The appellate court affirmed in part, reversed in part, and remanded the case.

The check in question cleared on March 2, 2009, the day after its deposit, leading Tolman's banking expert to suggest that better banking practices would include verifying check validity before involving law enforcement. Tolman could not access the funds until March 16 due to a bank hold. After a criminal complaint against him, the bank manager failed to follow up on the check's status and did not update law enforcement on its clearance. Tolman learned of felony charges for uttering a forged instrument from his mother on June 28, 2009, prompting him to consult an attorney and turn himself in to avoid an arrest at home or work. He was booked and released the same day after securing bail. His attorney later contacted Reassure, which sent a letter clarifying that the check was valid, leading to the dismissal and expungement of the charges against Tolman.

In October 2009, Tolman filed suit against Reassure, Bank of the Lakes, and J.P. Morgan Chase. The jury ruled on May 2, 2014. Reassure raised four points on appeal: first, it argued the trial court erred by allowing Tolman's negligence claim against Reassure since Oklahoma law does not recognize such a claim. Second, Reassure contended that even if negligence were a valid claim, the trial court wrongly failed to grant a directed verdict in its favor, asserting that its conduct did not directly cause Tolman's injuries. Third, Reassure claimed that intervening causes severed the causal link between its actions and Tolman’s injuries. Lastly, Reassure argued the trial court erred by not instructing the jury that attorney fees are not recoverable in negligence claims. Initially, Tolman had claimed breach of contract, bad faith, and breach of fiduciary duty against Reassure, later adding a negligence claim, which Reassure objected to but the court overruled. Tolman argued that Reassure owed a duty of care and assumed responsibility through a promise made by its employee to investigate the fraud claims—an assertion supported by case law indicating a duty of care exists. The record, however, showed no investigation was conducted by Reassure.

A life insurance beneficiary's claim against an insurance company is classified as a first-party claim, governed by contract law. Oklahoma permits extra-contractual damages for breach of the implied warranty of good faith and fair dealing, which is a tort claim. Recent cases reinforce the insurer's duty to act in good faith. However, no Oklahoma Supreme Court ruling acknowledges a negligence claim by an insured against their insurer. The insurer-insured relationship is dictated by the insurance policy and the implied covenant of good faith and fair dealing. A breach of this covenant requires a culpability level exceeding mere negligence. The federal district court in Oklahoma has also noted a lack of recognition for a simple negligence cause of action against an insurer. The Oklahoma Supreme Court has delineated two actionable claims stemming from an insurance contract: one for breach of contract and another for bad faith, with the latter sounding in tort. The court concluded that no separate tort action for negligence exists regarding an insurer's failure to pay a claim. Instead, a claim for bad faith is necessary, requiring evidence of unreasonable withholding of payment. Consequently, it was erroneous for the trial court to submit a negligence claim to the jury. In response, the appellee filed a conditional counter-claim asserting that the insurer's actions constituted a breach of the duty of good faith and fair dealing, challenging the trial court's directed verdict on the breach of contract and bad faith claims.

Breach of a duty to deal fairly with an insured is classified as an intentional tort, necessitating that the insurer's actions be willful, malicious, or oppressive in delaying or avoiding claim payment. An insurer's obligation to investigate claims promptly is inherent to their contractual duty to pay valid claims. In this case, Reassure investigated and paid Tolman's life insurance claim within thirty days. A bad faith claim against an insurer requires evidence of a breach of a contractual duty or implied covenant. The record does not show any contract provision that Reassure breached, nor is there evidence of bad faith in their dealings with Tolman. The trial court's decision to direct a verdict favoring Reassure on Tolman's breach of contract and bad faith claims was upheld. However, the court reversed and remanded the case regarding Tolman's negligence claim against Reassure for jury consideration. The final ruling was AFFIRMED IN PART, REVERSED IN PART, and REMANDED.