Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com.

Help support the publication of case reports on MoreLaw

Date: 06-09-2024

Case Style:

Karen Swain v. United Automobile Insurance Company

Case Number: CJ-2012-222

Judge: Jeffrey E. Payton

Court: District Court, Sequoay County, Oklahoma

Plaintiff's Attorney: Randall K. Calvert and Andr3ew R. Davis

Defendant's Attorney: Randal E. Long and William T. Mckee

Description: Oklahoma City, Oklahoma insurance law lawyers represented the Plaintiff who sued the Defendant breach of contract theory.

"¶2 Matthew Leroy Swain is Ms. Swain's son. At the time of the motor vehicle accident underlying this case (September 12, 2010), he was an unemancipated minor. On September 10, 2012, Matthew, who attained majority, filed a lawsuit against Ms. Swain in negligence for severe injuries he sustained when Ms. Swain lost control of the vehicle she was driving and in which he was a passenger; Matthew was ejected from the front passenger seat. United was not named as a party in that lawsuit.

¶3 Although Ms. Swain was not served, about a year and a half later, on April 14, 2014, she filed an Answer to Matthew's lawsuit in which she denied her negligence and filed a Third-Party Petition against United alleging breach of contract and bad faith. Among other allegations, Ms. Swain alleged that at the time of the accident, she had an "Oklahoma Personal Auto Policy" with United that provided liability coverage for bodily injury in the amount of $25,000.00 per person and $500,000.00 per accident and the vehicle involved in the accident was covered under that policy. She alleged that in "June 2012, [United] refused to provide coverage under [the policy] for the bodily injuries sustained by [Matthew] in the September 10, 2010 accident." Ms. Swain also alleged she had been sued by Matthew for her negligent operation of the vehicle and in which action Matthew claimed her negligence was the proximate cause of his injuries.

¶4 As to her breach of contract claim, Ms. Swain alleged United was obligated under the terms of the policy and "controlling Oklahoma law and public policy," "to pay . . . $25,000 for the bodily injuries sustained by [Matthew]," and its failure to pay benefits for bodily injury was a material breach of the policy.1 As to her bad faith claim, Ms. Swain alleged United violated the duty of good faith and fair dealing it owed to her "by unreasonably, and in bad faith, refusing to pay a valid claim under the Policy." She alleged as follows:

In particular, [United] breached its duty of good faith and fair dealing by: (a) failing to properly investigate and evaluate the claim for coverage under the policy; and (b) refusing to pay the claim without a reasonable basis for that refusal.
. . . As a direct result of the failure of [United] to deal fairly and in good faith with [her], [she] has suffered a loss of peace of mind and security, and has suffered emotional distress, worry and anguish, and embarrassment.

She further alleged United's actions were "reckless and/or intentional" and sought an award of punitive damages.

¶5 According to the record, the Answer and Third-Party Petition were the first notice United received about Matthew's lawsuit against Ms. Swain. Upon receiving notice of Matthew's lawsuit, United defended the suit on behalf of Ms. Swain and eventually settled Matthew's claim for the policy limits of $25,000. On May 12, 2014, an entry of appearance was filed on behalf of United and United filed its motion to dismiss Ms. Swain's claims against it.2 On October 1, 2015, Matthew dismissed with prejudice his lawsuit against Ms. Swain "and her insurance carrier." An agreed order allowing United to file its answer out of time3 was entered January 23, 2019. United admitted Ms. Swain was an insured under the policy of insurance but denied the allegations of breach of contract and violation of its duty of good faith and fair dealing. The June 7, 2021 Pre-Trial Conference Order states, "The remaining cause of action [against United] is for breach of the implied covenant of good faith and fair dealing," and was to proceed under the legal theories of recovery of breach of the duty of good faith and fair dealing, punitive damages, and attorney fees. On October 18, 2021, Ms. Swain filed a motion for leave to amend the caption of the case to reflect herself as Plaintiff and United as Defendant because Matthew's claim against Ms. Swain was settled. The court granted the motion.

¶6 Pertinent to this Court's decision on appeal, United, at numerous points throughout the proceedings, filed motions and responses to Ms. Swain's motions in which it argued that Ms. Swain's bad faith claim was based on a faulty legal premise. In essence, United argued that Ms. Swain was not entitled to bring a bad faith claim for its handling of Matthew's third-party claim.4 Ms. Swain argues her action is not a third-party claim but rather is a first-party claim for United's breach of its contractual obligations to her before Matthew's lawsuit was filed.5

¶7 A two-day jury trial was conducted in October 2021 during most of which video deposition testimony of several witnesses was heard, including the testimony of the United claims adjusters who handled the claim; however, the jury also heard testimony from Ms. Swain and two of her experts. Among other matters, United moved for a directed verdict at the conclusion of Ms. Swain's case, but that motion was denied. United introduced the redacted video depositions of Matthew, Ms. Swain, and Matthew's attorney, and redacted versions of two exhibits. After receiving the court's instructions on Ms. Swain's claims for violation of the covenant of good faith and fair dealing, bad faith damages and punitive damages, ....

Outcome: The jury returned a verdict for Ms. Swain finding United breached its duty of good faith and fair dealing recklessly and intentionally and awarded her $25,000.00 in compensatory damages. In the second stage verdict, the jury awarded Ms. Swain $500,000.00 in punitive damages.

Ms. Swain's argument that United failed to indemnify her because it denied her coverage prior to suit is without merit and, thus, cannot provide a basis for her claim that United breached its duty of good faith and fair dealing to her. Consequently, we conclude the trial court erred in denying United's motion for directed verdict. Accordingly, we reverse the court's judgment and remand with directions to enter judgment for United.


Plaintiff's Experts:

Defendant's Experts:


Find a Lawyer


Find a Case