Just as the Oklahoma Sooners took care of the Florida Gators in the Cotton Bowl (55-20), the Oklahoma Supreme Court issued a commanding opinion on December 15, 2020, confirming that claims are valid and enforceable in Oklahoma. In fact, the Supreme Court of Oklahoma seemed almost surprised that it was even an issue when it overturned the wrongful grant of a summary judgment by the trial court in favor of the insurance company against a construction company.
In Johnson and Triple Crown Construction v CSAA General Insurance Company 1 ("CSAA") Johnson's home was damaged by a storm and she filed a claim against CSAA. Johnson also issued a contract to his construction company, Triple Diamond, to repair the property. Johnson and Triple Diamond then sued the CSAA for breach of contract and bad faith. The CSAA then filed a motion to dismiss or alternatively motion for summary judgment that raised an argument ̵
Initial with a thorough historical analysis of missions and their acceptance as a majority rule, the Oklahoma Supreme Court clarified that “the concept of a policy covered by a selected action after loss was not new when we addressed it in the American Alliance . "In American Alliance 2 the Supreme Court of Oklahoma noted that an exception occurs when the subject of the assignment is not the policy and its coverage, but the right to receive funds for an insured loss and the assignment takes place after In its opinion, the Court stated:
It seems to be the rule, followed by most courts, that where such a policy is in force at the time when the insured property burns, by the occurrence of the latter event, the relationship between the insurer and the insured becomes simply for the debtor and the creditor, and that the chosen in action, which the latter then has against the former, can be transferred validly to a third party, by assignment, without fulfilling the policy requirement that the insurer's consent to this (by approval or otherwise) is obtained. 3
A few years after American Reliance the Oklahoma Supreme Court reiterated the difference between assigning an elected official to a job and creating insurance coverage in Shadid v. American Druggist Fire Insurance Company ]. 4 Following American Reliance the Supreme Court of Oklahoma ruled that a maturity claim is a transferable "chosen in deed" despite language in a standard fire policy that states "Allocation of this policy shall not be valid except with the written consent of this company. ”
Referring to this long-standing legal precedent while enforcing a historical analysis of the majority rule, the Supreme Court held on 15 December 2020:
We agree with the majority of courts that allow a transfer of an insured who has an insurable interest when the object of the assignment is a post-loss selected in deed based on real estate insurance.
An insured who has an insurable interest can assign a post-loss selected in action based on a claim against a property insurance without violating an insurance clause that requires the written consent of the insurer for ten division of the insurance. 5
Immediately after the Oklahoma Supreme Court delivered its opinion, Triple Diamond's attorney wrote a direct letter to the Oklahoma Insurance Commissioner on December 17, 2020, stating the relevant part:
Regards. My name is Aaron Stiles and I represent a large group of roofing contractors. In the past, your office has examined contractors to practice as an unlicensed public adjuster while working under a claim / benefits statement. Your office believed, at the request of some insurers, that these assignments were either illegal or invalid. Attached is the opinion of the Oklahoma Supreme Court, which clearly and unequivocally states that your opinion was wrong and that assignments are valid in Oklahoma. . . I must insist that you stop your practice of investigating contractors working on a contract now that you have been formally served with the Supreme Court's opinion. . . I further request that at any time in the future that an insurer requires that a contractor be investigated to operate under contract law, that you take out such an insurance company to file a false complaint.
So for any contractor in Oklahoma who uses assignments in yours, you can be assured that they are valid and enforceable when properly prepared. Similarly, it seems that the Oklahoma Supreme Court has opened the door to future considerations as to whether the harm of bad faith in Oklahoma can also be awarded despite previous decisions to the contrary. With the right facts, it seems that the Oklahoma Supreme Court is ready to consider the distinction between a "pure torture" and a "torture arising from a contract" for the purpose of assuring the insured of a property insurance selected in deed against its insurer. We will have to wait and see what 2021 brings.
1 Johnson v. CSAA General Ins. Co. – P.3d -, 2020 OK 119 (Okla. 15 December 2020) (for official publication).
2 American Alliance Ins. Co. or N. Y. v. McCallie 1957 OK 312, 319 P.2d 295 (Okla. 1957).
3 Id. at 298 (relying on court statements from Wisconsin and Iowa, cases mentioned in notes at 122 ALR 144, 56 ALR 139, and the then 45 CJS insurance, 29 am.Jur. 3458).
4 Shadid v. American Druggist Fire Ins. Co. 1963 OK 146, 386 P.2d 311.
5 Johnson 2020 OK 119, ¶ 26, ¶ 34 (as corrected December 18, 2020).