Opinion
21-5029
01-31-2022
JASON KLINTWORTH, Plaintiff - Appellant, v. VALLEY FORGE INSURANCE COMPANY, Defendant-Appellee, and CNA FINANCIAL CORPORATION, d/b/a CNA Commercial Insurance, Defendant.
D.C. No. 4:20-CV-00178-CVE-CDL, (N.D. Okla.)
Before HOLMES, BALDOCK, and BACHARACH, Circuit Judges.
ORDER AND JUDGMENT [*]
Bobby R. Baldock, Circuit Judge
Plaintiff Jason Klintworth brought a bad-faith tort action against his insurer, Defendant Valley Forge Insurance Company ("Valley Forge"), in Oklahoma state court. After removal, the district court, exercising jurisdiction under 28 U.S.C. § 1332, entered summary judgment for Valley Forge. Klintworth appeals the district court's orders denying his motion for partial summary judgment and granting summary judgment in favor of Valley Forge. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
Klintworth also appeals the district court's orders denying his motions to remand to state court. By insufficiently briefing this issue, Klintworth has waived it. See Fed. R. App. P. 28(a)(8)(A) ("[T]he argument . . . must contain: appellant's contentions and the reasons for them, with citations to the authorities and parts of the record on which the appellant relies."). "[P]arties appearing before this court cannot satisfy Rule 28 by incorporating their claims by reference to either appendices or records from the court below." United States v. Patterson, 713 F.3d 1237, 1250 (10th Cir. 2013) (citing 10th Cir. R. 28.3(B)). Yet this is precisely what Klintworth tries to do.
I.
This case is a dogfight; the parties cannot agree on anything. In outlining the factual background of this case, we are mindful that we must "view the evidence and draw reasonable inferences in the light most favorable to the nonmoving party," Shotts v. GEICO Gen. Ins. Co., 943 F.3d 1304, 1314 (10th Cir. 2019), but we do not credit "evidence" that is uncited or unsupported by the record. Repeated assertions of "fact" do not make them so; facts must be cited and supported by the record. See Fed. R. App. P. 28(a)(8)(A).
On March 9, 2016, Klintworth was involved in a deadly car accident. Klintworth was slowing down on the interstate when Demarco Metoyer, travelling close to 70 miles per hour, rear ended Linda Cervantes' car, propelling it into the back of Klintworth's truck. The accident killed Metoyer's passenger and Cervantes. Klintworth did not receive any medical treatment at the scene of the accident.
At the time of the accident, Klintworth was insured under an insurance policy issued by Valley Forge. The policy included uninsured/underinsured motorist ("UM") coverage. Klintworth reported the accident to his insurance agent the same day. Two days later on March 11, Valley Forge's assigned claim adjuster, J.W. Graham, interviewed Klintworth about the accident. Klintworth told Graham that he was injured, visited a doctor, and needed to go back. He also asked Valley Forge to open a collision claim to help pay for his vehicle repairs. Klintworth declined opening a medical pay claim. The parties dispute whether Graham disclosed UM coverage during this conversation. Because the accident caused fatalities, Graham assigned defense counsel to Klintworth for the limited purpose of defending him in any third-party litigation.
About a month later on April 13, Klintworth sent an email to Valley Forge stating, "it has come to my attention that I could get some financial relief by tapping into my uninsured motorist coverage. Could you help me in directing me as to with whom to speak?" The record reflects the email was sent to the correct email address, but Valley Forge never saw it because it was automatically filtered to a sub-folder of Graham's Microsoft Exchange Sync Issue folder. The following day, Graham talked to Klintworth. Nothing in the record suggests Klintworth mentioned the April 13 email or otherwise inquired into UM coverage. After their discussion, Graham opened a medical pay claim with a $5,000 limit.
The policy limit was actually $2,000. But due to a data entry error, the limit was set at $5,000 in the system. This error was never corrected, and Valley Forge paid out the full $5,000 to Klintworth.
Following the accident, Klintworth sought medical treatments and diagnoses from medical professionals, as well as therapy and guidance from religious advisors. The two most important treatments, for purposes of this appeal, are a surgery on Klintworth's left shoulder in June 2016, three months after the accident, and a hospitalization weeks later, resulting in medical bills of $17,482 and $15,676, respectively. The hospitalization occurred because Klintworth, misunderstanding the pre-surgery directions to discontinue prescription medications, did not resume his medications post-surgery, resulting in diabetic ketoacidosis and sepsis. Throughout his briefing, Klintworth asserts Valley Forge knew about these treatments and his financial instability. But no factual support exists in the record for these allegations, or, at the very least, Klintworth fails to cite where in the voluminous record we can find factual support.
Klintworth hired Adam Weintraub to represent him regarding the accident. Valley Forge received a letter from Weintraub on July 13, 2016. The letter, dated June 15, 2016 (about a week before Klintworth's shoulder surgery), asked: "Please advise of any UM/Med pay coverage available to Mr. Klintworth." Klintworth alleges Valley Forge never responded to this letter, but the record plainly contradicts his assertion. Graham emailed back the same day informing Weintraub:
We remind Appellant's counsel that misrepresentations to this Court do not only breach his ethical obligations, they also seriously damage counsel's credibility and the persuasive value of his advocacy.
Please note that there is UM coverage on Mr. Klintworth[']s policy but it is my understanding the two vehicles that struck Mr. Klintworth[']s vehicle, and are at fault, had liability coverage provided that would compensate for his injury/damages. . . . With regard to med pay there is also Med Pay coverage on the policy . . . it appears of the 5000.00 in coverage provided that 4, 673.00 has been paid.
Later that day, Graham received a second letter from Weintraub. This second letter, dated July 7 (about two weeks after Klintworth's surgery and a week before his hospitalization), informed Valley Forge that Klintworth was filing a petition against Metoyer and requested consideration of his claims under UM/medical pay coverage because Weintraub erroneously believed Metoyer did not have liability coverage. Confused by Weintraub's vague communications and erroneous statements, Graham asked James Daniel, who was meeting with Weintraub later that week, to clarify Klintworth's intentions regarding UM coverage. Valley Forge appointed Daniel for the limited purpose of defending Klintworth against any third-party litigation. After meeting with Weintraub, Daniel reported to Graham that Klintworth "has not necessarily made a claim against his UM, but wanted to ensure that you know what was 'going on' and that he may do so." Daniel further reported that Weintraub was mistaken regarding Metoyer's insured status; Metoyer had $25,000 of liability insurance.
Graham continued to monitor Klintworth's file for a UM claim. On December 6, 2016, Graham unexpectedly received a letter from Weintraub on behalf of Klintworth, dated November 29, demanding $2,985,242.42 or policy limits. The breakdown of this amount is as follows: (1) $51,831.42 in medical bills, (2) $350,000 for pain and suffering, (3) $185,000 for lost wages, and (4) almost $2.4 million for impairment of earning ability. The letter included medical records and bills, but no supporting documentation for the claimed financial losses. Despite Klintworth's unsupported assertions to the contrary, before this letter, nothing in the record indicates Valley Forge knew about Klintworth's surgery, hospitalization, or financial difficulties.
Peter Wheeler's report suggests the proper valuation for medical bills is the amounts paid for treatment, not the amounts billed. See Okla. Stat. tit. 12, § 3009.1 ("Upon the trial of any civil action arising from personal injury, the actual amounts paid for any services . . . shall be the amounts admissible at trial, not the amounts billed for such expenses."). Therefore, Wheeler determined $40,000, the amount Klintworth paid, was the appropriate value for medical bills.
Two days later, Graham referred the claim to Peter Wheeler-an attorney retained by Valley Forge-to investigate and evaluate Klintworth's demands. In mid-December, Wheeler advised Weintraub of his appointment and his need for further documentation, including documents to support Klintworth's alleged lost wages and impairment of earning capacity. Finally, on February 6, 2017, Weintraub provided the documents necessary to evaluate Klintworth's alleged economic damages. Wheeler examined Klintworth under oath on March 29, 2017. About a month later, on the recommendation of Wheeler, Valley Forge paid Klintworth $50,000 in advance UM benefits.
Wheeler sent his final report to Graham on May 31, 2017. Wheeler relied on his education and experience as a defense lawyer to evaluate Klintworth's claims. The report begins by analyzing the non-economic component of Klintworth's UM claim-i.e., the physical injury component. Wheeler recommended paying between $100,000-$150,000 to compensate Klintworth's "First Impression, Pain, Suffering, Agony, Personal Distress, and Physical Injury"-$40,000 of which was for medical bills previously incurred. This amount was intended to compensate Klintworth's tinnitus, headaches, left shoulder surgery, undiagnosed depression, and strain/sprain to the neck and back. Klintworth argues this amount did not include future pain and suffering, but again the record belies this allegation. We recognize that Valley Forge did not compensate future pain and suffering for Klintworth's left shoulder injury, but that was because of a causation issue. The left shoulder was pain free post-surgery until Klintworth fell and reaggravated the injury. Even though causation was questionable, Wheeler even recommended paying the medical bills associated with Klintworth's hospitalization for diabetic ketoacidosis and sepsis. Throughout his report, Wheeler considered compensation of pain and suffering, past and future, as well as permanency of the claimed injuries.
Looking at the citations to the record for this allegation, it only takes moving back one page in the record to find the lawyer who wrote Klintworth's brief, Mr. Stanley, asking Wheeler:
Q: . . . you said, that you considered future pain and suffering was regarding-relating to the left shoulder?
MR. HASKINS: Object to Form
THE WITNESS: I don't think I said that was the only thing. I think-I knew there would be some annoyance for the tinnitus.
Q: (BY MR. STANLEY) Uh-huh.
A: His words or at least he agreed with my characterization of it as an annoyance. I took that into account. I thought about the left shoulder. I thought about the neck and back. And I thought about-I think that's it.
Q: Okay. As relates to future pain and suffering?
A: As relates to future.Wheeler's testimony is, at most, ambiguous about whether he found there was no future pain and suffering. But when you consider Wheeler's testimony and report in conjunction with the fact Klintworth was paid $150,000 for "First Impression Pain, Suffering, Agony, Personal Distress and Physical Injury" even though there was only $40,000 in medical bills, the only conclusion is the value of the claim included future pain and suffering. See Okla. Unif. Jury Instructions - Civil 4.1 (listing the factors to consider when awarding personal injury damages including "pain and suffering, past and future;" and "[w]hether the injuries are permanent") (quoted in Wheeler's report).
Wheeler did not, however, recommend payment of all non-economic claims. He recommended denying payment for Klintworth's right shoulder injury because it did not develop until three months after the accident. He also recommended denying compensation for Klintworth's right hand and elbow injuries because they were more consistent with diabetic peripheral neuropathy or carpal tunnel syndrome than injuries from the accident. Wheeler also rejected Klintworth's claims for acute and post-traumatic stress disorders (ATSD and PTSD) and depression because, after examining Klintworth under oath, Wheeler determined those arose not from the car accident but from the closing of Klintworth's business.
Next, Wheeler considered Klintworth's loss of income and loss of earning capacity claims. Klintworth purchased his company in 2013 and originally earned $185,000 per year. The company's financial statements show it was in dire straits before the accident. In 2015, the company reported a loss of nearly $500,000 and reported a net loss in the first quarter of 2016. In response to the company's deteriorating financial condition, Klintworth reduced his salary to $125,000 in 2015. The company shut down in May 2016. Klintworth testified that he was willing and able to work, both mentally and physically, by February 2017. Wheeler did not believe any of the financial losses were caused by the accident, nevertheless he recommended a $125,000 payment to treat Klintworth "fairly and in good faith."
Wheeler's final valuation of the claims, including bodily injury, pain and suffering, and loss of income, was $225,000-$275,000. On June 1, 2017, Graham reviewed Wheeler's report and agreed with his recommendations. Valley Forge authorized an additional UM payment of $200,000, bringing Klintworth's total recovery to $275,000 ($25,000 from Cervantes' insurance, $50,000 advance UM payment, and $200,000 final UM payment). Klintworth also received the benefit of $5,000 in medical payments from his medical pay claim and $4,545.66 from his property damage claim. The UM payments were made "without prejudice as to any further rights he may have under the policy or under the law."
On June 24, 2017, Klintworth filed an amended complaint in an already-ongoing state court lawsuit adding claims against Valley Forge for breach of contract and bad faith. Almost two years later, Klintworth dismissed his breach of contract claim. The case was removed to federal court where Valley Forge filed a Motion for Summary Judgment. Klintworth responded by filing a Motion for Partial Summary Judgment. In March 2021, the district court issued an Opinion and Order on Klintworth's bad-faith claim denying his motion and granting Valley Forge's motion.
II.
"We review the grant of summary judgment by the district court de novo, applying the same legal standard to the evidence in the record as did the district court." Shotts, 943 F.3d at 1314. In doing so, we "view the evidence and draw reasonable inferences in the light most favorable to the nonmoving party." Id. Summary judgment is appropriate where the moving party shows "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Not all factual disputes will preclude summary judgment; "the motion should be granted in situations where the factual issues are all either irrelevant or spurious." Bolack v. Underwood, 340 F.2d 816, 819 (10th Cir. 1965).
"Under Oklahoma law, an insurer has an implied duty to act in good faith and deal fairly with its insured." Porter v. Farmers Ins. Co., 505 Fed.Appx. 787, 791 (10th Cir. 2012) (unpublished) (citing Badillo v. Mid Century Ins. Co., 121 P.3d 1080, 1093 (Okla. 2005)). "Violation of this duty gives rise to an action in tort." Id. The burden of proof is on the insured claiming bad faith; the insured "must make a 'clear showing' that the insurer acted unreasonably and in bad faith." Id. (citing Christian v. Am. Home Assurance Co., 577 P.2d 899, 905 (Okla. 1977)). "Until the facts, when construed most favorably against the insurer, have established what might reasonably be perceived as tortious conduct on the part of the insurer, the legal gate to submission of the issue to the jury remains closed." Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1437 (10th Cir. 1993). When evaluating the bad faith of an insurance company, "[t]he action of the company must be assessed in light of all facts known or knowable concerning the claim at the time [the insured] requested the company to perform its contractual obligation." Conti v. Republic Underwriters Ins. Co., 782 P.2d 1357, 1362 (Okla. 1989) (emphasis omitted) (citing Buzzard v. McDanel, 736 P.2d 157 (1987) (Buzzard I)).
III.
Klintworth's arguments all deal with attempts to establish Valley Forge's breach of the duty of good faith and fair dealing-i.e., bad faith. The Oklahoma Supreme Court first recognized the tort of bad-faith breach of contract in Christian v. American Home Assurance Co., 577 P.2d 899 (Okla. 1977). Oklahoma joined "the growing number of jurisdictions which now recognize a cause of action in tort against an insurer for a bad faith refusal to compensate its insured for a loss covered by the policy." Id. at 901. Concerned with the "quasi-public nature of the insurance industry and the unequal bargaining power of the parties," Oklahoma courts have extended the tort of bad faith to a variety of contexts to protect their citizens from unreasonable conduct by insurance companies. Buzzard v. Farmers Ins. Co., 824 P.2d 1105, 1109 (Okla. 1991) (Buzzard II). Klintworth argues Valley Forge breached its duty of good faith and fair dealing in at least one of the following two ways: (1) by failing to disclose UM coverage to Klintworth; and (2) by delaying its investigation. These contentions are meritless.
A.
Klintworth first claims Valley Forge acted in bad faith by failing to disclose UM coverage. Valley Forge disputes this claim and argues we should find it disclosed UM coverage because, even though Graham testified he could not recall his conversation with Klintworth word for word, Graham routinely disclosed UM coverage in these situations. Even though this presents a factual dispute, we conclude summary judgment was appropriate because on the record before us Valley Forge's alleged failure to disclose UM coverage constitutes, at most, negligent conduct. See Badillo, 121 P.3d at 1094 ("[T]he minimum level of culpability necessary for liability against an insurer to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against said insurer."). "[W]e have discretion to affirm [summary judgment] on any ground adequately supported by the record, so long as the parties have had a fair opportunity to address that ground." Hasan v. AIG Prop. Cas. Co., 935 F.3d 1092, 1099 (10th Cir. 2019). We find it appropriate to affirm summary judgment on the district court's alternative holding that "there is nothing in the record that establishes that such a failure to disclose [UM coverage] would have been anything other than negligent." Klintworth v. Valley Forge Ins. Co., No. 20-CV-0178-CVE-CDL, 2021 WL 816730, at *17 (N.D. Okla. Mar. 3, 2021).
Valley Forge argues there is no factual dispute because Klintworth "admitted in his written discovery responses that he contacted [Valley Forge] and 'was told that [he] had underinsured motorist coverage.'" In Klintworth's interrogatories, Klintworth admits: "I contacted CNA to see if I had insurance that would cover my losses. I was told that I had underinsured motorist coverage." No one briefed us on the relationship between CNA and Valley Forge. We, therefore, cannot definitively say it is appropriate to impute CNA's UM disclosure to Valley Forge, even though we believe the admitted disclosure is probably referencing Graham.
To establish Valley Forge acted in bad faith by failing to disclose UM coverage, Klintworth relies on Oklahoma's Unfair Claims Settlement Practices Act ("UCSPA"). Oklahoma enacted the UCSPA "to provide the Insurance Commissioner with power to regulate the insurance industry by issuing 'cease and desist' orders or by revoking or suspending an insurance company's license to do business in Oklahoma" when an insurance company fails to follow certain prescribed standards of care. Aduddell Lincoln Plaza Hotel v. Certain Underwriters at Lloyd's of London, 348 P.3d 216, 223 (Okla.Civ.App. 2014). Oklahoma courts recognize that-even though the UCSPA does not provide a private right of action-a bad-faith claim can be predicated on the insurer's failure to conform to the UCSPA's standards of care. See Beers v. Hillory, 241 P.3d 285, 293 (Okla.Civ.App. 2010) ("The bad-faith action may also be based upon an insurer's failure to perform an act that is derivative or secondary in nature; that is, an insurer's duty that owes its existence to a . . . statutory . . . duty arising from the insurer-insured relationship." (quoting Brown v. Patel, 157 P.3d 117, 122 (Okla. 2007))).
An insurer's failure to conform to the UCSPA, however, is alone insufficient to establish bad faith. Id. at 294. Instead, to establish bad faith the insured must show the insurer's failure to conform to the UCSPA rises to the minimum level of culpability necessary to sustain bad-faith liability. See id. This minimum level of culpability is something "more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against said insurer." Badillo, 121 P.3d at 1094. To survive summary judgment, therefore, Klintworth needs to show: (1) Valley Forge's alleged failure to disclose UM coverage is an "unfair settlement practice," Okla. Stat. tit. 36, § 1250.5; and (2) Valley Forge's culpability is more than simple negligence. Klintworth's claim fails on this second inquiry.
The district court erroneously held that the insured must also show the insurer's "unfair settlement practice" was "flagrant" or "constitute[s] a business practice" to establish a bad-faith claim. The district court reached this conclusion by misreading the following quotation:
However, when relying on the UCSPA to establish a breach of the insurer's duty, two caveats are critical. First, breach of a duty imposed by [the UCSPA] is not a violation of the Act. A violation occurs only if the insurer's failure to conform to some requirement of the statute is found to be flagrant or to constitute a business practice. Second, a violation of the Act does not necessarily establish bad faith. An insurer may carelessly fail to perform some duty required by the statute with such frequency to warrant administrative sanction, but that does not establish more than negligent conduct in any individual case [as required for a bad-faith claim].Beers v. Hillory, 241 P.3d 285, 294 (Okla.Civ.App. 2010) (footnote omitted). The district court misread these qualifications to mean a bad-faith claim can only exist when the insurer's failure to disclose UM coverage is flagrant or constitutes a business practice. What Beers actually holds is a violation of the Act (the UCSPA) can only exist when the insurer's failure to disclose UM coverage is flagrant or constitutes a business practice. Therefore, we disagree with the district court's imposition of an element of flagrancy or business practice to establish a bad-faith claim based upon the breach of a duty imposed by the UCSPA.
The UCSPA includes as an "unfair claim settlement practice" the "failure to fully disclose to first party claimants, benefits, coverages, or other provisions of any insurance policy or insurance contract when the benefits, coverages or other provisions are pertinent to a claim." § 1250.5(1) (cleaned up). Klintworth contends Graham should have disclosed UM coverage to him because it was pertinent to his claim, and Graham's failure to do so constitutes bad faith. Arguably, Valley Forge did not engage in an "unfair claim settlement practice" at all because at the time Klintworth is suggesting UM coverage should have been disclosed-shortly after the accident-Valley Forge could have reasonably concluded that UM insurance was inapplicable. After all, Klintworth initially walked away from the car accident reporting no major injuries and Valley Forge knew at least one of the tortfeasors carried insurance. But we will assume, for purposes of this appeal, that Valley Forge should have disclosed UM insurance, and that Valley Forge's alleged failure to do so constitutes an "unfair claim settlement practice."
Ultimately what dooms Klintworth's argument is Valley Forge's alleged failure to disclose UM insurance constitutes, at most, negligence which is insufficient to support bad faith. Graham testified, and Klintworth does not dispute, that his standard practice was to disclose coverage, including UM coverage. A discrete and isolated failure to disclose UM insurance tends to support Valley Forge only acted negligently. But we can still find Valley Forge's culpability exceeds simple negligence if the surrounding circumstances suggest a higher level of culpability. Reviewing the record, any failure to disclose UM coverage was, at most, a result of negligence. Up until July 13, 2016, when Weintraub sent a letter to Valley Forge asking whether any UM coverage was available, no one suggested that, based on what Valley Forge knew or should have known, Klintworth's claims could exceed the coverages of the tortfeasors' policies. Therefore, failure to disclose UM coverage up to that point does not suggest anything more than simple negligence. Valley Forge's forthcoming and informative response to Weintraub's inquiry bolsters our conclusion. Valley Forge informed Weintraub: "Please note that there is UM coverage on Mr. Klintworth[']s policy but it is my understanding the two vehicles that struck Mr. Klintworth[']s vehicle, and are at fault, had liability coverage provided that would compensate for his injury/damages." Because any failure to disclose UM coverage only amounts to negligence, Klintworth cannot establish bad faith based on Valley Forge's alleged failure to disclose UM coverage.
B.
Next, Klintworth attempts to establish bad faith by alleging a bad faith delay in investigation. As stated above, under Oklahoma law a bad-faith action may "be based upon an insurer's failure to perform an act that is derivative or secondary in nature." Brown, 157 P.3d at 122. Because "a duty to timely and properly investigate an insurance claim is intrinsic to an insurer's contractual duty to timely pay a valid claim," id. (emphasis omitted), Oklahoma recognizes delayed investigation as a basis to establish bad faith. See Buzzard II, 824 P.2d at 1112.
The district court rejected Klintworth's delay in investigation claim. The court reasoned a bad faith delay in investigation claim rests on the premise that a claim has been made. After reviewing the terms of the policy, the district court concluded that Klintworth did not make a UM claim until Weintraub sent the demand on November 29, 2016. The district court decided there was no bad faith delay in investigation because Valley Forge began investigating the claim in December 2016, and "any delay in [Valley Forge]'s realization that [Klintworth] had a viable [UM] claim was not unreasonable, or in bad faith." Klintworth, 2021 WL 816730, at *16.
The district court held a UM claim was not made until November 29, 2016 because that was the first time Klintworth submitted medical records to Valley Forge. This conclusion was based on a provision of Klintworth's policy that stated:
A person seeking uninsured motorists coverage must also notify us, in writing, of a tentative settlement between the "insured" and the insurer of an "uninsured motor vehicle" . . . . This notice must be sent by certified mail and must include: . . . [c]opies of all medical bills.Klintworth makes a strong argument that the district court improperly relied on this provision to decide when a UM claim is made, because this provision is a mechanism to protect the subrogation rights of the insurer when the insured reaches a tentative settlement with the tortfeasor. In other words, this provision may be wholly irrelevant to deciding the issue of when a UM claim is made. Because we ultimately assume without deciding, for purposes of this appeal, that a UM claim was made in March 2016, we do not delve any further into the district court's holding that a UM claim was first made on November 29, 2016.
Klintworth makes several challenges to the district court's reasoning, but they are not clearly laid out. We understand Klintworth to raise the following arguments. First, Klintworth argues he made a UM claim in March 2016: "In March 2016 but no later than June 2016, the evidence was overwhelming and irrefutable that Mr. Klintworth met the requirements for UM coverage." Second, he claims "the undisputed facts also show [Valley Forge] did not commence its investigation until December 2016," even though the same facts discovered by this investigation and leading to $250,000 of UM benefits "could and should have [been] known [by Valley Forge] in March 2016 but no later than June 2016." Third, Klintworth contends the district court improperly imposed notice requirements that were directly contrary to Oklahoma law. Finally, Klintworth takes issue with the district court's holding that there was no bad faith because Klintworth failed to provide information to Valley Forge.
Valley Forge responds by largely following the district court's reasoning, arguing a UM claim was not made until December 2016 when Valley Forge received Klintworth's demands. Even though the parties' main arguments revolve around deciding when a UM claim was made under Klintworth's policy and Oklahoma law, we need not decide this issue. "[W]e have discretion to affirm [summary judgment] on any ground adequately supported by the record, so long as the parties have had a fair opportunity to address that ground." Hasan, 935 F.3d at 1099. Part of the district court's reasoning was, based on the facts in the record, that Valley Forge conducted a reasonable investigation from the date of the accident given Klintworth's material withholding of vital information. Because Klintworth's briefing challenges this reasoning, we decline to decide when a UM claim was made, and instead exercise our discretion to affirm the district court's grant of summary judgment on this other ground. We assume without deciding, for purposes of this appeal, that Klintworth made a UM claim in March 2016 and hold no reasonable jury could conclude that Valley Forge delayed their investigation in bad faith.
Under Oklahoma law, "when presented with a claim by its insured, an insurer 'must conduct an investigation reasonably appropriate under the circumstances' and 'the claim must be paid promptly unless the insurer has a reasonable belief that the claim is legally or factually insufficient.'" Newport v. USAA, 11 P.3d 190, 195 (Okla. 2000) (quoting Buzzard II, 824 P.2d at 1109). "We evaluate the adequacy of the investigation in light of all the facts that [the insurer] knew, or should have known, at the time [the insured] brought his claim." Porter, 505 Fed.Appx. at 794; see also Newport, 11 P.3d at 195 ("The knowledge and belief of the insurer during the time period the claim is being reviewed is the focus of a bad-faith claim." (quoting Buzzard II, 824 P.2d at 1109)).
"An insured in turn has an obligation to cooperate with the insurer, which is both contractual and implied in law." First Bank of Turley v. Fid. & Deposit Ins. Co. of Md., 928 P.2d 298, 304 (Okla. 1996) (footnote omitted). "It is the insured's sole duty to give its insurer timely and adequate notice of a claim to aid the insurer in the discovery of facts bearing on coverage." Id. (cleaned up). "As part of its notice-giving obligation, the insured must provide the insurer with facts material to its ascertainment of the" insurer's obligations. Id. at 305. If "the insured's failure to give adequate notice-not available from other sources-made it entirely impossible for the insurer to discharge its duty," that can be "an absolute defense against liability." Id. The Oklahoma Supreme Court summarized the interaction between the insured's notice-giving obligations and the insurer's possible defense as follows:
[T]he defense based on the insured's claimed failure timely to supplement its initial notice by providing critical information does not call upon the trier to compare the parties' fault, one toward the other, but rather to measure the extent of the impact, if any, the insured's alleged misperformance (by withholding vital information) may have had on the main issue in the case-the good or bad faith of the insurer's decision. . . . The trier's assessment, we repeat, is to be rested upon consideration of facts that were known and knowable to the insurer when its response was due to the insured's initial request.Id. at 309. We, therefore, conclude the insured's failure to provide notice and critical information must be considered when evaluating the good or bad faith of the insurer's investigation.
The district court reached the same conclusion as we do now, that Klintworth's conduct is relevant to determining whether there was a bad-faith investigation. The district court rightfully noted:
Plaintiff, either individually or through Weintraub, does not appear to have contacted defendant to alert it of the unexpected increase in the value of the claim. As it is clear that the plaintiff and his attorney were in communication with defendant, it is not unreasonable for defendant to have expected some notice or indication that an unexpected, but related, loss had occurred. As a result, the Court finds that any delay in defendant's realization that plaintiff had a viable UIM claim was not unreasonable, or in bad faith.Klintworth, 2021 WL 816730, at *16 (cleaned up). Even though the district court failed to cite any authority for these conclusions, the district court's analysis is clearly correct under Oklahoma law. Therefore, we reject any argument by Klintworth that the "trial court's ruling effectively releases the insurer of any duty to investigate" and "shifts that duty onto the insured" which "[n]o Oklahoma law supports."
When examining whether an insured's failure to give notice and critical information to the insurer modifies, excuses, or defeats "the insurer's performance under the contract," we must consider:
[W]hether (1) the initial notice was adequate to put the insurer on notice of potential liability under the policy, (2) the nondisclosed (or later-revealed) facts were so material that they should have been reported, (3) the notice was sufficient for the insurer's investigation and discovery of all the facts relative to its potential liability; and (4) the insurer's reasonable investigation could have uncovered the excluded information.Id. at 305 (emphasis omitted). These are considerations of fact that generally must be submitted to the jury. But if "all the relevant facts, which are undisputed, support but a single inference," the "alleged inadequacy of the insured's notice may be treated as a question of law." Id. at 306; see Porter, 505 Fed.Appx. at 791 ("Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial."). After this exhaustive framing of the issues and Oklahoma case law, we finally consider the facts of this case.
We assume without deciding, for purposes of this appeal, that Klintworth made a UM claim in March 2016. We must now decide whether any rational jury could conclude that Valley Forge failed to "conduct an investigation reasonably appropriate under the circumstances" following this initial claim. Newport, 11 P.3d at 195. Even if Valley Forge did not investigate the UM claim around March 2016, no reasonable jury could conclude that this failure to investigate was in bad faith because Klintworth's "failure to give adequate notice-not available from other sources- made it entirely impossible for the insurer to discharge its duty." First Bank of Turley, 928 P.2d at 308.
Nothing in the initial notice, or shortly thereafter, put Valley Forge on notice to investigate medical bills that would eventually, months later, exhaust the liability policies of the tortfeasors. We agree with Klintworth that an insurer cannot wait to investigate a UM claim "until exhaustion of liability limits." Buzzard II, 824 P.2d at 1112. But we disagree with Klintworth that his initial notice was sufficient for the insurer to be able to discharge its duty to investigate. No reasonable jury could conclude that an insurer should be investigating UM coverage when, based on the undisputed facts Valley Forge knew or should have known: (1) at least one of the tortfeasors had liability insurance, in this case, through Allstate; (2) Klintworth, at that time, was seeing a doctor for mild injuries, but declined medical pay coverage and made no indication to Valley Forge that his injuries may be more severe than they first appeared; (3) Klintworth opened a collision claim for his vehicle, which was paid in full and did not exceed the preliminary reserve; and (4) once Klintworth opened a medical pay claim, he did not exhaust its limits until months later. Valley Forge had no idea that Klintworth's claim could even conceivably exceed the tortfeasor's liability policies. This issue stands on its facts; we do not delineate any standard under Oklahoma law for deciding when an insured's notice to the insurer is so inadequate to prevent an insurer from investigating a UM claim. Instead, we hold that, on the facts of this case, no reasonable jury could conclude a failure to investigate the UM claim in March 2016 or shortly thereafter was in bad faith.
Klintworth believes his April 2016 email should create a triable issue of bad faith. We disagree. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient [to survive summary judgment]; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). At the outset, we are skeptical that a rational jury would doubt Graham's clear testimony that he never received the email because it was automatically routed to the Sync Issue folder. Judges do not live in a vacuum; emails sent to us have disappeared into the diaspora. But even if we sent this issue to a jury and they doubted Graham's credibility, the email is not enough to survive summary judgment. The April 2016 email is a mere scintilla of evidence insufficient for a jury to reasonably find for Klintworth. Based on all the other evidence, no reasonable jury could find bad faith based on the mishandling of this one stray email. Every other time Klintworth or his lawyer reached out to Valley Forge about UM coverage, Valley Forge promptly and properly responded. Also, even if Valley Forge saw the email, UM coverage was inapplicable. April 2016 is a month before Klintworth shuttered his business and two months before his shoulder surgery and hospitalization-the losses eventually triggering UM coverage. No reasonable jury could find the April 2016 email creates a triable issue of bad faith.
Klintworth also argues that, even if Valley Forge was not obligated to begin investigation by March 2016, it should have begun its investigation no later than June 2016. The basis of this argument appears to be Klintworth's ballooning medical bills after his left shoulder surgery in June 2016. Klintworth received a $17,482 bill for the surgery and a $15,676 bill for hospitalization weeks later for diabetic ketoacidosis and sepsis. Of course, if Valley Forge knew or should have known about these bills, Valley Forge should have investigated UM coverage because the bills were windfall expenditures that could exhaust the tortfeasors' liability policies. But again, Klintworth, both individually and through his lawyer, gave inadequate notice to Valley Forge making it entirely impossible for Valley Forge to discharge its duty.
Valley Forge was unaware of Klintworth's surgery or hospitalization until November 29, 2016. Klintworth now asks us to hold there is a triable issue of bad faith because Valley Forge failed to uncover and investigate large unforeseeable medical bills that Klintworth could have easily alerted Valley Forge to by saying something as simple as "I am having surgery," or "I was hospitalized." Klintworth's position is unmeritorious. These "nondisclosed (or later-revealed) facts were so material that they should have been reported." First Bank of Turley, 928 P.2d at 305 (emphasis omitted). Valley Forge could not have reasonably foreseen Klintworth's expensive surgery or hospitalization bills because Klintworth walked away from the accident complaining of minor injuries, the surgery and hospitalization occurred months after the accident, and Klintworth, by this point, only exhausted $4,673 of the $5,000 of medical pay coverage.
Although Klintworth disputes this, he points to no facts in the record to support his contention and we found none.
We recognize that days before the surgery, Weintraub, Klintworth's lawyer, sent a letter to Valley Forge stating: "Please advise of any UM/Med pay coverage available to Mr. Klintworth." But Weintraub made no mention of the surgery, and this vague request for advice is wholly different than a request for coverage. Valley Forge responded to Weintraub, stating: "Please note that there is UM coverage on Mr. Klintworth[']s policy but it is my understanding the two vehicles that struck Mr. Klintworth[']s vehicle, and are at fault, had liability coverage provided that would compensate for his injury/damages." At this point, Klintworth or Weintraub had the responsibility to make an indication to Valley Forge that it might be mistaken about whether the tortfeasors' liability coverage would compensate his injuries or damages. Again, we are not delineating any standard here. All we are saying is that no reasonable jury could conclude Valley Forge acted in bad faith when Klintworth and Weintraub withheld material information from the insurer. Valley Forge acted reasonably under the circumstances. If we found merit in Klintworth's arguments, any insured could withhold information from their insurance company and then seek punitive damages later by bringing a bad-faith claim. See Buzzard II, 824 P.2d at 1114-15 (recognizing punitive damages are available for a bad-faith claimant).
We also recognize that Weintraub sent a letter to Valley Forge on July 7, 2016 stating: "We believe Mr. Demarco to be without liability coverage. Accordingly, please consider these claims under Mr. Klintworth's UM/Medpay coverage." But again, Klintworth fails to produce any evidence that Valley Forge conducted an inadequate investigation following this letter. After receiving this letter, Valley Forge asked Daniel-Klintworth's appointed defense counsel-to inquire into Klintworth's intentions regarding UM coverage because both tortfeasors had liability coverage available. Valley Forge asked Daniel to inquire because he was meeting with Weintraub in person and Weintraub's written communications were so unilluminating. Looking at the undisputed record, Valley Forge's request to Daniel was "an investigation reasonably appropriate under the circumstances." Buzzard II, 824 P.2d at 1109. Daniel could clarify whether Klintworth was making a UM claim and Metoyer's insurance status. At their meeting, Weintraub explained he was initially incorrect, and that "Mr. Metoyer does have insurance, but he believes that it is only a policy for $25,000," and Klintworth "has not necessarily made a claim against his UM." Based on the facts Valley Forge knew, or should have known, we hold no reasonable jury could conclude that Valley Forge's investigation was unreasonable under the circumstances when: (1) Klintworth continued to vaguely indicate he might need UM coverage in the future; (2) Valley Forge was unaware of Klintworth's large medical bills, which were so material they should have been disclosed; and (3) the claim, based on what Valley Forge knew or should have known, appeared to fall within the tortfeasors' liability coverages. If anyone is playing a "game of three card monte," to use his own words, it is Klintworth.
Any argument that Valley Forge could not rely on Daniel to inquire into Klintworth/Weintraub's statements is waived because it first appears in Appellant's Reply in Further Support of His Opening Brief. See Headrick v. Rockwell Int'l Corp., 24 F.3d 1272, 1277-78 (10th Cir. 1994) (White, J.) ("[W]e prefer to hold the argument waived pursuant to the general rule that appellate courts will not entertain issues raised for the first time on appeal in an appellant's reply."). We remind Appellant's counsel that it is inappropriate to use a reply brief to raise new issues and submit new arguments. We also take issue with stylizing a reply brief as being "in Further Support of [the] Opening Brief."
Looking at the undisputed record, the only conclusion that a reasonable jury could make is Valley Forge's investigation of Klintworth's UM claim was in good faith. Valley Forge continued to monitor Klintworth's file for a UM claim and stood ready to perform its duties under the policy. Once Klintworth finally disclosed that there were medical bills and economic losses that could exceed the tortfeasors' liability coverages, Valley Forge promptly began its investigation. Within two days of receiving Klintworth's demands for $2,985,242.42 or policy limits, Valley Forge retained counsel, Wheeler, to investigate and evaluate Klintworth's claims. Klintworth did not provide Valley Forge with the financial records supporting his claimed financial losses until February 6, 2017. On March 29, 2017, Wheeler examined Klintworth under oath. Shortly thereafter on April 13, 2017, Valley Forge issued an advance UM payment of $50,000. On June 9, 2017, after Valley Forge completed its investigation of Klintworth's claims, Valley Forge issued a further payment of $200,000. Based on these undisputed facts-especially because it took Klintworth over two months to supply documentation for his economic losses-no reasonable jury could conclude Valley Forge's investigation was delayed in bad faith.
Klintworth also argues Valley Forge acted in bad faith by inadequately investigating his claims. As part of this argument, he alleges Valley Forge could not rely on Wheeler, a lawyer, to investigate his UM claims. Klintworth insufficiently briefs this argument, so we decline to consider it. See Bronson v. Swensen, 500 F.3d 1099, 1104 (10th Cir. 2007); Fed. R. App. P. 28(a)(8)(A).
IV.
Klintworth's final challenge is that Valley Forge acted in bad faith by failing to evaluate and/or pay claims for which evidence was discovered during litigation. The district court rejected these challenges, holding "once a court proceeding is commenced seeking insurance benefits, normal claim handling is superseded by the litigation proceeding." Klintworth, 2021 WL 816730, at *19 (quoting Andres v. Okla. Farm Bureau Mut. Ins. Co., 290 P.3d 15, 17 (Okla.Civ.App. 2012)) (cleaned up). Klintworth challenges the district court's conclusion that the duty of good faith does not extend past the commencement of litigation. Klintworth then goes on to argue that, since Valley Forge obtained evidence during discovery supporting Klintworth's claims, Valley Forge acted in bad faith by failing to investigate and pay those claims through the normal claim handling process. The specific evidence Klintworth alleges Valley Forge should have investigated was the evidence "establishing his tinnitus is permanent, his right shoulder [injury is] related [to the accident], his left shoulder injury is permanent, his strain / sprain injury to his back and neck is permanent, and he suffers ATSD and PTSD and depression which will result in over $1.9 million in loss of earning capacity." We conclude that, regardless if the duty of good faith continues after the commencement of litigation, Klintworth cannot establish bad faith on these facts.
Every piece of evidence Klintworth believes Valley Forge should have investigated goes to claims that Valley Forge considered and paid or considered and denied. In other words, Klintworth's litigation-discovered evidence all goes to whether Valley Forge properly valued his claims. Of course, this evidence would be helpful for Klintworth to establish a breach of contract claim, but he dropped his breach of contract claim in June 2019. As a matter of common sense, we doubt the Oklahoma Supreme Court would permit a bad-faith investigation claim to be predicated on an insurer's failure to investigate litigation-discovered evidence through the normal claims process when that evidence goes to claims already paid or denied and the insured voluntarily dropped their breach of contract claim. After all, once a court proceeding "is commenced seeking insurance benefits," "an insurer cannot be guilty of bad faith because it does not conduct its own investigation, but instead relie[s] upon its counsel to conduct an investigation that is appropriate in a litigation context." Andres, 290 P.3d at 17.
That this evidence may have been discovered after Klintworth dropped his breach of contract claim is irrelevant, because once Klintworth filed his breach of contract claim, the appropriate avenue to resolve the claim dispute was in the courts. We do not see why, on these specific facts, Valley Forge needed to investigate the litigation-discovered evidence outside the litigation context when Klintworth himself did not think it worth his time to pursue the breach of contract claim. We therefore hold, on the specific facts of this case, that Valley Forge did not act in bad faith.
We do not mean to say that once litigation is commenced, that can be the only place to resolve claim disputes. But instead, based on the facts of this case, Valley Forge "clearly has the right to resist payment and litigate any claim to which the insurer has a reasonable defense." Buzzard II, 824 P.2d at 1109 (emphasis omitted).
* * *
Klintworth raises other arguments in his briefing, including: (1) the district court erred by not remanding the case to state court, (2) Valley Forge conduced an inadequate investigation in bad faith, (3) the district court improperly allowed Valley Forge to assert a new defenses prohibited by Oklahoma law, and (4) Valley Forge could not rely on Daniel-Klintworth's appointed counsel-to ask Weintraub if Klintworth was making a UM claim. These arguments are waived for insufficient briefing. See Fed. R. App. P. 28(a)(8)(A); Bronson, 500 F.3d at 1104 ("[W]e routinely have declined to consider arguments that are not raised, or are inadequately presented, in an appellant's opening brief."); Headrick, 24 F.3d at 1277-78 ("[W]e prefer to hold the argument waived pursuant to the general rule that appellate courts will not entertain issues raised for the first time on appeal in an appellant's reply.").
If we overlooked any other argument, it is because the briefing is unclear.
For the reasons stated herein, we AFFIRM the district court's judgment.
We deny as moot Appellant's Motion to Certify Questions to the Oklahoma Supreme Court. We deny Appellee's Motion for Leave to File Sur-Reply to Appellant's Reply.
[*] This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.