The South Oklahoma City Chamber of Commerce gave Merlin Law Group a wonderful ribbon cutting ceremony celebrating the Grand Opening of our new Oklahoma City Office. Drew Houghton, Larry Bache and I were thrilled by the outpouring of wishes for success. I am certain that insurance companies delaying, denying and underpaying Oklahoma claims are not as wishful for our growth as the Chamber Chairman of the Board, Karl Hillerman, is—as seen in this photo wishing that we aspire to even larger offices, with many more attorneys.


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Most states follow the “American Rule” when it comes to litigation. In other words, absent a specific statute or contractual provision to the contrary, each party pays their own legal costs and fees. However, the Oklahoma legislature passed, and on May 10, 2017, the governor signed into law, a bill which, in essence, abolished the “American Rule” in all civil cases. While it appears that this was the unintended consequence of House Bill 1470, the law will require the losing party in civil lawsuits to pay all court costs to the winning party, and can also place the losing party on the hook for the winning party’s legal fees. The law will take effect November 1.
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I recently received a request to write about the claims handling guidelines in Oklahoma. Again, I plan to go through all 50 states, but if you have a burning desire to see your state sooner rather than later, speak up! In Oklahoma, the handling of insurance claims is governed by both statute and the administrative code.
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It is generally understood that a disagreement as to scope or cost of damages is not enough to rise to the level of bad faith in first-party property damage cases. However, a recent case out of the Western District of Oklahoma held that evidence of unreasonable underpayment of claim was sufficient to survive a 12(b)(6) motion to dismiss.


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In Redcorn v. State Farm Fire & Casualty Company,1 the insured’s roof was damaged by wind or hail. Although the policy did not define “actual cash value,” it contained an endorsement entitled Roof Surface Losses—Actual Cash Value Endorsement, which provided for roof surface repair and replacement coverage on an actual cash value basis:

Roof Surfaces: We will pay the actual cash value at the time of loss for loss or damage to roof surfaces. We will not pay an amount exceeding that which you actually and necessarily spend to repair or replace the damaged roof.


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When I get hired on property damage cases, part of the materials I receive from the policyholder, or the public insurance adjuster, is a full or partial denial letter in which the carrier fairly specifically sets out reasons and quotes policy provisions supporting the denial of coverage. If I am hired on a case and I don’t see a denial letter or the reasons for the denial are not clear then I will ask the carrier to set out in writing the specific reasons for the denial and I ask them to cite policy provisions.


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In Texas the general rule seems to be that either the insurance company or the policyholder may invoke the appraisal clause (before or after suit is filed). After the award both parties are generally bound by the award, unless they can prove the award was arrived at as a result of fraud or some other recognized basis for challenging the award. It is very difficult to set aside an award.1 I was recently asked by a policyholder about setting aside an unfavorable award in Oklahoma. The rules are different in Oklahoma because the appraisal award is only binding on the party who invoked appraisal. This rule was discussed in an interesting case out of the Oklahoma Supreme Court, Massey v. Farmers Insurance Group,2 where the Court answered a certified question from the U.S. Court of Appeals for the Tenth Circuit.


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My last blog, The First Thing You Do Is Read the Policy, Part I: Limitations Clauses in Texas and the Spicewood Case, was the first in a series on “limitations clauses” in insurance policies. I imagined old Andy Griffith (à la Matlock) sitting around a cracker barrel in his blue seersucker suit telling young lawyers and public insurance adjusters, “The first thing you do is you read the insurance policy.”


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