Progressive Northern Insurance Company v. J&S Exchange, Inc. et al

Filing 48

OPINION AND ORDER by District Judge James H. Payne: granting 28 Motion for Summary Judgment (case terminated) (cjt, Deputy Clerk)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA

PROGRESSIVE NORTHERN
INSURANCE COMPANY,
Plaintiff,
v.
J&S EXCHANGE, INC.
and WILMA CHARLIEN PEAVLER,
as the Special Administrator for the
Estate of CHRISTOPHER ALLEN
RICHTER,
Defendants.

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Case No.: 17-CV-229-JHP

OPINION AND ORDER
Before the Court is the Motion for Summary Judgment filed by Plaintiff, Progressive
Northern Insurance Company (“Progressive”) [Doc. No. 28]. Defendant, Wilma Charlien
Peavler, as the Special Administrator for the Estate of Christopher Allen Richter (“Defendant
Peavler”) has filed her Response to Plaintiff’s Motion for Summary Judgment [Doc. No. 30]
and Progressive has filed its Reply in Support of Motion for Summary Judgment [Doc. No.
32]. Defendant, J&S Exchange, Inc. (“Defendant J&S”), has not filed any Response to
Plaintiff’s Motion for Summary Judgment.
BACKGROUND
A.

General Background
On July 7, 2014, non-party Ivan Fry (“Fry”), non-party Zach Vassar (“Vassar”), and

decedent, Christopher Allen Richter (“Richter”) were involved in a one-car accident which

resulted in the death of Richter. Fry was driving a 2001 Dodge Dakota (“the Dodge”) when
the accident occurred. At the time of the accident, Fry was insured under Policy No.
902648618 (“the Fry Policy”), a personal policy of automobile insurance that had been
issued by Progressive to Fry’s mother, Cynthia Wolfkill. By coincidence, Defendant J&S
was also insured by Progressive on July 7, 2014, under Policy No. 08201121-2 (“the J&S
Policy”), a commercial policy of automobile insurance issued to Defendant J&S.
As a result of the accident, Defendant Peavler filed suit against Fry and Defendant
J&S in Kay County, Oklahoma (“the Peavler litigation” or “the Peavler lawsuit”).
Defendant Peavler’s claims against Defendant J&S are based on the theory of respondeat
superior. Due to the allegations asserted in the Peavler litigation, Progressive filed this
declaratory judgment action seeking a judicial determination it (1) will owe no more than
$25,000 of indemnity coverage to Defendant Peavler under the Fry Policy in the event any
verdict is entered against Defendant J&S in the Peavler litigation based on the theory of
vicarious or respondeat superior liability; (2) owes no uninsured/underinsured (“UM/UIM”)
coverage to Defendant Peavler under the J&S Policy; (3) owes no medical payments
(“medpay”) coverage to Defendant Peavler under the J&S Policy; and (4) owes no duty to
defend or indemnify Defendant J&S or Fry under the liability coverage provisions of the J&S
Policy.
B.

Relevant Procedural History
Progressive instituted this declaratory judgment action on June 16, 2017, seeking a

declaratory judgment from this Court as to its rights and liabilities under the Fry Policy and
the J&S Policy. [Doc. No. 1.] Originally, Ivan Fry was also named as a defendant. Id.
2

However, on October 11, 2017, Progressive filed a Notice of Voluntary Dismissal of Ivan
Fry, which memorialized Fry’s stipulation that he would be bound by the judicial
determinations of this Court. [Doc. No. 15.] Defendant J&S filed its Answer on August 17,
2017, [Doc. No. 10], and Defendant Peavler filed her Answer on September 5, 2017, [Doc.
No. 13]. Neither Defendant J&S nor Defendant Peavler asserted any affirmative defenses,
counterclaims, or crossclaims. [Doc. Nos. 10 and 13.]
On April 2, 2018, Progressive filed its Motion for Summary Judgment. [Doc. No. 28.]
Defendant Peavler filed her Response on April 12, 2018, [Doc. No. 30] and Progressive filed
its Reply on April 26, 2018, [Doc. No. 32].

Defendant J&S filed no Response to

Progressive’s Motion for Summary Judgment. Defendant Peavler sought leave to file a
supplemental Response on May 1, 2018, [Doc. No. 33], to which Progressive objected, [Doc.
No. 40]. Defendant Peavler’s request for leave to file a supplemental Response was denied
by this Court by way of minute order on May 16, 2018. [Doc. No. 41.] As such,
Progressive’s Motion for Summary Judgment is fully briefed and before this Court.
The parties jointly sought a stay of remaining deadlines in this matter on May 31,
2018, [Doc. No. 43] on the grounds this Court’s ruling on Progressive’s Motion for Summary
Judgment, even if it is not granted, may moot the need for further litigation of Progressive’s
declaratory judgment action. [Doc. No. 43.] The parties’ request for a stay was granted by
Order of this Court on June 1, 2018.1 [Doc. No. 45.] Pursuant to the terms of that Order, in
the event this Court’s ruling on Progressive’s Motion for Summary Judgment does not

1

The parties also jointly requested a stay of the Settlement Conference in this matter, which
was granted. [Doc. Nos. 44 and 46].
3

dispose of this matter in full, the parties are to file either a joint dismissal without prejudice
or request a lift of the stay in this matter within fourteen (14) days of the entry of this
Opinion and Order. Id.
C.

Undisputed Factual Background
On July 7, 2014, Fry was involved in a single-vehicle accident while the Dodge,

which he – not Defendant J&S – owned. At the time of the underlying accident, Richter was
a passenger in the Dodge Fry was driving. Fry was driving Richter and Vassar to the J&S
job site on July 7, 2014, and at that time he had J&S’ tools in the Dodge. It is undisputed Fry
and Richter were both employees of Defendant J&S on July 7, 2014. As a result of the
accident, Richter passed away. Defendant Peavler instituted suit against Fry and Defendant
J&S in which she demanded judgment in excess of $75,000. The Peavler lawsuit alleges
Richter’s death was due to the negligence of Fry; that Fry was an employee of Defendant
J&S at the time of the underlying accident; that Fry was acting within the course and scope
of his employment with Defendant J&S at the time of the underlying accident; and that
Defendant J&S is vicariously liable for the negligence of Fry.
The Defendants dispute whether Fry was acting in the course and scope of his
employment with Defendant J&S at the time of the underlying accident. Defendant Peavler
has alleged Richter was not acting in the course and scope of his employment with Defendant
J&S at the time of the underlying accident because Richter was merely commuting to the
worksite and was not carrying out any work assignments or tasks. It is undisputed Defendant
J&S had workers’ compensation coverage at the time of the underlying accident.

4

Progressive issued the Fry Policy to Cynthia Wolfkill, and Fry was identified as a
driver and household resident on the Fry Policy at the time of the accident. The Fry Policy
also identifies the Dodge on the Declarations Page as an insured auto and provides $25,000
per person/$50,000 per accident of liability coverage. It is undisputed that Fry is an insured
under the Fry Policy and that $25,000 per person/$50,000 per accident of liability coverage
is available to respond on Fry’s behalf, in his individual capacity, to the claims asserted by
Defendant Peavler in the Peavler litigation.
Progressive issued the J&S Policy to its named insured, J&S Exchange, Inc., with
effective dates of August 21, 2013, to August 21, 2014. The J&S Policy did not identify the
Dodge on the Declarations Page as an insured auto. The J&S Policy provides UM/UIM,
Liability, Hired Auto Liability, and Employer’s Non-Owned Auto Liability coverage, all
with a combined single limit of $1,000,000. The J&S Policy also provides Medpay coverage
in the amount of $5,000 per person. There is no dispute concerning the language set forth
in the Fry Policy and the J&S Policy, though the parties disagree on how that language
should be interpreted and applied.
DISCUSSION
A.

Jurisdiction Over Progressive’s Declaratory Judgment Action
Before the Court decides the issues presented by Progressive’s Motion for Summary

Judgment, it must address a jurisdictional issue first raised by Defendant Peavler in her
Response to Progressive’s Motion for Summary Judgment. Defendant Peavler points out that
Defendant J&S, in the Peavler litigation, filed a motion to dismiss her Petition, which was
denied. Asserting Progressive is in privity with Defendant J&S in the Peavler litigation,
5

Defendant Peavler argues the judicial declaration Progressive seeks with respect to the
liability coverage provided by the J&S Policy “is inconsistent with the ruling of the state
court.” [Doc. No. 30] at p.1.
Defendant Peavler did not cite any authority in support of her argument that
Progressive’s request for a declaratory judgment would be “inconsistent with the ruling of
the state court,” nor has she expressly challenged this Court’s jurisdiction over Progressive’s
declaratory judgment action at any time in the instant case. However, the Court is aware that
“[a] judgment is void when a court enters it lacking subject matter jurisdiction or jurisdiction
over the parties.” Williams v. Life Sav. and Loan, 802 F.2d 1200, 1202 (10th Cir.1986)
(citation omitted). Accordingly, in light of Defendant Peavler’s suggestion that entry of
judgment on Progressive’s request for declaratory relief could conflict with a state court
decision, the Court has elected to examine the propriety of its exercise of jurisdiction over
this declaratory judgment action.
One of the primary functions of the Declaratory Judgment Act is to provide an
insurance company a forum in which it can have its liability under an insurance policy
determined. Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384, 1386 (10th Cir.1978).
This Court may exercise its discretion when determining whether to retain jurisdiction over
Progressive’s request for declaratory relief. State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d
979, 983 (10th Cir.1994). The Tenth Circuit has provided clear guidance on what factors a
federal court should consider when deciding whether it will exercise jurisdiction over a
complaint for declaratory relief when there is companion, parallel state court litigation in
process:
6

This circuit has provided trial courts in its bailiwick with substantial guidance
on this score, instructing them to weigh two questions originally supplied by
Professor Borchard: Will a declaration of rights, under the circumstances,
serve to clarify or settle legal relations in issue? Will it terminate or afford
relief from the uncertainty giving rise to the proceeding? If an affirmative
answer can be had to both questions, the trial court should hear the case; if not,
it should decline to do so. [Citations omitted.]
Mhoon at 983.
The Mhoon court went on to adopt a list of five fact-intensive factors, initially
articulated by the Sixth Circuit, which this Court should consider when determining whether
it should exercise jurisdiction of Progressive’s declaratory judgment action:
[1] whether a declaratory action would settle the controversy; [2] whether it
would serve a useful purpose in clarifying the legal relations at issue; [3]
whether the declaratory remedy is being used merely for the purpose of
‘procedural fencing’ or ‘to provide an arena for a race to res judicata’; [4]
whether use of a declaratory action would increase friction between our federal
and state courts and improperly encroach upon state jurisdiction; and [5]
whether there is an alternative remedy which is better or more effective.
Id. (citation omitted).
Defendant Peavler implicates the fourth Mhoon factor, suggesting a decision by this
Court would “increase friction between our federal and state courts and improperly encroach
on state jurisdiction ... .” St. Paul Fire & Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1169
(10th Cir. 1995) (citing Mhoon at 983). Defendant Peavler did not enter a copy of the state
court order she referenced in the record. Nevertheless, this Court may take judicial notice
“of proceedings in other courts, both within and without the federal judicial system, if those
proceedings have a direct relation to matters at issue.” St. Louis Baptist Temple, Inc. v.
Federal Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir.1979). Further, this Court “may
utilize the doctrines underlying judicial notice in hearing a motion for summary judgment
7

substantially as they would be utilized at trial,” and it may do so sua sponte. Id. (citation
omitted).
The order denying Defendant J&S’ motion to dismiss in the Peavler litigation, which
was filed on January 16, 2018, does not reflect any ruling that would impact Progressive’s
request for a judicial determination of its rights and responsibilities under the liability
coverage provided by the J&S Policy. The order simply recognizes the general legal
principle that a motion to dismiss “should be granted when there appears, based on the
allegations of the Petition taken in light of the law, that there is no possible way for relief to
be granted.” The order held that, “if taken as true, [Peaverl’s Petition] indicates a basis for
a respondeat superior claim against the Defendant, J&S Exchange, Inc.” and “based on the
evidence in the case at this time, the issues of the Petition have not been foreclosed.”
The decision that Defendant Peavler’s state court Petition should survive Defendant
J&S’ motion to dismiss is not an adjudicative declaration of any fact or legal issue which
would be relevant to the relief sought by Progressive in its declaratory judgment action.
Upon review of the record in the Peavler litigation, there is no order or ruling which would
create friction between the District Court of Kay County, State of Oklahoma, and any ruling
this Court may enter concerning Progressive’s Motion for Summary Judgment.2 Thus, the
only Mhoon factor implicated by Defendant Peavler dictates in favor of this Court’s retention
of jurisdiction over this matter.

2

As this Court has determined there has been no ruling issued in the Peavler litigation that
could result in any conflict or friction between it and the state court, Defendant Peavler’s assertion
that Progressive was “in privity” with Defendant J&S for purposes of Defendant J&S’ state-court
motion to dismiss is moot and need not be addressed.
8

Further, while Defendant Peavler did not raise any of the other Mhoon factors, this
Court has considered them in the context of the record. Upon consideration of the evidence,
the Court holds a ruling would settle the controversy before it in this matter – the nature and
extent of insurance coverage owed by Progressive, if any, for the underlying accident and
ensuing Peavler litigation. A decision on Progressive’s declaratory judgment action would
also clarify the legal relationship among the parties in this matter. Specifically, the Court
shall determine whether Defendant J&S and Fry are considered insureds for purposes of the
liability coverage provided by the J&S Policy, and will also determine whether Defendant
Peavler is an insured under the J&S Policy for purposes of the UM/UIM and medpay
coverages it provides. The first and second Mhoon factors, like the fourth, weigh in favor
of this Court’s exercise of jurisdiction over this matter.
Defendant Peavler has not presented any evidence that would suggest Progressive is
using its declaratory judgment action “for the purpose of ‘procedural fencing’ or ‘to provide
an arena for a race to res judicata’.” Mhoon at 983. In fact, the parties’ joint request for a
stay of deadlines in this matter reflects the opposite. They have advised the Court if it finds
issues of material fact which preclude entry of summary judgment, these issues will be
decided in the Peavler litigation.3 [Doc. No. 43.] This demonstrates none of the parties are
seeking to utilize this Court’s determination of Progressive’s request for declaratory relief
to engage in procedural fencing, or obtain a ruling that can then be declared a res judicata
determination of some factual or legal issue in the Peavler litigation. Finally, there is no

3

These representations also reflect the parties have taken steps to avoid any friction between
this Court’s rulings and decisions made by the State Court.
9

indication in the record, or by any party, that “there is an alternative remedy which is better
or more effective.” Mhoon at 983. As such, the third Mhoon factor weighs in favor of this
Court’s exercise of jurisdiction over this matter, and there is no evidence the fifth Mhoon
factor is relevant.
In light of the foregoing, it is appropriate for this Court to exercise jurisdiction over
Progressive’s declaratory judgment action.
B.

Summary Judgment
“The court shall grant summary judgment if the movant shows that 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). A fact is “material” if it “might affect the outcome of the suit under the
governing law,” and a dispute is only “genuine” if “the evidence is such that a reasonable
[finder of fact] could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A key purpose of summary judgment is dispose of claims
or defenses that are factually unsupported, and FED.R.CIV.P. 56(a) should be interpreted in
a manner that facilitates this purpose. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986).
When considering a party’s request for summary judgment, the Court will view the evidence
in the light most favorable to the non-moving party. Estate of Booker v. Gomez, 745 F.3d
405, 411 (10th Cir.2014). The non-moving party, though, must present sufficient evidence
to require submission of the matter to the jury to survive summary judgment. Piercy v.
Maketa, 480 F.3d 1192, 1197 (10th Cir.2007).

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C.

Insurance Policy Construction and Interpretation
The Court’s jurisdiction over this matter originates pursuant to 28 U.S.C. § 1332

(diversity jurisdiction). As such, this Court interprets the insurance policies at issue in
accordance with Oklahoma state law. Houston Gen. Ins. Co. v. Am Fence Co., Inc., 115 F.3d
805, 806 (10th Cir.1997) (applying Oklahoma insurance law). Oklahoma law is clear that an
insurance policy is a contract subject to the rules of interpretation and application which
govern contracts. Cranfill v. Aetna Life Ins. Co., 49 P.3d 703, 706 (Okla.2002). If an
insurance policy is not ambiguous, it is interpreted according to the plain meaning of the
language in the policy. VBF, Inc. v. Chubb Group of Insurance Companies, 263 F.3d 1226,
1230 (10th Cir.2001).
Further, “[a] basic rule of insurance law provides that the insured has the burden of
showing that a covered loss has occurred, while the insurer has the burden of showing that
a loss falls within an exclusionary clause of the policy.” Pitman v. Blue Cross and Blue
Shield of Oklahoma, 217 F.3d 1291, 1298 (10th Cir.2000). Finally, “[b]ecause interpretation
of an unambiguous contract or insurance policy is a question of law for the Court, that
interpretation is proper for summary judgment adjudication. The same applies to insurance
policy exclusionary provisions ... .” Progressive Direct Ins. Co. v. Yousif, 2010 WL
3959623, *2 (W.D.Okla.) (footnote and citations omitted).
D.

The Fry Policy
The Fry Policy states, unambiguously, that “[t]he limit of liability shown on the

declarations page for liability coverage is the most we will pay regardless of the number of
... insured persons.” The limit of liability shown on the declarations page of the Fry Policy
11

is $25,000 per person. There is no question Fry is an insured under the Fry Policy.
Defendant J&S, however, falls within the definition of an “insured person” under the Fry
Policy “with respect only to vicarious liability for the acts or omissions” of Fry. Progressive
has not sought a judicial determination as to whether Defendant J&S falls within the
definition of an “insured person.” Rather, it only seeks a judicial determination that the limit
of liability coverage available under the Fry Policy is $25,000 per person.
Defendant Peavler did not present any evidence in opposition to Progressive’s request
for a judicial determination that the maximum amount of liability coverage available under
the Fry Policy – irrespective of whether just Fry, or both Fry and Defendant J&S, are
eventually deemed to fall within the scope of the definition of an “insured person” – is
$25,000. As such, upon review of the undisputed facts and the arguments presented, this
Court declares the maximum limit of liability coverage available under the Fry Policy for the
underlying accident and/or the claims presented by Defendant Peavler in the Peavler
litigation is $25,000 per person, regardless of how many “insured persons” exist.
E.

The J&S Policy
Progressive and Defendant Peavler have each cited to certain portions of the J&S

Policy in support of their respective arguments. The language of the J&S Policy provisions
relied upon by Progressive and Defendant Peavler is undisputed. Excerpts of Part I, Liability
to Others of the main commercial auto policy form [Form 6912 (06/10)]; the Employer’s
Non-Ownership Liability Endorsement [Form 1890 (03/08)]; the Uninsured/Underinsured
Motorist Coverage Endorsement [Form 2852 OK (06/11)]; and the Medical Payments

12

Coverage Endorsement [Form 4757 OK (11/04)] are at issue. The relevant provisions of the
J&S Policy, for purposes of all coverage questions at issue under that policy, are as follows:
PART I - LIABILITY TO OTHERS
INSURING AGREEMENT – LIABILITY TO OTHERS
Subject to the Limits of Liability, if you pay the premium for liability coverage
for the insured auto involved, we will pay damages, other than punitive or
exemplary damages, for bodily injury, property damage, and covered
pollution cost or expense, for which an insured becomes legally responsible
because of an accident arising out of the ownership, maintenance or use of
that insured auto.
*

*

*

ADDITIONAL DEFINITIONS USED IN THIS PART ONLY
A.

When used in Part I – Liability To Others, insured means:
1.

You with respect to an insured auto.

2.

Any person while using, with your permission, and
within the scope of that permission, an insured auto you
own, hire, or borrow except:
*
(c)

*

*

The owner or anyone else from whom the insured
auto is leased, hired, or borrowed unless the
insured auto is a trailer connected to a power
unit that is an insured auto. However, this
exception does not apply if the insured auto is
specifically described on the declarations page.
*

*

*

EXCLUSIONS – PLEASE READ THE FOLLOWING EXCLUSIONS
CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE FOR AN
ACCIDENT OR LOSS WILL NOT BE AFFORDED UNDER THIS
PART I – LIABILITY TO OTHERS.

13

Coverage under this Part I, including our duty to defend, does not apply to:
*
3.

*

*

Worker’s Compensation
Any obligation for which an insured or an insurer of that
insured, even if one does not exist, may be held liable under
workers’ compensation, unemployment compensation, disability
benefits law, or any similar law.
*

*

*

Form 1890 (03/08)
EMPLOYER’S NON-OWNERSHIP LIABILITY ENDORSEMENT

Except as specifically modified in this endorsement, all
provisions of the Commercial Auto Policy apply.
We agree with you that the insurance provided under your
Commercial Auto Policy is modified as follows:
ADDITIONAL DEFINITION
ENDORSEMENT

USED

IN

THIS

If you pay a premium for this Employer's Non-Ownership
Liability coverage, then the following definition is added:
"Non-owned auto" means an auto that you do not own, lease,
hire, rent, or borrow, and that is used in connection with your
business. This includes autos owned by your employees,
partners (if you are a partnership), members (if you are a limited
liability company), or members of their households, but only
while such autos are used in your business or your personal
affairs.
CHANGES TO PART I - LIABILITY TO OTHERS
The definition of insured auto is modified to include a
non-owned auto. The definition of insured does not include the
owner of a non-owned auto.

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*

*

*

ALL OTHER TERMS, LIMITS AND PROVISIONS OF
THE POLICY REMAIN UNCHANGED.
*

*

*

Form 2852 OK (06/11)
UNINSURED/UNDERINSURED MOTORIST COVERAGE ENDORSEMENT

Except as specifically modified in this endorsement, all provisions of the
Commercial Auto Policy apply.
We agree with you that the insurance provided under your Commercial Auto
Policy is modified as follows:
INSURING AGREEMENT
Subject to the Limits of Liability, if you pay the premium for
Uninsured/Underinsured Motorist Coverage, we will pay for damages, other
than punitive or exemplary damages, which an insured is legally entitled to
recover from the owner or operator of an uninsured auto because of bodily
injury:
1.
sustained by an insured;
2.
caused by an accident; and
3.
arising out of the ownership, maintenance, or use of an uninsured
auto.
*

*

*

ADDITIONAL DEFINITIONS
When used in this endorsement, whether in the singular, plural, or possessive:
1.
"Insured" means:
*
*
*
b.

if the named insured shown on the declarations page is
a corporation, partnership, organization or any other
entity that is not a natural person:
(I)
any person occupying your insured auto or
temporary substitute auto
15

*
2.

*

*

“Non-owned auto” means any auto that is not owned by you or
furnished for your regular use and, if the named insured is a natural
person, not owned by or furnished for the regular use of the named
insured’s spouse or relative.
*

*

*

ALL OTHER TERMS, LIMITS AND PROVISIONS OF THE POLICY
REMAIN UNCHANGED.
*
*
*
Form 4757 OK (11/04)
MEDICAL PAYMENTS COVERAGE ENDORSEMENT

Except as specifically modified in this Endorsement, all provisions of the
Commercial Auto Policy apply.
We agree with you that the insurance provided under your Commercial Auto
Policy is modified as follows:
INSURING AGREEMENT
Subject to the Limits of Liability, if you pay the premium for Medical
Payments Coverage, we will pay the usual and customary charge for
reasonable and necessary expenses, incurred within three (3) years from the
date of an accident, for medical and funeral services because of bodily injury:
1.
sustained by an insured;
2.
caused by an accident; and
3.
arising out of the ownership, maintenance or use of a motor vehicle or
trailer.
*
ADDITIONAL DEFINITIONS

*

*

When used in this Endorsement, whether in the singular, plural, or possessive:
1.
“Insured” means:
*

*
16

*

b.

2.

if the named insured shown on the Declarations Page is
a corporation, partnership, organization or any other
entity that is not a natural person, any person occupying
your insured auto, temporary substitute auto, or
trailer while attached to an insured auto.

“Non-owned auto” means any auto that is not owned by you or
furnished for your regular use and, if the named insured is a person, not
owned by or furnished for the regular use of the named insured’s
non-resident spouse or a relative.
*

*

*

EXCLUSIONS - READ THE FOLLOWING EXCLUSIONS
CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL
NOT BE AFFORDED UNDER THIS ENDORSEMENT.
Coverage under this Endorsement does not apply to bodily injury:
*

*

*

2.
occurring during the course of employment if workers’
compensation coverage should apply;
*
9.

*

*

sustained by any person while occupying a non-owned vehicle without
the express or implied permission of the owner;
*

*

*

ALL OTHER TERMS, LIMITS AND PROVISIONS OF THE POLICY
REMAIN UNCHANGED.
The

Liability

to

Others,

Employer’s

Non-Ownership

Liability;

Uninsured/Underinsured Motorist; and the Medical Payments coverages are all identified
separately, with separately-identified limits and premium charges, on the Declarations Page.
Similarly, the main policy form and the forms that “modif[y] the contract” (endorsements)

17

are identified separately by form number on the Declarations Page. Additionally, the
Declarations Page of the J&S Policy states, “Your insurance policy and any policy
endorsements contain a full explanation of your coverage.”
1.

Uninsured/Underinsured Motorist Coverage
Progressive points out that in order to qualify as an “insured” for purposes of the

uninsured/underinsured motorist (“UM/UIM”) coverage provided by the J&S Policy, Richter
would have had to have been “occupying your insured auto or temporary substitute auto.”
It is undisputed the Dodge Fry owned, and was driving, was not listed on the Declarations
Page of the J&S Policy, nor did it fall within the definition of “your insured auto” or a
“temporary substitute auto.” As such, Progressive maintains Richter does not fall within the
definition of an “insured” for purposes of the UM/UIM coverage provided by the J&S Policy
and no UM/UIM coverage is owed under the J&S Policy for Richter’s death.
In response, Defendant Peavler argues the “reasonable expectations doctrine” applies
to the question of whether UM/UIM coverage is owed by Progressive under the J&S Policy.
The Oklahoma Supreme Court has expressly adopted the “reasonable expectations doctrine.”
Max True Plastering Co. v. USF&G Co., 912 P.2d 861 (Okla.1996). In Max True
Plastering, the party seeking coverage filed suit against USF&G Co., and specifically
asserted the bases demonstrating its reasonable expectation that coverage existed for a denied
loss. Id. at 863. As recognized by the Tenth Circuit, “the reasonable expectations doctrine
permits a court to reform a contract to honor the objectively reasonable expectations of the
parties ‘even though painstaking study of the policy provisions might have negated those
expectations.’” Roberts v. Farmers Ins. Co., 201 F.3d 448, *1 (10th Cir.1999) (citation
18

omitted) (unpublished). In order for UM/UIM coverage under the J&S Policy to be afforded
to Defendant Peavler under the “reasonable expectations doctrine,” she must demonstrate
Defendant J&S (1) had a reasonable expectation UM/UIM coverage would be afforded to
Richter while Richter was a passenger in a vehicle Defendant J&S did not own, and which
was not identified as an “insured auto” on the J&S Policy, and (2) the definition of “nonowned auto” set forth in the UM/UIM Coverage Endorsement is ambiguous. Max True
Plastering at 870 (“Today, we hold that the doctrine of reasonable expectations may be
applicable to the interpretation of insurance contracts in Oklahoma, and that the doctrine may
apply to ambiguous contract language ... .”). If Defendant Peavler shows there is no genuine
issue of material fact as to these two elements, the ambiguity she identifies must be resolved
in her favor. Id.
Progressive acknowledges the “reasonable expectations doctrine” is the law of
Oklahoma. However, it argues the “reasonable expectations doctrine” is an affirmative
defense Defendant Peavler was required to plead. It is undisputed Defendant Peavler did not
assert the “reasonable expectations doctrine” as an affirmative defense. Progressive did not
cite any published Oklahoma precedential or persuasive authority that specifically states the
“reasonable expectations doctrine” must be affirmatively pleaded.4 Under both federal law
and Oklahoma state law, however, if an affirmative defense is not pleaded, it is waived.
Racher v. Westlake Nursing Home Limited Partnership, 871 F.3d 1152, 1167 (10th Cir.2017).

4

In the Max True Plastering case, the “reasonable expectations doctrine” was affirmatively
pleaded by the party seeking its application. Max True Plastering, supra (the party seeking
coverage filed suit against USF&G Co., specifically alleging the bases upon which it asserted its
reasonable expectation was that coverage existed for a denied loss).
19

See also RST Service Mfg., Inc. v. Musselwhite, 628 P.2d 366, 368 (Okla.1981) (citation
omitted).
Progressive also cites Oklahoma Supreme Court authority which address whether
insurance contracts should be reformed based on ambiguities in the policy language, the
expectations of the insured, or mutual mistake. See, generally, Haggard v. Calhoun, 294
P.2d 836 (Okla.1956), American Motorists Ins. Co. v. Biggs, 380 P.2d 950 (Okla.1963), and
Carraco Oil Co. v. Mid-Continent Cas. Co., 484 P.2d 519 (Okla.1971). In reliance on these
decisions, Progressive argues a key pre-Max True Plastering principle of Oklahoma law is
that any allegation an insurance policy should be reformed due to the presence of ambiguous
terms, the expectations of the insured, or mutual mistake must be affirmatively pleaded. See
Haggard at 839 (“[I]n an action to reform a written contract on the ground that it differs from
the agreement of the parties, either fraud, mutual mistake or accident must be alleged and
proven.”) (bold emphasis added). See also Albert & Harlow, Inc. v. Fitzgerald, 389 P.2d
994, 996-997 (Okla.1964) (“Before testimony could be admissible to prove that the written
contract was entered into through fraud, accident or mistake, which would constitute an
affirmative defense, it was necessary for defendant to plead fraud, accident or mistake.”)5
In support of its argument Defendant Peavler has waived her right to assert the
“reasonable expectations doctrine,” Progressive also relies upon FED.R.CIV.P. 12(b), which
states, “Every defense to a claim for relief in any pleading must be asserted in the responsive

5

The Oklahoma Supreme Court, in Albert and Harlow, Inc., found that as the defendant had
not affirmatively pleaded fraud, accident, or mistake in his answer, evidence of discussions between
defendant and the plaintiff's salesman was inadmissible to vary the terms of the written contract at
issue. Albert & Harlow, Inc., at 997.
20

pleading if one is required.” Though Progressive did not cite this authority, FED.R.CIV.P.
8(c) is also relevant, as it states, “[i]n responding to a pleading, a party must affirmatively
state any avoidance or affirmative defense ... .” The Rule goes on to list eighteen affirmative
defenses that are “includ[ed]” in those defenses a party must affirmatively assert. None of
the enumerated exemplary affirmative defenses are “reformation,” but “estoppel,” “fraud,”
and “waiver” are listed. FED.R.CIV.P. 8(c).6 The list of affirmative defenses that must be
asserted in a responsive pleading identified in FED.R.CIV.P. 8(c), however, is not exhaustive.
Racher at 1163 (citation omitted).
Progressive maintains that as the Tenth Circuit has recognized the purpose of the
“reasonable expectations doctrine” is “to reform a contract to honor the objectively
reasonable expectations of the parties,” (Roberts, supra, *1, emphasis added) and as
Oklahoma law demonstrates “in an action to reform a written contract on the ground that
it differs from the agreement of the parties, either fraud, mutual mistake or accident must
be alleged and proven,” (Haggard, supra, at 839, emphasis added), the “reasonable
expectations doctrine” is an affirmative defense which Defendant Peavler was required to
plead in her Answer. Progressive further maintains that, as Defendant Peavler did not assert
this affirmative defense prior to filing her Response to its Motion for Summary Judgment,
she has waived this affirmative defense.

6

Like its federal counterpart, the Oklahoma Pleading Code also requires that an affirmative
defense be pled and identifies fraud, estoppel, and waiver as affirmative defenses. 12 O.S. §
2008(C). This Oklahoma statute also requires a party to affirmatively set forth “[a]ny other matter
constituting an avoidance or affirmative defense.” Id.
21

The Court agrees with Progressive. The “reasonable expectations doctrine,” the
purpose of which is to reform the written terms of an insurance contract, is an affirmative
defense. As such, Defendant Peavler was required to assert the doctrine as an affirmative
defense in her Answer and her failure to do so has resulted in a waiver of the defense.
Even had Defendant Peavler properly pleaded the affirmative defense of the
“reasonable expectations doctrine,” however, it would not serve to create UM/UIM coverage
under the J&S Policy. As stated by the Oklahoma Supreme Court, “Under the doctrine, if
the insurer or its agent creates a reasonable expectation of coverage in the insured
which is not supported by policy language, the expectation will prevail over the language of
the policy.” Max True Plastering at 864 (bold emphasis added). Defendant Peavler asserts,
without evidentiary support, that “[i]t would be reasonable for J&S to understand that a
UM/UIM Endorsement which included a definition of non-owned auto would cover a person
occupying a non-owned auto.”7 This unsupported statement is not evidence. See Pinkerton
v. Colorado Dept. of Transp., 563 F.3d 1052, 1061 (10th Cir.2009) (citation omitted) (“[T]he
argument of counsel is not evidence, and cannot provide a proper basis to deny summary
judgment.”) and Bones v. Honeywell Intern., Inc., 366 F.3d 869, 875 (10th Cir.2004) (citation
omitted) (“To defeat a motion for summary judgment, evidence, including testimony, must
be based on more than mere speculation, conjecture, or surmise.”). Defendant Peavler has

7

This also demonstrates why Defendant Peavler was required to assert the “reasonable
expectations doctrine” as an affirmative defense and why Progressive and Defendant J&S were
prejudiced by her failure to do so. The other parties in this matter were not given notice that (1)
evidence of J&S’ “reasonable expectations” concerning the coverage provided by the J&S Policy
would be relevant to any issue or (2) any provisions of the J&S Policy were, according to Defendant
Peavler, ambiguous. As such, neither Progressive nor Defendant J&S had any opportunity prior to
the dispositive motion deadline to seek discovery regarding or form any response to these issues.
22

presented no evidence that Defendant J&S (or Richter) had any expectation – much less a
reasonable expectation – that the UM/UIM coverage provided by the J&S Policy would be
available to a person riding in a vehicle that was neither listed on the J&S Policy nor owned
by Defendant J&S.
Even if there was some evidence before this Court concerning Defendant J&S’
“reasonable expectations” about the UM/UIM coverage provided by the J&S Policy,
Defendant has failed to demonstrate the UM/UIM coverage provided by that policy contains
any ambiguous terms. Defendant Peavler attempts to apply the terms of the Employer’s
Non-Ownership Liability Endorsement to expand the UM/UIM coverage provided by the
UM/UIM Coverage Endorsement of the J&S Policy. The title of the Employer’s NonOwnership Liability Endorsement clearly reflects it is a “Liability Endorsement.” By
express terms set forth in bold, capital letters, the Employer’s Non-Ownership Liability
Endorsement states “CHANGES TO PART I – LIABILITY TO OTHERS” and also
specifically sets forth that “ALL OTHER TERMS, LIMITS, AND PROVISIONS OF
THE POLICY REMAIN UNCHANGED.”
Defendant Peavler has not demonstrated any ambiguity exists in the J&S Policy.
Rather, she urges exactly the type of “forced and constrained” interpretation Max True
Plastering expressly precludes. Max True Plastering at 869. While no Oklahoma court has
addressed the argument presented by Defendant Peavler, it has been addressed in Babin v.
GEICO Cas. Co., 2012 WL 4335467, 2012-0221 (2012) (unpublished). The Babin Court’s
analysis and rejection of the exact argument Defendant Peavler has made in an attempt to
create UM/UIM coverage where none exists is instructive:
23

Since the named insured (Hub) is a corporation, the UM endorsement clearly
indicates that in order for “any person” to be an insured, they must be
occupying “your insured auto” or a “temporary substitute auto.” It is
undisputed that Ms. Dick's personal vehicle was not a temporary substitute
auto for Hub. Furthermore, the general definition section of Progressive's
policy provides that “your insured auto” means “[a]ny auto specifically
described on the Declarations Page, unless you have asked us to delete that
auto from the policy.” The record reflects that Ms. Dick's personal vehicle was
not listed or specifically described on the declarations page of the policy. Thus,
Ms. Dick was not occupying an insured auto at the time of the accident and she
is not considered an insured under the policy for UM purposes. The
Progressive policy unambiguously limits UM coverage to those persons
occupying vehicles specifically listed on the policy's declarations page.
Ms. Dick contends, however, that Progressive's policy provides UM coverage
due to another endorsement that modifies and expands the general definition
of “insured auto” in a section titled “EMPLOYERS' NON–OWNERSHIP
LIABILITY ENDORSEMENT.” We disagree with Ms. Dick's interpretation
of that particular endorsement. ...
*
*
*
The employer's non-ownership liability endorsement modifying the definition
of an “insured auto” is expressly and unambiguously limited to Part 1 of the
policy, which is the “LIABILITY TO OTHERS” section. This endorsement
does not apply to the UM endorsement provisions in Progressive's policy.
Accordingly, the UM endorsement section of Progressive's policy is not
expanded beyond the general definition of “insured auto,” which requires that
the vehicle be specifically described on the declarations page of the policy.
Babin at *3-4 (italics and bold emphasis in original, footnote omitted).
Similarly, there is no ambiguity in the J&S Policy concerning whether Richter
qualified as an “insured” for purposes of the UM/UIM coverage.

The J&S Policy

unambiguously dictates he did not.
Finally, Defendant Peavler has failed to demonstrate Oklahoma public policy requires
the J&S Policy to provide UM/UIM coverage for the death of Richter. Defendant Peavler
acknowledges Oklahoma law permits an employer with a commercial automobile policy to

24

limit UM/UIM coverage to company-owned vehicles. See Graham v. Travelers Ins. Co., 61
P.3d 225, 230 (Okla.2002) (“CKE and Travelers are free to exclude employees operating
their own vehicles from UM/UIM coverage through the method of limiting UM/UIM
coverage to vehicles owned by the company. No public policy is violated by such a
limitation.”) No published Oklahoma decision has abrogated, or limited the holding of
Graham. Defendant Peavler suggests, however, that the Oklahoma Supreme Court’s
decision in Ball v. Wilshire Ins. Co., 221 P.3d 717 (Okla.2009) demonstrates that because
Richter was not riding in a vehicle he owned, the facts of this matter may prompt the
Oklahoma Supreme Court to revisit the holding of Graham.
As Progressive points out, the Ball Court commented on the Graham decision, stating,
“the critical factor in upholding the UM coverage restriction appeared to be Graham's
ownership of his own vehicle.” Ball at 728 (emphasis added). It is true Richter did not own
the vehicle he was in at the time of the underlying accident – Fry did. There is no evidence
before the Court as to whether Richter was the owner of any vehicle; whether he had an
opportunity to purchase UM/UIM coverage; whether he was an insured under any other
policy of UM/UIM coverage at the time of the July 7, 2014, accident; or whether Defendant
Peavler received UM/UIM benefits from any other insurer as a result of Richter’s death.8 As

8

While Progressive did not argue Defendant Peavler was required to assert UM/UIM
coverage existed under the J&S Policy by operation of Oklahoma law and/or public policy as an
affirmative defense, the Court notes that Defendant Peavler’s public policy argument requires
evidentiary support. Specifically, Defendant Peavler’s argument requires evidence as to whether
Richter was covered by any other policy of UM/UIM coverage. Defendant Peavler’s failure to
assert her “public policy” defense before she filed her Response to Progressive’s Motion for
Summary Judgment prevented the other parties from obtaining any evidence relevant to this issue
or developing any response to this defense before the dispositive motion deadline.
25

such, there is no evidence in the record to support Defendant Peavler’s argument, and there
is no issue of material fact present in regard to the issue of whether Oklahoma public policy
requires the J&S Policy to provide UM/UIM coverage for Richter’s death – as a matter of
law, it does not.9 Accordingly, Progressive owes no UM/UIM coverage to Defendant
Peavler under the J&S Policy.
2.

Medical Payments Coverage
Defendant Peavler did not assert the “reasonable expectations doctrine” as an

affirmative defense to Progressive’s request for a judicial determination that it owes no
medpay coverage under the J&S Policy. As such, she has waived this affirmative defense
just as she waived it with respect to Progressive’s request for a judicial determination that
it owes no UM/UIM coverage under the J&S Policy.
Even had Defendant Peavler asserted the “reasonable expectations doctrine” as an
affirmative defense in her Answer, she has failed to demonstrate that doctrine requires
Progressive to provide medpay coverage under the J&S Policy. Defendant Peavler has
presented no evidence regarding Defendant J&S’ expectations concerning the medpay
coverage provided by the J&S Policy. Further, just as the Employer’s Non-Ownership
Liability Endorsement does not serve to amend the provisions of the UM/UIM Coverage
Endorsement, it does not serve to amend the provisions of the Medpay Coverage

9

Progressive also argues that in the event Oklahoma public policy requires provision of
UM/UIM coverage under the J&S Policy, it is only required to provide $25,000 of UM/UIM
coverage – the statutory UM coverage amount. While the Court agrees with this proposition, its
determination that Oklahoma public policy does not require Progressive to provide UM/UIM
coverage under the J&S Policy moots the issue. See Roe v. Harco National Insurance Company,
2017 WL 5618283, *3 (N.D.Okla.).
26

Endorsement. Accordingly, Progressive owes no medpay coverage to Defendant Peavler
under the J&S Policy.
3.

Liability Coverage
Progressive has stipulated for purposes of its Motion for Summary Judgment that the

Dodge, which is not listed on the Declarations Page of the J&S Policy, is a “non-owned” auto
as that term is defined by the Employer’s Non-Ownership Liability Endorsement. The
Employer’s Non-Ownership Liability Endorsement – which only amends the PART I –
LIABILITY TO OTHERS section of the J&S Policy – specifically adds “non-owned auto[s]”
to the definition of “insured auto[s]” for purposes of liability coverage, only. It is therefore
undisputed for purposes of Progressive’s Motion for Summary Judgment that the Dodge Fry
owned and was driving on July 7, 2014, falls within the definition of an “insured auto” under
the liability coverage provided by the J&S Policy. The Employer’s Non-Ownership Liability
Endorsement’s definition of “non-owned auto” also contains the following language: “The
definition of insured does not include the owner of a non-owned auto.” Therefore, this
Court finds that Fry does not fall within the definition of an “insured” for purposes of the
liability coverage provided by the J&S Policy. Defendant J&S is the only entity and/or
person who falls within the definition of an “insured” for purposes of the liability coverage
provided by the J&S Policy.10
The only liability claim Defendant Peavler has asserted against Defendant J&S in the
Peavler litigation is one of respondeat superior. There is no allegation Defendant J&S,

10

Progressive set forth these points in its Motion for Summary Judgment, and Defendant
Peavler did not address them in her Response to Progressive’s Motion for Summary Judgment.
27

itself, is responsible for the death of Richter under any direct theory of liability. Rather,
Defendant Peavler has alleged Defendant J&S is vicariously liable for the acts of Fry, who
Defendant Peavler asserts was acting within the course and scope of his employment by
Defendant J&S at the time of the underlying accident.
Progressive acknowledges there are genuine issues of fact present as to whether Fry
and/or Richter were acting within the course and scope of their employment at the time of
the underlying accident. It further concedes that the presence of these genuine issues of fact
are material to and preclude this Court from deciding the question of whether Exclusions 5
and/or 6 of the PART I – LIABILITY TO OTHERS coverage serve to exclude the liability
coverage provided by the J&S Policy. According to Progressive, however, even presuming
the factual scenario presented by Defendant Peavler in the Peavler litigation exists – in which
Fry was acting in the course and scope of his employment and Richter was not acting in the
course and scope of his employment – this Court can determine as a matter of law that the
liability coverage provided by the J&S Policy is barred by Exclusion 3.
Exclusion 3 reads as follows:
3.

Worker’s Compensation
Any obligation for which an insured or an insurer of that
insured, even if one does not exist, may be held liable under
workers’ compensation, unemployment compensation, disability
benefits law, or any similar law.

Exclusion 3 does not violate Oklahoma public policy.11 Motor vehicle insurance
liability policies in Oklahoma “need not insure any liability under any workmen's

11

Defendant Peavler makes no argument Exclusion 3 violates Oklahoma public policy
governing mandatory automobile liability insurance.
28

compensation law nor any liability on account of bodily injury to or death of an employee
of the insured while engaged in the employment, other than domestic, of the insured, or while
engaged in the operation, maintenance or repair of any such vehicle ... .” 47 O.S. § 7-324(C).
See also Deffenbaugh v. Hudson, 791 P.2d 84, 86 (Okla.1990) (“[A]utomobile liability
insurers are not obligated by law to protect their insureds against responsibility which falls
within the workers' compensation reparations regime. The terms of 47 O.S.1981 § 7–324(f)
clearly relieve insurers of any legal obligation to include in the standard motor vehicle
liability policy a provision for indemnity against employment-related harm.”) (italics
emphasis in original). Oklahoma federal district courts have recognized automobile liability
exclusions like Exclusion 3 comply with Oklahoma public policy – even if the insured under
the automobile liability policy did not have workers’ compensation coverage in place.
Colony Ins. Co. v. Jackson, 2010 WL 4117423 (N.D.Okla.) (“Colony I”); Colony Ins. Co.
v. Jackson, 2011 WL 2118728 (N.D.Okla.) (“Colony II”); and Allstate Fire and Casualty Ins.
Co. v. Adame, 2017 WL 5617071 (W.D.Okla.).
Progressive first argues that if the question of whether Fry was acting within the
course and scope of his employment with Defendant J&S at the time of the accident is
answered in the negative, then it is legally impossible that Defendant J&S could be
vicariously liable for Fry’s actions. Under this scenario, no liability coverage would be
available to Defendant J&S because it would not be liable for Fry’s negligence. Defendant
Peavler neither addresses nor disputes this scenario. The Court agrees that in this factual
scenario, no liability coverage would be owed under the J&S Policy. If it is determined Fry
was acting outside the course and scope of his employment with Defendant J&S, any
29

personal liability he may have for Richter’s death is not covered by the J&S Policy, as Fry
is not an insured under that policy. Additionally, no coverage would be owed by Progressive
under the J&S Policy in this scenario, as no liability could legally attach to Defendant J&S.12
Progressive also addresses the possibility that Fry could be found to have been acting
within the course and scope of his employment with Defendant J&S, which is what
Defendant Peavler maintains the facts will demonstrate.13 Progressive argues that if Fry was
acting in the course and scope of his employment at the time of the underlying accident, he
is statutorily immune from civil liability under the Administrative Workers Compensation
Act (the “AWCA”). In support of this position, Progressive relies upon various provisions
of the AWCA:
The rights and remedies granted to an employee subject to the provisions of
the Administrative Workers' Compensation Act shall be exclusive of all other
rights and remedies of the employee, his legal representative, dependents, next
of kin, or anyone else claiming rights to recovery on behalf of the employee
against the employer, or any principal, officer, director, employee, stockholder,
partner, or prime contractor of the employer on account of injury, illness, or
death. Negligent acts of a co-employee may not be imputed to the employer.
...
85A O.S. §5(A).
The immunity from civil liability described in subsection A of this section
shall apply regardless of whether the injured employee is denied compensation
or deemed ineligible to receive compensation under this act.

12

See, Roberts v. H-40 Drilling, Inc., 501 Fed.Appx. 759 (10th Cir.2012) (unpublished)
(applying Oklahoma law concerning an employer’s vicarious liability for an employee where
employee caused car accident and finding that as employee was not in course and scope of
employment, employer could not, as a matter of law, bear respondeat superior liability for
employee’s actions).
13

This factual determination is at issue and will be made in the context of the Peavler
litigation, either by way of dispositive motion or jury verdict.
30

85A O.S. §5(C).
Progressive argues these provisions of the AWCA provide Fry and Defendant J&S
statutory immunity from civil liability for Richter’s death even if, as Defendant Peavler
alleges, Richter was not acting within the course and scope of his employment with
Defendant J&S at the time of the underlying accident.14 Defendant Peavler counters by
arguing Fry and Defendant J&S only enjoy the statutory immunity provided by the AWCA
if Richter was acting within the course and scope of his employment when he was killed.
According to Defendant Peavler, it is only if Richter was acting in the course and scope of
his employment that he would be entitled to the rights and remedies provided by the AWCA.
Defendant Peavler’s position is that the exclusivity provisions of the AWCA – and the
statutory immunity from civil liability it provides to Fry and Defendant J&S – are only
implicated if Richter was acting in the course and scope of his employment with Defendant
J&S when he was killed.
Neither Progressive nor Defendant Peavler fully address the language of Exclusion
3 of PART I – LIABILITY TO OTHERS of the J&S Policy in context with the relevant
provisions of the AWCA and the facts of this matter. Exclusion 3 bars liability coverage for
“[a]ny obligation for which an insured or an insurer of that insured, even if one does not
exist, may be held liable under workers' compensation ... law.” (Emphasis added.) As noted
above, Fry does not fall within the definition of an “insured” for purposes of Exclusion 3;
only Defendant J&S is considered an “insured” under the liability coverage provided by the
14

If Fry enjoys statutory immunity from civil prosecution under the AWCA, his employer
and Progressive’s insured, Defendant J&S, also enjoys the same statutory immunity pursuant to 85A
O.S. §5(A).
31

J&S Policy. As such, the issue of whether Exclusion 3 serves to bar liability coverage will
depend on whether the claims asserted by Defendant Peavler in the Peavler litigation are an
“obligation” for which Defendant J&S “may be held liable under worker’s compensation ...
law.” (Emphasis added.) The key issue before the Court is whether Exclusion 3 requires a
determination that Defendant J&S was, in fact, “liable under workers’ compensation ... law”
for Richter’s death. This Court holds no such determination is necessary, as the plain
language of Exclusion 3 shows no such determination of fact is necessary.
The unambiguous language of the exclusion bars coverage for any “obligation” for
which Defendant J&S “may be held liable under workers’ compensation ... law.” (Emphasis
added.) This exclusion is distinguishable from the two other employment-related exclusions
set forth in the J&S Policy:
5.

Employee Indemnification and Employer’s Liability Bodily injury
to:
a.

b.

*
6.

An employee of any insured arising out of or within the course
of:
(I)
That employee’s employment by any insured; or
(ii)
Performing duties related to the conduct of any insured’s
business; or
The spouse, child, parent, brother or sister of that employee as
a consequence
of Paragraph a. above.
*

*

Fellow Employee Bodily injury to:
a.

b.

a fellow employee of an insured injured while within the course
of their employment or while performing duties related to the
conduct of your business.
the spouse, child, parent, brother, or sister of that fellow
employee as a consequence of Paragraph a. above.
32

The applicability of these two exclusions requires certain determinations of fact
Exclusion 3 does not require. Exclusion 5 first requires a factual determination as to whether
the injured person “an employee of any insured.” If that fact is proven, then the exclusion
only applies if the injury was caused by an incident “arising out of or within the course of”
the injured person’s “employment by any insured” or while “performing duties related to the
conduct of any insured’s business.” Similarly, Exclusion 6 first requires a factual
determination as to whether the injured person was “a fellow employee of an insured.” If
that fact is proven, then Exclusion 6 only applies if it is also determined that the injured
person was “injured while within the course of their employment or while performing duties
related to the conduct of” the named insured’s business.
Exclusion 3 is broader than both Exclusion 5 and 6. The only determination of fact
required by Exclusion 3 is whether Defendant J&S “may be held liable under workers'
compensation ... law” for the “obligation” that, in this case, is liability for Richter’s death.
As a matter of law, there is no genuine issue of material fact present that precludes the Court
from making this determination. This Court does not need to decide whether Richter was
acting in the course and scope of his employment with Defendant J&S at the time of the
underlying accident, nor does it need to determine whether Defendant J&S would have been
liable under the AWCA if Defendant Peavler had chosen to submit a workers’ compensation
claim as a result of Richter’s death.15 It must only determine whether Defendant J&S may
15

The briefing on Progressive’s Motion for Summary Judgment does not include a statement
of undisputed material fact concerning whether a workers’ compensation claim was ever presented
as a result of Richter’s death. However, the remainder of the record reveals no such workers’
compensation claim was ever submitted to the Workers’ Compensation Commission. In fact, the
foundation of Defendant Peavler’s pursuit of recovery against Defendant J&S is that Richter was
33

have been liable under the AWCA if Defendant Peavler had chosen to pursue a workers’
compensation claim.
Oklahoma law demonstrates Defendant J&S “may be held liable under workers’
compensation ... law” for Richter’s death. (Bold emphasis added.) It is true the general rule
in Oklahoma is that “an injury suffered by an employee in going to and returning from his
regular place of work does not arise out of and in the course of his employment so as to be
compensable under Workmen's Compensation Law, in the absence of an agreement or
contract to the contrary.” Weatherbee Elec. Co. v. Duke, 294 P.2d 298, 301 (Okla.1955).
This general rule is codified in the current version of the AWCA,16 and was codified in the
2011 version of the Workers’ Compensation Code.17 Even though provisions of the various
incarnations of the workers’ compensation statutory schemes that have been enacted in
Oklahoma have attempted to exclude from the definition of a “compensable injury” one
which is sustained while an employee is traveling to or from work, the Oklahoma workers’
compensation tribunals and Oklahoma courts have often found such injuries compensable.
For instance, most recently, the Oklahoma Supreme Court found that a pipeliner who
was leaving a gas station to travel to a job worksite and was involved in a car accident while
in transit was acting in the course and scope of his employment. Pina v. American Piping

not acting in the course and scope of his employment, and she, therefore, was not obligated to
present a workers’ compensation claim.
16

See 85A O.S. §13(a) and (b)

17

See 85 O.S. 2011 § 312 (repealed)
34

Inspection, Inc., — P.3d —, 2018 OK 40.18 The injured party in Pina presented a workers’
compensation claim under the current version of the AWCA,19 which contains the following
provisions:
13.

“Course and scope of employment” means an activity of any kind or
character for which the employee was hired and that relates to and
derives from the work, business, trade or profession of an employer,
and is performed by an employee in the furtherance of the affairs or
business of an employer. The term includes activities conducted on the
premises of an employer or at other locations designated by an
employer and travel by an employee in furtherance of the affairs of an
employer that is specifically directed by the employer. This term does
not include:
a.

an employee's transportation to and from his or her place of
employment,

b.

travel by an employee in furtherance of the affairs of an
employer if the travel is also in furtherance of personal or
private affairs of the employee,

85A O.S. § 13(a) and (b).
Pina was injured in a single-car accident while driving from a gas station where he had
stopped while traveling the 130 miles from his home to the job site. The Administrative Law
Judge denied Pina’s claim for workers’ compensation benefits, finding he had not sustained
a compensable injury under the AWCA. This decision was upheld by the Workers’

18

This case was not decided until May 8, 2018, which was after the briefing on Progressive’s
Motion for Summary Judgment was complete.
19

Richter’s death occurred on July 7, 2014. The current workers’ compensation statutory
scheme, the AWCA, went into effect on February 1, 2014. “The date of injury has long been the
point in time in workers' compensation cases when rights of the parties become established,
including when a claim must be filed; which law to use for determining benefits, and a schedule of
compensation to determine the amount of benefits a claimant is entitled to receive.” Williams Co.,
Inc. v. Dunkelgod, 295 P.3d 1107, 1111 (Okla.2012).
35

Compensation Commission and the Oklahoma Court of Civil Appeals, which “determined
that [Pina’s] injuries occurred while he was driving from his permanent residence to the job
site and as such were excluded from coverage and not a compensable injury. The Court of
Civil Appeals also determined that the trip from the gas station to the rig drilling site was a
dual purpose trip and as such was excluded under 85A O.S. Supp. 2013 § 2 (13) (b).” Pina
at *3. The Oklahoma Supreme Court overturned the lower courts and found Pina’s injuries
had been sustained in the course and scope of employment on the basis of the following
facts:
(1) Employer's representative designated the specific gas station and time for
stopping; (2) Petitioner stopped at the gas station for the purpose of filling his
gas tank to be used at the work site; (3) the Supervisor acknowledged that
Petitioner was “reporting to work that morning when he made it to the gas
station;” (4) Petitioner left the gas station with the permission of his supervisor
to proceed to the work site; (5) Employer paid for the gas used in Petitioner's
truck to haul equipment and supplies at the work site, but only if Petitioner
stopped at the designated gas station; (6) Employer paid for water and ice for
Petitioner and other employees but only if they stopped as designated by
Employer; (7) there were no stores within walking distance of the work site for
employees to obtain gasoline or ice and water; (8) Petitioner testified that he
left the gas station that morning to drive to the rig drilling site; and (9) there
is no evidence in the record that Petitioner said he was leaving the gas station
to take a nap.
Pina at *5 (footnote omitted).
The Pina Court cited to four pre-AWCA cases that had interpreted prior workers’
compensation statutory schemes when determining whether an injury sustained while
traveling to or from work was compensable. Pina at *5 and FN12 (citing Helmerich &
Payne, Inc. v. Gabbard, 333 P.2d 964 (Okla.1958); Ince v. Chester Westfall Drilling Co.,
346 P.2d 346, 348, (Okla.1959); Haco Drilling Co. v. Burchette, 364 P.2d 674 (Okla.1961);

36

and Skinner v. Braum's Ice Cream Store, 890 P.2d 922 (Okla.1995) in support of the
statement, “We have long recognized that hauling ice and water to an oilrig drilling site is
considered “material being hauled for the employer.”). It then went on to state:
We reject Employer's argument that [Pina] was simply traveling to and from
his place of employment at the time of injury. We likewise find no evidence
in the record that the travel by [Pina] was for a “dual purpose.” ... He arrived
at the gas station at the appointed location and time to obtain gas, so he could
work all day without stopping, all for the benefit of the Employer. We
conclude that [Pina’s] travel that morning was for the sole benefit of his
Employer. Accordingly, his accident is a covered event under the AWCA as
being in the course and scope of his employment.
Pina at *6.
Neither party cited any Oklahoma authority that interpreted or applied the current
AWCA. Similarly, there is no citation by either party to any Oklahoma case addressing the
issue of whether an employee-passenger injured in a car accident may pursue a tort claim
against a co-employee-driver, or if such tort claim is barred by the AWCA’s exclusivity
provision. Progressive relied primarily on a Kansas case, Scott v. Hughes, 275 P.3d 890
(Kan.2012), in support of its argument that Fry – and, therefore, Defendant J&S – were
statutorily immune from civil liability.20 Progressive cited Scott in support of this argument,
pointing out that the Kansas Supreme Court held passengers in a car could not pursue a tort
claim against their co-employee-driver regardless of whether those passengers were acting
in the course and scope of their employment at the time of the underlying accident – because

20

According to Progressive, if the civil immunity provided by the AWCA’s exclusivity
provision applies to Fry, Exclusion 3 serves to bar coverage because Defendant J&S then “may be
held liable under workers’ compensation ... law.”
37

the co-employee-driver was acting in the course and scope of his employment, the
exclusivity provisions of Kansas’ statutory workers’ compensation scheme applied.
Defendant Peavler maintains Scott is not applicable because the passengers in that
case had already been deemed to have been acting in the course and scope of their
employment in previous proceedings and had received workers’ compensation benefits.
According to Defendant Peavler, the “actual teaching” of Scott is “[a]n employee who has
suffered ‘any injury for which compensation is recoverable under the workers compensation
act’ is limited to the act and a fellow employee as well as the employer is immune from civil
suit.” See [Doc. No. 30] at p.12. She then cites to Oklahoma jurisprudence discussing the
“Grand Bargain” of workers’ compensation – a worker’s relinquishment of the right to
recover from his or her employer under a tort theory of negligence if he or she is injured on
the job in exchange for the employer’s guarantee of wage and medical benefits if the
employee is injured in the course and scope of employment. See [Doc. No. 30] at pp.13-15.
Defendant Peavler argues that Progressive’s reliance on 85A O.S. § 5(c) in support
of its position that the statutory immunity Fry and Defendant J&S enjoy (which would
demonstrate Defendant J&S “may be held liable under workers compensation ... law” and
Exclusion 3, therefore, applies) is an absurd interpretation of the statute which violates the
“Grand Bargain.” Progressive’s suggested interpretation of 85A O.S. § 5, says Defendant
Peavler, would “mean that if an employee does not qualify for compensation because his
injuries do not arise out of and in the course of employment he nevertheless cannot sue his
employer or co-employee in tort and is left without any remedy.” See [Doc. No. 30] at p.16.
Defendant Peavler proposes that the meaning of 85A O.S. § 5(c) is if “the plaintiff has a
38

colorable claim for compensation, beginning with the fact that the injury is work-related, but
is somehow prevented from asserting his claim,” it is only then the plaintiff’s employer
and/or co-employee are statutorily immune from civil liability.21
The Court agrees with Defendant Peavler’s interpretation of 85A O.S. § 5. The Court
also finds Richter’s death was, as she describes it, a “colorable claim for compensation”
under the AWCA. This is not a factual determination Richter was acting in the course and
scope of his employment at the time of the underlying accident. It is a legal determination
that the undisputed facts demonstrate, under Oklahoma law, Richter may have been acting
in the course and scope of his employment. The Court also agrees with Defendant Peavler
that Scott is distinguishable from this matter because the passengers in that claim had
submitted workers’ compensation claims and received workers’ compensation benefits. This
distinction, however, proves – under Kansas law – a sleeping passenger simply riding in a
vehicle and receiving no pay for travel time may be determined to have been acting in the
course and scope of his or her employment and have sustained a compensable injury. Scott
at 421-422.
Defendant Peavler’s decision to forego presentation of a workers’ compensation claim
does not result in the legal or factual conclusion Richter’s death occurred outside the course
and scope of his employment.22 The mere fact that Defendant Peavler did not submit a

21

As an example of what type of situation would be governed by 85A O.S. § (C), Defendant
Peavler refers to “missing the one-year statute of limitations.” See [Doc. No. 30] at p.16. Under the
AWCA, Richter’s death would be subject to a two-year statute of limitations. 85 O.S. § 69(A)(3).
22

As the parties agree, the question of whether Richter was acting in the course and scope
of his employment is a fact which is in dispute.
39

worker’s compensation claim as a result of Richter’s death does not mean she had no valid
worker’s compensation claim. Fry’s and Defendant J&S’ statutory civil immunity is not
mooted by Defendant Peavler’s choice not to seek recovery under the AWCA, nor does
Defendant Peavler’s choice remove this matter from the impact of Exclusion 3. Regardless
of whether Defendant Peavler elected to pursue a workers’ compensation claim, the facts
demonstrate Defendant J&S “may be held liable under workers compensation ... law” for
Richter’s death.
Oklahoma law demonstrates the undisputed facts upon which Defendant Peavler bases
her claim that Fry was acting in the course and scope of his employment at the time of
Richter’s death are just as likely to support a determination Richter was acting in the course
and scope of his employment when he was killed. Defendant Peavler maintains Fry was in
the course and scope of his employment at the time of the underlying accident because
Defendant J&S had instructed him to transport Richter and Vassar to the worksite and
because Fry’s truck had Defendant J&S’ tools in it when the accident occurred. As noted
above, the Pina Court relied on pre-AWCA authority in reaching its conclusion that Pina
suffered a compensable injury while in the course and scope of his employment despite the
statutory exclusion of travel to and from work from the definition of “course and scope of
employment.”

This same pre-AWCA authority demonstrates Richter’s death was a

“colorable claim for compensation” because the same facts Defendant Peavler argues support
a finding Fry was acting in the course and scope of his employment may also demonstrate
Richter was, at the time of this death, within in the course and scope of his employment
Helmerich & Payne, Inc. at 965 (upholding determination worker suffered compensable
40

injury in the course and scope of employment when driving his own vehicle in which other
workers rode as part of a carpool and in which a water cooler used at work was being carried,
despite the undisputed evidence demonstrating “[i]t was never definitely determined who
owned or furnished the water container but it was not claimed by the employer that it did not
belong to it” and “[t]here was no agreement by the employer to haul the employees or
otherwise see that they reached their place of work or that they were returned from their work
to their homes.”); Ince at 347 (reversing denial of workers’ compensation benefits for
employee who was killed while driving vehicle home from work where “decedent was
transporting an empty water can owned by decedent's employer, which can was used in
carrying water from the home of the employee who transported the drilling crew to the
drilling site where the water was drunk by members of the crew.”); Haco at 677 (Plaintiff,
who was not an employee of Haco and was injured in a two-vehicle accident when his car
and a vehicle being driven by an employee of Haco, obtained a verdict in his favor against
Haco on a theory of respondeat superior liability for its employee-driver’s negligence. Haco
appealed the verdict, arguing its employee was not in the course and scope of his
employment at the time of the accident and, as such, it could not be held vicariously liable
for its employee’s actions. The Oklahoma Supreme Court upheld the jury’s verdict, finding
the employee who was not paid for travel time was acting in the course and scope of his
employment when driving a vehicle for purposes of carpooling to work with two other
workers and carrying a water can which was used on the job site, stating “We recognize as
the general rule that a man's employment does not begin until he has reached the place of his
employment, and does not continue after he has gone. [Citation omitted.] However, the
41

instant situation presents an exception to the general rule. Not only was it anticipated that an
employee's car would be used but under the facts a particular person (on the day in question
this was Hughes) and his car was to carry the ice water. Hughes was going to work but this
does not vary the fact that he was engaged in carrying out instructions given relative to
performance of acts in his employment.”); and Skinner at 925 (reversing trial court’s grant
of summary judgment in favor of employer (“Braum’s”) where plaintiff, who was not an
employee of Braum’s, was injured when her car and a car driven by a Braum’s employee
collided, filed suit against employer under a theory of respondeat superior liability, stating
“[w]e find that an employee, instructed to complete a task by an employer while traveling
to work, may be within the scope of employment during the commute.”).
Other pre-AWCA Oklahoma cases which have analyzed the question of whether an
employee is in the course and scope of employment when traveling to and from work also
demonstrate Richter had a “colorable claim for compensation.” Holliman v. Twister Drilling
Co., 377 P.3d 133, 136 (Okla.2016) (upholding tribunal’s award of workers’ compensation
benefits to employee who was injured in a two-car accident while a passenger in a carpool
where employer did pay travel pay, but employee-passenger did not receive travel pay for
the specific trip during which the accident occurred (the crew rotated the disbursement of
travel pay), as injury fell within an exception to the general rule that travel to and from work
is not considered within the course and scope of employment, stating in reliance on the case
of Christian v. Nicor Drilling Co., 653 P.2d 185 (Okla.1982) “[b]ecause Employer
compensated the employees for travel expenses, an exception to the going and coming rule,
Worker's injuries are compensable.”); Lucas v. Triad Drilling Co., 969 P.3d 363 (Okla.1998)
42

(holding worker who was injured in single-car accident while riding in the bed of a pickup
truck being driven from work to his home by a co-employee fell within the “special task”
exception to the general rule that travel to and from work is not considered within the course
and scope of employment where worker had been asked to come to work to assist with a
project for which he was not normally scheduled and employer provided transportation, but
did not pay worker for travel time); and Christian, supra at 186 (footnote omitted) (holding
passenger and driver employees sustained compensable injuries during travel to work in
driver’s vehicle after missing the employer-provided carpool and being instructed to drive
themselves to work on the grounds an exception to the general rule that travel to and from
work is not within the course and scope of employment exists “[w]hen the employer provides
transportation to the job site or whenever the nature of the work itself creates a necessity for
travel” and stating “[o]nce an employer has acknowledged a need to provide his personnel
with transportation, it matters little what method is chosen so long as the means of
conveyance used are within the contemplation of both the employer and the employee.”)
Defendant Peavler attached a transcript of a recorded statement of Fry in support of
her opposition to Progressive’s Motion for Summary Judgment. See [Doc. No. 30-3].
Progressive raises no objection to Defendant Peavler's reliance on this transcript in support
of her proposed additional undisputed material facts at enumerated paragraphs 26 and 27.
See [Doc. No. 30] at pp.3-4. Under Tenth Circuit law, “(1) the content of summary judgment
evidence must be generally admissible and (2) if that evidence is presented in the form of an
affidavit, the Rules of Civil Procedure specifically require a certain type of admissibility, i.e.,
the evidence must be based on personal knowledge.” Bryant v. Farmers Ins. Exchange, 732
43

F.3d 1114 (10th Cir.2005) citing Hardy v. S.F. Phosphates Ltd., 185 F.3d 1076, 1082 n. 5
(10th Cir.1999).

Fry’s unsworn statements include his description of why he was

transporting Vassar and Richter; Defendant J&S’ involvement in the arrangement of that
transportation; and his transport of Defendant J&S’ tools at the time of the underlying
accident. It is, frankly, unclear to the Court why Defendant Peavler asserted additional fact
number 26 and 27 and attached Fry’s unsworn statement in support, as she did not refer to
those additional facts or Fry’s unsworn statement at any point in the body of her Response
to Progressive's Motion for Summary Judgment.
In any event, Fry’s statements are not hearsay, as they have not been presented for the
truth of the matter asserted in the statement. FED.R.EVID.801. Specifically, neither party is
required to prove whether Fry’s statements concerning the circumstances surrounding the
underlying accident are true in order for this Court to determine whether liability coverage
exists under the J&S Policy. The parties agree the issue of whether Fry’s statements
demonstrate he was acting in the course and scope of his employment is disputed, and neither
party asserts this factual issue must be answered by this Court in order to rule on
Progressive's Motion for Summary Judgment. Simply put, the truth of the statements Fry
made concerning facts relevant to the question of whether he was acting in the course and
scope of his employment at the time of the underlying accident are irrelevant to the question
of whether liability coverage exists under the J&S Policy. As such, Fry's unsworn statement
is not hearsay and may be considered by this Court.
In his unsworn statement, Fry said he was instructed by Defendant J&S to “find some
people to hire.”

Id. at 5:2-18.

According to Fry, Richter and Vassar were his
44

“responsibility” and because they did not drive, he had to “go pick them up.” Id. Fry also
agreed that Defendant J&S (through its employee, Scott) made it his “task” to deliver Vassar
and Richter to the job site and put him “in charge of rounding them up.” Id. at 6:18 – 7:4.
Fry said if he did not pick Vassar and Richter up, he would have been working “by
[him]self.”

Id.

These statements demonstrate Defendant J&S provided Richter

transportation by directing Fry to deliver him to the job site. These statements also
demonstrate “the means of conveyance [were] within the contemplation of both the employer
and employee.” Christian at 186.23 These statements, which Defendant Peavler – in the
course of the Peavler litigation – has argued prove Fry was in the course of scope of his
employment (along with the fact Fry was carrying Defendant J&S’ tools in his vehicle),
arguably also support a determination Richter was acting in the course and scope of his
employment at the time he was killed.
Again, this Court does not hold Richter was acting in the course and scope of his
employment when he was killed. Rather, it finds under Oklahoma law, the AWCA, and the
undisputed facts of this matter, Richter – as a matter of law – may have been in the course
and scope of his employment at the time of the underlying accident. Defendant Peavler’s
choice not to pursue workers’ compensation benefits does not change this. As such,

23

The Court acknowledges Christian is a pre-AWCA decision. However, the Pina Court
cited pre-AWCA authority in support of its interpretation and application of the AWCA.
Additionally, the Oklahoma Supreme Court relied upon Christian when deciding the 2016 case of
Holliman, which interpreted and applied the 2011 version of the Workers’ Compensation Code,
enacted 30 years after Christian was decided. The Oklahoma Supreme Court has also cited to preAWCA authority in decisions interpreting and applying the AWCA for purposes of determining
whether an employee has suffered a compensable injury. See Corbeil v. Emricks Van & Storage,
Guarantee Insurance, 404 P.3d 856 (Okla.2017) and Graham v. D&K Oilfield Services, Inc., 404
P.3d 863 (Okla.2017).
45

Defendant Richter’s death is an “obligation” for which Defendant J&S “may be held liable
under workers compensation ... law.” (Emphasis added.) This Court, therefore, holds the
liability coverage provided by the J&S Policy is excluded by Exclusion 3.
This determination is supported by the public policy of Oklahoma, Oklahoma statutes,
and Oklahoma jurisprudence specifically holding an insurer may exclude coverage for
liabilities that are compensable under the workers’ compensation statutory scheme. See 47
O.S. §7-324(e) and Deffenbaugh v. Hudson, 791 P.2d 84, 86 (Okla.1990) (“[a]utomobile
liability insurers are not obligated by law to protect their insureds against responsibility
which falls within the workers' compensation reparations regime. The terms of 47 O.S.1981
§ 7–324(f) clearly relieve insurers of any legal obligation to include in the standard motor
vehicle liability policy a provision for indemnity against employment-related harm.”)
(emphasis in original) (footnote omitted).24 While this Court is unaware of any published
Oklahoma state court decision holding Exclusion 3 (or other employment-related automobile
liability exclusions) remains effective even when an employer fails to obtain workers’
compensation insurance, Progressive identified two Oklahoma federal court decisions which
reached the conclusion Oklahoma substantive law would find the absence of workers’
compensation insurance would not avoid the impact of an automobile liability policy’s
employment-related exclusions. Allstate Fire and Casualty Ins. Co. v. Adame, 2017 WL
5617071 (W.D.Okla.) (holding automobile insurer was not required to provide liability
coverage for lawsuit multiple employees, who all parties stipulated were in the course and
24

At the time of the Deffenbaugh decision, the subsection at issue was codified as (f). There
are no substantive difference between the language of the subsection analyzed in Deffenbaugh and
the current language set forth in subsection (e).
46

scope of their employment at the time of a car accident, filed pursuant to 85A O.S. §5(B)(1)
against employer who did not have workers’ compensation insurance at time of accident)
and Colony Ins. Co. v. Jackson, 2011 WL 2118728, *8 (N.D.Okla.) (“Colony II”) (stating
after determining claimant was within course and scope of employment at time of car
accident “J.C.'s failure to carry workers' compensation insurance—and Dale's failure to
recover any workers' compensation benefits—does not prevent application of the Workers'
Compensation Exclusion.”). In reaching its determination that the absence of workers’
compensation insurance did not “prevent application of Workers Compensation Exclusion,”
the Colony II Court cited the following authority:
[J]ohnson v. Marciniak, 231 F.Supp.2d 958, 959–60 (D.N.D.2002) (holding
that identical workers' compensation exclusion precluded coverage, regardless
of whether any workers' compensation benefits are actually paid to the injured
party) (explaining that an employer/insured “should not be rewarded for failure
to obey workers compensation law” and that if employer would have obtained
workers' compensation insurance, any tort claim against it for an employee's
on the job injury would have been barred); Brown, 184 S.W.3d at 534–35
(“Every jurisdiction that has considered this issue has held that a “workers'
compensation” exclusion in a policy of commercial automobile or CGL
insurance ... precludes coverage when the insured employer is exposed to tort
liability solely because of its failure to procure a policy of workers'
compensation insurance.”)
Colony II at *8.
As Defendant Peavler points out, it was either stipulated or determined in these two
federal cases that the parties seeking recovery for their injuries were acting within the course
and scope of their employment at the time they sustained those injuries. See [Doc. No. 30]
at p.9. This distinction does not moot the rationale of these decisions which applies to this
matter. The workers’ compensation exclusions in the automobile liability policies at issue

47

in those cases were not found ineffective because the employer had no workers’
compensation insurance. Similarly, Exclusion 3 is not moot because Defendant Peavler
chose not to present what this Court has determined, as a matter of law, was a “colorable
claim for compensation” to the Workers’ Compensation Commission. Unlike the employers
in Adame and Colony II, Defendant J&S carried workers’ compensation insurance.
Defendant Peavler, therefore – unlike the employees in Adame and Colony II – had the
option of presenting a workers’ compensation claim. In fact, if she wished to recover
damages for Richter’s death, she was required to do so.
The Workers’ Compensation Commission is vested with “the exclusive responsibility
and duty to carry out the provisions of” the AWCA. 85A O.S. § 19(A). It is only when an
employer fails to carry workers’ compensation insurance that an employee is permitted to
“maintain an action in the district court for damages ... .” 85A O.S. § 5(D). By statute, it is
the Workers’ Compensation Commission that has the exclusive authority to determine
whether Richter’s death occurred in the course and scope of employment, thereby making
it a compensable injury, unless the employer at issue has failed to obtain workers’
compensation insurance. Defendant Peavler never invoked the authority of the Workers’
Compensation Commission for purposes of determining whether Richter’s death was
compensable under the AWCA despite the fact Defendant J&S had workers’ compensation
insurance. Instead, she made the decision not to submit a workers’ compensation claim.
This unilateral decision – just like an employer’s decision not to carry workers’
compensation insurance – does not serve to moot the impact and effect of Exclusion 3.

48

If this Court were to hold Defendant Peavler’s choice not to present what it has
determined as a matter of law was a “colorable claim for compensation” to the exclusive
authority of the Workers’ Compensation Court negated the impact of Exclusion 3, it would
be sanctioning her attempt to shift the burden of insuring employment-related injuries from
workers’ compensation insurers to automobile liability insurers.

This would violate

Oklahoma’s clear public policy “reliev[ing] insurers of any legal obligation to include in the
standard motor vehicle liability policy a provision for indemnity against employment-related
harm.” Deffenbaugh at 86 (emphasis in original). See also 47 O.S. §7-324(e).
This Court acknowledges it is possible, had Defendant Peavler presented a workers’
compensation claim for Richter’s death, it may have been ultimately determined Richter was
not acting in the course and scope of his employment when he was killed. Many workers’
compensation claims raise the issue of whether the injured employee was acting within the
course and scope of employment when the injury occurred. For instance, the Oklahoma
Supreme Court recently analyzed the issue of whether an employee who slipped and fell on
an icy curb when walking from the OSU/OKC parking lot to the building in which she
worked had sustained a compensable injury under the AWCA. Legarde-Bober v. Oklahoma
State University, 378 P.3d 562 (Okla.2016). The AWCA specifically excludes from the
definition of “course and scope of employment ... any injury occurring in a parking lot or
other common area adjacent to an employer's place of business before the employee clocks
in or otherwise begins work for the employer or after the employee clocks out or otherwise
stops work for the employer.” 85A O.S. § 2(13)(c). The Oklahoma Supreme Court found
the employee had been in the course and scope of her employment as OSU/OKC had
49

admitted the parking lot was on its premises. Legarde-Bober at 564-565.25 Similarly, as
discussed at length above, the Pina Court held the employee seeking workers’ compensation
benefits for an injury sustained in an accident that occurred while the employee was driving
to the job site was acting within the course and scope of his employment under 85A O.S. §
2(13).
There are four enumerated exceptions from the definition of the term “course and
scope of employment” under the AWCA. 85A O.S. § 2(13). Whether any given employee
falls within those exceptions when injured, thereby justifying the denial of workers’
compensation benefits, is an issue of fact over which the Workers’ Compensation Court has
exclusive jurisdiction.26 Under Defendant Peavler’s theory of liability, any employee whose
right to recover workers’ compensation benefits is dependent upon a factual determination
of whether he or she was acting within the “course and scope of employment” as defined by
the AWCA may simply avoid the exclusive jurisdiction of the Workers’ Compensation Court
by choosing not to pursue a workers’ compensation claim and, instead, pursuing a tort case
in district court against a co-employee or employer for recovery of damages. This violates
the very “Grand Bargain” of workers’ compensation Defendant Peavler described, and is an
“end-run” around the statutory immunity the AWCA provides to employers and co-

25

The Oklahoma Supreme Court also found 85A O.S. § 2 (13)(a), (b), and (d) inapplicable
to the employees’ claim. Legarde-Bober at 564-565.
26

As noted herein, it is only if an employer fails to obtain workers’ compensation insurance
that an employee may submit the question of whether he or she suffered a compensable injury to a
district court. 85A O.S. § 5(D).
50

employees.27 Under Defendant Peavler’s theory of insurance coverage, an injured employee
can shift the burden of indemnification for work-related injuries from a workers’
compensation insurer to an automobile liability insurer by simply choosing not to submit a
workers’ compensation claim.

This violates Oklahoma’s express public policy of

“reliev[ing] insurers of any legal obligation to include in the standard motor vehicle liability
policy a provision for indemnity against employment-related harm.” Deffenbaugh at 86
(emphasis in original). See also 47 O.S. §7-324(e).
Finally, this Court recognizes the two-year statute of limitations governing Defendant
Peavler’s workers’ compensation claim expired on July 7, 2016. 85A O.S. § 69(A)(3). As
Defendant Peavler acknowledges, the statutory immunity afforded to Fry and Defendant J&S
remains despite the expiration of the statute of limitations governing her workers’
compensation claim. 85A O.S. § 5(D). See also [Doc. No. 30] at p. 16. Defendant J&S,

27

The Court notes Defendant Peavler’s reliance on the statement made by Justice Wilson in
her concurring opinion in the Deffenbaugh case: “It is settled in this jurisdiction that an employee
is immune from tort liability for injury to a co-employee when the co-employee receives workers’
compensation for the injury.” Deffenbaugh at 91. (Bold and italics emphasis added by Defendant
Peavler at [Doc. No. 30], p.7.) In Deffenbaugh, it was undisputed the injured employees and
employee who caused the injury (during a one-car accident) were acting in the course and scope of
their employment; at issue was whether the employee who caused the injury had waived the
statutory immunity provided by the version of the statutory workers’ compensation scheme in effect
at that time by purchasing personal automobile liability insurance. Deffenbaugh at 85-86. The
Deffenbaugh Court found no waiver of the statutory immunity had occurred. Defendant Peavler
suggests this statement by Justice Wilson means an injured employee must actually receive workers’
compensation benefits for the statutory immunity provided by the AWCA to apply. This Court
disagrees. Rather, the statutory immunity applies to any claim for damages over which the Workers’
Compensation Commission has the exclusive authority to determine whether a compensable injury
has occurred. For the reasons set forth herein, under Oklahoma law, the question of whether
Richter’s death was a compensable injury under the AWCA is one over which the Workers’
Compensation Commission has exclusive authority. As such, there is no requirement Defendant
Peavler have actually obtained workers’ compensation benefits for Richter’s death in order for this
Court to determine as a matter of law J&S “may be held liable under workers’ compensation ... law”
as stated in Exclusion 3 of the J&S Policy.
51

therefore, “may be held liable under workers’ compensation ... law” even though the statute
of limitations has expired; that law dictates Fry and Defendant J&S would have statutory
immunity over Defendant Peavler’s workers’ compensation claim, had she chosen to submit
that claim (whether before or after the expiration of the 2-year statute of limitations) to the
one tribunal that has exclusive authority over the question of whether Richter’s death was a
compensable injury under the AWCA – the Workers’ Compensation Commission. As such,
the expiration of the statute of limitations governing Defendant Peavler’s workers’
compensation claim does not serve as an impediment to this Court’s determination that
Exclusion 3 of the J&S Policy bars liability coverage for the underlying accident and ensuing
Peavler litigation.
CONCLUSION
For the reasons outlined above, Progressive’s Motion for Summary Judgment is
GRANTED in its entirety. IT IS HEREBY ORDERED Progressive (1) owes no more than
$25,000 of indemnity coverage to Defendant Peavler under the Fry Policy in the event any
verdict is entered against Defendant J&S in the Peavler litigation based on the theory of
vicarious or respondeat superior liability; (2) owes no uninsured/underinsured (“UM/UIM”)
coverage to Defendant Peavler under the J&S Policy; (3) owes no medical payments
(“medpay”) coverage to Defendant Peavler under the J&S Policy; and (4) owes no duty to
defend or indemnify Defendant J&S or Fry under the liability coverage provisions of the J&S
Policy.

52

IT IS SO ORDERED this 7th day of November, 2018.

53