August 19, 2013

The U.S. District Court for the Northern District of Oklahoma recently held that Oklahoma law did not apply to render void an exclusion to uninsured/underinsured motorist coverage included in a Texas auto policy.  In O’Farrell v. State Farm Mut. Auto. Ins. Co., No. 12-CV-0633-CVE-TLW, 2013 WL 3820082 (N.D. Okla. July 24, 2013), the court was called upon to construe a policy purchased in Texas, billed to a Texas address, concerning an SUV that was titled in Texas and that State Farm believed to be kept in Texas, as it related to a claim arising out of a single-car rollover accident that occurred while the car was in fact being kept in Oklahoma.  State Farm denied the claim, relying on a policy exclusion that the insured’s vehicle was excluded from the definition of “uninsured motor vehicle.”  The parties agreed that the question of whether Texas or Oklahoma law applied would be dispositive, because Oklahoma law declared the exclusion to be void as against public policy and Texas law stated that the exclusion was permissible.

The court, in considering the parties’ cross-motions for summary judgment, observed that a 2009 Oklahoma state supreme court opinion held that the Oklahoma legislature had already made the applicable determination by enacting a statute that restricted the reach of the Oklahoma UIM statute to policies “issued, delivered, renewed, or extended” in Oklahoma.  Thus, the policy in O’Farrell, which was issued, renewed, or extended in Texas, was not governed by Oklahoma law.  While the parties spent a significant portion of the summary judgment briefing discussing where the SUV was in fact garaged, that fact issue did not affect the choice of law issue.  The insured never told State Farm that the vehicle was no longer garaged in Texas, and had for the life of the policy continued to accept and pay bills at a Texas address.  Texas law therefore applied, resulting in summary judgment in State Farm’s favor.