Hellard v. Mid Century Insurance Company

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OKLAHOMA

DUSTIN HELLARD, )

)

Plaintiff, )

)

v. ) Case No. 19-CV-00043-GKF-CDL

)

MID CENTURY INSURANCE COMPANY )

d/b/a FARMERS INSURANCE, )

)

Defendant. )

OPINION AND ORDER

This matter comes before the court on the Motion to Dismiss His Breach of Contract Claim

[Doc. 141] of plaintiff Dustin Hellard. For the reasons set forth below, the motion is conditionally

granted.

Background/Procedural History

This case relates to an insurance dispute. Mr. Hellard initiated this litigation on January

28, 2019. [Doc. 2]. The Amended Complaint, the operative pleading, includes claims for breach

of contract and breach of the implied duty of good faith and fair dealing, and seeks punitive

damages. [Doc. 10]. Defendant Mid Century Insurance Company (MCIC) filed a motion to

dismiss Mr. Hellard’s bad faith tort claim [Doc. 16], which this court denied. [Doc. 36]. On

September 16, 2019, the court entered a Scheduling Order setting this matter for the August 17,

2020 trial docket. [Doc. 37].

Thereafter, the parties engaged in discovery, which proved to be contentious. The parties

collectively sought intervention of the Magistrate Judge related to discovery disputes on seven

separate occasions. [Doc. 25; Doc. 33; Doc. 40; Doc. 55; Doc. 67; Doc. 78; Doc. 88]. These

motions were fully briefed, frequently on an expedited basis, and the parties twice appeared before

Magistrate Judge McCarthy. [Doc. 84; Doc. 87]. Further, MCIC objected to Magistrate Judge

McCarthy’s order denying its motion to compel discovery responses from Mr. Hellard, requiring

review by this court. [Doc. 71].

On April 13, 2020, the court entered an Amended Scheduling Order that included the

following deadlines, among others:

August 31, 2020 Dispositive and Daubert Motions, Motions in Limine

November 17, 2020 Deposition Designations

November 23, 2020 Agreed Proposed Pretrial Order

November 24, 2020 Counter-Designations

December 1, 2020 Pretrial Conference/Objections to Deposition Designations

[Doc. 63].

Consistent with the Amended Scheduling Order, on August 31, 2020, MCIC filed a Motion

for Summary Judgment [Doc. 90], a Daubert Motion to Exclude the Testimony of Plaintiff’s

Expert Richard Cary [Doc. 92], and three motions in limine. [Doc. 93; Doc. 94; Doc. 95]. Mr.

Hellard also filed a motion in limine that included eight separate topics. [Doc. 91]. In an Opinion

and Order dated November 10, 2020, the court denied MCIC’s summary judgment motion. [Doc.

133].

On November 16, 2020, the parties filed pretrial disclosures. [Doc. 136; Doc. 137]. The

next day, the parties submitted deposition designations of Dawn Kavanaugh and William Wilson.

[Doc. 138; Doc. 139; Doc. 140].

On November 23, 2020, the parties timely submitted a thirty-three (33) page proposed

pretrial order. That same day, Mr. Hellard filed the opposed Motion to Dismiss His Breach of

Contract Claim. [Doc. 141]. Therein, Mr. Hellard seeks leave to voluntarily dismiss his breach

of contract claim and try only his bad faith claim against MCIC. In support thereof, Mr. Hellard

expresses his belief that “such approach will preserve judicial economy by limiting the issues to

be tried and shorten trial length by 2-3 days,” “simplify the issues for the jury,” and direct focus

to “the most salient and valuable evidence.” [Doc. 141, p. 1]. Mr. Hellard further recognized that,

“in this instance [dismissal] would likely be a de facto dismissal with prejudice due to rules against

claim-splitting.” [Doc. 141, p. 3].

MCIC responded in opposition to the motion to dismiss and, therein, requested that, prior

to the court’s decision, Mr. Hellard “be first required to explicitly identify what witnesses and

evidence he believes will no longer be admissible or required.” [Doc. 145, p. 4 n.1].1

On December 1, 2020, the parties appeared before the court for a Scheduling Conference.

[Doc. 148]. Due to the ongoing outbreak of Coronavirus Disease 2019 (COVID-19), the court

continued trial of this matter to the March 15, 2021 docket. [Doc. 148]. Also during the

conference, the court directed Mr. Hellard to file a reply in support of his motion to dismiss to

“specifically explain how dismissal of the breach of contract claim will preserve judicial economy

by limiting the issues to be tried and shorten the trial length by 2-3 days, including explicitly

identifying what witnesses and evidence will no longer be necessary.” [Doc. 149]. The court

permitted MCIC to file a sur-reply on or before December 9, 2020. [Id.].

In his reply, Mr. Hellard contends that, if the breach of contract claim is dismissed, “the

evidence at trial must focus solely on what [MCIC] actually knew and considered” during the

period from July 2018 to March 2019, the time in which he contends MCIC was actually evaluating

1 In the week-long period between the filing of the motion to dismiss and MCIC’s response, the

parties also filed counter deposition designations pursuant to the Amended Scheduling Order.

[Doc. 143; Doc. 144]. The same day that MCIC filed its response brief, November 30, the parties

filed objections to pretrial disclosures. [Doc. 146; Doc. 147].

his claim. [Doc. 150, p. 4]. To illustrate, Mr. Hellard attaches Exhibit 1, which “reproduced the

parties’ respective witness and exhibit lists, sans objections, from their Pretrial Disclosures . . .

and indicates what evidence Plaintiff believes is irrelevant to his bad faith claim, and therefore

anticipates being unnecessary at trial if the breach of contract claim is dismissed.” [Doc. 150-1].

In the reply, Mr. Hellard also confirms that he requests dismissal of the breach of contract claim

with prejudice. [Doc. 150, pp. 8, 10].

As permitted by the court, MCIC filed a sur-reply in opposition. [Doc. 152]. Thus, the

motion to dismiss is ripe for the court’s determination.

Standard

Federal Rule of Civil Procedure 41 permits a plaintiff to dismiss a case without a court

order by filing either a notice of dismissal before the opposing party serves either an answer or a

motion for summary judgment or a stipulation of dismissal signed by all the parties who have

appeared. Fed. R. Civ. P. 41(a). In all other cases, “an action may be dismissed at the plaintiff’s

request only by court order, on terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2).

“The rule is designed primarily to prevent voluntary dismissals which unfairly affect the other side,

and to permit the imposition of curative conditions.” Brown v. Baeke, 413 F.3d 1121, 1123 (10th

Cir. 2005) (quoting Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d 354, 357 (10th Cir. 1996)).

“Dismissal under Rule 41(a)(2) is within the sound discretion of the court.” Clark v. Tansy,

13 F.3d 1407, 1411 (10th Cir. 1993); see also Brown, 413 F.3d at 1123. But “the district court

normally should grant such a dismissal,” absent “legal prejudice” to the defendant. Brown, 413

F.3d at 1123 (quoting Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir. 1997)). Determining

whether an opposing party will suffer “legal prejudice” from a dismissal requires consideration of

“practical factors including [1] ‘the opposing party’s effort and expense in preparing for trial;

[2] excessive delay and lack of diligence on the part of the movant; [3] insufficient explanation of

the need for a dismissal; and [4] the present stage of litigation.’” Id. at 1124 (quoting Ohlander,

114 F.3d at 1537). “These factors are neither exhaustive nor conclusive; the court should be

sensitive to other considerations unique to the circumstances of each case.” Id.

Analysis

The court will consider the practical factors identified by the Tenth Circuit in determining

whether MCIC will suffer legal prejudice if the court grants Mr. Hellard’s motion. Prior to

addressing the four practical factors, however, it is first necessary to consider the issue to which

the parties devote the majority of the briefing: whether dismissal of the breach of contract claim

will render irrelevant and inadmissible all evidence other than that of which MCIC actually knew

and considered between July 2018 to March 2019.

Mr. Hellard directs the court to the Oklahoma Supreme Court’s statements in Buzzard v.

Farmers Insurance Company, that “[t]he decisive question is whether the insurer had a ‘good faith

belief, at the time its performance was requested, that it had justifiable reason for withholding

payment under the policy’” and “[t]he knowledge and belief of the insurer during the time period

the claim is being reviewed is the focus of a bad-faith claim.” 824 P.2d 1105, 1109 (Okla. 1991).

Relying on these statements, Mr. Hellard argues that, if the breach of contract claim is dismissed,

the trial most focus only on evidence developed during the course of MCIC’s claims handling.

Thus, evidence such as the testimony of Mr. Hellard’s treating physicians, his medical records

(including the date requested and received by MCIC), and the MCIC policy itself will necessarily

be irrelevant. Given plaintiff’s factual allegations in this case, however, his position is not

supported by Oklahoma law.

Mr. Hellard premises his bad faith claim, in part, on allegations that MCIC both

unreasonably delayed in evaluating, and then unreasonably evaluated, his claim. See, e.g., [Doc.

150, p. 6 (emphasis added) (“But [MCIC] has no explanation for the undervaluation and delay of

which Plaintiff complains (i.e., that which occurred between July 2, 2018, when performance was

requested, and March 27, 2019, when benefits were tendered.”); Proposed Pretrial Order, dated

November 23, 2020, p. 1 (“Mr. Hellard claims in this lawsuit that . . . Mid Century breached the

duty of good faith and fair dealing by acting unreasonably and in bad faith in the handling of his

uninsured motorist claim, including by conducting an improper investigation and evaluation of his

insurance claim and by looking for ways to avoid paying his claim.”)]. Under Oklahoma law,

“[MCIC’s] actions, in this regard, must be assessed in light of all the facts known and knowable

concerning the claim at the time [plaintiff] requested [MCIC] to perform its contractual

obligations.” Buzzard v. McDanel, 736 P.2d 157, 159 (Okla. 1987) (emphasis added); see also

Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1439 (10th Cir. 1993) (“Whether an insurer’s

actions reasonably give rise to an inference of bad faith must be determined ‘in light of all facts

known or knowable concerning the claim’ at the time plaintiff requested the company to perform

its contractual obligation.”); Conti v. Republic Underwriters Ins. Co., 782 P.2d 1357, 1362 (Okla.

1989); Sims v. Travelers Ins. Co., 16 P.3d 468, 471 (Okla. Civ. App. 2000). Thus, an insured’s

failure to timely provide, or withholding of, vital information may provide a defense to bad faith.

First Bank of Turley v. Fid. & Dep. Ins. Co. of Md., 928 P.2d 298, 308-09 (Okla. 1996); see also

Perry v. Safeco Ins. Co. of Am., No. 18-CV-539-TCK-FHM, 2020 WL 1180726, at *5 (N.D. Okla.

Mar. 11, 2020) (quoting Garret v. Fairfield Ins. Co., Case No. 02-367-P, 2003 WL 23274567, at

*12 (E.D. Okla. Oct. 22, 2003)) (“[A]n insured’s failure to provide information critical to the

insurer’s consideration of the claim may ‘serve as a defense to defeat liability or . . . to reduce

recovery.’”); Dennis v. Progressive N. Ins. Co., No. CIV-17-182-SLP, 2018 WL 3489317, at *3

(W.D. Okla. Apr. 9, 2018) (discussing motion in limine directed to relevant time frame for

assessing bad faith).

MCIC has offered evidence that it repeatedly informed Mr. Hellard that additional

information was necessary to evaluate his claim. See, e.g., [Doc. 90-20, p. 2 (letter of August 16,

2018); Doc. 90-21, p. 1 (letter of February 6, 2018); Doc. 90-23 (letter of May 24, 2018); Doc. 90-

29 (letters of December 7, 2018 and January 15, 2019)] The requested information included Mr.

Hellard’s medical records, copies of discovery conducted in litigation filed by Mr. Hellard against

Tulsa Public Schools, and Mr. Hellard’s examination under oath. [Id.]; see also [Doc. 90-30

(correspondence of January 29, 2019 from attorney Greg Givens to plaintiff’s counsel stating,

“Claims representative, Dawn Kavanaugh, advised me she does not have all the information

needed to complete her evaluation but she has sufficient information at this time to make an

uninsured motorist offer and tender of benefits.”)].2 Mr. Hellard’s proposal to “streamline” trial

of this matter would render all of the information requested by MCIC that was either belatedly or

never received wholly inadmissible. However, such evidence is relevant to MCIC’s defense that

Mr. Hellard delayed or withheld pertinent information. See [Doc. 38; Proposed Pretrial Order,

dated November 23, 2020]. “To show that Plaintiff failed to provide available information and

that Defendant was prejudiced by the failure, Defendant will need to introduce information and

2 For this reason, Buzzard v. Farmers Insurance Company and Newport v. USAA, 11 P.3d 190

(Okla. 2000), the two cases on which Mr. Hellard primarily relies, are distinguishable. In both of

those cases, the insurer sought to introduce evidence of defenses that were neither internally noted

nor communicated to the claimants during the claims handling process. Buzzard, 824 P.2d at 1109;

Newport, 11 P.3d at 199-200 (noting “there [was] no indication” in claim file that insurer

questioned causation of claimant’s injuries prior to pretrial conference in litigation related to

claim).

documents that it subsequently obtained from Plaintiff or others.” Charles A. Shadid, L.L.C. v.

Aspen Specialty Ins. Co., No. CIV-15-595-D, 2018 WL 3420816, at **1-2 (W.D. Okla. July 13,

2018). Thus, even if the court permits Mr. Hellard to dismiss his breach of contract claim, it will

not result in the categorical exclusion of the identified evidence.

Mr. Hellard also premises his bad faith claim on the assertion that MCIC conducted an

unreasonable investigation. [Proposed Pretrial Order, dated November 23, 2020, p. 1]. The Tenth

Circuit has recognized that “[a]lthough the evaluation centers on the time of denial, the entire

course of conduct between the parties is relevant to the question whether the insurer acted in good

faith.” Willis v. Midland Risk Ins. Co., 42 F.3d 607, 613 (10th Cir. 1994); see also Timmons v.

Royal Globe Ins. Co., 653 P.2d 907, 917 (Okla. 1982) (“The essence of the cause before the Court

is failure to deal fairly and in good faith with an insured and as such, the jury may be shown the

entire course of conduct between the parties to arrive at a determination of whether that standard

had been breached or not.”). Thus, MCIC’s conduct over the entire course of its investigation of

Mr. Hellard’s claim is relevant, including MCIC’s conduct prior to July 2, 2018. For this additional

reason, dismissal of Mr. Hellard’s breach of contract claim would not result in the wholesale

preclusion of evidence of the parties’ conduct prior to the July 2018 to March 2019 time period as

urged by plaintiff.

It is well-established under Oklahoma law that an insured owes an insurer a reciprocal

“obligation to cooperate with the insurer, which is both contractual and implied in law.” First

Bank of Turley, 928 P.2d at 304 (internal footnotes omitted). An insured (or their counsel) cannot

play hide-the-ball during the claims-handling process and subsequently utilize a court’s procedural

processes to keep those facts from the jury. Dismissal of the breach of contract claim will not

result in the broad exclusion of evidence proposed by plaintiff and the court declines to adopt

Exhibit 1, attached to Mr. Hellard’s reply in support of his motion to dismiss.

With these principles in mind, the court turns to the practical factors articulated by the

Tenth Circuit to determine whether MCIC will suffer legal prejudice if the court grants Mr.

Hellard’s motion to dismiss.

First, with respect to the opposing party’s effort and expense in preparing for trial, the

procedural history of this case provides significant evidence of efforts expended defending the

suit. As previously stated, the parties engaged in extensive discovery and frequently required court

intervention to resolve discovery disputes. Additionally, MCIC filed a motion for summary

judgment, Daubert motion, and three motions in limine, prepared its pretrial disclosures,

deposition designations, and assisted in the drafting of a proposed pretrial order—all under the

impression that Mr. Hellard would proceed with his breach of contract claim. However, the court

observes that, pursuant to the guidelines contained herein, most, if not all, of that work can be

utilized in defending the bad faith cause of action. Thus, this factor weighs in favor of dismissal.

With regard to the second factor, excessive delay and lack of diligence on the part of the

movant, the procedural history of this matter demonstrates that Mr. Hellard has fully participated

in this litigation and diligently pursued his claims. Insofar as MCIC contends that Mr. Hellard

unduly delayed seeking dismissal of the breach of contract claim, Mr. Hellard filed the motion to

dismiss less than two weeks after the court issued its Opinion and Order denying MCIC’s motion

for summary judgment. Cf. [Doc. 133] with [Doc. 141]. It was not unreasonable for Mr. Hellard

to await the court’s ruling on the motion to determine the procedural posture of the case moving

forward before making strategic decisions related to trial. Moreover, regardless of the delay, as

set forth herein, MCIC is unlikely to suffer prejudice as dismissal will not result in the wholesale

exclusion of the evidence identified by Mr. Hellard. Thus, this factor weighs slightly in plaintiff’s

favor.

The third factor requires the court to consider the sufficiency of Mr. Hellard’s explanation

of the need for a dismissal. As previously stated, Mr. Hellard asserts dismissal is required in order

to “preserve judicial economy by limiting the issues to be tried and shorten trial length by 2-3

days,” “simplify the issues for the jury,” and direct focus to “the most salient and valuable

evidence.” [Doc. 141, p. 1]. While dismissal will not limit the evidence in the manner proposed

by Mr. Hellard, it will simplify the issues for the jury insofar as the jury will need to consider only

one claim and fewer jury instructions. Thus, this factor weighs slightly in plaintiff’s favor.

As for the fourth factor, the present state of the litigation, trial in this matter is not scheduled

to begin for forty (40) days. Moreover, the court notes that Mr. Hellard seeks dismissal of his

breach of contract claim with prejudice. Thus, MCIC will be protected from any further litigation

on the insurance contract related to Mr. Hellard’s claim. The Tenth Circuit has recognized “[i]n

most cases, the normal analysis will result in the district court granting the plaintiff’s motion to

dismiss with prejudice.” Cnty. of Santa Fe v. Pub. Serv. Co. of N.M., 311 F.3d 1031, 1049 (10th

Cir. 2002). Thus, this factor weighs in plaintiff’s favor.

Upon consideration of the totality of the circumstances presented in this case, and subject

to the guidelines set forth herein, the court finds that dismissal of Mr. Hellard’s breach of contract

claim with prejudice would not result in legal prejudice to MCIC and would be just and proper.

IV. Conclusion

WHEREFORE, plaintiff Dustin Hellard’s Motion to Dismiss His Breach of Contract Claim

[Doc. 141] is conditionally granted subject to the guidelines set forth herein. Mr. Hellard may

dismiss his breach of contract claim with prejudice.

Mr. Hellard shall file his dismissal with prejudice no later than Friday, February 5, 2021

at 5:00 p.m. In the event a dismissal with prejudice is not filed, this case shall proceed to jury

trial on both claims.

DATED this 3rd day of February, 2021.