Silver v. Slusher

ALMA WILSON, Justice,

dissenting:

The coverage termed “uninsured motorist coverage” is surely one of the most remarkable contractual undertakings ever devised, for uninsured motorist coverage does not insure uninsured motorists, (third parties); nor does it insure vehicles; rather, uninsured motorist coverage affords first-party coverage to person(s) for whom the insurance contract is being written. It, thus, matches the complexity of the underlying policy and affords benefits on account of a wide variety of losses: medical expense, lost earnings, pain and suffering, including death. In this state, the indemnity language of uninsured motorist coverage, as mandated by 36 O.S. 1981 § 3636 is this:

“The policy ... shall provide coverage ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicle and hit and run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom....” [Emphasis added.]

There has been limited testing of the question how far the offeree must understand the terms of the coverage offered in order to decline it effectively. It has been held that the insurance company has no duty to explain uninsured motorist coverage to an insurance applicant unless the applicant asks for an explanation. Lopez v. Midwest Mutual Ins. Co., 223 So.2d 550 (Fla.App.1969). This view comports with the rule in Oklahoma, as set forth in the early case of All American Bus Lines, Inc. v. Schuster, 199 Okl. 628, 189 P.2d 412 (1948), as follows:

“Where a party signs a written agreement, in the absence of false representa*886tion or fraud, he is bound by it, although ignorant of its contents.” [Emphasis added.]

In the case now before this Court, Randall alleges that he telephoned the agent’s office for an explanation of uninsured motorist coverage. He further alleges that it was misrepresented to him that uninsured motorist coverage applies only to property damage caused by an uninsured motorist. He further averred that, relying upon the false explanation given to him, he signed the rejection statement which is the subject of this appeal. When Randall asked for the explanation about uninsured motorist coverage, it devolved upon the insurer to provide a complete and accurate explanation of uninsured motorist coverage, such that Randall would be able to make an intelligent and knowing decision whether to reject the coverage or not. There is always a duty to not state an untrue fact even when there is no duty to speak in the first instance. As stated in Gidley v. Chapple, 110 P. 1099 (Okla.1910):

“[Although a party may keep absolute silence and violate no rule of law or equity, yet if he volunteers to speak and to convey information which may influence the conduct of the other party, he is bound to discover the whole truth.” [Emphasis added.]

Moreover, it is the law in Oklahoma that everyone has a duty to not injure or harm another person, and such harm may stem from negligent misrepresentation. See, e.g., Oklahoma Constitution, Article II, § 6; 76 O.S. 1981 § 1; 23 O.S.1981 § 3. Further, the insureds here are not precluded from recovery under a theory of constructive fraud because they stood within the Special Relationship of Insured to Insurer.

An insurance policy is not an ordinary contract. It is a complex instrument, unilaterally prepared and seldom understood by the insured. The parties are not similarly situated. The company and its representatives are expert in the field; the insured is not_ Allstate Insurance Co. v. Pietrash, 454 P.2d 106 (Nev.1969). [Emphasis mine.]

Consequently, this Court has held that contracts of insurance are contracts of adhesion as a result of this uneven bargaining position. Wilson v. Travelers Insurance Co., 605 P.2d 1327 (Okla.1980). This Court has also previously recognized the quasi-public nature of these particular adhesion contracts. In Christian v. American Home Assurance, 577 P.2d 899 (Okla.1978), we stated:

In Fletcher, [v. Western National Life Insurance Co., Cal.App.3d 376, 89 Cal.Rptr. 78, 47 A.L.R.3d 286 (1970)], the Court discussed the special relationship between an insurer and its insured which gives rise to the duty of good faith and fair dealing. The Court observed that the industry has a quasi-public nature, that it involves the public interest.... The consumer has no bargaining power and no means of protecting himself from the kinds of abuses set forth.... The following discussion of this special relationship between an insurance company and its insured, is relevant here:
“... To some extent this special relationship and the special duties take cognizance of the great disparity in the economic situations and bargaining abilities of the insurer and the insured. ... To some extent the special relationship and duties of the insurer exist in recognition of the fact that the insured does not contract ... to obtain a commercial advantage but to protect [himself].” [Emphasis added.]

Similarly, in the case of Egan v. Mutual of Omaha Insurance Co., 620 P.2d 141 (Cal.1979), it is stated:

The insurer’s obligations are ... rooted in their status as purveyors of a vital service labelled quasi-public in nature. Suppliers of services affected with a public interest must take the public’s interest seriously, where necessary placing it before their interest in maximizing gains and limiting disbursements.... [A]s a supplier of a public service rather than a manufactured product, the obligations of insurers go beyond meeting reasonable expectations of coverage. The obligations of good faith and fair *887dealing encompass qualities of decency and humanity inherent in the responsibilities of a fiduciary. Insurers hold themselves out as fiduciaries, and with the public’s trust must go private responsibility consonant with that trust.... Furthermore, the relationship of insurer and insured is inherently unbalanced; the adhesive nature of insurance contracts places the insurer in a superior bargaining position.

I am accordingly convinced that a special fiduciary relationship does exist between the insureds and the insurer in this case, and that recovery may be available if the insureds can prove their allegations of constructive fraud and/or negligent misrepresentation.

Under the facts of the present case, even though the acts of the insurer’s agent may or may not have been intended to deceive, it is obvious that the false representations were made with intent to induce the Plaintiffs to enter into the contract of waiver of UM benefits. Constructive fraud is defined at 15 O.S.1981 § 59 as:

1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him; or, 2. Any such act or omission as the law specially declares to be fraudulent, without respect to actual fraud.

Constructive fraud does not necessarily involve any moral guilt, intent to deceive, or actual dishonesty of purpose; even an innocent or negligent misrepresentation may constitute “constructive fraud” where there is an underlying right to be correctly informed of the facts.

Additionally, with respect to the issue of constructive fraud, I must also register my disagreement with the majority’s conclusion that the technical form of the pleadings in this case preclude consideration of the insured’s claim on this basis. The Oklahoma Pleading Code provides:

“Each averment of a pleading shall be simple, concise and direct. No technical forms of pleadings or motions are required.” 12 O.S.1988 Supp., § 2008(E)(1).

Lawsuits should be determined on their merits and according to the dictates of justice, rather than in terms of whether or not the averments in the paper pleadings have been artfully drawn. This is a fundamental requirement of civil procedure, as evidenced by the mandate of 12 O.S.1988 Supp., § 2008(F):

“All pleadings shall be so construed as to do substantial justice.”

The function of pleadings is narrow, i.e., to give “fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). This fundamental criteria has been met in this case. Inasmuch as Randall’s claims were sufficiently pleaded and material facts remained in controversy when the trial court granted summary judgment, the trial court erred in granting the insurer’s motion for summary judgment at that time. Therefore, this Court should remand this case to the trial court to determine the factual issues raised by Randall’s allegations.

I have been authorized to state that HODGES and DOOLIN, JJ., join in this dissent.