Davis v. Mid-Century Insurance

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
NOV 20 2002
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

JAMES E. DAVIS and VIRGINIA
CALAME,

Plaintiffs - Appellees,

v. No. 00-6224

MID-CENTURY INSURANCE
COMPANY and FARMERS GROUP,
INC.,

Defendants - Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. No. CIV-96-2070-T)

Eric S. Eissenstat (Burck Bailey and Dino E. Viera with him on the briefs) of
Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Oklahoma, for
Defendants-Appellants.

John T. Edwards and Shannon L. Edwards of Monnet, Hayes, Bullis, Thompson &
Edwards, Oklahoma City, Oklahoma, for Plaintiffs-Appellees.

Before EBEL, McKAY, and CUDAHY, * Circuit Judges.

Honorable Richard D. Cudahy, Senior Circuit Judge, United States Court
*

of Appeals for the Seventh Circuit, sitting by designation.
McKAY, Circuit Judge.

Appellees Mr. Davis and Ms. Calame jointly owned real estate damaged by

a hail storm. In its March 26, 1998 Order, the district court for the Western

District of Oklahoma granted summary judgment to Appellees holding that the

cost to remove damaged shingles and the labor cost involved in installing new

shingles were not subject to depreciation under the actual cash value provision of

Appellees’ dwelling policy.

Prior to submitting Appellees’ bad faith insurance claim to a jury, the

parties stipulated Appellees’ damages to be $439.50. Aplt. App. at 1215.

Appellants, however, retained the right to challenge the district court’s holdings

that the cost to remove damaged shingles and the labor cost involved in installing

new shingles were not subject to depreciation. At trial, the jury awarded

Appellees $40,000 in damages on Appellees’ bad faith claim and awarded

Appellees $17,000,000 in punitive damages.

On appeal, Appellants contest the district court’s holdings that the cost of

removing damaged shingles and the labor cost involved in installing new shingles

cannot be depreciated. Other issues on appeal include whether the district court

erred in failing to grant Appellants’ Judgment as a Matter of Law on Appellees’

bad faith claim, whether the district court erred in allowing the issue of punitive

-2-
damages to reach the jury, and whether the district court erred in allowing

Appellees to pierce the corporate veil making Appellant Farmers Group, Inc.,

liable for the punitive damages assessed against Appellant Mid-Century

Insurance.

On appeal, we companioned this case with Branch v. Farmers Insurance Co.

(Appeal No. 00-6385). We then abated both cases pending a response from the

Oklahoma Supreme Court to three certified questions. The Oklahoma Supreme

Court’s response is attached to our decision in Branch and by reference is made a

part of this opinion. We issue this opinion simultaneously with the Branch

decision and in accordance with the Oklahoma Supreme Court’s holdings.

The Oklahoma Supreme Court’s answers to our certified questions resolve

the underlying issues for us. The cost of removing damaged shingles is not

subject to depreciation. However, the labor cost of installing new shingles is

subject to depreciation. The Oklahoma Supreme Court’s answers indirectly

resolve the bad faith and punitive damages issues as well.

“[A]n insurer has an implied duty to deal fairly and act in good faith with

its insured[,] and . . . the violation of this duty gives rise to an action in tort . . . .”

Christian v. American Home Assurance Co., 577 P.2d 899, 904 (Okla. 1977).

However, “the tort of bad faith does not prevent the insurer from resisting

payment or resorting to a judicial forum to resolve a legitimate dispute.” Skinner

-3-
v. John Deere Ins. Co., 998 P.2d 1219, 1223 (Okla. 2000). For bad faith liability

to attach, the law at the time of the alleged bad faith must be settled. See id. at

1224.

The law was not settled at the time of Mid-Century’s actions. “There was

no conclusive precedential legal authority on the issue” of whether the costs

associated with the removal of damaged shingles or the labor costs incurred in

installing new shingles were properly subject to depreciation under the actual

cash value provision of a dwelling policy. See id. at 1223. Furthermore, the

Oklahoma Supreme Court ultimately found Mid-Century’s position regarding the

issues to be partially correct. (Cost of labor to install new shingles is depreciable,

cost to remove damaged shingles is not). As a matter of law, Appellants’

litigation of this legitimate coverage dispute cannot constitute bad faith because

Appellants’ position in the litigation was reasonable. See Thompson v. Shelter

Mut. Ins., 875 F.2d 1460, 1462 (10th Cir. 1989).

We affirm the district court’s holding that the cost of removing damaged

shingles is not subject to depreciation. We reverse the district court’s holding

that the labor cost incurred to install new shingles is not depreciable.

Accordingly we direct the district court to amend the amount of damages awarded

to Appellee from $439.50 to $165.00. Furthermore, we reverse the district court’s

denial of Mid-Century’s Motion for Judgment as a Matter of Law on Appellees’

-4-
bad faith claim. Because Mid-Century did not act in bad faith as a matter of law,

we also reverse the jury’s award of punitive damages against Mid-Century. We

need not consider the piercing of the corporate veil issue as our decision renders

it moot.

AFFIRMED in part, REVERSED in part, and REMANDED to the

district court for entry of judgment consistent with this opinion.

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Copr. © West 2002 No Claim to Orig. U.S. Govt. Works

55 P.3d 1023
2002 OK 16
(Cite as: 55 P.3d 1023, 2002 WL 378169 (Okla.))

Supreme Court of Oklahoma. including purchase price, replacement cost,
appreciation or depreciation, the age of the
Eldon Carl BRANCH, Plaintiff, building, the condition in which it has been
v. maintained, and market value.
FARMERS INSURANCE COMPANY, INC., and
Farmers Group, Inc., Defendants. [2] Insurance k2172
217k2172
No. 96,790.
[2] Insurance k2185
March 12, 2002. 217k2185
Rehearing Denied Sept. 9, 2002.
"Replacement cost" is the sum of those costs an
Insureds brought federal court actions against insured is reasonably likely to incur in replacing
property insurers to challenge depreciation of his covered loss.
tear-off and labor costs in calculating payment
for hail damage to roof. The United States [3] Insurance k2182
District Court for the Western District of 217k2182
Oklahoma, Miles-LaGrange, J., 123 F.Supp.2d (Formerly 217k2181)
590, and Ralph Thompson, J., permitted
depreciation of labor costs in one case. Appeals Labor costs for a new roof were "replacement
were taken. The Court of Appeals, McKay, J., costs" and, therefore, could be depreciated when
certified questions. The Supreme Court, using the replacement costs less depreciation
Winchester, J., held that: (1) actual cash value method of valuing a loss covered by a
(ACV) is not replacement cost less depreciation, homeowners' insurance policy.
but is determined by the broad evidence rule; (2)
labor costs for a new roof were "replacement [4] Insurance k2140
costs" and, therefore, could be depreciated when 217k2140
using the replacement costs less depreciation
method of valuing a loss; (3) layer of roofing to [4] Insurance k2182
be torn off was "debris" within the meaning of 217k2182
policy provision requiring the insurer to pay (Formerly 217k2181)
reasonable expenses to remove debris caused by
a covered loss; and (4) the labor cost to tear off Layer of roofing to be torn off was "debris"
the shingles was not subject to depreciation. within the meaning of homeowners' policy
provision requiring the insurer to pay reasonable
Questions answered. expenses to remove debris caused by a covered
loss, and, thus, the labor cost to tear off the
West Headnotes shingles was not subject to depreciation.

[1] Insurance k2181 [5] Insurance k1713
217k2181 217k1713

[1] Insurance k2182 An insurance policy is a contract.
217k2182
[6] Insurance k1806
"Actual cash value" (ACV) is not replacement 217k1806
cost less depreciation; rather, ACV is determined
b y the broad evidence rule r e q u i r i n g The same principles generally apply to the
consideration of all relevant factors and construction of a policy of insurance as apply to
circumstances existing at the time of loss, any adhesion contract.
*1024 Federal Certified Question. aware of the case of Redcorn v. State Farm Fire
and Casualty Co., 55 P.3d 1017 (2002) where the
¶ 0 The United States Court of Appeals for the United States District Court for the Western
Tenth Circuit has certified questions of law District of Oklahoma has certified a question
pursuant to the Oklahoma Uniform Certification substantially similar to the first question certified
of Questions of Law Act, 20 O.S.1991, §§ 1601- by the Tenth Circuit. The answer to the certified
1611. The plaintiff, Eldon Carl Branch, question in Redcorn is being handed down
purchased a homeowner's policy from the contemporaneously with the answers to those
defendant, Farmers Insurance Company, Inc., presently before us.
which provided for payment of replacement cost
in the event of a covered loss. The plaintiff's ¶ 2 The facts reported by the Tenth Circuit are
roof was damaged during a storm. The Tenth as follows. The plaintiffs in these cases
Circuit certified the following questions: "(1) In purchased homeowner's policies from various
determining actual cash value, using the insurance companies. Those policies provide for
replacement costs less depreciation method, may roof surface repair and replacement coverage and
labor costs be depreciated? (2) In determining separate coverage for "debris removal" following
replacement cost less depreciation, are labor a covered loss. Hail and wind damaged the
costs of removing a damaged roof necessarily plaintiffs' roofs causing a total loss. The insurers
included or may roof tear-off be separately do not dispute coverage. The insurers
covered as 'debris removal?' (3) If tear-off costs determined replacement cost, including materials
are properly included as necessary replacement and labor, and reduced that amount by
costs and labor costs are depreciable generally, depreciating both those components of the total
may the labor costs incurred during tear-off also cost. The plaintiffs contend that neither the labor
be depreciated?" associated with installing a new roof, nor the
labor incurred during tear-off of damaged roofs
CERTIFIED QUESTIONS ANSWERED are depreciable. The Tenth Circuit has certified
the following questions:
Gary B. Homsey, Kevin Hill, Homsey, Cooper, "(1) In determining actual cash value, using the
Hill & Associates; Shannon L. Edwards, replacement costs less depreciation method,
Monnet, Hayes, Bullis, Thompson & Edwards, may labor costs be depreciated?
Oklahoma City, OK; for Plaintiff. "(2) In determining replacement cost less
depreciation, are labor costs of removing a
Burck Bailey, Eric S. Eissenstat, Dino E. Viera, damaged roof necessarily included or may roof
Fellers, Snider, Blankenship, Bailey & Tippens, tear-off be separately covered as 'debris
Oklahoma City, OK, for Defendants. removal?'
"(3) If tear-off costs are properly included as
Richard C. Ford, Rustin J. Strubhar, Crowe & necessary replacement costs and labor costs are
Dunlevy, Attorneys for Amici Curiae State Farm depreciable generally, may the labor costs
Fire & Casualty Company, and State Farm incurred during tear-off also be depreciated?"
General Insurance Company.
¶ 3 In the Davis case, the insurer figured the cost
WINCHESTER, J. to tear off and replace the old damaged roof. The
insurer then reduced this total amount by fifty
**1 ¶ 1 The United States Court of Appeals for percent for depreciation based on the roof's age
the Tenth Circuit has certified three questions of in ratio to its estimated life. The plaintiffs
law pursuant to the Oklahoma Certification of argued that neither the labor for the tear-off, nor
Questions of Law Act, 20 O.S.1991, §§ 1601- the labor for replacement should be subject to
1611. The court states that it has heard oral depreciation. In construing the plaintiffs' policy,
arguments in two substantially *1025 similar the federal district court in Davis found that both
diversity cases appealed from the United States the plaintiffs and the insurers suggested
District Court for the Western District of reasonable interpretations of the provisions
Oklahoma, Branch v. Farmers Ins. Co., 123 regarding depreciation of labor. As a result, the
F.Supp.2d 590 (W.D.Okla.2000), and Davis v. court determined that an ambiguity existed in the
Mid-Century Ins. Co., CIV-96-2070-T policy as to whether the cost of labor associated
(W.D.Okla. March 26, 1998) (Westlaw 1998 WL with replacement of the roof was subject to
1285714). The federal court informs us that it is depreciation. In that regard, the court concluded
that the materials were properly subject to relevant factors and circumstances existing at the
depreciation, but labor costs to replace the roof time of loss. Some relevant factors listed in
should not have been depreciated. Concerning Rochester include purchase price, replacement
the question of debris removal, representatives of cost, appreciation or depreciation, the age of the
the insurer testified that the damage caused to the building, the condition in which it has been
plaintiffs' roof in this case resulted in the roof maintained and market value. Rochester
surfacing becoming debris. The court found that American Ins. Co., 1953 OK 4, ¶¶ 11-18, 252
the plaintiffs' policy regarding debris removal P.2d at 493 494. While replacement cost and
was unambiguous, and that it was a separate item depreciation are considerations in determining
of coverage not subject to depreciation. actual cash value, the two terms of the Davis and
Branch policies are not equivalent.
**2 ¶ 4 Like the Davis case, the insurer in
Branch depreciated the tear-off cost and the labor ¶ 7 The plaintiff, in Rochester American Ins.
cost for installing a new roof to replace one that Co., argued that cost of reproduction was the
had been destroyed by wind and hail. The exclusive measure of recovery. But the Court
insurer paid the balance to the plaintiff, who was answered by quoting McAnarney v. Newark Fire
the insured. He sued, alleging that the insurer Ins. Co., 247 N.Y. 176, 159 N.E. 902, 56 A.L.R.
breached the terms of the insurance policy by 1149, that "Indemnity is the basis and foundation
depreciating the labor for tear off and of insurance law." The goal of indemnity is to
installation. The federal district court in Branch place the insured in as good a condition, so far as
found that tear-off costs and installation costs practicable as he would have been if no fire had
were reasonably likely in replacing a roof and occurred. McAnarney added that to effectuate
therefore were included within the meaning of complete indemnity, every fact and circumstance
"replacement cost." The court further found that tending to aid in formation of a correct estimate
the term "replacement cost" was unambiguous, of the loss should be considered by the trier of
and it was proper to depreciate the cost of labor. fact. McAnarney, 247 N.Y. at 184, 159 N.E. at
904-905.
I. IN DETERMINING ACTUAL CASH VALUE,
USING THE REPLACEMENT COSTS LESS **3 ¶ 8 Like this Court in Rochester American
DEPRECIATION METHOD, MAY LABOR Ins. Co., the Supreme Court of Indiana also
COSTS BE DEPRECIATED? quoted McAnarney in deciding Travelers
Indemnity Co. v. Armstrong, 442 N.E.2d 349
[1] ¶ 5 The Davis case included an endorsement (Ind.1982). That case cited four methods in
to the plaintiffs' policy that provided, "Loss to determining actual cash value of losses, [FN1]
roof surfacing will be settled at Actual Cash but identified the fourth test, the broad evidence
Value." The Branch case *1026 provided, "[W]e rule originating with McAnarney, as the majority
will settle covered losses to the roof surfacing ... rule. Travelers Indemnity Co., 442 N.E.2d at
on a replacement cost less depreciation basis." 356. The Indiana court called the broad evidence
The Davis policy measures the loss at "actual rule a flexible rule that permitted an appraiser,
cash value," and the Branch policy measures the court, or jury to consider any relevant factor in
loss at "replacement cost less depreciation." The determining actual cash value of damaged
question from the Tenth Circuit appears to make property. Travelers Indemnity Co., 442 N.E.2d
these terms equivalent, but they are not. at 356.

A. ACTUAL CASH VALUE IN DAVIS. FN1. The other methods cited as
minority rules are (1) Replacement cost,
¶ 6 Actual cash value in Oklahoma is determined without deduction for depreciation, (2)
by the "broad evidence rule" as described in The market value test, and (3) The
Rochester American Ins. Co. v. Short, 1953 OK replacement cost with deduction for
4, 252 P.2d 490. The Court-approved Syllabus in depreciation. Travelers Indemnity Co.,
Rochester American Ins. Co., 1953 OK 4, ¶ 0, 442 N.E.2d at 355.
252 P.2d at 490, explains the relation between
actual cash value and the broad evidence rule. ¶ 9 The Davis court found an ambiguity
Syllabus 3 provides that actual cash value of a regarding whether the cost of labor associated
building totally destroyed by fire is a matter of with roof replacement may be depreciated in an
fact to be determined by a consideration of all actual-cash-value policy. This Court has
previously held that the interpretation of a definition, it was proper to depreciate both
contract and whether it is ambiguous is a matter materials and labor when calculating the loss
of law for the Court to determine and resolve suffered by the insured. We agree with the
accordingly. Dodson v. St. Paul Ins. Co., 1991 conclusion of the Branch court.
OK 24, ¶ 12, 812 P.2d 372, 376. The term
"actual cash value" is found in the standard fire **4 ¶ 12 A roof is the product of materials and
insurance policy, 36 O.S.Supp.2000, § 4803 (G). labor, and the roof's age and condition are also
[FN2] Subsection B of that statute provides that relevant facts in setting the amount of a loss.
"no policy or contract of fire insurance shall be Depreciation in insurance law is not the type that
made, issued or delivered by any insurer or by is charged off the books of a business
any agent or representative thereof, on any establishment, but rather it is the actual
property in the state, unless is shall conform as to deterioration of a structure by reason of age, and
all provisions, stipulations, agreements, and physical wear and tear, computed at the time of
conditions, with such form of policy." Because the loss. Travelers Indemnity Co., 442 N.E.2d at
the term "actual cash value" is a statutory term 353.
that has been construed by this Court in the
Rochester American Ins. Co. case, it has a C. SUMMARY AND ANSWER FOR
specific meaning that is not ambiguous. CERTIFIED QUESTION NUMBER 1.

FN2. Section 4803 was last amended by ¶ 13 In summary, actual cash value is determined
1993 Okla.Sess.Laws, ch. 222, § 1. by the broad evidence rule. The Davis court
determined that under the broad evidence rule,
¶ 10 The Rochester American Ins. Co. case "replacement cost less depreciation" was the
involved the destruction of a building, in contrast proper measure for the loss of the roof under the
to the Davis case that involves the destruction of facts before that court. The Branch policy
a roof. The issue is how the broad evidence rule contained an endorsement providing for
applies to the destruction of a roof. The Davis "replacement cost less depreciation" to settle
court found that *1027 the roof had a fixed life covered losses to roof surfacing. Therefore, in
expectancy of twenty years. It had been in place both cases, the losses of the two roofs were
ten years. The court concluded that replacement measured in the same manner. A roof is the
cost less depreciation was the primary factor to product of both materials and labor, just as a
be considered in applying the broad evidence building in Rochester American Ins. Co. was the
rule. This determination is permissible under the p r o d u c t o f b o t h m a t e r i a ls and labor.
broad evidence rule. The court correctly Depreciation was one of the factors considered in
acknowledged that the presentation of a different determining the loss in the Rochester case. We
factual scenario could mandate that other factors answer the first question certified to us by the
be given more weight, but observed such a Tenth Circuit that labor costs may be depreciated
scenario was not before the court. when using the replacement costs less
depreciation method.
B. REPLACEMENT COST LESS
DEPRECIATION IN BRANCH. II. IN DETERMINING REPLACEMENT COST
LESS DEPRECIATION, ARE LABOR COSTS
[2][3] ¶ 11 Replacement cost is correctly defined OF
by the Branch court as "the sum of those costs an REMOVING A DAMAGED ROOF
insured is reasonably likely to incur in replacing NECESSARILY INCLUDED OR MAY ROOF
his covered loss." The court cited the holding in TEAR-OFF BE SEPARATELY
Gilderman v. State Farm Ins. Co., 437 Pa.Super. COVERED AS 'DEBRIS REMOVAL?'
217, 226, 649 A.2d 941, 945 (1994). The
Branch court then found that the term [4] ¶ 14 Our answer to the first certified question
"replacement cost" was unambiguous and subject was that replacement cost includes the labor
to only one reasonable interpretation. Therefore, involved in replacement, and therefore is subject
since labor to install a new roof was a cost the to depreciation under a "replacement cost less
insured was reasonably likely to incur in depreciation" endorsement in the insurance
replacing his roof, the cost of labor was included policy. The second question asks whether, given
within the meaning of "replacement cost." the rule cited, debris removal must be included in
Because labor was included within that "replacement cost less depreciation." The Tenth
Circuit observes that the insurance industry does remove any scattered or fallen shingles after the
not appear to have a uniform practice on whether storm. The court further stated as undisputed
labor costs incurred during tear-off are that tearing off the plaintiff's old roof surfacing
depreciable. Both the Davis and Branch policies was necessary to the proper installation of a new
contain identical endorsements regarding debris roof.
removal. They provide: "We will pay your
reasonable expenses to remove debris caused by [5][6] ¶ 17 An insurance policy is a contract.
a covered loss to covered property under Section The same principles generally apply to the
1 [Branch reads 'SECTION I']--Property." In construction of a policy of insurance as apply to
Davis, the insurance adjuster recommended tear any adhesion contract. Dodson v. St. Paul Ins.
off and removal of one layer of roofing, and Co., 1991 OK 24, ¶ 10, 812 P.2d 372, 376. In
included this labor in the total cost of Johnny F. Smith Truck & Dragline Service v.
replacement. This labor cost of tear off was United States, 49 Fed.Cl. 443 (2001), the Court
reduced by fifty percent for depreciation based of Federal Claims resolved a contract dispute
on the roof's age. In Branch, the insurance between the plaintiff and the United States
adjuster recommended tearing off *1028 two regarding debris removal in a flood damaged
layers of old roof surfacing. A depreciation area. The dispute involved the definition of
factor of thirty- five percent was applied, based "debris." That court used a similar definition as
on the adjuster's estimate of the age and the Branch court: "1. a. The scattered remains of
condition of the old roof and the average life of a something broken or destroyed; rubble or
similar composition shingle roof. The plaintiffs wreckage. b. Carelessly discarded refuse; litter."
in the two cases assert that the labor involved in American Heritage Dictionary of the English
tearing off the old roof surface should not have Language (4th ed.2000).
been depreciated.
¶ 18 If a roof has been damaged by wind or hail
**5 ¶ 15 The federal district courts in the two to the degree that it must be replaced, then the
cases reach different conclusions. In Davis, the damaged portion is rubble or wreckage. If the
court listed as an undisputed fact that the roof whole roof must then be torn off to repair or
surfacing had become debris. The court found replace the damaged portion, then those materials
that the parties' respective arguments regarding also must be considered wreckage. Farmers
depreciation of expenses for debris removal Union Mutual Ins. Co. v. Oakland, 251 Mont.
presented a close question. The court observed 352, 825 P.2d 554 (1992). See also, Manduca
that the policy appeared to set out debris removal Datsun, Inc. v. Universal Underwriters Ins. Co.,
as a separate item of coverage, not subject to 106 Idaho, 163, 168, 676 P.2d 1274, 1279 (Idaho
depreciation, but also found merit in the insurer's Ct.App.1984). Replacement costs include the
explanation of its adjustment practices regarding cost of the labor to install the new materials
including debris removal as one of the costs forming the new roof. Removing damaged
associated with replacement. The court materials, and materials that have to be removed
concluded that the policy should be construed to as a result of storm damage to the roof in order to
give effect to the language of the endorsement install the new roof, must all be treated as rubble,
providing coverage for debris removal without or in the contract language, debris. If the insurer
deduction for depreciation. intended to exclude debris removal of damaged
roofing products, it could have done so. To
¶ 16 In Branch, the insurer asserted that the answer the question of the 10th Circuit, labor
plaintiff's existing roof surfacing was not debris, costs to tear off an old roof are not included as a
and therefore the tear off was an integral part of necessary part of the replacement costs of
the total replacement cost. The court defined installing a new roof.
"debris" as "Scattered remains: RUINS," and
"Discarded waste." Webster's II New Riverside II. IF TEAR-OFF COSTS ARE PROPERLY
University Dictionary 351 (1984). The court INCLUDED AS NECESSARY REPLACEMENT
found no evidence to indicate that the plaintiff's COSTS AND
old roof surfacing constituted debris. The court LABOR COSTS ARE DEPRECIABLE
observed that the undisputed facts showed that GENERALLY, MAY THE LABOR COSTS
the plaintiff's roof remained useful and was INCURRED DURING
repaired a full year after the storm that caused the TEAR-OFF ALSO BE DEPRECIATED?
damage. There was no evidence that he had to
 **6 ¶ 19 We have answered that tear off of the
old roof is not included as a necessary part of the
replacement costs of installing a new roof. The
debris removal clauses in the insurance policies
before this Court are identical, and do not
mention depreciation. Therefore, the labor costs
in debris removal may not be depreciated.

*1029 ¶ 20 CERTIFIED QUESTIONS
ANSWERED.

¶ 21 CONCUR: HARGRAVE, C.J.; HODGES,
LAVENDER, OPALA, WINCHESTER, JJ.

¶ 22 CONCUR IN PART; DISSENT IN PART:
WATT, V.C.J. (JOINS BOUDREAU, J.);
SUMMERS (JOINS BOUDREAU, J.),
BOUDREAU (BY SEPARATE WRITING), JJ.

¶ 23 RECUSED: KAUGER, J.

BOUDREAU, J., concurring in part and
dissenting in part, WATT, V.C.J., and
SUMMERS, J. joining.

¶ 1 I concur in part and dissent in part.

¶ 2 I concur in the majority's answers to the
second and third certified questions.

¶ 3 I dissent from the majority's answer to the
first certified question for the reasons stated in
my dissent to Redcorn v. State Farm Fire and
Casualty Co., 2002 OK 15, 55 P.3d 1017 which
is being handed down contemporaneously. I
would hold that in determining actual cash value
using the replacement costs less depreciation
method, labor costs may not be depreciated.

55 P.3d 1023, 2002 WL 378169 (Okla.), 2002
OK 16

END OF DOCUMENT