F I L E D
United States Court of Appeals
Tenth Circuit
December 12, 2005
PUBLISH
UNITED STATES COURT OF APPEALS Clerk of Court
TENTH CIRCUIT
RUSSELL LEE GILLOGLY,
Plaintiff - Appellee/Cross -
Appellant,
v.
GENERAL ELECTRIC CAPITAL Nos. 04-7026, 04-7032, 04-7042
ASSURANCE COMPANY, aka GE
Capital Assurance, aka GE Financial
Assurance Holdings, Inc.,
Defendant - Appellant/Cross -
Appellee.
Appeal from the United States District Court
for the Eastern District of Oklahoma
(D.C. No. 02-CV-658)
John T. Edwards and Shannon L. Edwards, Monnet, Hayes, Bullis, Thompson &
Edwards, Oklahoma City, Oklahoma; Reid L. Ashinoff, Michael S. Gugig, and
Joshua S. Akbar, Sonnenschein Nath & Rosenthal LLP, New York, New York;
and James M. Sturdivant and Timothy A. Carney, Cable & Gotwals, Tulsa,
Oklahoma, for Defendant-Appellant/Cross-Appellee.
W.G. Gil Steidley, Jr., Michelle Harris, and Keri G. Williams, Steidley & Neal,
Tulsa, Oklahoma; and Charles D. Neal, Jr., Steidley & Neal, McAlester,
Oklahoma, for Plaintiff-Appellee/Cross-Appellant.
Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and
KELLY, Circuit Judge.
EBEL, Circuit Judge.
In these appeals, we interpret a long term care insurance policy that
Plaintiff Russell Lee Gillogly (“Gillogly”) purchased from a predecessor to
Defendant insurer General Electric Capital Assurance Company (“GECA”). 1 We
REVERSE the district court’s grant of summary judgment for Gillogly on his
claim that GECA breached its contract with Gillogly when it denied his request
for benefits under the policy. We also REVERSE the district court’s entry of
judgment in favor of Gillogly on his claim that GECA denied his request for
benefits in bad faith. Finally, we AFFIRM the district court’s entry of judgment
as a matter of law for GECA on Gillogly’s claim for punitive damages.
Therefore, we REMAND the case to the district court with instructions to enter
judgment for GECA on Gillogly’s claims that GECA breached its contract with
Gillogly and acted in bad faith.
1
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination
of appeal numbers 04-7026 and 04-7032. See Fed. R. App. P. 34(a)(2); 10th Cir.
R. 34.1(G). Those cases are therefore ordered submitted without oral argument.
-2-
BACKGROUND
In 1989 Gillogly purchased a “Long Term Care Insurance Nursing Home
Indemnity Policy” (“Policy”) from AMEX Life Assurance Company. As a result
of a 1996 merger, GECA assumed all of AMEX Life Assurance Company’s rights
and obligations under the Policy.
The Policy provides a “Nursing Home Benefit”—a fixed daily benefit of
$60 per day for an inpatient stay in a nursing home for up to 730 days after a
deductible period of 100 days is reached. Specifically, the Policy states:
We will pay the Daily Benefit for each Day Of A Nursing Home Stay
After the Deductible Period, if:
• the Policy is in force when the Nursing Home stay starts; and
• You are confined in the Nursing Home as an overnight resident
patient and a room and board charge is made for that day; and
• Your Nursing Home Stay is Necessary . . . .
Your Nursing Home Stay Is Necessary as long as: (1) a Doctor
certifies that Your admission is required due to injury or sickness;
and (2) there exists a level of functional incapacity which makes your
continued Nursing Home stay appropriate and reasonable.
This Policy makes no distinction, in the duration or amount of
benefits You will be paid, for different levels of care (whether
skilled, intermediate, or custodial) as long as Your Nursing Home
Stay Is Necessary.
The Policy defines a “Nursing Home” as:
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A facility or distinctly separate part of a hospital or other institution
which is licensed by the appropriate licensing agency to engage
primarily in providing nursing care and related services to inpatients
and:
• Provides 24 hour a day nursing service under a planned
program of policies and procedures which was developed with
the advice of, and is periodically reviewed and executed by, a
professional group of at least one physician and one Nurse;
and
• Has a Doctor available . . . in case of emergency; and
• Has at least one Nurse who is employed there full time . . . ;
and
• Has a Nurse on duty or on call at all times; and
• Maintains clinical records for all patients; and
• Has appropriate methods and procedures for handling and
administering drugs and biologicals.
NOTE: The above requirements are typically met by licensed skilled
nursing facilities, comprehensive nursing care facilities and
intermediate nursing care facilities as well as some specialized
wards, wings and units of hospitals. Those requirements are
generally NOT met by: rest homes; homes for the aged; sheltered
living accommodations; residence homes; or similar living
arrangements.
The Policy does not define the term “nursing care and related services” used in
the first part of the Policy’s definition of “Nursing Home.”
In 2001 Gillogly began residing at the Van Buren House (“VBH”) of the
McAlester Regional Health Center (“MRHC”) in Oklahoma. Gillogly thereafter
sought benefits from GECA under the Policy to pay for his stay at VBH. GECA
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declined to award benefits because GECA believed that VBH did not qualify as a
“Nursing Home” under the Policy, stating in a letter to Gillogly that:
The referenced policy is a basic Nursing Home Indemnity Policy. It
provides neither alternative care facility nor home health care
benefits. Its principal focus is to indemnify stays in care facilities
that satisfy the policy definition of a Nursing Home.
The term Nursing Home is defined in the policy as a facility licensed
by the appropriate licensing agency to engage primarily in providing
nursing care and related services to inpatients. The policy also
requires the facility to provide certain services; these are listed in a
bulleted format.
. . . [T]he information submitted from the Van Buren House . . .
reflected they are not licensed by the appropriate licensing agency to
engage primarily in providing nursing care. In fact, the care facility
holds a license issued by the Oklahoma Department of Health to
function as a Residential Care Home.
. . . The state of Oklahoma has provided a Residential Care Home
license in order to allow the care facility in question to provide
personal care services only.
Gillogly filed suit against GECA in the United States District Court for the
Eastern District of Oklahoma, alleging that GECA had breached its contract and
the covenant of good faith and fair dealing in denying his request for benefits
under the Policy. 2 Gillogly sought both compensatory and punitive damages.
2
Oklahoma recognizes a cause of action in tort for an insurance company’s
bad faith refusal to pay a valid insurance claim. See Christian v. Am. Home
Assurance Co., 577 P.2d 899, 904 (Okla. 1977).
-5-
GECA filed a motion for summary judgment, arguing that it had neither
breached its contract with Gillogly nor acted in bad faith in denying Gillogly’s
request for benefits. Gillogly filed a motion for partial summary judgment,
seeking to establish that GECA was liable for breach of contract. The district
court denied GECA’s motion and granted Gillogly’s motion, holding that GECA
was liable for breach of contract. However, because damages for the breach had
not been determined, the court did not enter judgment on the claim.
The parties proceeded to a jury trial on Gillogly’s claim that GECA had
acted in bad faith in denying his request for benefits. At the close of all the
evidence, the district court determined as a matter of law that GECA had acted in
bad faith. The court also granted judgment as a matter of law to GECA on
Gillogly’s claim for punitive damages. The jury then determined Gillogly’s actual
damages on the claim that GECA had acted in bad faith to be $4 million. The
district court entered judgment on that claim on January 12, 2004.
On March 15, 2004, fourteen days after the district court rejected GECA’s
post-judgment motion for judgment as a matter of law, a new trial, or remittitur of
the jury verdict, GECA filed a notice of appeal. In that notice, GECA asserted
that it would contest the district court’s entry of judgment on Gillogly’s claim that
GECA had acted in bad faith, as well as the district court’s denial of GECA’s
post-judgment motion. Gillogly filed a notice of appeal on March 19, 2004,
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appealing the district court’s order granting GECA judgment as a matter of law on
his punitive damages claim.
On April 14, 2004, the district court entered judgment on Gillogly’s breach
of contract claim, awarding Gillogly damages in an amount to which the parties
had stipulated. 3 GECA filed a second notice of appeal on May 3, 2004, this time
challenging the district court’s order granting summary judgment to Gillogly on
his breach of contract claim.
DISCUSSION
I. Jurisdiction and Standard of Review
We exercise jurisdiction over these appeals pursuant to 28 U.S.C. § 1291, 4
reviewing de novo the district court’s rulings on the parties’ motions for summary
judgment and a directed verdict. See Welding v. Bios Corp., 353 F.3d 1214, 1217
(10th Cir. 2004); Strickland Tower Maintenance, Inc. v. AT&T Commc’ns, Inc.,
3
In addition to $80,601 for breach of contract, the district court awarded
Gillogly $750,000 for costs, attorney’s fees, and pre-judgment interest.
4
When the parties filed the first two notices of appeal, the district court’s
judgment was not yet final because damages for the breach of contract claim had
not been determined and a judgment on that claim had not been entered. See Fed.
R. Civ. P. 54(b); Albright v. UNUM Life Ins. Co., 59 F.3d 1089, 1092 (10th Cir.
1995). However, those notices of appeal became valid when the district court
entered judgment on Gillogly’s breach of contract claim on April 14, 2004,
because the court’s January 12 and April 14 judgments together constitute a final
judgment. See Lewis v. B.F. Goodrich Co., 850 F.2d 641, 644-46 (10th Cir.
1988) (en banc). The two judgments, along with the court’s orders addressing the
parties’ summary judgment motions and GECA’s post-judgment motion, dispose
of all claims by and against all parties in the proceedings.
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128 F.3d 1422, 1426 (10th Cir. 1997). Summary judgment is appropriate when
the pleadings, deposition transcripts, affidavits and evidentiary material show that
there is no genuine issue as to any material fact and the moving party is entitled
to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Welding, 353 F.3d at
1217. A party can obtain judgment as a matter of law in its favor “only if the
proof is all one way or so overwhelmingly preponderant in favor of the movant as
to permit no other rational conclusion.” Conoco Inc. v. ONEOK, Inc., 91 F.3d
1405, 1407 (10th Cir. 1996) (quotations omitted).
II. Breach of Contract
A. Legal Framework
Under the substantive law of the State of Oklahoma, which we apply in this
diversity case, see C.F. Braun & Co. v. Okla. Gas & Elec. Co., 603 F.2d 132, 133
n.1 (10th Cir. 1979):
[p]arties to [an] insurance contract . . . are bound by [the] terms of
[the] contract and courts will not undertake to rewrite [the] terms
thereof. The construction of an insurance policy should be a natural
and reasonable one, fairly construed to effectuate its purpose, and
viewed in the light of common sense so as not to bring about an
absurd result. . . . A policy of insurance is a contract and should be
construed as every other contract, that is, where not ambiguous,
according to its terms.
Wiley v. Travelers Ins. Co., 534 P.2d 1293, 1295-96 (Okla. 1974). Thus, if a
reasonably prudent lay person would find that a term used in a policy is not
susceptible to two interpretations on its face, see Cranfill v. Aetna Life Ins. Co.,
-8-
49 P.3d 703, 706 (Okla. 2002), the intent of the parties should be ascertained
from the policy alone. See id.; Dodson v. St. Paul Ins. Co., 812 P.2d 372, 376
(Okla. 1991).
At the time that Gillogly first submitted his claim for benefits under the
Policy, and at all times since then, the Oklahoma State Department of Health
(“Department”) did not license a category of facilities called “nursing homes.”
Rather, the Department licensed “nursing facilities” and “residential care homes”
pursuant to a pair of complementary statutes, the Nursing Home Care Act, Okla.
Stat. tit. 63, §§ 1-1900.1 to 1-1952, and the Residential Care Act, Okla. Stat. tit.
63, §§ 1-819 to 1-842.
At all times relevant to this appeal, the Nursing Home Care Act defined
“nursing facility” as:
a home, an establishment or an institution, a distinct part of which is
primarily engaged in providing:
a. skilled nursing care and related services for residents who
require medical or nursing care,
b. rehabilitation services for the rehabilitation of injured,
disabled, or sick persons, or
c. on a regular basis, health related care and services to
individuals who because of their mental or physical condition
require care and services beyond the level of care provided by
a residential care home and which can be made available to
them only through a nursing facility.
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Okla. Stat. tit. 63, § 1-1902(10). The act stated that “[n]o person shall establish,
operate, or maintain in this state any nursing facility without first obtaining a
license as required by the Nursing Home Care Act.” Id. § 1-1903(A). The act
also makes clear that its use of the term “facility” “shall not include a residential
care home or an adult companion home.” Id. § 1-1902(9).
At all times relevant to this appeal, the Nursing Home Care Act defined
“residential care home” as:
any home, establishment, or institution licensed pursuant to the
provisions of the Residential Care Act . . . which offers or provides
residential accommodations, food service, and supportive assistance
to any of its residents or houses any resident requiring supportive
assistance. The residents shall be persons who are ambulatory and
essentially capable of managing their own affairs, but who do not
routinely require nursing care.
Id. at § 1-1902(12). The Residential Care Act provides a similar definition for
“residential care home,” though the precise wording of that definition was
changed after Gillogly requested benefits under the Policy in 2001. Until 2001,
the Residential Care Act defined “residential care home” as:
any establishment or institution . . . which offers or provides
residential accommodations, food service, and supportive assistance
to any of its residents or houses any residents requiring supportive
assistance . . . . Said residents shall be ambulatory and essentially
capable of managing their own affairs, but do not routinely require
skilled nursing care or intermediate care.
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Historical and Statutory Notes, Okla. Stat. tit. 63, § 1-820. In 2001, the
Oklahoma legislature amended the Residential Care Act to define “residential
care home” as:
any establishment or institution which offers, provides or supports
residential accommodations, food service, and supportive assistance
to any of its residents or houses any residents requiring supportive
assistance . . . . The residents . . . shall be ambulatory and essentially
capable of participating in their own activities of daily living, but
shall not routinely require nursing services . . . .
Okla Stat. tit. 63, § 1-820(12). Thus, the earlier version of the Residential Care
Act provided that the residents of residential care homes shall not “routinely
require skilled nursing care or intermediate care,” instead of stating that the
residents of such homes shall not “routinely require nursing services.”
To implement the Residential Care Act, the Oklahoma State Department of
Health issued Residential Care Home Regulations. See Okla. Admin. Code Tit.
310, Ch. 680. At all times relevant to this appeal, these regulations defined
“residential care home” as:
[a]ny establishment or institution . . . which offers or provides
residential accommodations, food service and supportive assistance
to any of its residents or houses any residents requiring supportive
assistance . . . . Said residents shall be ambulatory and essentially
capable of managing their own affairs, but do not routinely require
skilled nursing care or intermediate care.
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Okla. Admin. Code § 310:680-1-2. Thus, the language of the Residential Care
Home Regulations is identical to the language of the earlier version of the
Residential Care Act.
B. Application
The Policy’s definition of the term “Nursing Home” is not ambiguous. The
Policy requires that a “Nursing Home” be “licensed . . . to engage primarily in
providing nursing care and related services to inpatients.” The form that such a
license will take is left to the “appropriate licensing agency” in each area where
the Policy is used. The Policy is unambiguous as a matter of law, see Wynn v.
Avemco Ins. Co, 963 P.2d 572, 575 (Okla. 1998), because the Policy’s definition
of the term “Nursing Home” simply is not susceptible to two interpretations on its
face. See Cranfill, 49 P.3d at 706. Thus we must interpret the intent of the
parties in contracting for insurance from the Policy alone, without examining
outside evidence of their understanding of the contract. See id.
VBH does not qualify as a “Nursing Home” under the Policy. In order for a
facility to qualify as a “Nursing Home” under the Policy, it must be, inter alia,
“licensed by the appropriate licensing agency to engage primarily in providing
nursing care and related services to inpatients.” It is undisputed that the
Department is the “appropriate licensing agency” for the State of Oklahoma. The
Department licensed VBH as a “residential care home,” not as a “nursing
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facility.” Under the Nursing Home Care Act, the residents of residential home
facilities shall not “routinely require nursing care.” Okla. Stat. tit. 63,
§ 1-1902(12). The act specifically excludes “residential care homes” from its
definition of “nursing facilit[ies].” Id. § 1-1902(9). The act also states that
“nursing facilit[ies]” that provide “skilled nursing care and related services” do so
for individuals who require “care and services beyond the level of care provided
by a residential care home.” Id. § 1-1902(10). Since VBH is specifically licensed
as a residential care home and the Oklahoma statutes require that the residents of
VBH shall not routinely require nursing care, VBH is specifically designated by
statute as something other than a facility that is “primarily engaged in providing .
. . skilled nursing care and related services.” It follows that VBH cannot qualify
under the Policy as a facility licensed to “engage primarily in providing nursing
care and related services.” See Gregg v. IDS Life Ins. Co., 692 N.Y.S.2d 182,
183 (N.Y. App. Div. 1999) (denying benefits under a long term care insurance
policy because the facility in which the insured resided was not a nursing home as
defined by the licensing requirement contained in the policy); see also Waak v.
Nat’l Bankers Life Ins. Co., 141 N.W. 2d 454, 456-57 (Neb. 1966) (emphasizing
that it is the formal licensing or categorization of an institution that controls
whether the institution is covered by an insurance policy); Cullop v. Rogue Valley
Physicians’ Serv., Inc., 503 P.2d 699, 701 (Or. 1972) (en banc) (noting that an
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institution licensed as a rehabilitation center by the state board of health did not
constitute an “approved hospital” under an insurance policy requiring that a
hospital be licensed to be covered).
It is true that at least one district court reached a different conclusion in an
unpublished disposition interpreting a GECA insurance contract that defines
“Nursing Home” in the same way as the Policy at issue in this case. In McDonald
v. General Electric Capital Assurance, No. CIV-02-614-C (W. D. Okla. May 7,
2003) (unpublished), the district court determined that the insured was entitled to
benefits for a stay in an assisted living facility apparently not licensed as a
“nursing facility.” The court reasoned that “[t]he plain language of the policy
does not require a specific type of license,” and therefore rejected the insurer’s
contention that Okla. Stat. tit. 63, § 1-1902 (regulating nursing facilities) was
controlling. The court stated that “all that is required is that the facility be
licensed to primarily provide nursing care and related services” and summarily
concluded that the facility “satisfies this requirement.” However, the McDonald
court did not discuss how that facility met this requirement or what constitutes
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“nursing care.” 5 McDonald is not persuasive in light of the statutory language
and the substantial authority to the contrary.
At the time that Gillogly submitted his request for benefits, the Residential
Care Act defined “residential care home” as a facility whose residents shall not
“routinely require skilled nursing care or intermediate care.” Okla. Stat. tit. 63,
§ 1-820(12). However, the Nursing Home Care Act and Residential Care Act are
complementary provisions. Both are contained in Oklahoma’s Public Health
Code. See Okla. Stat. tit. 63, §§ 1-101 to 1-2703. The two provisions are clearly
intended to be read together. See Okla. Stat. tit. 63, § 1-1902(12) (reference in
the Nursing Home Care Act to the Residential Care Act).
The Nursing Home Care Act stated that the residents of residential care
homes shall not “routinely require nursing care,” while the Residential Care Act
stated that the residents of such homes shall not “routinely require skilled nursing
care or intermediate care.” Read together, we must read the phrase “nursing care”
used to define “residential care home” in the Nursing Home Care Act as
5
The court did discuss whether the facility provided twenty-four hour
“nursing service” as required by a different portion of the policy. In analyzing
that portion of the policy, the court rejected the insurer’s contention that the
facility did not provide “nursing service” because it did not provide “nursing
care” as defined by Oklahoma statute. Finding the term “nursing service”
ambiguous, and therefore interpreting the term’s meaning against the insurer, the
court stated that the term “nursing service” included the level of care provided by
an assisted living facility. However, the court did not address in detail the
question of whether the facility was licensed to provide “nursing care.”
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synonymous with the phrase “skilled nursing care or intermediate care” used to
define “residential care home” in the Residential Care Act.
To the extent that VBH’s residential care license allows the facility to
provide custodial care, that license is not equivalent to a license to “engage
primarily in providing nursing care” within the meaning of the Policy because
Oklahoma statutes distinguish “nursing care” from custodial care. The Nursing
Home Care Act defines a “nursing facility” as one “primarily engaged in
providing . . . skilled nursing care and . . . rehabilitation services, . . . and
health-related care . . . beyond the level of care provided by a residential care
home and which can be made available only through a nursing facility.”
(Emphasis added.) Thus, “nursing” care must consist of something more than
custodial care. Okla. Stat. tit. 63, § 1-1902(10).
Nor is VBH licensed to provide “nursing care” because the facility is
licensed to have nurses provide care to residents. Such an interpretation would
mean that virtually any hospital would qualify as a “Nursing Home” under the
Policy, and that the insurer would be required to pay a benefit when the insured
stays as an overnight resident in a hospital after fulfilling his or her 100-day
deductible. This would effectively convert the Policy from a “Long Term Care
Insurance Nursing Home Indemnity Policy” to a policy covering some of the
hospitalization costs associated with any catastrophic medical event.
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Gillogly argues that because the Policy states that it “makes no distinction
. . . for different levels of care (whether skilled, intermediate, or custodial) as
long as Your Nursing Home Stay is Necessary,” the Policy should be interpreted
to cover custodial care in a facility licensed as a “residential care home.”
However, the Policy’s provision of coverage for all levels of care in a properly-
licensed “Nursing Home” does not provide coverage for any level of care
provided in another type of institution. See A. Kimberley Dayton, et al., 3
Advising the Elderly Client, § 24:11 (2005) (“Most long-term care policies today
cover all levels of nursing home care, including skilled, intermediate, and
custodial care.”) (emphasis added).
Gillogly contends that because VBH is a distinctly separate part of a
hospital—MRHC—and the hospital is licensed to engage primarily in providing
nursing care, VBH qualifies as a properly-licensed facility under the Policy. This
argument is without merit. Even assuming that MRHC is “licensed . . . to engage
in primarily providing nursing care” within the meaning of the Policy, this
argument ignores VBH’s separate license as a residential care home, effectively
rendering the MRHC license a superfluity. Moreover, the argument conflicts with
the plain text of the Policy, which defines a “Nursing Home” as “[a] facility or
distinctly separate part of a hospital or other institution which is licensed by the
appropriate licensing agency to engage primarily in providing nursing care and
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related services to inpatients . . . .” [Emphasis added]. The “which is licensed”
clause modifies the nouns “facility” and “part”—not the noun “hospital,” which is
part of the prepositional phrase “of a hospital or other institution.”
Gillogly also contends that VBH should qualify as a “Nursing Home” under
the Policy because of a note following the Policy’s definition of a “Nursing
Home” which states:
The above requirements are typically met by licensed skilled nursing
facilities, comprehensive nursing care facilities and intermediate
nursing care facilities as well as some specialized wards, wings, and
units of hospitals. Those requirements are generally NOT met by:
rest homes; homes for the aged; sheltered living accommodations;
residence homes; or similar living arrangements.
However, this note only suggests general characteristics that are typical of nursing
facilities and it does not purport in any way to modify the licensing requirement
contained in the definition of nursing homes.
Finally, Gillogly suggests that because VBH provides the six types of
services set forth in bullet points in the Policy, VBH qualifies as the type of
facility that the parties thought of as a “Nursing Home” when they contracted for
insurance coverage. However, the Policy does not allow facilities to qualify as
“Nursing Homes” in two ways, either by being appropriately licensed or by
providing certain services. Rather, the Policy allows facilities to qualify as
“Nursing Homes” in only one way, defining a “Nursing Home” as a facility that
both is licensed “and” provides certain enumerated services.
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Because VBH does not qualify as a “Nursing Home” under the Policy,
GECA did not breach its contract with Gillogly as a matter of law when it denied
Gillogly’s request for benefits for his stay at VBH. Therefore, we reverse the
district court’s grant of summary judgment to Gillogly on his breach of contract
claim, and remand the case with instructions that the district court enter judgment
for GECA on the claim.
III. Other Issues
Because we reverse the district court’s grant of summary judgment to
Gillogly on his breach of contract claim, and direct the district court on remand to
enter judgment for GECA on that claim, we also reverse the district court’s
judgment that GECA acted in bad faith. See Davis v. GHS Health Maint. Org.,
Inc., 22 P.3d 1204, 1210 (Okla. 2001) (“[A] determination of liability under the
contract is a prerequisite to a recovery for bad faith breach of an insurance
contract.”); Expertise, Inc. v. Aetna Fin. Co., 810 F.2d 968, 972 (10th Cir. 1987)
(“[T]he plaintiff obviously must establish that a binding agreement has been
breached to invoke this theory [of bad faith breach of contract under Oklahoma
law]. Because we have held that the plaintiff failed to establish a breach of an
enforceable agreement, we must also conclude that it failed to establish a prima
facie case of bad faith breach of contract.”); McCarty v. First of Georgia Ins. Co.,
713 F.2d 609, 612 (10th Cir. 1983) (noting that “[w]hen the Oklahoma Supreme
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Court held that claimants must make a ‘clear showing that the insurer
unreasonably, and in bad faith, withholds payment,’ it was simply emphasizing
the obvious: if the insured were not entitled to payment, a cause of action for
wrongful denial of the claim could not arise”) (citation omitted). Therefore, on
remand the district court should enter judgment for GECA on Gillogly’s claim
that GECA acted in bad faith in denying his request for benefits under the Policy.
We affirm the district court’s grant of judgment to GECA on Gillogly’s
punitive damages claim because GECA did not deny Gillogly’s request for
benefits in bad faith. “It is settled in Oklahoma that for a jury to award punitive
damage, actual damages must first be shown.” Davidson v. First Bank & Trust
Co., Yale, 609 P.2d 1259, 1262 (Okla. 1977), overruled on other grounds by
Beneficial Fin. Co. v. Young, 612 P.2d 1357, 1359-60 (Okla. 1980). Because
Gillogly did not and could not prove that GECA is liable for acting in bad faith,
Gillogly cannot show actual damages resulting from GECA’s conduct. Therefore,
Gillogly is not entitled to punitive damages, and the district court did not err in
granting judgment to GECA as a matter of law on Gillogly’s punitive damages
claim. 6
The district court ruled that GECA was entitled to judgment as a matter of
6
law on the issue of punitive damages because Gillogly “presented no evidence
that [GECA] either recklessly disregarded its duty to deal fairly and act in good
faith with plaintiff or intentionally and with malice breached its duty to deal fairly
(continued...)
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CONCLUSION
We REVERSE the district court’s grant of summary judgment to Gillogly
on his breach of contract claim. We also REVERSE the district court’s entry of
judgment in favor of Gillogly on his claim that GECA acted in bad faith. Finally,
we AFFIRM the district court’s entry of judgment in favor of GECA on Gillogly’s
punitive damages claim. We REMAND the case with instructions that the district
court enter judgment for GECA on Gillogly’s claims that GECA breached its
contract with Gillogly and acted in bad faith in denying his request for benefits
under the Policy.
6
(...continued)
and act in good faith with plaintiff.” However, “[w]e are free to affirm a district
court decision on any grounds for which there is a record sufficient to permit
conclusions of law, even grounds not relied upon by the district court.” United
States v. Sandoval, 29 F.3d 537, 542 n.6 (10th Cir. 1994) (quotations omitted).
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