Opinion:Morgan v. State Farm Mutual Automobile Insur. Co., 2021 OK 27
Subject matter:Insurance bad faith; Statute of limitations
Date Decided:May 25, 2021
Trial Court:N/A
Route to this Court:Certified questions from the U.S. Court of Appeals for the Tenth Circuit
Facts:Plaintiff/Appellant Morgan was driving drunk and severely injured a third party. Defendant/Appellee State Farm was Morgan’s liability insurer and settled the injured party’s claim against Morgan for his policy limits of $100,000 in exchange for the injured party’s release of all claims against Morgan. However, the injured party also had a workers’ compensation claim resulting from his injuries and the workers compensation insurer’s subrogee sued Morgan in Oklahoma state court for reimbursement of amounts it paid to the injured party. The jury in the subrogation case returned a verdict against Morgan in the amount of $844,865.89, finding that State Farm knew about the subrogee’s claim against Morgan but failed to apprise the subrogee of its pending settlement with the injured party. Morgan then brought suit against State Farm for breach of the implied duty of good faith and fair dealing and for breach of contract. State Farm raised statute of limitations defenses against Morgan’s claims and the Tenth Circuit certified two questions to the Oklahoma Supreme Court to assist the Tenth Circuit in resolving the statute of limitations defenses. 
Question 1: Where a plaintiff is injured by entry of an adverse judgment that remains unstayed, is the injury sufficiently certain to support accrual of a tort cause of action based on that injury under 12 O.S. § 95 before all appeals of the adverse judgment are exhausted?
Question 2: Does an action for breach of contract accrue at the moment of the breach where a plaintiff is not injured until a later date?
Standard of Review:N/A
Analysis:Both certified questions presented in this case present issues of first impression for which there is no controlling Oklahoma precedent. 
With respect to Question No. 1, Morgan’s tort cause of action against State Farm is for breach of the implied duty of good faith and fair dealing in its handling of the injured party’s claim against Morgan. Morgan complains that State Farm acted in bad faith by failing to obtain a release of the injured party’s workers’ compensation claim as a part of the settlement. A tort is not complete until there is an injury that is certain and not speculative. A bad faith cause of action based on an adverse judgment against the insured does not accrue until the underlying judgment becomes final and non-appealable or, in the case of an appeal, until the judgment is affirmed and mandated. 
With respect to Question No. 2, a cause of action accrues when a party can first maintain an action to a successful conclusion. A party can sue and recover for nominal damages as soon as a contract is breached, therefore all of the elements of a breach of contract claim are satisfied at the time of breach (even if the full extent of damages may not be sustained until later). “…unlike a tort claim, a breach of contract is a legal wrong independent of the existence of actual damages…[a] plaintiff can maintain a breach of contract action to a successful conclusion without proof of actual damages, because nominal damages are all that is required.” The tort-based discovery rule does not apply to a breach of contract action and there is no tolling of the statute of limitations until the plaintiff knows or should have known of the breach. 
Vote:5-3. Opinion by Kane, V.C.J. Concur: Darby, C.J., Winchester, Edmondson and Rowe, J.J. Concur in Part, Dissent in Part: Kauger, Combs and Gurich, J.J.
Other:The Court notes that with respect to some torts, the impact of the discovered rule is blunted by a statute of repose (e.g., Section 109- the Oklahoma architects’ and builders’ statute of repose).