Summary
The Supreme Court of Oklahoma held that an automobile-business exclusion in an automobile liability insurance policy was contrary to Oklahoma public policy to the extent it excluded the minimum liability coverage required by the state's compulsory insurance law. The court affirmed the trial court's garnishment ruling, vacated the Court of Civil Appeals' opinion, and overruled Karner v. Maynor insofar as it conflicted with this holding.
Topics
Practice areas
Questions Presented
- Whether Oklahoma's compulsory liability insurance scheme renders an automobile-business exclusion in an automobile liability policy void as against public policy to the extent of the statutory minimum coverage.
- Whether the Tapps were entitled to garnishment of the statutory minimum liability coverage despite the policy's automobile-business exclusion.
Holdings
- An automobile-business exclusion that denies liability coverage to an innocent third-party victim is contrary to Oklahoma public policy and is void to the extent it excludes the minimum liability coverage required by the Compulsory Liability Insurance Act.
- The Tapps were entitled to recover the statutory minimum liability coverage through garnishment, and the trial court correctly ordered garnishment.
Key quotations
“Applying the automobile business exclusionary clause would prejudice an innocent third party and violate the intent of the compulsory liability insurance law that, to the minimum amount of liability coverage required by statute, the innocent plaintiff should be entitled to recover.” (120 P.3d at 484)
“Accordingly, we affirm the trial court and hold that the automobile business exclusion in Harmon's liability insurance policy is contrary, to the extent of the minimum amount required by the statute, to the public policy inherent in the Compulsory Liability Insurance law.” (120 P.3d at 484)
Factual background
Tonya Harman took her vehicle to Auto Tech for repair work. While Wayne Perciful was moving the vehicle during the repairs, it lurched forward and struck Karen Tapp and a truck owned by Karen Tapp and/or James Tapp. The Tapps obtained a $100,000 judgment against Perciful and sought $10,000 in liability coverage from State Farm, Harman's insurer, but State Farm relied on an automobile-business exclusion.
Procedural history
The Tapps obtained a $100,000 judgment against Wayne Perciful after he confessed judgment. They then initiated garnishment proceedings against State Farm, claiming $10,000 in liability coverage under Tonya Harman's automobile policy. The trial court ordered garnishment, the Court of Civil Appeals affirmed, and the Supreme Court granted certiorari, vacated the intermediate appellate opinion, and affirmed the trial court.