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McMullan v. Enter. Fin. Group

Supreme Court of Oklahoma

January 31, 2011, Decided

Case Number: 108241

Opinion

 [**1174]  KAUGER, J:

 [*P1]  We granted certiorari to address the first impression question of whether ] a vehicle service contract meets the definition of an insurance contract. 1 We hold that it does.

FACTS

 [*P2]  On April 25, 2007, the plaintiff/petitioner, Henry McMullan, III (petitioner/buyer) purchased a 2004 Ford Mustang Cobra from a Hyundai dealership in Norman, Oklahoma. At the same time, he also purchased a vehicle service contract for $1800.00 from Enterprise Financial Group, Inc. (respondent/provider), a separate company. The service contract indemnified the buyer for certain repair costs if mechanical breakdowns occurred before 48 months or 50,000 miles, whichever happened first.

 [*P3]  About six months after the service contract was purchased, the Mustang suffered a mechanical breakdown. The buyer submitted a claim to Enterprise, alleging that the breakdown was covered under the service contract, but it refused to pay the claim. On March 31, 2009, the buyer filed a lawsuit against Enterprise for breach of contract and bad faith breach of contract. 2 On February 19, 2010, Enterprise filed a motion for partial summary judgment arguing that the buyer  [***4] was precluded from asserting a bad faith breach of contract claim because the service contract was not an insurance contract.

 [*P4]  In an order filed April 5, 2010, the trial court granted the provider's motion for partial summary judgment finding that because the vehicle service contract was not an insurance contract, the provider was not subject to a bad faith breach of contract claim. This question of first impression was certified for immediate appeal to pursuant to 12 O.S. 2001 §952(b)(3). 3 We granted certiorari on June 7, 2010.

 [**1175]   [*P5] A VEHICLE SERVICE CONTRACT MEETS THE DEFINITION OF AN INSURANCE CONTRACT.

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2011 OK 7 *; 247 P.3d 1173 **; 2011 Okla. LEXIS 9 ***

HARRY McMULLAN, III, Plaintiff/Petitioner, v. ENTERPRISE FINANCIAL GROUP, INC., Defendant/Respondent.

Prior History:  [***1] CERTIORARI REVIEW OF A CERTIFIED INTERLOCUTORY ORDER FROM THE DISTRICT COURT OF OKLAHOMA COUNTY. Honorable Daniel L. Owens, Trial Judge.

Disposition: REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.

CORE TERMS

warranty, service contract, contracts, insurance contract, insurer, associations, provider, consumer, premium, insurance company, regulation, indemnity, indemnify, service provider, net assets, Insurance Act, replacement, repair, express exclusion, consumer product, licensed, extended warranty, unearned premium, hundred percent, reserve account, repair costs, purchaser, buyer, pertinent part, reinsurance

Insurance Law, Contract Formation, General Overview, Business & Corporate Compliance, Contracts Law, Contract Conditions & Provisions, Indemnity Clauses, Commercial Law (UCC), Subject Matter, Goods, Types of Contracts, Personal Service Agreements, Definition of Goods, Industry Practices, Business Insurance, Commercial General Liability Insurance, Indemnification, Liability & Performance Standards, Good Faith & Fair Dealing