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Valparaiso Univ. Law School

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Monday, November 8, 2010

Oklahoma attorney fee statute doesn't cover breach of agency K

Oklahoma has a statute that provides:

A "In any civil action to recover for labor or services rendered, or on an open account, a statement of account, account stated, note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, unless otherwise provided by law or the contract which is the subject of the action, the prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and collected as costs."
Okla. Stat. tit. 12, § 936.  Does the statute permit attorneys' fees in a suit by an insurance company against an agent who, in breach of its agreement, failed to notify the insurer of a claim and thus caused the insurer to incur bad-faith damages?
No, says the Tenth Circuit.  In its recent decision in North American Specialty Insurance Co. v. Britt Paulk Insurance Agency, Inc..No. 10-7010 (U.S. Ct. App. 10th Cir,. Nov. 4, 2010), the court noted that Oklahoma construes § 936 very narrowly, and the insurer's suit is neither a "contract relating to the purchase or sale of goods, wares, or merchandise," an "open account," or any other of the specific categories set forth in the statute.  The insurer was therefore not entitled to recover the quarter-million in attorneys' fees it incurred.
FGS.

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