FILED
                                                             United States Court of Appeals
                                                                     Tenth Circuit

                                                                   August 11, 2009
                     UNITED STATES COURT OF APPEALS
                                                                Elisabeth A. Shumaker
                            FOR THE TENTH CIRCUIT                   Clerk of Court



    AMANDA L. BALL,

                Plaintiff-Appellant,

    v.                                                  No. 06-7095
                                                 (D.C. No. 05-CV-491-RAW)
    WILSHIRE INSURANCE                                  (E.D. Okla.)
    COMPANY, a North Carolina
    company,

                Defendant-Appellee.


                             ORDER AND JUDGMENT *


Before HARTZ, EBEL, and TYMKOVICH, Circuit Judges.



         Amanda L. Ball appeals the district court’s grant of summary judgment to

defendant Wilshire Insurance Company and its denial of her partial motion for

summary judgment in this insurance-coverage dispute. We certified certain

questions of law to the Supreme Court of Oklahoma. That court has answered our



*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
questions and the parties have filed supplemental briefs addressing the Supreme

Court of Oklahoma’s opinion. In light of the answers to the certified questions,

we AFFIRM the district court’s decision.

                                         I.

      On June 2, 2003, Ms. Ball, with her roommate as a passenger, was driving

a pickup truck loaned to her by her employer, John Drummond d/b/a Henryetta

Autosales (Henryetta), while Henryetta repaired her car. A serious accident with

another vehicle caused numerous injuries to Ms. Ball, her roommate, and the

occupants of the other car. Wilshire was Henryetta’s insurer. Relying on the

policy’s exclusion of coverage for vehicles that Henryetta loaned while it was

repairing a customer’s vehicle (the loaned-vehicle exclusion), Wilshire refused

Ms. Ball’s requests to defend her against state-court negligence suits brought by

the other car’s passengers. Wilshire also denied Ms. Ball’s claim for her own

injuries under the uninsured/underinsured motorist (UM) provisions of the policy.

The state court entered a consolidated default judgment against Ms. Ball for more

than 20 million dollars.

      Ms. Ball then sued Wilshire in federal district court, alleging that

Wilshire’s refusals to defend her in the state suits and to pay UM benefits

breached the terms of Henryetta’s policy and constituted bad faith. While the

federal suit was pending, Wilshire paid Ms. Ball and her roommate the limits of

the policy’s UM coverage, so Ms. Ball amended her theory of bad-faith liability

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away from Wilshire’s denial of UM benefits to focus on its delay in paying the

benefits.

      The district court granted summary judgment to Wilshire. The court noted

the loaned-vehicle exclusion, but predicted that the Supreme Court of Oklahoma

would invalidate the exclusion to the extent it conflicted with the minimum

coverage required by Oklahoma’s Compulsory Liability Insurance statute, Okla.

Stat. tit. 47, §§ 7-600 to 7-612 (the Compulsory Insurance Law). But examining

the interaction between an insurer’s duty to defend and the Compulsory Insurance

Law, the court held that Wilshire had no duty to defend Ms. Ball and did not act

in bad faith in declining to do The court further found no bad faith in the delay

in paying UM benefits because the law was not settled whether the Compulsory

Insurance Law invalidated the loaned-vehicle exclusion.

      Ms. Ball appealed, arguing that she is an “insured” under the policy; that

because she is an “insured,” Wilshire had a duty to defend her; and that Wilshire

acted in bad faith in refusing to defend her and in failing to tender the UM

benefits in a timely manner. We certified certain questions of law to the Supreme

Court of Oklahoma. That court having answered the questions, see Ball v.

Wilshire Ins. Co., No. 104939, __ P.3d __, 

(Okla. 2009),

we proceed to resolve this appeal.




                                        -3-
                                          II.

      We review a grant of summary judgment de novo. See Grynberg v. Total,

S.A., 

, 1346 (10th Cir. 2008), cert. denied, 

(2009).

Because this is a diversity case arising out of Oklahoma, we follow the decisions

of the Supreme Court of Oklahoma. See 

Ball clearly indicates that

the district court’s decision should be affirmed in all respects.

      As the district court predicted, the Supreme Court of Oklahoma held that

the Compulsory Insurance Law voids the loaned-vehicle exclusion to the extent of

the statutory minimum required amount of coverage. See 

But the

Oklahoma court disagreed with Ms. Ball’s conclusion that the statutory

invalidation of the loaned-vehicle exclusion necessarily means that “the exclusion

never existed and the wrongly excluded person becomes entitled to the

performance of the insurer’s other contractual obligations to its insured, including

a defense.” 

Rather, the court held:

      The statutory omnibus clause displaces only those insurance policy
      provisions that are incompatible with the law’s intent to provide
      minimal compensation to an injured third party. The person whose
      minimal coverage is law-mandated is not entitled to the insurer’s
      performance of purely contractual obligations that stand outside the
      law’s mandate.

of the loaned-vehicle exclusion, Wilshire had no duty to

defend, even though it had a duty to indemnify in the amount of the minimum

statutorily required coverage. See 

                                          -4-
      Because Wilshire did not have a duty to defend, its refusal to defend

Ms. Ball in the state lawsuits cannot be considered unreasonable or in bad faith.

Ms. Ball argues in her supplemental brief that good faith required Wilshire to

“resolve the dispute without occasioning harm upon the insured by, for example,

seeking judicial declaration of coverage or defending under reservation of rights,”

rather than simply refusing to defend. Aplt. Supp. Br. at 4. We disagree.

Oklahoma provides three options to an insurer who disputes a demand to defend:

“(1) seek declaratory relief that would define the insurer’s rights and obligations;

(2) defend the insured under a reservation of rights, or (3) refuse to take any

action at the peril of being later found in breach of its duty to defend.”

First Bank of Turley v. Fid. & Deposit Ins. Co. of Md., 

, 304-05

(Okla. 1996). Wilshire chose the third option, and its gamble paid off when the

Supreme Court of Oklahoma held that in these circumstances there is no duty to

defend.

      Finally, Ball held that the issue of whether Wilshire was required to tender

payment for UM coverage was unsettled under Oklahoma law, meaning that

Wilshire could not be liable under a bad-faith theory. See 

,

at *10 (“Inasmuch as the insurer has made payment to the claimant and the law

had not been settled by requiring payment under this fact pattern, a bad-faith

claim will not lie against the insurer.”).




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                               III.

The judgment of the district court is AFFIRMED.


                                      Entered for the Court


                                      Harris L Hartz
                                      Circuit Judge




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