Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-05-01553/USCOURTS-ca10-05-01553-0/pdf.json

Parties Involved:
State Farm Mutual Automobile Insurance Company
Appellee
Virgil Stickley
Appellant

Document Text:

FILED

United States Court of Appeals

Tenth Circuit

October 10, 2007

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

VIRGIL STICKLEY,

Plaintiff - Appellant,

v. No. 05-1553

STATE FARM MUTUAL

AUTOMOBILE INSURANCE

COMPANY,

Defendant - Appellee.

Appeal from the United States District Court

for the District of Colorado

(D.C. No. 04-N-1685 (OES))

Robert B. Carey (Julie B. Cliff and L. Dan Rector, with him on the briefs), The

Carey Law Firm, Colorado Springs, Colorado, for Plaintiff - Appellant.

Todd P. Walker (Michael S. McCarthy with him on the brief), Faegre & Benson

LLP, Denver, Colorado, for Defendant - Appellee.

Before O’BRIEN, McCONNELL, and HOLMES, Circuit Judges.

O’BRIEN, Circuit Judge.

Virgil Stickley appeals from the district court’s grant of summary judgment

to State Farm Mutual Automobile Insurance Company (State Farm). Exercising

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 1
 The No-Fault Act was repealed on July 1, 2003. See Colo. Rev. Stat. 1

§ 10-4-726 (effective July 1, 2003). 

 Until 2001, the “basic” level of coverage was called “minimum.” 2

Compare Colo. Rev. Stat. § 10-4-706(1) (2000 through 2001).

-2-

jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.

I. Background

A. The No-Fault Act

In 1973, the Colorado legislature enacted the Colorado Auto Accident

Reparations Act (“CAARA” or “No-Fault Act”) which governed the sale of

automobile insurance in the state. See Colo. Rev. Stat. §§ 10-4-701 through 726. 

1

The purpose of the No-Fault Act was to avoid inadequate compensation to victims

of automobile accidents. Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d

550, 553 (Colo. App. 1998). Under CAARA, automobile insurance policies had

to include a basic level of personal injury protection (PIP). This basic level 2

included: (a) $25,000 per individual, $50,000 per accident for legal liability

coverage and $15,000 for property damage, exclusive of interest and costs; (b)

$50,000 for medical services per person for any one accident regardless of fault if

performed within five years of the accident; (c) $50,000 for rehabilitative services

per person for any one accident regardless of fault if performed within ten years

of the accident; (d) reimbursement for up to $400 of gross income per week plus

expenses up to $25 a day for fifty-two weeks; and (e) $1,000 in death benefits. 

See Colo. Rev. Stat. § 10-4-706(1)(a)-(e). These basic levels applied to “1) the

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 2
 Subsections 706(3) and (4) were repealed on July 1, 2002, pursuant to 3

terms of the statute. See Colo. Rev. Stat. § 10-4-706(3) & (4) (2002).

 From 1992 through 2000, this “reduced” PIP coverage was called 4

“basic.” Compare Colo. Rev. Stat. § 10-4-706(3) (1992 through 2000). In 2001,

the “minimum” coverage found in § 706(1) was renamed “basic” and the “basic”

coverage found in § 706(3) was renamed “reduced.” Compare Colo. Rev. Stat. §

10-4-706(1) & (3) (2001 through 2002).

-3-

named insured, 2) resident relatives of the named insured, 3) passengers

occupying the insured’s vehicle with the consent of the insured, and 4)

pedestrians who are injured by the covered vehicle.” Brennan, 961 P.2d at 553;

see also Colo. Rev. Stat. § 10-4-707(1). In connection with the basic level of

coverages, CAARA allowed an insurer to offer managed care options through

health maintenance organizations (HMO) or preferred provider organizations

(PPO). See Colo. Rev. Stat. § 10-4-706(2) (2001).

From 1992 through its repeal in 2002, § 706(3) of CAARA allowed an 3

insurer to offer an “alternative to the minimum coverages” known as a “reduced”

PIP policy. See Colo. Rev. Stat. § 10-4-706(3) (1992 through 2002). The 4

reduced coverages included: (I) up to $25,000 per person for any one accident for

identified types of medical procedures, if performed within five years of the

accident; (II) no compensation for rehabilitation; and (III) $5,000 of death

benefits. See Colo. Rev. Stat. § 10-4-706(3)(b)(I)-(III) (2001). In order to

qualify for the reduced coverages, the combined annual gross income of the

person applying and their spouse could not exceed 185% of the federal poverty

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 3
-4-

level for a family of four, adjusted upward for family size. See Colo. Rev. Stat. §

10-4-706(3)(c)(I). The reduced policy was limited to “the named insured,

resident spouse, and resident child.” See Colo. Rev. Stat. § 10-4-706(3)(f)(I)

(2001). 

Enacted and repealed at the same time as the reduced PIP coverages,

CAARA also contained a provision which required insurance companies to

provide written explanations of available § 706 coverage options to their insureds:

An insurer issuing policies providing coverages as set forth in this

section shall provide written explanations of all available coverages

prior to issuing any policy to an insured. After a named insured

selects a policy with desired personal injury protection coverage, an

insurer shall not be under any further obligation to notify such

policyholder in any renewal or replacement policy of the availability

of a reduced personal injury protection policy or of any alternative

personal injury protection coverage.

Colo. Rev. Stat. § 10-4-706(4)(a) (2001).

Apart from the basic PIP coverages, CAARA also required insurance

companies to offer their insureds optional enhanced PIP benefits in exchange for

higher premiums. Section 10-4-710(2)(a) provided:

Every insurer shall offer the following enhanced benefits for

inclusion in a complying policy, in addition to the basic coverages

described in section 10-4-706, at the option of the named insured:

(I) Compensation of all expenses of the type described in section 10-

4-706(1)(b) [medical expenses] without dollar or time limitation; or

(II) Compensation of all expenses of the type described in section 10-

4-706(1)(b) [medical expenses] without dollar or time limitations and

payments of benefits equivalent to eighty-five percent of loss of

gross income per week from work the injured person would have

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 4
 Section 710(2)(b) permitted an enhanced policy to have an aggregate 5

limit of $200,000 for any one person as a result of any one accident. 

-5-

performed had such injured person not been injured during the period

commencing on the day after the date of the accident without dollar

or time limitations.

Colo. Rev. Stat. § 10-4-710(2)(a) (2003). Though not specified in § 10-4-710 or 5

elsewhere in CAARA, Brennan held these enhanced PIP coverages applied to the

same category of people outlined in § 10-4-707(1), including pedestrians. 

Brennan, 961 P.2d at 553. 

B. Case Facts

On December 21, 1992, Mary Stickley purchased automobile insurance

from State Farm Agent Leland Woelk for her husband, Virgil Stickley (“Stickley”

or “Virgil”). At that time, State Farm offered four PIP coverage options: P1, P3,

P4 and P8. P1 consisted of the basic level of PIP coverage required by CAARA

($50,000 rehabilitation and $50,000 medical expenses). The maximum amount of

PIP benefits payable under P1 was $130,900. P3 provided the basic P1 benefits

for rehabilitation expenses and loss of income but increased medical expense

coverage to $100,000. The maximum amount of PIP benefits payable under P3

was $189,900. P4 and P8 were State Farm’s enhanced PIP benefit plans. Both

plans provided for payment of medical expenses with no time limit, while P4 also

allowed for loss of income benefits without a time limitation. However, both

plans capped benefits at $200,000 per person, per accident and excluded

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 5
-6-

pedestrians from their coverages. Mary Stickley selected P3 coverage for Virgil.

In August 1998, State Farm sent Virgil a Renewal Notice for the policy

along with an informational bulletin captioned “News and Notes.” The Renewal

Notice stated:

HIGHER PERSONAL INJURY PROTECTION COVERAGE

LIMITS ARE AVAILABLE

You can purchase higher Personal Injury Protection coverage limits

with no deductible

Coverage P4 semi-annual Premium = $110.16

Coverage P8 semi-annual Premium = $107.27

See the enclosed News and Notes article for an explanation of these

coverages.

(App. Appx. at 161.)

The “News and Notes” article provided the following with regards to enhanced

PIP coverage:

Policyholders have the option to choose higher levels of PIP

coverage — two of which are P8 and P4 coverages — for an

additional premium. 

P8 coverage — P8 coverage has an aggregate limit of $200,000. 

This limit is the most we will pay for all no-fault benefits combined

(medical and rehabilitation expenses, loss of income, essential

services and death compensation).

The medical expenses benefit does not have a time limitation (unlike

P1, which is limited to five years), and you can recover up to

$200,000 for medical expenses (unless part of your aggregate limit

was used for other no-fault benefits). The other no-fault benefit

provisions have limitations, in addition to being subject to the

aggregate limit.

P4 coverage — This coverage provides the same benefits as P8,

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 6
 A month earlier, Mary Stickley received a Renewal Notice for her vehicle 6

which also quoted the cost for adding P4 and P8 coverage. Mary Stickely’s

Renewal Notice contained the same News and Notes explanation of P4 and P8

coverage as the Stickleys received for Virgil’s car.

-7-

except it provides broader loss of income benefits. It pays 100

percent of loss of income up to $125 a week, and up to 85 percent of

loss of income over $125. This benefit is subject to the aggregate

limit of $200,000. In contrast, P8 and P1 coverages limit loss of

income benefits to $100 per week, up to a maximum of 52 weeks. 

Your enclosed renewal notice quotes the premium for P4 and P8

coverages with no deductible. If you are interested in purchasing

either of these coverages, please contact your State Farm agent.

(App. Appx. at 163.) After receiving this renewal notice, Virgil paid the premium

for P3 PIP coverage. He never requested or paid for P4 or P8 PIP coverage. 6

In November 1998, State Farm eliminated the Pedestrian Limitation via

Endorsement 6850AJ. That same month, State Farm began disseminating

Endorsement 6850AJ to its policyholders, sending it to the policyholder at his/her

next renewal date (which occurred every six months). Endorsement 6850AJ

became effective for Stickley no later than March 22, 1999. Not only did

Endorsement 6850AJ amend Virgil’s policy by removing its Pedestrian Limitation

for enhanced PIP benefits, it contained a schedule detailing the coverages for

P1through P5, P7 and P8 – the seven coverages available at that time. Virgil

continued paying the premium for P3 PIP coverage.

On October 6, 1999, Virgil was injured in a car accident while acting in the

scope of his employment with Cheyenne Drilling. Following the accident, Virgil

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 7
-8-

received medical and wage loss benefits from Cheyenne Drilling’s workers’

compensation insurance, specifically, $95,193.71 in medical and hospital

expenses and $40,598 in lost income from October 6, 1999, through October 19,

2001. State Farm also began paying P3 PIP benefits to Virgil, paying him

$5,540.90 for items not covered by workers’ compensation. On October 19,

2001, Cheyenne Drilling and Virgil settled all remaining lost income claims for

$60,000. On February 12, 2004, Cheyenne Drilling paid Virgil another $60,000

to settle all remaining medical claims.

C. Procedural History

On August 16, 2004, Virgil initiated this lawsuit against State Farm seeking

declaratory relief and reformation of his insurance policy based on State Farm’s

violations of CAARA, specifically, its failure to (1) provide him with a written

explanation of all available coverages before issuing his policy pursuant to Colo.

Rev. Stat. § 10-4-706(4)(a) and (2) make a legally compliant offer of enhanced

PIP benefits to him under Colo. Rev. Stat. § 10-4-710(2)(a). He also alleged

claims of breach of contract, willful and wanton statutory bad faith and breach of

the implied covenant of good faith and fair dealing. On April 18, 2005, State

Farm filed a motion for summary judgment and Virgil filed a motion for partial

summary judgment. On November 18, 2005, the district court granted State

Farm’s motion and denied Stickley’s motion. It concluded State Farm was

entitled to summary judgment on Stickley’s claims for declaratory relief and

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 8
-9-

reformation because it did not violate either Colo. Rev. Stat. §§ 10-4-706(4)(a) or

10-4-710(2)(a). Because Stickley’s remaining claims were contingent on his

reformation claim, the district court concluded State Farm was entitled to

summary judgment on the remaining claims as well. This appeal followed.

II. Discussion

A. Standard of Review

In diversity cases like this one, the substantive law of the forum state

governs the analysis of the underlying claims, “but we are governed by federal

law in determining the propriety of the district court’s grant of summary

judgment.” Eck v. Parke, Davis & Co., 256 F.3d 1013, 1016 (10th Cir. 2001). 

Accordingly, “[w]e review the grant of summary judgment de novo, applying the

same standard as the district court pursuant to Rule 56(c) of the Federal Rules of

Civil Procedure.” Gwinn v. Awmiller, 354 F.3d 1211, 1215 (10th Cir. 2004). 

“Summary judgment is appropriate if ‘the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(c)). 

However, we may “affirm a district court decision on any grounds for which there

is a record sufficient to permit conclusions of law, even grounds not relied upon

by the district court.” United States v. Sandoval, 29 F.3d 537, 542 n.6 (10th Cir.

1994) (quotation omitted). 

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 9
-10-

B. Arguments

Stickley asserts the district court erred in granting summary judgment to

State Farm. He renews his claim State Farm never made a statutorily compliant

offer of enhanced PIP benefits because (1) it did not provide written explanations

of enhanced PIP benefits according to § 706(4)(a) and (2) none of the offers or

explanations after the date his wife purchased his policy satisfied the offer

requirement under § 10-4-710(2)(a). 

1. Written Explanations Under Colo. Rev. Stat. § 10-4-706(4)(a).

The district court concluded Stickley was not entitled to contract

reformation based on a violation of Colo. Rev. Stat. § 10-4-706(4)(a) because the

statute only requires insurance companies to provide written explanations of those

PIP benefits found in § 706. Stickley contends that while § 710(2)(a) only

requires an insurance company to offer enhanced benefits, § 706(4)(a) requires an

insurance company to provide written explanations of all available coverages

prior to issuing any policy to an insured, which includes the enhanced PIP

coverages in § 710(2)(a). State Farm takes the opposite view and argues §

706(4)(a) only requires written explanations of those PIP benefits set forth in §

706. 

Pure questions of statutory interpretation are reviewed de novo. Ward v.

Allstate Ins. Co., 45 F.3d 353, 354 (10th Cir. 1994). The principal task of

statutory interpretation is to determine legislative intent. Farmers Group, Inc. v.

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 10
-11-

Williams, 805 P.2d 419, 422 (Colo. 1991). A statute should, where possible, be

construed according to its plain meaning and, as a whole, giving meaning to all its

parts. Climax Molybdenum Co. v. Walter, 812 P.2d 1168, 1173 (Colo. 1991);

People v. Terry, 791 P.2d 374, 376 (Colo. 1990).

“When the federal courts are called upon to interpret state law, the federal

court must look to the rulings of the highest state court, and, if no such rulings

exist, must endeavor to predict how that high court would rule.” Johnson v.

Riddle, 305 F.3d 1107, 1118 (10th Cir. 2002). “If there be no decision by that

court then federal authorities must apply what they find to be the state law after

giving ‘proper regard’ to relevant rulings of other courts of the State.” Id. at

1119 (quoting Comm’r of Internal Revenue v. Bosch’s Estate, 387 U.S. 456, 465

(1967)). The decision of an intermediate appellate state court “is a datum for

ascertaining state law which is not to be disregarded by a federal court unless it is

convinced by other persuasive data that the highest court of the state would

decide otherwise.” West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237 (1940). 

The Colorado Supreme Court has not ruled on this issue, but the Colorado

Court of Appeals has:

We conclude that the plain language of § 10-4-706(4)(a) requires

written explanations of the various basic PIP coverages described in

§ 10-4-706, but does not apply to other types of coverage described

elsewhere in the No-Fault Act, including enhanced PIP coverage

described in § 10-4-710. Read in context, the phrase “all available

coverages” refers back to the immediately preceding phrase

“coverages as set forth in this section,” and does not require a written

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 11
 While we do not rely on unpublished decisions as authoritative 7

precedent, we acknowledge a number of Colorado state district courts have

reached the same conclusion. See e.g., Montez v. Am. Family Mut. Ins. Co., Case

No. 04CV6448, 2005 WL 2893847, *2, n.1 (Colo. Dist. Ct. May 27, 2005) (citing

Dunn v. Am. Family Mut. Ins. Co., Denver District Court Case No. 04CV6732

(Apr. 28, 2005); Cole v. Am. Standard Ins. Co., Denver District Court Case. No.

04CV2998 (Feb. 25, 2005); Almarez v. Guideone Specialty Mut. Ins. Co., Boulder

District Court Case No. 03CV2013 (Oct. 22, 2004)). Additionally, a number of

federal district courts have agreed in unpublished opinions. See e.g., May v.

Travelers Prop. Cas. Co., 2006 WL 2784864, *5 (D. Colo. Sept. 26, 2006);

Breaux v. Am. Mut. Ins. Co., 387 F.Supp.2d 1154, 1163 (D. Colo. 2005); Padhiar

v. State Farm Auto Ins. Co., 2006 WL 517644, *4 (D. Colo. March 2, 2006), aff’d

on other grounds sub nom. Padhiar v. State Farm Mut. Auto. Ins. Co., 479 F.3d

727 (10th Cir. 2007). 

-12-

explanation of any other type of coverage, including enhanced PIP

coverage, described in other sections of the No-Fault Act.

Munger v. Farmers Ins. Exch., --P.3d--, 2007 WL 2003001 * 5 (Colo. App. July

12, 2007). The Colorado Court of Appeals noted its interpretation was consistent

with the district court’s decision in this case. Id. (citing Stickley v. State Farm

Mut. Auto. Ins. Co., 402 F.Supp.2d 1226, 1232 (D.Colo. 2005)). We agree with

the Colorado Court of Appeals; the plain meaning of § 706(4)(a) only requires

insurance companies to provide written explanations of those PIP benefits

detailed in § 706, e.g., reduced benefits, basic benefits or minimum benefits.7

Enhanced PIP benefits are not mentioned in § 706. Nevertheless, Stickley

continues to argue State Farm was required to give written explanations of

enhanced PIP benefits to its insureds. Like the Colorado Court of Appeals, we

conclude State Farm had no such obligation.

Stickley argues the Colorado Division of Insurance has interpreted

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 12
-13-

§ 706(4)(a) in accordance with his reading of the statute and asserts deference

should be given to its interpretation. See Lucero v. Climax Molybdenum Co., 732

P.2d 642, 645-46 (Colo. 1987) (“When courts are faced with a problem of

statutory construction, deference should be given to the interpretation given the

statute by the officer or agency charged with its administration.”). Stickley relies

on several Market Conduct Examination Reports prepared by independent

contractors for the Colorado Department of Regulatory Agencies, Division of

Insurance. 

Having interpreted § 706(4)(a) based on its plain meaning, we are not faced

with a problem of statutory construction. In Munger, the Colorado Court of

Appeals disregarded similar Market Examination Reports: 

We do not read these reports, which involve other insurers and are

based on information not in the record before us, as unequivocally

establishing the Division of Insurance’s agreement with plaintiff’s

position. In any event, even if the reports could be so interpreted,

they would not be dispositive of the issue if they conflict with the

plain language of the statute. 

2007 WL 2003001 at * 5; but cf. Soto v. Progressive Mountain Ins. Co., --P.3d--,

2007 WL 2128189 (Colo. App. July 26, 2007) (reviewed market conduct

examination reports as agency’s interpretation because found Colo. Rev. Stat.

§ 10-4-710(2)(a) ambiguous).

Because State Farm was not required to provide written explanations of

enhanced benefits under § 706(4)(a), Stickley is not entitled to contract

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 13
-14-

reformation on that basis.

2. Sufficiency of Offer Under Colo. Rev. Stat. § 10-4-710(2)(a).

Stickley claims he is entitled to reformation of his insurance policy because

State Farm failed to offer him enhanced benefits as required by § 710(2)(a). 

Section 710(2)(a) requires an insurance company to offer two kinds of enhanced

PIP benefits for inclusion in a complying policy. See Colo. Rev. Stat. § 10-4-

710(2)(a)(I) & (II); Soto, 2007 WL 2128189 at * 5 (requiring insurance

companies to offer both types of enhanced benefits available under § 710(2)(a)(I)

and (II), not just one or the other). However, CAARA does not define what

constitutes an offer in this context. The district court applied a test based on

contract law. Subsequently, in Padhiar v. State Farm Mutual Automobile

Insurance Company, we clarified the proper test to be applied. 479 F.3d 727

(10th Cir. 2007). We said: “In analyzing the nature and scope of an insurer’s

duty the Colorado Supreme Court determined that the insurer must perform its

duty of notification in a manner reasonably calculated to permit the insured to

make an informed decision on whether to purchase . . . coverage higher than the

[basic] statutory liability limits.” Id. at 733 (internal citation and quotation

omitted). This test comes from Allstate Ins. Co. v. Parfrey, 830 P.2d 905, 913

(Colo. 1992); see also Munger, 2007 WL 2003001 at * 2 (concluding the Parfrey

analysis applies to determining the adequacy of an insurer’s offer of enhanced PIP

coverage). Parfrey also provided several factors to be considered:

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 14
-15-

In determining whether an insurer has fulfilled its statutory duty, a

court may appropriately consider such factors as the clarity with

which the purpose of . . . coverage was explained to the insured,

whether the explanation was made orally or in writing, the specificity

of the options made known to the insured, the price at which the

different levels of . . . coverage would be purchased, and any other

circumstances bearing on the adequacy and clarity of the notification

and offer.

830 P.2d at 913. In the final analysis, the sufficiency of the offer “must be

resolved under the totality of the circumstances.” Id. at 914. 

Whether we apply the specific factors set out in Parfrey or consider the

totality of the circumstances, we affirm the district court’s conclusion that State

Farm satisfied its obligation under § 710(2)(a) to offer Stickley optional enhanced

PIP coverages. See Padhiar, 479 F.3d at 734-35. Stickley was quoted the cost of

P4 and P8 enhanced benefits in the 1998 Renewal Notice and was referred to the

News and Notes article accompanying the Renewal Notice for an explanation of

those benefits. The News and Notes article provided him this explanation and

told him how he could purchase these enhanced benefits. Stickley chose to

continue with P3 coverage. Less than a year later, Stickley received Endorsement

6850AJ which removed any limitation on the recovery of enhanced PIP benefits

by pedestrians and enclosed a schedule specifically listing all available PIP

coverages. 

Stickley claims the 1998 Renewal Notice and News and Notes cannot be

considered a valid offer because at that time, State Farm’s policies still excluded

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 15
 Stickley also claims State Farm is limited to its statement the offer of 8

enhanced PIP coverage came from the 1998 Renewal Notice and News and Notes. 

As pointed out in Padhiar, “several other courts have found that these identical

mailings by State Farm provided sufficient notice under § 710.” 479 F.3d at 734. 

 Stickley claims Hill v. Allstate Insurance Company, holds that an insured 9

has standing to bring an enhanced PIP claim even though he is not within the

category of persons excluded by a policy defect if the complaint is explicitly

framed as a contract/tort action. 479 F.3d 735 (10th Cir. 2007). This is true to

the extent the focus of the case is on whether State Farm failed to offer him a

-16-

pedestrians from its enhanced PIP coverages, which Brennan held violated

CAARA. Furthermore, Stickley claims Soto v. Progressive Mountain Insurance 8

Company, stands for the proposition that unless all coverages in a policy are

certified by the Division of Insurance, the insurer does not have the ability to

make a valid offer. 2007 WL 2128189 at * 5. These propositions are foreclosed

by Padhiar:

Brennan pointed out the necessity for insurance policies to provide

pedestrian coverage, and, after Brennan, State Farm issued

Endorsement 6850AJ which removed the pedestrian limitation from

Padhiar’s policy and included a complete schedule of all available

coverages, including P4 and P8 enhanced benefits. Setting aside

whether Padhiar would even have standing to bring a claim based on

the pedestrian limitation even though he is not a pedestrian, Padhiar

in fact received an offer under § 710 containing all available

coverages under a policy which did not contain any pedestrian

limitation.

479 F.3d at 734. The same is true here. Even were we to assume Stickley, as a

non-pedestrian, has standing to challenge the sufficiency of the 1998 Renewal

Notice as an offer under § 710(2)(a) based on it containing the pedestrian

limitation, we agree with the district court. “[State Farm] complied with section 9

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 16
compliant policy and subsequently failed to provide compliant benefits. Id. at

741. Stickley was not a pedestrian, therefore, State Farm could not fail to provide

him the excluded pedestrian coverage. Even so, State Farm cured any defect by

issuing Endorsement 6850AJ. See Padhiar, 479 F.3d at 734-35.

-17-

10-4-710, at the latest, by March 1999, when it sent . . . Endorsement [6850AJ].” 

Stickley, 402 F.Supp.2d at 1235.

To the extent Stickley is arguing the former pedestrian limitation

automatically entitles him to the fullest amount of benefits possible for all

categories of insureds, even those categories unrelated to the defect, he is

incorrect. The plaintiff in Brennan was an injured pedestrian. 961 P.2d at 552. 

The driver had purchased enhanced PIP benefits, but the policy excluded

pedestrians from receiving those benefits. Id. The Colorado Court of Appeals

interpreted CAARA to require insurance companies to offer enhanced PIP

benefits that covered pedestrians in addition to the other categories of people

listed in § 707(1). Id. In the end, it agreed with the trial court that the policy

should be reformed to provide enhanced benefits to pedestrians. Id. at 554. It did

not, however, order reformation of the entire policy to provide enhanced PIP

benefits for all categories of people.

Thus, when an insurance policy is found to violate CAARA, only the

defective portion of the policy is reformed to comply with CAARA. It does not

wipe the slate clean and give the insured the fullest amount of benefits available

for every category possible. Disregarding the fact State Farm removed the

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 17
-18-

pedestrian limitation from Stickley’s policy when it issued Endorsement 6850AJ,

reformation of his insurance contract to include the highest possible PIP benefits

for pedestrians would not benefit him. Stickley was not a pedestrian and

therefore would not receive additional benefits as a result of reformation based on

that pedestrian limitation. The only defect Stickley can claim is he was never

offered enhanced PIP benefits at all. As we have determined, State Farm satisfied

its obligation to “offer” Stickley enhanced PIP benefits under § 710(2)(a).

AFFIRMED.

Appellate Case: 05-1553 Document: 010147940 Date Filed: 10/10/2007 Page: 18