Opinion ID: 171597
Heading Depth: 2
Heading Rank: 1

Heading: Issues Related to the September 1, 2006 Summary Judgment Order

Text: Because this is a diversity action, the laws of the forum state, Colorado, govern our analysis of the underlying claims. Federal law, however, governs our analysis of the district court's summary judgment rulings. Reid v. Geico Gen. Ins. Co., 499 F.3d 1163, 1165 (10th Cir.2007). We review summary judgment rulings de novo and apply the same standard as the district court, Rule 56(c) of the Federal Rules of Civil Procedure. Id. (citing Hill v. Allstate Ins. Co., 479 F.3d 735, 739 (10th Cir.2007)). Under Rule 56(c), summary judgment is appropriate if there is no genuine issue as to any material fact and... the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Mr. Reffel, Mr. Persichitte, and Mr. Whitehead claim the district court erred in several regards in its September 1, 2006 summary judgment order. First, they assert that the insurance policies at issue did not contain an aggregate limit that complied with § 10-4-710(2)(b) of the CAARA. Second, they disagree with the district court's determination that the policies prohibited stacking. Third, Mr. Whitehead challenges the district court's findings that he did not include in his complaint any claims based on the May 2001 policy and that any subsequent attempt to amend the complaint would be untimely. Fourth, Mr. Persichitte objects to the district court's determination that § 10-4-710 only required American Family to offer enhanced PIP coverage when issuing new policies, and notas is the present situationwhen renewing policies. Fifth, Mr. Reffel objects to the district court's application of the statute of limitations to bar his claims.
Section 10-4-710(2)(b) provided: A complying policy may provide that all benefits set forth in section 10-4-706(1)(b) to (1)(e) and in this section are subject to an aggregate limit of two hundred thousand dollars payable on account of injury to or death of any one person as a result of any one accident arising out of the use or operation of a motor vehicle. The district court found that the policies, through PIP endorsements, both expressly contemplate and clearly establish $200,000 aggregate caps. App. at 797. The district court noted that the endorsements contain charts of available PIP coverage with DELUXE PIP AGGREGATE LIMIT$200,000 per person indicated at the top of the charts. Id. Based on this, the district court found that the policies contained aggregate limits. In their appeal, Mr. Reffel, Mr. Persichitte, and Mr. Whitehead argue that because the limit only applies on a per person basis, and not on a per person, per accident basis, the limit does not comply with the statute. Consequently, they conclude the limit is unenforceable. Additionally, they argue that § 10-4-710(2)(b) only applies to complying policies. They contend that the present policies are non-complying policies based on their treatment of rehabilitation benefits, deductibles, and co-insurance.
Plaintiffs acknowledge that the PIP endorsements contain the language AGGREGATE LIMIT$200,000 per person and reference an accident, but contend that there is not a sufficient connection between these references to satisfy § 10-4-710(2)(b). We disagree. The reference to an accident appears in conjunction with a list of what PIP benefits will be paid. Similarly, a provision titled Limits of Liability contains the statement our liability for [PIP] benefits for bodily injury sustained by an eligible injured person in one motor vehicle accident is limited as follows.... App. at 478. These references make clear that the monetary cap applies per person and per accident.
Section 10-4-703(2) defined a complying policy as: a policy of insurance which provides the coverages and is subject to the terms and conditions required by this part 7, and is certified by the insurer and the insurer has filed a certification with the commissioner that such policy, contract, or endorsement conforms to Colorado law and any rules or regulations promulgated by the commissioner. Part 7 required coverages for liability, and PIP medical expenses, rehabilitation, wage loss, essential services, and death benefits. Zahner v. Am. Family Mut. Ins. Co., 179 P.3d 98, 102 (Colo.Ct.App. 2007). If a policy provides these coverages, it is a complying policy. Id. Here, plaintiffs contend that portions of their policies do not provide the coverages required by Part 7. They point to provisions that: (1) prevent excess rehabilitation benefits from covering medical expenses; and (2) reduce the maximum of payable benefits by the amount of deductibles and co-insurance. Even if we were to assume that plaintiffs are correct in their reading of the policies, this argument alone does not change the aggregate limits set forth in the policies. If a policy does not provide these minimum coverages required by the CAARA, the policies would be reformed to provide those minimum coverages. Colby v. Progressive Cas. Ins. Co., 928 P.2d 1298, 1300 n. 1 (Colo.1996) (also noting that the CAARA is incorporated into every automobile insurance policy). Reformation of the policy only alters the defective portion to comply with the CAARA, leaving the remainder unchanged. Stickley v. State Farm Mut. Auto. Ins. Co., 505 F.3d 1070, 1080 (10th Cir.2007) ([W]hen 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.). As a result, a policy that initially contained aggregate limits, but is later reformed, continues to contain aggregate limits after reformation. See Clark v. State Farm Mut. Auto. Ins. Co., 433 F.3d 703, 711 (10th Cir.2005) (Thus, we agree with the district court that the ... policy's $200,000 aggregate limit applies to benefits under the reformed policy.).
Because we conclude the reformed policies have aggregate limits, we next determine if those limits can be stacked. As the district court noted, [s]tacking means `aggregating, combining, [or] multiplying .. . limits of separate policies....' Estate of Curry ex rel. Bowen v. Farmers Ins. Exch., 101 P.3d 1133, 1135 (Colo.Ct.App.2004) (quoting Colo.Rev.Stat. § 10-4-402(3.5)). Colorado allows anti-stacking provisions. Id. The district court concluded that the plain language of the PIP endorsement expressly proscribes stacked coverage. App. at 800. To support this conclusion, the district court quoted from the PIP endorsement, no eligible injured person shall recover duplicate benefits for the same elements of loss under this and any similar insurance. Id. Similarly, the district court highlighted the Limits of Liability provision stating: No matter how many persons are insured, policies [ ] apply, claims are made[,] or insured motor vehicles to which this coverage applies, [American Family's] liability for [PIP] benefits for bodily injury sustained by an eligible injured person in one motor vehicle accident is limited.... The total aggregate amount payable for medical expenses, rehabilitation expenses, work loss, essential expenses, and death compensation, [sic] shall not exceed the amount s[h]own in the schedule of this endorsement. Id. The district court also considered the relation of the aggregate limit to stacking and determined the overall limit to American Family's liability was $200,000. Id. Plaintiffs argue that the provisions the district court quoted do not apply to stacking. Plaintiffs contend that the block quotation from the Limits of Liability provision only addresses the per-occurrence liability on a single policy. Regarding the duplicate benefits quotation, plaintiffs contend that it only bars insureds from collecting benefits twice for the same bills, which plaintiffs assert is not at issue in this case. In contrast, plaintiffs point to another provision in the PIP endorsement that they contend supports stacking. This provision states: If an eligible injured person has other similar insurance, including self-insurance, for a loss covered by this endorsement, we will pay our share according to this endorsement's proportion of the total limits of all similar insurance. But, this does not apply to optional benefits purchased by that eligible person for additional premiums on a voluntary basis. Aplt. Br. at 43. American Family responds by highlighting portions of the endorsement that it believes prohibit stacking. This includes the Limits of Liability and duplicate benefits provisions quoted by the district court. Additionally, American Family cites the Two or More Cars Insured provision, which states, The total limit of our liability under all policies issued to you by us shall not exceed the highest limit of liability under any one policy. When this policy insures two or more cars, the coverages apply separately to each car.... Aple. Br. at 28. American Family also references cases from the Colorado Court of Appeals and Colorado Supreme Court that considered similar language to be valid anti-stacking provisions. E.g. Shelter Mut. Ins. Co. v. Thompson, 852 P.2d 459, 464 (Colo.1993); Am. Standard Ins. Co. v. Ekeroth, 791 P.2d 1220 (Colo.Ct.App.1990). We agree with American Family's interpretation of the policy provisions. The other similar insurance provision contemplates insurance from a third party other than American Family. As plaintiffs concede, this provision does not apply to enhanced PIP.... Aplt. Br. at 44. The remainder of the provision is a proration clause. In Shean v. Farmers Ins. Exch., 934 P.2d 835, 838 (1996), the Colorado Court of Appeals stated: That a proration clause must be viewed as irrelevant when, as here, a policy contains a separate, intra-company anti-stacking clause and all applicable policies have been issued by one insurer is... consistent with the typical use of a proration clause. A pro rata clause is just one clause of the standard insurance industry inter-company anti-stacking provision that is intended both to limit the amount of total recovery to that available under one policy, and to distribute that liability among companies. Here, there are separate, intra-company anti-stacking clause[s]. The Colorado Supreme Court has considered language identical to the Two or More Cars Insured clause presently at issue to be anti-stacking clauses that were unambiguous according to existing precedent in this jurisdiction. Roberts v. Am. Family Mut. Ins. Co., 144 P.3d 546, 551 (Colo.2006) (discussing the clauses' conspicuousness). Thus, the policy's statement, The total limit of our liability under all policies issued to you by us shall not exceed the highest limit of liability under any one policy, serves as an enforceable anti-stacking clause. Plaintiffs contend that the concluding sentence, [W]hen this policy insures two or more cars, the coverages apply separately to each car, limits coverage on a vehicle basis. Plaintiffs argue this violates the CAARA requirement that PIP coverage is mandatory when a [person in a class that requires PIP coverage] is injured in an accident with any motor vehicle, irrespective of the insured's occupancy in a particular vehicle at the time of injury. DeHerrera v. Sentry Ins. Co., 30 P.3d 167, 173 (Colo.2001). Plaintiffs' argument misconstrues the Two or More Cars provision. First, the separate application of coverage to each car does not imply that PIP coverage will not be provided according to CAARA requirements. This provision does not state that it is limiting the coverage. Second, the separate application of coverage to each car does not modify the preceding statement. Alternatively, Mr. Reffel contends that the references to our, you, and us preclude application of the anti-stacking provisions to his policies. Mr. Reffel reads the policies to define you as the policyholder named in the declaration and spouse, if living in the same household. Aplt. Br. at 45. This definition omits resident relatives. Mr. Reffel was an eligible injured person under a policy issued to him and a resident relative under policies issued to his father. Resolving this issue is unnecessary, however, because other provisions applicable to Mr. Reffel also prohibit stacking. The Limits of Liability provisionNo matter how many persons are insured, policies or bonds apply, claims made or insured motor vehicles to which this coverage applies, our liability for [PIP] benefits for bodily injury sustained by an eligible injured person in one motor vehicle accident is limited....indicates that American Family's liability is limited to the amount in the schedule of the Endorsement. See Bush v. State Farm Mut. Auto. Ins. Co., 101 P.3d 1145, 1147 (Colo.Ct.App. 2004) (Giving the words of this provision their plain meaning, we conclude that, regardless of the number of ... policies that apply to this accident, State Farm's maximum liability ... cannot be more than the liability of the policy with the highest liability limit.); Shean, 934 P.2d at 840 (finding that similar language contains valid anti-stacking and per occurrence limits on liability); but see Estate of Curry ex rel. Bowen v. Farmers Ins. Exch., 101 P.3d 1133, 1136 (Colo.Ct.App.2004) (citing Shean for the conclusion that similar language is only a per occurrence limitation on liability and not an anti-stacking provision).
American Family reasons that if the court were to find that anti-stacking provisions applied to Mr. Whitehead's claim, then any error by the district court in dismissing the May 2001 policy claim would be harmless. As stated, anti-stacking provisions do apply to Mr. Whitehead's claims. Additionally, Mr. Whitehead already has received the maximum PIP benefits he could receive under the aggregate limit of the relevant policy. Mr. Whitehead responds that the error is not harmless because he is entitled to a determination of his rights under the May 2001 policy, and his claim [of] bad faith attendant to that policy remains valid. Aplt. Reply Br. at 4. The basis of this dispute is the district court's finding that the complaint did not include any claim arising from the May 2001 policy. To support this finding, the district court read the complaint to only assert claims based on policies procured between 1979 and 1999. These dates identify which policies are at issue. The district court note[d] that Plaintiff Whitehead's argument [for reformation of the May 2001 policy] is not contained in Plaintiffs' complaint, and appears for the first time in Plaintiff Whitehead's motion for partial summary judgment. App. at 791. The district court then considered whether amendment of the complaint was appropriate. In its analysis, the district court began by reciting standards addressing whether the new claim would shift the thrust of the case or prejudice the other party by denying defendant fair notice. Id. Ultimately, the district court considered the timing of the amendment and whether Mr. Whitehead could explain the lack of timeliness. Finding no valid explanation, the district court denied the implicit motion to amend. Id. at 792. We review de novo a district court's dismissal of claims based on failure to plead adequate facts. United Steelworkers of Am. v. Or. Steel Mills, Inc., 322 F.3d 1222, 1228 (10th Cir.2003). A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.... Fed.R.Civ.P. 8(a)(2). Specific facts are not necessary; the statement need only `give the defendant fair notice of what the ... claim is and the grounds upon which it rests.' Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007)). The degree of specificity needed to establish plausibility and fair notice, and the need for sufficient factual allegations depend upon the context of the case. Robbins v. Oklahoma, 519 F.3d 1242, 1248 (10th Cir.2008). Does the complaint's statement that [f]rom 1979 to 1999, Plaintiffs procured Colorado automobile insurance policies from Defendant American Family restrict plaintiffs' claims to only those based upon policies from that time period? To impose such a limitation on plaintiffs' claims is inappropriate. The complaint does not contain any other limiting statement about which policies are at issue. Although there were several plaintiffs, the complaint used broad language such as each named insureds' ... policy. E.g. App. at 62. Significantly, the district court was incorrect in its statement that arguments addressing the May 2001 policy first appeared in Mr. Whitehead's motion for partial summary judgment. American Family's brief supporting its motion for partial summary judgment, which was filed on the same day but before Mr. Whitehead's motion, addressed the May 2001 policy multiple times and requested dismissal of all of Mr. Whitehead's claims. American Family apparently had fair notice of Mr. Whitehead's claims and upon which policies these claims were based. The district court erred by concluding that the complaint did not include claims based on the May 2001 policy. Accordingly, we must determine if this error warrants reversal. Reversal is unwarranted if inclusion of the May 2001 policy in the complaint would not support any of Mr. Whitehead's claims. See Fed.R.Civ.P. 61 (discussing harmless error). The only claim based on the May 2001 policy that Mr. Whitehead argues remains valid is the bad faith breach of contract claim. Under Colorado law, [a]n insurer's liability for bad faith breach of insurance contract depends on whether its conduct was appropriate under the circumstances. Goodson v. Am. Standard Ins. Co. of Wis., 89 P.3d 409, 415 (Colo.2004). This requires the insured to prove, based on insurance industry standards, that the insurer's conduct was unreasonable and that the insurer either knew that its conduct was unreasonable or recklessly disregarded the fact that its conduct was unreasonable. Burgess v. Mid-Century Ins. Co., 841 P.2d 325, 328 (Colo.Ct.App.1992) (citing Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo.1985)). The analysis centers on the insurer's conduct, and not on its ultimate financial liability. Goodson, 89 P.3d at 416. American Family argues that the court's determination that anti-stacking provisions apply removes any financial liability it may have under the May 2001 policy, and makes harmless any error regarding dismissal of claims based on the policy. This argument is not fully responsive. Questions remain whether American Family's conduct regarding the May 2001 policy was reasonable, and whether it knew that its conduct was unreasonable or recklessly disregarded that fact. These questions are independent of whether American Family had a duty to stack Mr. Whitehead's policies. Thus, if the district court erred, the error was not necessarily harmless. We are unable to conclusively answer whether the error was harmless and whether Mr. Whitehead suffered any compensable damages as a result of American Family's actions regarding the May 2001 policy because the district court prematurely dismissed the claim. As a result, we remand this issue to the district court for further proceedings.
The district court granted American Family summary judgment on Mr. Persichitte's and Mr. Reffel's claims. The district court rested this ruling in part upon the conclusion that the CAARA in effect when American Family issued the Persichitte policy did not require the offer of enhanced PIP benefits, which forms the basis of Mr. Persichitte's. [2] Although Mr. Persichitte and Mr. Reffel renewed their policies after the CAARA was amended to require the offer of optional enhanced PIP benefits, the district court concluded the renewal of a policy is not the same as the issuance of a policy under the CAARA. Mr. Persichittealong with Mr. Reffel implicitlyappeals this conclusion. We review the district court's interpretation of Colorado statutes de novo. See Freightquote.com, Inc. v. Hartford Cas. Ins. Co., 397 F.3d 888, 892 (10th Cir.2005) (citing Salve Regina Coll. v. Russell, 499 U.S. 225, 239, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991), for the statement, The obligation of responsible appellate review and the principles of a cooperative judicial federalism underlying Erie require that courts of appeals review the state-law determinations of district courts de novo.). Resolving the issue of whether, under the CAARA, the renewal of a policy equates to the issuance of a policy requires that we reconcile whether statutory interpretation controls, as found by the district court, or whether we should rely upon case law, as argued by Mr. Persichitte. [3] The statute at issue was Colo.Rev.Stat. § 10-4-710. In 1992, the Colorado legislature amended this statute to require an insurer to offer enhanced PIP benefits. Colo.Rev. Stat. § 10-4-710(2)(a) (2002). The amendment only applied to policies issued on and after July 1, 1992. Id. at § 10-4-710(4) (2002). Significantly, § 10-4-710(4) did not include a reference to policies that were renewed on and after July 1, 1992. This is in contrast to other statutes and bills that reference both issuance and renewal. E.g. § 10-4-609(2) (2002) (Prior to the time the policy is issued or renewed....); H.B. 92-1176 § 13 (Colo.1992) (This act shall apply to all policies issued or renewed on or after July 1, 1992.). The Colorado Supreme Court's application of the canons of statutory construction to look first to the plain meaning of a statute suggests that the inclusion of issued necessarily excludes issued or renewed. Lunsford v. W. States Life Ins., 908 P.2d 79, 84 (Colo.1995) (Where the language of a statute is clear on its face, we must apply it as written.... Furthermore, when the legislature speaks with exactitude, we must construe the statute to mean that the inclusion or specification of a particular set of conditions necessarily excludes others.). The district court concluded that § 10-4-710(2)(a) applied only to policies issued on and after July 1, 1992 and that it did not apply to policies issued before July 1, 1992, but renewed after July 1, 1992. Mr. Persichitte disagrees with the district court's interpretation of the statute and instead emphasizes the case law definition of issued. Under Colorado insurance law, a renewal policy is `just as much a new contract as if issued on a form carrying a different number than the original policy.' Hoang v. Monterra Homes (Powderhorn) LLC, 129 P.3d 1028, 1035 (Colo.Ct.App.2005), rev'd on other grounds, 149 P.3d 798 (Colo.2007) (quoting Aronoff v. Carraher, 146 Colo. 223, 361 P.2d 354, 357 (Colo.1961)); Am. Cas. Co. v. Glaskin, 805 F.Supp. 866, 872 (D.Colo. 1992) (Each renewal of an insurance policy is a separate contract that may be enforced as written.). We note that this view of renewals is not uniform in all states. See Pierce v. Allstate Ins. Co., 316 Or. 31, 848 P.2d 1197, 1200 (Or.1993) (The statutory scheme also makes clear that the renewal of a motor vehicle liability policy for an additional period does not constitute the issuance of a new policy.). Colorado courts, however, have treated renewed policies as new contracts before, and after, the 1992 amendment to § 10-4-710(2)(a). Because the Colorado legislature is presumed to be familiar with existing case law, we are asked to infer that the legislature intended to include renewed policies within its reference to issued policies. Shelter Mut. Ins. Co. v. Thompson, 852 P.2d 459, 464 n. 5 (Colo.1993) (Because the legislature is presumed familiar with existing case law, this precedent is deemed approved.). Mr. Persichitte concludes that § 10-4-710(2)(a) applied to policies issued or renewed after July 1, 1992. Additionally, Mr. Persichitte argues that other Colorado statutes explicitly treat an insurer's obligations under a renewed policy differently. Mr. Persichitte cites former § 10-4-706(4) for the statement, After a named insured selects a policy with desired [PIP] 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 basic [PIP] policy or of any alternative [PIP] coverage. Similarly, Mr. Persichitte highlights language in § 10-4-601(3), defining renewal policy to be the issuance and delivery by an insurer of a policy replacing at the end of the policy period a policy previously issued.... While both of Mr. Persichitte's arguments have some appeal, § 10-4-710(2)(a) is unambiguous and its plain meaning must control. It is clear that the legislature was aware that under the CAARA the issuance of a policy is treated differently from the renewal of a policy. By citing other Colorado statutes, Mr. Persichitte underscores that the Colorado legislature was aware of this distinction. Because the legislature distinguished between the issuing and renewing of policies in the CAARA, we cannot ignore the clear language of the statute by applying case law interpretations of other statutes. Accordingly, the legislature chose to apply § 10-4-710(2)(a) to policies issued on and after July 1, 1992 and not to policies renewed after that date. American Family issued the policy that covered Mr. Persichitte in 1987. Although the policy was renewed after 1992, § 10-4-710(2)(a) did not apply to this renewed policy. As noted by the district court, the same analysis applies to Mr. Reffel's claims. American Family first issued Mr. Reffel's policy in November 1984, before the applicability of the 1992 amendment to the CAARA. Because we conclude that § 10-4-710(2)(a) does not apply to Mr. Reffel's claims, we need not consider Mr. Reffel's arguments concerning the accrual date for the statute of limitations and equitable tolling.