Opinion ID: 171597
Heading Depth: 3
Heading Rank: 3

Heading: Mr. Whitehead's May 2001 Policy

Text: 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.