Opinion ID: 166418
Heading Depth: 3
Heading Rank: 2

Heading: Whether the pre-April 11, 2002 Liability Inquiry Constituted a Claim

Text: 29 Roberts contends that she made a claim by calling Shelter before April 11, 2002, to inquire into making a bodily injury liability claim for the $25,000.00 policy limit. Shelter describes Roberts' call as a phantom claim and denies that Roberts had such a conversation with its representative. For purposes of summary judgment, however, we must accept Roberts' version of the facts and assume the call Roberts describes did in fact occur. 30 The district court concluded the call was not significant because Roberts did not rely upon the information Shelter gave her. Specifically, the court held: 31 There is a factual dispute as to whether [Roberts] contacted Shelter agent Hackerott to inquire whether she m[ight] have a claim. [Roberts] claims that the agent told her she had no claim, while Hackerott expressly denies such a conversation occurred. In any event, the court considers this factual dispute immaterial, because [Roberts] testified that she did not rely on Hackerott's information. . . . 32 Roberts, 338 F.Supp.2d at 1220. 33 The district court's conclusion, which rested upon whether Roberts relied on Shelter's response, is flawed. Shelter owed its duty to act in good faith and without negligence to Printup, not Roberts. See Stewart v. Mitchell Transport, Inc., 197 F.Supp.2d 1310, 1314-16 (D.Kan.2002). Roberts' lack of reliance upon Shelter's assertion that she was not entitled to the $25,000.00 liability limit for her bodily injuries is immaterial to whether Shelter fulfilled its duty to Printup. See id. Shelter cannot avoid its potential responsibility to Printup to initiate settlement negotiations by falsely informing Roberts that she was not entitled to pursue such a claim. 34 When Roberts was informed by a friend that she might be entitled to additional money beyond the PIP benefits, Roberts contacted Shelter to inquire into this matter. Roberts was aware that she had a possible claim or might be entitled to recover on the basis of a liability claim involving her son. Roberts described her conversation with Hackerott in this way: I asked her about the money that — that the 25,000 bodily injury claim and she told me I was not entitled to it and that was the end of the conversation. App. at 80. Again, viewing the facts in the light most favorable to Roberts, she endeavored to make a liability claim and was prevented from doing so by Shelter. The district court erred in determining as a matter of law no claim was presented prior to the April 11 letter. In turn, the district court erred in determining the insurer was under no duty to initiate settlement negotiations before receipt of Roberts' letter. 2. The April 11, 2002 Offer/Demand Letter 35 Roberts contends the district court erred in granting summary judgment to Shelter on her claims that, as regards Printup, Shelter acted negligently or in bad faith in its handling of her policy limit offer. Roberts argues the district court improperly substituted its own standard of care. The district court determined as a matter of law that Shelter acted neither in bad faith or negligently in responding to Roberts' demand letter. The district court reached this conclusion after determining Shelter's actions constituted a mere clerical error and that even though Shelter's attempted acceptance of the offer was untimely, it was within thirty days of the letter being sent and within a couple of days of the letter being received by the proper Shelter supervisor. Roberts, 338 F.Supp.2d at 1222. 36 Whether an actor's conduct constitutes negligence is generally a factual question left to a jury. Gust v. Jones, 162 F.3d 587, 593 (10th Cir.1998). The question should only be answered by the court in rare cases where the evidence is susceptible to only one possible inference. Carl v. City of Overland Park, Kan., 65 F.3d 866, 869 (10th Cir.1995). 37 On April 11, 2002, Roberts mailed a letter to Shelter's Topeka claims office to settle all claims for the $25,000.00 policy limit. Because the statute of limitations was due to expire on April 21, 2002, the offer had a ten-day time limit. Roberts provided Shelter with her address and telephone number. On April 16, 2002, Roberts filed an action against Printup in state court. She directed the clerk to withhold issuance and service of summons on Printup. When the time limit expired without contact from Shelter, Roberts directed service upon Printup. 38 The demand letter was marked received by Shelter's Topeka claims office on April 15. However, the mail handler in the Topeka office erroneously determined that the letter related to a PIP claim, which would be handled by Shelter's PIP department in Columbia, Missouri. On April 21, 2002, the date the offer expired, the letter was mailed to Columbia. On May 2, 2002, the PIP department mailed the Plaintiff's letter to the Kansas City claims department, where it was received on May 6, 2002. On May 7, 2002, a Shelter supervisor contacted a Shelter litigation attorney to discuss Roberts' demand letter. Both concluded that upon confirmation of the medical bills, Shelter would pay its policy limit, i.e., $25,000.00. That same day, in Shelter's first contact with Roberts since she sent the letter, Siebolt requested copies of Roberts' medical bills and advised her of Shelter's position. Shortly thereafter, Shelter offered to settle for the policy limit. 39 Roberts contends that, given the time sensitive nature of her offer, Shelter's Topeka claims office should have contacted the home office and requested a representative contact Roberts before April 21, 2002. Roberts asserts that [a]t very least, a Shelter representative should have immediately contacted [her] to acknowledge the receipt of her letter, requested any information that it needed to identify the claim, or if it needed additional time, request an extension of time to respond. Aplt. Br. at 29-30. Roberts argues Shelter's failure to act amounts to negligence. 40 Kansas Administrative Regulation 40-1-34, with some exceptions not relevant here, adopts by reference the Unfair Claims Settlement Practices Model Regulation. No exceptions are set forth as to § 6(a), which provides that [e]very insurer, upon receiving notification of a claim shall, within ten working days, acknowledge the receipt of such notice unless payment is made within such period of time. UNFAIR CLAIMS SETTLEMENT PRACTICES MODEL REGULATION § 6(a), available at http://www.ksinsurance. org/company/ModelLaws/ Ref%40-1-34.htm. Shelter did not acknowledge the receipt of Roberts' demand letter within that time period. 41 The district court and Shelter emphasize that, once the letter arrived in possession of the appropriate Shelter employee, Shelter promptly responded. Roberts counters by contending she sent her claim to the proper office and Shelter mishandled it. She notes Shelter has no specific training for its mail handlers on dealing with time sensitive mail. Further, she notes that even though her letter referenced a liability claim against Printup and not a PIP claim, the letter was forwarded to the PIP department. 42 The district court concluded that Shelter's clerical error did not constitute bad faith. Because Roberts offers no evidence showing that Shelter's handling of the letter was done in bad faith, we agree with the district court and conclude it properly granted summary judgment as to Roberts' bad faith handling of her April 11 letter claim. 4 43 We disagree, however, with the district court's conclusion that such an error could not, as a matter of law, constitute negligence, particularly in light of the UNFAIR CLAIMS SETTLEMENT PRACTICES MODEL REGULATION § 6(a). We conclude the district court erred in holding as a matter of law that Shelter's handling of Roberts' time sensitive demand letter was not negligent. We also reject Shelter's assertion that it is not liable for any excess judgment because it never refused to pay/accept Roberts' April 11, 2002, settlement demand. Since an insurer can be liable for its handling of a claim against an insured even without an offer to settle having been made, Coleman, 542 F.2d at 536-38, it is illogical to conclude that it cannot be liable simply because it never refused to pay a settlement demand. 5