Court Opinion

ID: 9945369
Source: CourtListenerOpinion
Date Created: 2024-02-27 19:01:49.850576+00
Date Added: 2024-06-11T14:25:27.820507
License: Public Domain

Appellate Case: 23-1062    Document: 010111006116      Date Filed: 02/27/2024   Page: 1
                                                               FILED
                                                   United States Court of Appeals
                    UNITED STATES COURT OF APPEALS         Tenth Circuit

                           FOR THE TENTH CIRCUIT                        February 27, 2024
                    ________________________________________________
                                                                       Christopher M. Wolpert
                                                                           Clerk of Court
     SUSAN AUER,

          Plaintiff - Appellant,

     v.                                                   No. 23-1062
                                              (D.C. No. 1:22-CV-01454-RM-NRN)
     STATE FARM MUTUAL                                     (D. Colo.)
     AUTOMOBILE INSURANCE
     COMPANY,

          Defendant - Appellee.
                   ________________________________________________

                            ORDER AND JUDGMENT *
                    ________________________________________________

 Before BACHARACH, KELLY, and LUCERO, Circuit Judges.
             ________________________________________________

          This appeal involves the timeliness of an insurance claim. The

 plaintiff, Ms. Susan Auer, was injured in a car wreck. For these injuries,

 Ms. Auer obtained the limit of the other driver’s coverage for liability

 insurance. But Ms. Auer thought the injuries were worth more, and she had

 *
       The parties don’t request oral argument, and it would not help us
 decide the appeal. So we have decided the appeal based on the record and
 the parties’ briefs. See Fed. R. App. P. 34(a)(2)(C); 10th Cir. R. 34.1(G).

       This order and judgment does not constitute binding precedent except
 under the doctrines of law of the case, res judicata, and collateral estoppel.
 But the order and judgment may be cited for its persuasive value if
 otherwise appropriate. See Fed. R. App. P. 32.1(a); 10th Cir. R. 32.1(A).
Appellate Case: 23-1062   Document: 010111006116   Date Filed: 02/27/2024   Page: 2

 coverage for underinsured motorist benefits through State Farm Mutual

 Automobile Insurance Company. So Ms. Auer submitted a claim.

       State Farm denied the claim, and Ms. Auer sued for breach of the

 insurance contract and for bad faith. The contract claim was time-barred,

 but a genuine dispute of material fact exists on timeliness of the bad-faith

 claims.

 1.    Ms. Auer considered the other driver underinsured.

       The car wreck took place in 2016. In July 2019, the other driver’s

 insurer paid Ms. Auer $100,000, which represented that driver’s policy

 limits on his liability coverage.

       Ms. Auer had underinsured motorist coverage with State Farm, and

 she didn’t think that $100,000 was enough to compensate for her injuries.

 So Ms. Auer’s attorney made a claim with State Farm under her policy for

 underinsured motorist benefits. In connection with that claim, State Farm

 conducted an independent medical examination of Ms. Auer.

       On November 4, 2019, State Farm and Ms. Auer’s attorney discussed

 the claim and the independent medical examination. In this discussion,

 State Farm said that it believed the payment from the other insurance

 company had fully compensated Ms. Auer for her injuries. State Farm

 characterizes this statement as a denial of the claim. Ms. Auer disagrees,

 pointing out that State Farm agreed to monitor the claim for additional

 information.

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Appellate Case: 23-1062   Document: 010111006116   Date Filed: 02/27/2024   Page: 3

       Following this conversation, Ms. Auer’s attorney gathered new

 medical evidence and submitted it to State Farm in June 2020. In

 discussing the new medical evidence, the attorney complained to State

 Farm that it had “declined to make any offer of settlement regarding

 [Ms. Auer’s claim for underinsured motorist benefits], in effect denying

 [her] right to receive compensation pursuant to her . . . coverage.”

 Appellee’s Supp. App’x at 19. In light of State Farm’s failure “to make any

 offer of settlement,” the attorney alleged bad faith and offered to settle for

 $195,000. Id.

       State Farm submitted the new medical evidence to a specialist. After

 the specialist finished reviewing the new evidence, State Farm said on

 July 30, 2020, that it wasn’t changing its valuation of the claim.

       Ms. Auer sued in March 2022, asserting three claims:

       1.    breach of contract,

       2.    common law bad faith in breaching the insurance contract, and

       3.     statutory liability for unreasonable delay and denial of an
              insurance claim.

 The district court granted summary judgment to State Farm on all the

 claims, and Ms. Auer appeals.

 2.    We apply the same standard that governed in district court.

       We conduct de novo review of the grant of summary judgment,

 considering the evidence in the light most favorable to the non-moving

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Appellate Case: 23-1062    Document: 010111006116    Date Filed: 02/27/2024   Page: 4

 party. See Martin K. Eby Constr. Co. v. OneBeacon Ins. Co., 777 F.3d

 1132, 1137 (10th Cir. 2015). Summary judgment is appropriate only if “the

 movant shows that there is no genuine dispute as to any material fact and

 the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

 56(a).

 3.       The contract claim was untimely.

          On the contract claim, the parties agree that

          •    the limitations period was two years from the date that
               Ms. Auer had obtained payment from the other driver’s
               insurance company (Colo. Rev. Stat. § 13-80-107.5(1)(b)) and

          •    Ms. Auer waited more than two years to assert a contract claim.

 But Ms. Auer argues that a fact question existed on equitable tolling.

          Periods of limitation are often subject to equitable tolling when

 flexibility is necessary to prevent an injustice. Brown v. Walker Com., Inc.,

 521 P.3d 1014, 1021 (Colo. 2022). In Colorado, this flexibility may be

 appropriate when

          •    the defendant’s wrongful conduct prevents timely filing of the
               complaint or

          •    timely filing is impossible because of extraordinary
               circumstances.

 Id. at 1022 n.5.

          Ms. Auer bases equitable tolling on extraordinary circumstances. In

 district court, however, Ms. Auer said little to support equitable tolling.

 For example, in responding to the motion for summary judgment, Ms. Auer
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 devoted only two sentences to equitable tolling, saying that her former

 attorney had a “debilitating medical condition” as a result of the Covid

 pandemic. Appellee’s Supp. App’x at 26.

       Despite the brevity of Ms. Auer’s argument, her attorney presented

 an affidavit from her former attorney addressing the effect of Covid on the

 litigation. In that affidavit, the former attorney stated that (1) he had

 contracted Covid twice, once for a “considerable period of time” after July

 2020 and again after December 2020 and (2) another attorney representing

 Ms. Auer had also gotten sick with Covid after December 2020. Id. at 30.

 But the attorney didn’t say how long they had been sick or why their

 sicknesses would have prevented them from filing a complaint in the two

 years that they had. In addition, the attorney signing the affidavit had filed

 at least five documents in the last seven months of the limitations period.

 Appellee’s Supp. App’x at 49, 53, 56, 59, 60.

       On appeal, Ms. Auer adds an allegation that she cashed the other

 driver’s check “during the pandemic’s most impactful times, right after

 nearly the entire world shut down as people were becoming sicker and

 sicker each day.” Appellant’s Opening Br. at 9. Ms. Auer didn’t make this

 allegation in district court. But even if we were to consider this argument,

 it would fail. Ms. Auer cashed the other driver’s check in July 2019, and

 Ms. Auer doesn’t present evidence of any reported Covid cases in the

 United States as of July 2019.

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 4.    A factual dispute affects timeliness of the bad-faith claims.

       Ms. Auer also claimed bad faith, invoking both the common law and

 Colorado statutes. The district court regarded these claims as untimely.

       The district court concluded that the period of limitations is again

 two years, and Ms. Auer agrees. 1 Colo. Rev. Stat. § 13-80-102(1)(a). So

 the question is when the bad-faith claims accrued.

       The claims accrued “on the date both the injury and its cause [were]

 known or should have been known by the exercise of reasonable

 diligence.” Colo. Rev. Stat. § 13–80–108(1). The parties agree that this

 date was when State Farm denied the claim. The question is when that

 denial took place. The parties identify two possible accrual dates:

       1.     November 4, 2019, which is when an adjuster talked to
              Ms. Auer’s attorney, and

       2.     July 30, 2020, which is when State Farm said that it wouldn’t
              change its valuation of Ms. Auer’s claim.

 Ms. Auer sued in March 2022, so the limitations period extended back only

 to March 2020. If the denial had taken place on November 4, 2019, the

 bad-faith claims would be untimely.

 1
       State Farm does not discuss the length of the limitations period.

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 If the denial had taken place on July 30, 2020, the claims would be timely.

       Colorado law “[o]rdinarily” treats accrual of a claim as a “question[]

 of fact for a jury to resolve.” City & Cnty. of Denver v. Bd. of Cnty.

 Comm’rs, ___ P.3d ___, 2024 WL 316914, at *5 (Colo. Jan. 29, 2024). The

 question entails a matter of law only “when the material facts are

 undisputed.” Id.

       The district court concluded that State Farm had denied the claim on

 November 4, 2019. This conclusion doesn’t account for the ambiguity of

 State Farm’s note from the conversation. The note says that Ms. Auer’s

 “losses appear to be within” the limits of the tortfeasor’s liability policy.

 Appellee’s Supp. App’x at 18. But the notes don’t say that State Farm is

 denying the claim. To the contrary, the insurer noted after the call that the

 claim was still “Pending.” Id.

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 Viewed favorably to Ms. Auer, the insurer’s notes don’t definitively reflect

 a denial of the claim.

       The Colorado Supreme Court hasn’t addressed the effect of an

 insurer’s inconclusive response like this one, but the Texas Supreme Court

 has, concluding “that ‘when there is no outright denial of a claim, the exact

 date of accrual of a cause of action . . . should be a question of fact to be

 determined on a case-by-case basis.’” Ehrig v. Germania Farm Mut. Ins.

 Ass’n, 84 S.W.3d 320, 325 (Tex. App. 2002) (quoting Murray v. San

 Jacinto Agency, Inc., 800 S.W.2d 826, 828 n.2 (Tex. 1990)). 2 “When the

 2
       The district court observed that Ms. Auer hadn’t justified equitable
 tolling on the bad-faith claims. Ms. Auer criticizes this observation, stating
 that the district court focused on tolling rather than estoppel. There’s a
 reason for that: Ms. Auer never mentioned estoppel in district court.

        State Farm says that Ms. Auer waived equitable estoppel by failing to
 raise it. Ms. Auer argues in her reply brief that when equities are involved,
 estoppel is closely related to tolling. Ms. Auer took the opposite approach
 in her opening brief, arguing that “‘equitable tolling’ . . . is distinct from
 ‘equitable estoppel.’” Appellant’s Opening Br. at 10.

       Ms. Auer was right the first time because Colorado law treats
 equitable tolling and estoppel as “analytically distinct.” Shell W. E&P, Inc.
 v. Dolores Cnty. Bd. of Comm’rs, 948 P.2d 1002, 1008 (Colo. 1997). Given
 that distinction, Ms. Auer couldn’t preserve a challenge involving estoppel
 through an argument for tolling. See Butler v. Daimler Trucks N. Am., LLC,
 74 F.4th 1131, 1143 (10th Cir. 2023) (stating that a party doesn’t preserve
 an appellate argument by raising a related argument in district court).
 Because Ms. Auer didn’t urge equitable estoppel when responding to the
 summary-judgment motion, she forfeited the issue. See Richison v. Ernest
 Grp., Inc., 634 F.3d 1123, 1130-31 (10th Cir. 2011). We could address the
 issue under the plain-error standard. Evanston Ins. Co. v. Law Off. of
 Michael P. Medved, P.C., 890 F.3d 1195, 1199 (10th Cir. 2018). But
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 facts are arguably not clear enough to put the aggrieved party on notice of

 a legal injury, the question of whether the facts are sufficient to put the

 party on notice or not should be determined by the factfinder.” Id. at 325–

 26.

       State Farm points to a later letter from Ms. Auer’s attorney. In that

 letter, the attorney characterized the prior conversation as a denial of

 Ms. Auer’s claim:

       We disagree with your denial of my Clients [sic] [under-insured]
       coverage and based on the nature and extent of her permanent
       life changing damages feel that Allstate [sic] had no reasonable
       basis for and acted in bad faith in valuing her claim in the manner
       you did in denying her [under-insured] coverage.

 Appellee’s Supp. App’x at 19. This letter could constitute evidence

 supporting State Farm’s characterization of the prior call as a denial of the

 claim. But we must view the letter in a light favorable to Ms. Auer as the

 nonmovant. See Part 2, above. In that light, a factfinder could reasonably

 regard this language as a negotiating ploy, for the attorney then referred to

 the potential for a bad-faith claim.

       This interpretation is supported by the attorney’s later affidavit,

 which stated that

       •      the adjuster had not said that State Farm was denying the claim
              and

 Ms. Auer hasn’t urged plain error. So we decline to consider Ms. Auer’s
 reliance on equitable estoppel. See id.

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        •       “[s]ubsequently, [he] received no notification in writing or
                otherwise from State Farm that the [underinsured motorist]
                claim was being denied.”

  Appellee’s Supp. App’x at 29. The conversation left the attorney with the

  impression that he should submit other evidence to support the claim. See

  id. He did so, and State Farm didn’t respond by saying that it had already

  denied the claim. State Farm instead agreed to request review by a

  specialist.

        Given the inconclusive nature of the claims note, the attorney’s

  affidavit characterizing the prior discussion, and State Farm’s later

  submission of new medical evidence to a specialist, a genuine issue of

  material fact exists regarding the date that the bad-faith claims accrued.

  See Cork v. Sentry Ins., 194 P.3d 422, 428 (Colo. App. 2008) (concluding

  that a genuine issue of material fact existed on the accrual of a bad-faith

  claim). So the district court should have rejected State Farm’s argument

  for summary judgment on the bad-faith claims.

                                        ** *

        Affirmed in part and reversed in part. The bad-faith claims are

  remanded for further proceedings in district court.

                                       Entered for the Court

                                       Robert E. Bacharach
                                       Circuit Judge

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