R. BROOKE JACKSON, District Judge.
This matter is before the Court on defendant State Farm Mutual Automobile Insurance Company's ("State Farm") motion for summary judgment [ECF No. 16]. For the reasons described below, the motion is denied.
This case arises out of a car accident where plaintiff Tawnya Westby and Minnie Burn collided while driving in Denver. ECF No 16 at 1. Westby sustained injuries. Id. The following facts and timelines are undisputed unless otherwise noted.
Westby's medical bills exceeded the amount that she received from the settlement with Titan. ECF No. 16 at 13. Therefore, she submitted a claim to her own insurer, State Farm, for "underinsured motorist" (UIM) insurance benefits. Id. at 2. Her policy included a UIM limit of $250,000. Id. at ¶ 7. Kaudy and State Farm negotiated over the UIM claim. Id. at ¶ 20. As the following timeline demonstrates, the two sides came close to settling. See ECF No. 16-1.
Westby's sole claim is that State Farm "breached the contract of insurance by not paying UIM benefits in an amount which she believes she is entitled to receive." ECF No. 16 at 2. As an affirmative defense, State Farm asserts that Westby did not file this action within the time required by both the applicable statute of limitations, C.R.S. § 13-8-107.5(1)(b), and the insurance policy, so she is therefore barred from claiming UIM benefits. Id. at ¶ 26. State Farm now moves for summary judgment on that issue, asking the Court to determine as a matter of law that the statute of limitations bars Westby's claim. ECF No. 16 at 16.
The Court may grant summary judgment if "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). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must "designate specific facts showing that there is a genuine issue for trial." Id. at 324. A fact is material "if under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. The Court will examine the factual record and make reasonable inferences therefrom in the light most favorable to the nonmoving party. Concrete Works of Colorado, Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).
The Court's jurisdiction in this matter is founded on diversity of citizenship. 28 U.S.C. § 1332(a). As a federal court sitting in diversity jurisdiction, this Court applies Colorado choice-of-law principles to determine what substantive law to apply. Sellers v. Allstate Ins. Co., 82 F.3d 350, 352 (10th Cir.1996). In Colorado, insurance policies are generally interpreted under the law of the state where the policy was issued.
Under Colorado law, an insured generally must commence an action arising out of a UIM claim "within three years after the cause of action accrues." C.R.S. § 13-80-107.5(1)(b). However, if the underlying bodily injury claim is properly "preserved," then the UIM claim is timely if it is "commenced . . . within two years after the insured received payment of the settlement or judgment on the underlying bodily injury liability claim." Id. (emphasis added). An insured can preserve a claim by either filing an action against the underinsured motorist, or if no action is filed, receiving payment of a settlement or judgment in the underlying bodily injury claim. § 13-80-107.5(1)(b). Both routes to preservation must occur within three years of the accident. Id.; § 13-80-101(1)(n)(I). Here, it is undisputed that Westby properly preserved her bodily injury claim against Burns: it was filed on October 23, 2012, which is less than three years from the date of the accident on December 1, 2009.
Consistent with § 13-80-107.5(1)(b), Westby's State Farm insurance policy ("the Policy") also addresses the statute of limitations for bringing a UIM claim.
In addition, legal action may only be brought against us;
ECF No. 18-1 at 1 (emphasis omitted).
The parties agree that Westby's UIM claim can only be timely if it was brought within two years of when she received payment from Titan. However, the parties disagree upon the meaning of the term "received payment," thereby disputing when the two-year statute of limitations began to run. ECF Nos. 18 at 4; 16 at 16. The resolution of this issue turns on the Court's interpretation of "received payment." The Court finds that Westby's UIM claim is timely because Westby received payment no earlier than February 7, 2013, which is less than two years before the filing of the UIM claim on January 12, 2015.
Under Colorado law, "[t]he interpretation of an insurance policy is a matter of law" to be decided by the Court.
The parties only submit two pages of the Policy (it appears to be four pages in total), but neither the excerpted portion of the Policy nor the statute defines "received payment." Therefore, the Court must give "received payment" its plain and ordinary meaning. The verb "receive" is defined as "[t]o take (something offered, given, sent, etc.); to come into possession of or get from some outside source." Black's Law Dictionary (10th ed. 2014) available at Westlaw. Black's Law Dictionary defines payment as (1) "performance of an obligation by the delivery of money or some other valuable thing accepted in partial or full discharge of the obligation" or (2) "the money or other valuable thing so delivered in satisfaction of an obligation." Id. I find these definitions to be too general to clarify the term's meaning under these particular circumstances.
State Farm contends that the Policy clearly states that the statute of limitations begins to run on the date that either the insured or the insured's legal representative receives payment. ECF No. 19 at 3-4. Defendant alleges that there is no dispute that Kaudy was Westby's legal representative. Id. at 4. Therefore, State Farm argues that the term "received payment" is unambiguous because "it cannot reasonably be disputed" that Kaudy received payment on December 28, 2012 when he deposited the $25,000 check into his COLTAF trust account.
In contrast, Westby argues that the State Farm policy language is ambiguous and can support "two reasonable but different interpretations." ECF No. 18 at 4. Westby testifies that she interprets the Policy to mean that she could receive payment after "she accepted the terms and conditions of the Titan Release." Id. at 4. She does not believe that she could receive payment on "any other artificial dates of transmission of funds to be held in escrow pending her acceptance of the Release terms." Id.
The parties also disagree about the impact of the language in Titan's December 26 letter to Kaudy. State Farm argues that the language was merely a request that the funds not be disbursed until the paperwork was signed and returned. ECF No. 16 at 14. Defendant attests that "[t]here is nothing in the documents . . . that required [Westby] to sign a Full and Final Release before she received payment of the settlement." Id. (emphasis added). Westby contends that she was ineligible to receive payment of the settlement funds until "she accepted the terms and conditions set forth in the proposed Release." ECF No. 18 at 4, ¶ 5. She claims that Titan's own "restrictive conditions" created the dynamic whereby neither she nor Kaudy could receive payment of the settlement funds until after she "agreed to the terms and conditions of the Release proposed by Titan[.]" Id. at ¶ 9.
Furthermore, the parties dispute the applicability of a recent Colorado Court of Appeals case, Stoesz v. State Farm Mutual Automobile Insurance Company, 2015 WL 3776869 (Colo. App. 2015), where the court interpreted the meaning of "payment" in regards to the preservation of an underlying bodily injury claim pursuant to § 13-80-107.5(1)(b). ECF Nos. 18 at 8-9; 19 at 8-10. The Stoesz Court determined that the term "payment" was unambiguous, and that a settlement agreement did not constitute "payment." WL 3776869, at *3-4. State Farm now argues that Stoesz is consistent with its position that Westby could not have "received payment" on February 7, 2013 when she signed the Release and thereby accepted the terms of the settlement. ECF No. 19 at 9. However, the Stoesz Court interpreted another term from the one at issue here, and it did so in an entirely different context.
At this point in the analysis, the appropriate inquiry is whether "received payment" is ambiguous when applied to the facts of this case. A disagreement between the parties regarding the meaning of a term does not, by itself, constitute an ambiguity. Ad Two, Inc. v. City and County of Denver ex rel. Manager of Aviation, 9 P.3d 373, 376-77 (Colo. 2000) (internal citation omitted). Despite the parties' divergent interpretations, I conclude that the term is unambiguous. Under these circumstances, the Court need not define the term or identify the exact date on which Westby "received payment." The controlling matter is that Westby was not legally entitled to receive funds any earlier than February 7, 2013 when she signed the Release. The alternative that the defendant proposes—that "received payment" means the date on which Kaudy deposited the funds into his COLTAF account—is unreasonable because of Titan's "do not disburse request" and the basic operation of a settlement agreement.
First, Titan's December 26 letter clearly asked Kaudy to wait to disburse the funds until after "all the settlement paperwork" had been returned to Titan's office. ECF No. 16-1 at 4. The paperwork included the Release, which was a covenant not to sue and a full release and discharge of both Burns and Titan from "any and all claims" resulting from the car crash between Westby and Burns. ECF No. 16-1 at 9. I interpret the language in the letter as Titan's saying to Kaudy, "here, please keep this money in your client trust account until the settlement is finalized." An attorney's deposit into a client trust account essentially holds the money in escrow, to be disbursed to the client after the occurrence of some condition. Titan could have easily kept the $25,000 in its own account until the settlement paperwork had been signed and returned. Under that scenario, Titan would have disbursed the funds at some point after Westby had signed and returned the settlement paperwork. Additionally, State Farm's argument that the letter was merely a request rather than a requirement does not change the Court's reasoning. The Court finds that the ordinary person would have interpreted the request from Titan to Kaudy about waiting to disburse the funds to be a condition precedent to the disbursement. Put differently, the average individual in either Kaudy or Westby's shoes would have read the letter and believed that no payment could be received until after the insured had returned the paperwork.
Second, the very nature of a settlement dictates that neither Westby nor Kaudy could have received any money until the settlement was final. A settlement is "an agreement ending a dispute or lawsuit." Black's Law Dictionary (10th ed. 2014) available at Westlaw. Such an agreement involves one party accepting a benefit—typically in the form of cash—in exchange for releasing the other party from future claims or suits. Westby attests that "there would not and could not have been any settlement with Titan Insurance Company if [she] did not agree to the terms and conditions of the Release[.]" Westby Affid. ECF No. 18-17 at ¶ 10. I agree. It is a matter of common sense that the insured cannot receive settlement funds until after the parties have completed the settlement because up until the moment that the agreement is finalized, the insured is not legally entitled to any money. In order for the claim to settle, Westby needed to sign the Release. Defendant presumes that Kaudy had "reviewed and approved the Release" when he filed the Stipulation to the Denver District Court on January 3, 2013. ECF No. 19 at 7. However, Kaudy's filing of the Stipulation is irrelevant here. The only impact of that filing was to dismiss the bodily injury claim against Burns. The filing of the Stipulation did not mean that Westby had agreed to the terms of the Release, thereby releasing Titan from future claims and becoming entitled to the settlement money.
Defendant emphasizes that the statute of limitations begins running when either the insured or her legal representative receives payment. ECF No. 19 at 4. That distinction does not change the Court's analysis because Westby had not yet agreed to the settlement terms on December 28, 2012. Under State Farm's theory, Westby could have had a change of heart regarding the settlement, opted not to sign the Release, and still have been able to access the funds because Kaudy had already "received payment" when he deposited the check.
I note that Kaudy did not actually disburse the money until March 20, 2013. ECF No. 16-1 at 13. Westby alleges that "subrogation issues prevented [her] from actually receiving payment until March 30, 2013." ECF No. 18 at ¶ 6. Plaintiff states that "those delays were both out of her, and State Farm's control." Id. at 5. Defendant raises a concern that if "received payment" means the date of disbursement, then an attorney could delay disbursement and thereby "impermissibly" extend the statute of limitations. ECF No. 16 at 14, 15. I decline to address this concern because the date of disbursement does not change my conclusion. See Cacioppo v. Eagle Cnty. Sch. Dist. Re-50J, 92 P.3d 453, 467 (Colo. 2004) (declining to answer "a hypothetical question about possible future interpretations to the law"). Irrespective of when the settlement funds were disbursed, Westby could not have received payment any earlier than February 7, 2013 when she signed the Release and became legally entitled to the money. This case was filed on January 12, 2015, which is less than two years after Westby could have first "received payment." Because it finds that the statute of limitations had not run, the Court denies defendant's motion for summary judgment.
For the reasons described above, defendant's motion for summary judgment [ECF No. 16] is DENIED.
