NINA Y. WANG, Magistrate Judge.
This matter comes before the court on three motions filed by Defendant State Farm Mutual Automobile Insurance Company ("State Farm" or "Defendant"):
The undersigned Magistrate Judge considers the Motions pursuant to 28 U.S.C. § 636(c) and the Order of Reference for all purposes [#15]. This court concludes that oral argument will not materially assist in the resolution of these matters. Accordingly, having reviewed the Motion and associated briefing, the applicable case law, and the entire docket, the court
This civil action arises out of an insurance dispute between Plaintiff James Roberts ("Plaintiff" or "Mr. Roberts") and his insurer State Farm. See [#1; #28]. About February 2017, Plaintiff sustained bodily injuries because of an automobile collision. [#28 at ¶¶ 7-8]. Believing his medical bills were more than the tortfeasor's own insurance limits, Plaintiff sought additional underinsured motorist ("UIM") benefits from State Farm. See [id. at ¶ 9].
The Parties exchanged several rounds of correspondence regarding Mr. Roberts's UIM claim. See [id. at ¶¶ 10-46]. Specifically, on April 17, 2018, State Farm offered $59,319.45 to settle Plaintiff's claim. [Id. at ¶ 11]. Then, on June 12, 2018, State Farm wrote Mr. Roberts and stated that it had evaluated $23,500 for pain and suffering for Plaintiff's UIM claim. [Id. at ¶ 14]. Though State Farm tendered benefits in the amount of $35,819.45 under the insurance policy, see [id. at ¶¶19-20], Plaintiff initiated this civil action asserting claims for breach of contract and unreasonable delay or denial of an insurance benefit pursuant to Colo. Rev. Stat. § 10-3-1115 ("statutory bad faith") on February 6, 2019, see [#1]. Following service of the Complaint on February 11, 2019, Defendant tendered an additional $23,500 in benefits as a reasonable amount owed to Plaintiff. See [#28 at ¶ 49].
Relevant here, Mr. Roberts filed a Motion to Amend his Complaint on May 31, 2019. See [#25]. Then, on June 13, 2019, the Parties appeared before the undersigned for an informal telephonic discovery dispute conference regarding the Rule 30(b)(6) Notice issued to State Farm by Plaintiff. As confirmed by the court's review of the electronic recording of the conference, Plaintiff conceded that he was not seeking any additional UIM benefits under the policy, but he continued to argue that Defendant's payment of the $23,500 constituted a confession of the breach of contract claim. [#27]. Also at this conference, Defendant indicated that it would not oppose the Motion to Amend in favor of filing of a dispositive motion, and thus the undersigned granted the Motion to Amend and deemed the Amended Complaint the operative pleading in this matter. See [#27]. The Amended Complaint, like the Complaint, asserts a breach of contract and statutory bad faith claim. See [#28]. Defendant then discussed its intention to file the instant Motion to Stay requesting that the court stay all discovery pending its determination of a forthcoming dispositive motion directed at the Amended Complaint.
On June 14, State Farm filed an Answer [#29]; a Motion for Summary Judgment, arguing that it is entitled to judgment as a matter of law on Plaintiff's statutory bad faith claim [#30]; and the instant Motion to Stay [#31]. Plaintiff has since filed his Response to the Motion to Stay [#33], and the court prohibited any Reply absent leave of the court; no such leave has been requested. Plaintiff has also filed his Response to the Motion for Summary Judgment [#34]. Though the time to Reply to the Motion for Summary Judgment has not yet lapsed, the issues presented by the Motion to Stay are intertwined with the Motion for Summary Judgment and this court finds that it is appropriate to adjudicate both matters presently.
State Farm moves for summary judgment in its favor on the second claim for relief, i.e., violation of Colo. Rev. Stat. § 10-3-1115(1)(a) for unreasonable delay of the payment of Mr. Roberts's UIM claim.
Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or conversely, is so one-sided that one party must prevail as a matter of law. Anderson, 477 U.S. at 248-49; Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000); Carey v. U.S. Postal Service, 812 F.2d 621, 623 (10th Cir. 1987). A fact is "material" if it pertains to an element of a claim or defense; a factual dispute is "genuine" if the evidence is so contradictory that if the matter went to trial, a reasonable party could return a verdict for either party. Anderson, 477 U.S. at 248. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing First Nat. Bank of Ariz. v. Cities Service Co., 391 U.S. 253, 289 (1968)).
"The Federal Rules of Civil Procedure do not provide for the stay of proceedings while a motion to dismiss is pending. Instead, Rule 1 instructs that the rules of procedure `shall be construed and administered to secure the just, speedy, and inexpensive determination of every action.'" Sutton v. Everest Nat'l Ins. Co., No. 07 CV 00425-WYD-BNB, 2007 WL 1395309, at *1 (D. Colo. May 9, 2007). Nonetheless, when ruling on a motion to stay, courts weigh the following factors: (1) the plaintiff's interests in expeditiously litigating this action and the potential prejudice to plaintiff of a delay; (2) the burden on the defendants; (3) the convenience to the court; (4) the interests of persons not parties to the civil litigation; and (5) the public interest. String Cheese Incident, LLC v. Stylus Shows, Inc., No. 1:02-CV-01934-LTB-PAC, 2006 WL 894955, at *2 (D. Colo. Mar. 30, 2006). But "stays of the normal proceedings of a court matter should be the exception rather than the rule," Christou v. Beatport, LLC, No. 10-CV-02912-CMA-KMT, 2011 WL 650377, at *1 (D. Colo. Feb. 10, 2011), and courts in this District generally disfavor stays, see, e.g., Chavez v. Young Am. Ins. Co., No. CIVA 06CV02419PSFBNB, 2007 WL 683973, at *2 (D. Colo. Mar. 2, 2007).
Further, Rule 26(c) of the Federal Rules of Civil Procedure provides that a court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. Fed. R. Civ. P. 26(c). The party seeking a protective order bears the burden of establishing its necessity, Centurion Indus., Inc. v. Warren Steurer & Assoc., 665 F.2d 323, 325 (10th Cir. 1981), but the entry of a protective order is left to the sound discretion of the court. See Rohrbough v. Harris, 549 F.3d 1313, 1321 (10th Cir. 2008). As part of the exercise of its discretion, the court may also specify the terms for disclosure. Fed. R. Civ. P. 26(C)(1)(B). The good cause standard is highly flexible, having been designed to accommodate all relevant interests as they arise. See Rohrbough, 549 F.3d at 1321.
In its Motion for Summary Judgment, Defendant argues that, as a matter of law, based on the undisputed facts, it is entitled to judgment in its favor on Plaintiff's statutory bad faith claim. [#30]. Specifically, State Farm urges this court to find that, as a matter of law, there has been no delay in the payment of Mr. Roberts's UIM benefits given the undisputed timeline of events and the fact that Plaintiff can point to no objective industry standard that required payment in a more expedited fashion than undertaken by Defendant. [Id.]. State Farm argues the court must resolve this preliminary question before considering the issue of the reasonableness of State Farm's actions. [Id. at 7].
In Response, Mr. Roberts contends that State Farm was obligated to pay $39,364.11 by at least mid-June 2018, and withheld it until months later with no justification. [#34]. Looking to state law as industry standards, Mr. Roberts relies on the Unfair Claims Settlement Practices Act ("UCSPA"), Colo. Rev. Stat. § 10-3-1104 et seq., for a basis to argue that there was an unreasonable delay in the payment of $10,819.45 and $5,044.66 prior to litigation. [Id. at 14]. He also argues that Defendant unreasonably denied the payment of $23,500 and only paid that amount after litigation, allowing the court to conclude that either State Farm has confessed breach of contract or unreasonable delay. [Id. at 15]. Mr. Roberts further relies upon the UCSPA to assert that the statute "imposes on every insurer a duty to act promptly in both communications and investigation in response to a claim," and Defendant's failure to properly communicate and respond to numerous questions as to why payment was being withheld was a breach of that duty. [Id.]. Finally, Plaintiff invokes Rule 56(d) of the Federal Rules of Civil Procedure and argues that the circumstances of the withholding of the benefits should be subject to discovery, as this would support the claim that State Farm acted unreasonably in delaying payment of Mr. Roberts's undisputed UIM benefits under Fisher v. State Farm Mut. Auto. Ins. Co., 419 P.3d 985 (Colo. App. 2015), see [id. at 23-26], and they "may very well give rise to a claim for exemplary damages,"
Colo. Rev. Stat. § 10-3-1115(1)(a) provides, "A person engaged in the business of insurance shall not unreasonably delay or deny payment" to an insured person. An insurer's action is unreasonable if its delay or denial of payment was without a reasonable basis. See Turner v. State Farm Mut. Auto. Ins. Co., No. 13-cv-01843-MSK-BNB, 2015 WL 1297844, at *3 (D. Colo. Mar. 19, 2015) (citing Colo. Rev. Stat. § 10-3-1115(2)). Given Plaintiff's concession that he is not seeking further UIM benefits, the only element at issue here is whether State Farm delayed Plaintiff's UIM benefits without a reasonable basis. See Baker v. Allied Prop. & Cas. Ins. Co., 939 F.Supp.2d 1091, 1107 (D. Colo. 2013); see also Wahlert v. Am. Standard Ins. Co. of Wisconsin, 173 F.Supp.3d 1187, 1193 (D. Colo. 2016) (explaining that, because of a statutory bad faith claim's lesser liability burden and onerous penalty provision, such a claim is financially more threatening to an insurer). Courts evaluate statutory bad faith claims objectively based on industry standards. Williams v. Owners Ins. Co., 621 F. App'x 914, 919 (10th Cir. 2015).
As discussed above, Defendant argues that the undisputed facts establish, as a matter of law, that State Farm neither delayed, nor acted unreasonably, in its adjustment and payment of Plaintiff's UIM claim, because Plaintiff can point to no industry standard to demonstrate that State Farm was required to pay Mr. Roberts's claim more expeditiously. [#30]. But Mr. Roberts is correct that legislative enactments like the UCSPA or administrative rules, though not conclusive, may be used as evidence of the standard of care. Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 343 (Colo. 2004). The UCSPA prohibits:
Plaintiff further relies upon State Farm Mut. Auto. Ins. Co. v. Fisher, 418 P.3d 501 (Colo. 2018) to suggest that as soon as an insurer concludes that benefits are covered under an UIM policy an immediate duty to pay arises, and unreasonably failing to do so gives rise to a statutory bad faith claim. [#34 at 19]. Plaintiff also contends that State Farm's payment of $23,500 the day after he filed suit amounts to a confession of Plaintiff's statutory bad faith claim. [#33 at 3]. Finally, Mr. Roberts asserts that he requires certain discovery of Defendant's knowledge and intent in adjusting his UIM claim. [#33; #34].
In Turner v. State Farm Mut. Auto. Ins. Co., 2015 WL 1297844, a court in this District considered various standards that could be applied to determine whether an insurance company had delayed payment. In that case, State Farm advocated for the application of 3 Colo. Code Regs. 702-5:5-1-14 (2012), which required that:
Turner, 2015 WL 1297844, at *4 (emphasis omitted) (quoting 3 Colo. Code Regs. 702-5:5-1-14, § 4(A)(1)). In turn, the plaintiff argued for the application of Colo. Rev. Stat. §§ 10-4-642(6)(b)-(c), which required the insured's claim to be paid, denied, or settled within thirty days of the insurer receiving the requested information or within ninety calendar days of receiving the claim. Id. The Turner court observed that several courts had applied 3 Colo. Code Regs. 702-5:5-1-14, but found that the application of Colo. Rev. Stat. §§ 10-4-642(6)(b)-(c) was not necessarily inconsistent. Id. at *5.
Here, the undisputed facts establish that Plaintiff made a demand for UIM benefits on April 12, 2018, and while State Farm made an offer to settle the claims for $59,319.45 on April 17, 2018, see [#28 at ¶ 11; #30 at 8], it did not make payments until June 20, 2018 (in the amount of $25,000);
Based on the record before the court, summary judgment at this juncture is not warranted. In this case, the timeline alone neither precludes nor establishes liability for undue delay for the amounts in dispute as a matter of law. Had Mr. Roberts sought damages for undue delay for the $25,000 paid in June 2018,
As discussed above, Defendant does not expressly move for summary judgment on the breach of contract claim. But Defendant asserts that the breach of contract claim is no longer viable. [#30 at 6 n.1]. And Mr. Roberts argues that "Plaintiff believes that it is a question of law whether the first claim for relief [breach of contract] is now moot or whether payment along with other facts evidence that Plaintiff's claim for unreasonable withholding has been confessed." [#33 at 3; #34]. Accordingly, it appears that the Parties agree there are no material facts in dispute with respect to this first claim.
Rule 56(f) of the Federal Rules of Civil Procedure allows this court, after giving notice and a reasonable time to respond, to grant a motion for summary judgment on grounds not raised by a party and consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute. Fed. R. Civ. P. 56(f)(2)-(3). Here, Mr. Roberts argues that as a matter of law, where an insurer makes voluntary payment post-filing of a lawsuit, this is considered a confession. [#34 at 20]. For this proposition, Plaintiff cites Canterbury at Riverwalk Condo. Ass'n, Inc. v. The Charter Oak Fire Ins. Co., No. 2016-cv-1239-MEH, 2016 WL 8465187 (D. Colo. May 24, 2016) and argues "[t]here, the Court cited to Colorado law concerning payment without protest or duress." [#34 at 20]. The significant and most concerning flaw, however, in Mr. Roberts's argument is that he cites not to a court order from the Canterbury case but to the plaintiff's Motion for Partial Summary Judgment. See Attach. 1. A review of the docket of that case reveals that the Canterbury court never adjudicated that motion, because a settlement was reached prior to any disposition. See Attach. 2.
Nor is this court persuaded by Plaintiff's citation of National Ins. Ass'n v. Sockwell, 829 So.3d 111 (Ala. 2002). First, as presented in the decision, the Sockwell court had no breach of contract claim before it. Id. at 114 n.1, 131. The question before it was whether the insurer was entitled to judgment as matter of law on the plaintiff's bad-faith claims. Id. at 114. Second, the case arises out of the application of Alabama common law, id. at 126-30, not Colorado law on breach of contract or even Colo. Rev. Stat. § 10-3-1115(1)(a). Third, this court finds Plaintiff's citation of Norton v. Ray, 78 P.2d 979 (Colo. 1938), where the defendant had admitted he had not paid plaintiff for rents due on certain premises, inapposite.
To prevail on a claim for breach of contract under Colorado law, a plaintiff must prove the following elements: (1) the existence of a contract; (2) performance by the plaintiff or some justification for nonperformance; (3) failure to perform the contract by the defendant; and (4) resulting damages to the plaintiff. PayoutOne v. Coral Mortg. Bankers, 602 F.Supp.2d 1219, 1224 (D. Colo. 2009) (citing W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992)). Mr. Roberts alleges that State Farm breached its duties under the contract by acting unreasonably and failing to promptly pay what was owed pursuant to the policy. [#28 at ¶¶ 53-54]. But Plaintiff fails to identify any
Defendant moved for a stay of discovery pending resolution of its Motion for Summary Judgment because, according to Defendant, the Motion for Summary Judgment is potentially dispositive of all claims in this action. See [#31]. Having decided the issue of summary judgment, Defendant's request for a stay is moot. But within the context of the Motion to Stay State Farm also moved for a protective order against certain discovery under Rule 26(c), arguing that the discovery issued by Plaintiff is "not proportionate to the needs" of the case, is overbroad, and is unduly burdensome. See [#30 at 3-5 (listing the propounded discovery requests)].
Given the court's ruling contained herein, this court agrees that discovery should be defined to the particular issues that are still at play, e.g., how and when State Farm determined it owed Mr. Roberts $10,819.54, $5,044.66, and $23,500 in UIM benefits and any justification for the time between such determination and payments in August 2018, December 2018, and February 2019, respectively. In considering the proposed Rule 30(b)(6) Notice provided by Plaintiff to Defendant, see [#33-1], it appears that the Notice as drafted seeks information broader than "circumstances relating to the withholding of benefits and the strategy of Defendant" related to those three payments. [#34 at 2]. For instance, it is not clear "how [State Farm] retained an attorney" is relevant to the circumstances relating to the withholding of benefits and the strategy of Defendant. [#33-1 at 2]. On the other hand, some of the topics appear to be directed at Plaintiff's identified concerns. In any case, it is not appropriate for the court to craft arguments for any party, particularly ones who are represented by able counsel. See United States v. Davis, 622 F. App'x 758, 759 (10th Cir. 2015) ("[I]t is not this court's duty, after all, to make arguments for a litigant that he has not made for himself"); Phillips v. Hillcrest Med. Ctr., 244 F.3d 790, 800 n.10 (10th Cir. 2001) (observing that the court has no obligation to make arguments or perform research on behalf of litigants). The court finds that the better course of action is to adjudicate the Parties' specific discovery disputes, after a robust meet and confer, with the court's rulings in mind.
Therefore, for the reasons stated herein,
David J. Pettinato, Esquire, William C. Harris, Esquire, Colorado Bar No. 49292, Merlin Law Group, P.A., 777 S. Harbour Island Blvd., Suite 950, Tampa, Florida 33602, Telephone: (813) 229-1000, Fax: (813) 229-3692, dpettinato@merlinlawgroup.com, charris@merlinlawgroup.com, for plaintiff.
Plaintiff, CANTERBURY AT RIVERWALK CONDOMINIUM ASSOCIATION, INC. ("CANTERBURY"), by and through the undersigned counsel and pursuant to F.R.C.P. 56, D.C.COLO.LCivR 56.1, and all other applicable Federal and Local rules, hereby files this Motion for Partial Summary Judgment and Incorporated Memorandum of Law in Support (RE: Policy Interpretation as to Calculation of Deductible), and as grounds therefore would state as follows:
1. This case involves a wind and hail insurance claim that had been timely submitted by CANTERBURY, a Colorado non-profit corporation, operating as Condominium Homeowners, consisting of 11 buildings, to its insurer THE CHARTER OAK FIRE INSURANCE COMPANY ("CHARTER OAK").
2. The reported date of loss is June 14, 2014.
3. It is undisputed that CHARTER OAK acknowledged coverage. It initially estimated the damages as being minor to each of the 11 buildings, less than full roof replacement, at $188,848.91 (Replacement Cash Value or RCV) and $106,637.39 (Actual Cash Value or ACV), which was allegedly below the Policy deductible as CHARTER OAK calculated it at this time. CHARTER OAK calculated the deductible(s) as follows:
(See attached Exhibit "A"). CHARTER OAK calculated the deductible by taking 2% of the applicable building "Policy Limit." For example:
3. CHARTER OAK later learned that it used the incorrect "Policy Limits" (also referred to as "Statement of Values") in calculating the Policy deductible in this claim; this was discovered when CHARTER OAK provided its amended estimate wherein it used the correct "Policy Limits."
4. CHARTER OAK'S Policy outlines how to calculate the deductible:
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE (See attached Exhibit "B," Form No. MP T1 75 03 06, pg. 1 of 2). The Policy states that the Wind/Hail deductible percentage is 2% which is "calculated separately for, and applies separately to: (a) Each building, if two or more buildings sustain loss or damage."
In determining the amount of the deductible, the Policy states that CHARTER OAK "will deduct an amount equal to ... 2% ... (as shown in the
5. It is undisputed that no insurance benefits were paid at this time. CANTERBURY disagreed with CHARTER OAK'S opinion.
6. It is undisputed CANTERBURY retained its own insurance claims professional to complete an independent investigation of the damages. On January 16, 2016, CANTERBURY provided CHARTER OAK its own damage estimate in the amount of $1,112,333.82 (RCV), minus depreciation of $108,601.41 for $607,247.81 (ACV).
7. It is undisputed on or about April 25, 2016, CHARTER OAK amended its estimate to $599,880.10 (RCV) now acknowledging that all 11 building's roofs needed to be replaced. This was an increase of $411,031.19 (RCV) or three (3) times higher than its initial estimate. On or about April 27, 2016, CHARTER OAK tendered to CANTERBURY Check No. 87259403 in the amount of $1,274.66 as "ACV payment for covered damages." (See attached composite Exhibit "C").
Now, however, CHARTER OAK calculated the buildings deductibles as follows:
(See attached Exhibit "C").
8. It is undisputed on May 6, 2016, CANTERBURY'S counsel requested that CHARTER OAK provide a copy of the "Statement of Values" as referenced in the certified copy of the policy CHARTER OAK had provided to CANTERBURY'S counsel. The same day, CHARTER OAK provided the applicable "statement of values that was used" by CHARTER OAK in calculating the deductible. (See attached Exhibit "D"). A "Statement of Values"
9. It is undisputed on May 18, 2016, CANTERBURY attempted to confirm how CHARTER OAK was calculating the deductible(s), and questioned CHARTER OAK as to its methodology: Good afternoon Mr. Clanton [CHARTER OAK adjuster],
In review of the Statement of Values provided, Bldg. #'s 6 and 7 are the same address. Please confirm that Bldg. #7 is for 2765 W. Riverwalk Circle.
Please also confirm that the Cherry Creek Insurance Group Statement of Values provided with a
(See attached Exhibit "E") (emphasis added).
CHARTER OAK claim representative, Jon Clanton, responded:
Susan,
yes, building 7 represents the value for 2765 and the statement of values provided to you,
(See attached Exhibit "E") (emphasis added).
It is undisputed that CHARTER OAK admitted that the September 14, 2010, "Statement of Values" (see below) for each of the 11 buildings it provided to CANTERBURY must be used to determine the applicable deductible for each building.
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE (See attached Exhibit "D").
It is undisputed the CHARTER OAK "Statement of Values" dated September 14, 2010, lists the "Values" for each of the 11 buildings that matches exactly the same "Policy Limit" amounts on CHARTER OAKS last amended damage estimate wherein it calculated the deductibles for each of the 11 buildings, and tendered an insurance payment in the amount $1,274.66. (See attached composite Exhibit "C").
10. On May 24, 2016, unable to wait any longer to receive full contractual indemnification and close before the two-year statute of limitations was to expire to bring a lawsuit, CANTERBURY was required to file suit. The filed complaint has three (3) Counts: Count I (Breach of Contract); Count II (Unreasonable Delay and Denial of Payment of Covered Benefits Pursuant to C.R.S. §§ 10-3-1115 and 10-3-1116); Count III (Bad Faith of an Insurance Contract).
11. Additionally, CANTERBURY plead, inter alia, CHARTER OAK breached the Policy by improperly calculating the applicable insurance deductible:
[DE. 1, ¶32].
In response, CHARTER OAK admitted it incorrectly calculated the deductible, but asserts it does not agree that the applicable deductible is $396,484.60:
[DE. 18, ¶32]
12. It is undisputed that post suit, CHARTER OAK requested a re-inspection and both Parties agreed to stand down in the hopes to try and resolve the claim without further litigation.
13. It cannot be disputed that the CHARTER OAK has acknowledged coverage.
14. It is undisputed that on September 16, 2016, CHARTER OAK filed its "Answer, Separate Affirmative Defenses and Demand for Jury Trial." [DE. 18]. It argued in its Affirmative Defenses it owed no more insurance benefits whatsoever based upon a number of alleged legal reasons, i.e., Plaintiff failed to comply with the terms and conditions of the policy, Plaintiff failed to mitigate, lawsuit is barred by the statute of limitations, Plaintiff's claim is barred by the deductible, etc. [DE. 18]; see also, [DE 18, Answers to ¶'s 34 (asserts it has paid the claim in full), 48, 50, 52 & 57].
15. It is undisputed that on October 3, 2016, post-suit, CHARTER OAK changed its legal position, from not owing any more insurance benefits, to now acknowledging it owed additional insurance benefits, and tendered a check for $247,459.66 (RCV), waiving its right to assert that the repair work needed to be done prior to the payment of the RCV insurance monies.
16. It is undisputed on October 5, 2016, CANTERBURY notified CHARTER OAK it had improperly calculated the insurance policy's deductible for each building, requested that it voluntarily correct its mistake, and then tender the undisputed insurance benefits being withheld in the amount of
17. It is undisputed that $36,641.70 is owed to CANTERBURY as undisputed insurance benefits. The question is, did CHARTER OAK already tender the insurance benefits given its new (un-explained) methodology of calculating the deductible, or does it still owe the insurance benefits. CHARTER OAK has never explained, in writing, as to how it calculated the deductible(s) when tendering its October 3, 2016, post suit payment.
Under Rule 56, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to a judgment as a matter of law." "A disputed fact is "material" if under the relevant substantive law it is essential to proper disposition of the claim. Wright v. Abbott Labs, Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001).
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Colorado law provides that the interpretation of an insurance policy is a question of law that must be resolved by the court. Thompson v. State Farm Fire & Cas. Co., 165 P.3d 900, 901 (Colo.App.2007). When a motion for summary judgment hinges solely on the appropriate interpretation of the provisions of an insurance policy, the issues are properly resolved by way of summary judgment regardless of whether disputed facts exist. Arkansas Valley Drilling, Inc. v. Continental Western Ins. Co., 703 F.Supp.2d 1232, 1238 (D. Colo. 2010).
The substantive issues are as follows:
1. As a matter of law, and policy interpretation, how is the deductible calculated under the CANTERBURY policy in this insurance claim?
The applicable deductibles for each of the 11 buildings is as follows:
2. As a matter of law, and policy interpretation, did CHARTER OAK fail to tender the proper amount of owed insurance benefits by incorrectly calculating the Policy deductible for each of the 11 insured buildings? And if Yes, does CHARTER OAK owe CANTERBURY an additional $36,641.70 in undisputed insurance benefits?
3. As a matter of law, did CHARTER OAK breach the policy by incorrectly calculating the proper amount of the applicable deductible for each of the 11 insured buildings?
4. As a matter of law, when CHARTER OAK has agreed to settle a disputed claim, in part, and tender post suit insurance benefits, is it the functional equivalent of a confession of a partial judgment in favor of CANTERBURY?
The Policy is clear on how to calculate the deductible for each building. There is no ambiguity.
Instead, of calculating the deductible as the Policy outlines, in detail, CHARTER OAK incorrectly calculates the deductible by using the "Blanket Limit" policy limits for all buildings of $21,656,315 × 2% = $433,126.30. (See attached Exhibit "F"). This calculation methodology, of course, favors CHARTER OAK since it provides a much higher total deductible. A $36,641.70 higher deductible. As opposed the Policy requires the deductible to be calculated separately, by building, by multiplying 2% x each of the 11 insured buildings "Statement of Values." The deductibles then by building are:
Because this Court's subject matter jurisdiction arises due to diversity of citizenship between the parties, Colorado substantive law governing the interpretation of insurance policies applies. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 426-27 (1996). Under Colorado law, insurance policies are construed under the same traditional principles as any other contract. Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo. 1999).
The terms of an insurance policy are construed in accordance with their plain and ordinary meaning, as those terms would be understood by an ordinary person on the street. MarkWest Hydrocarbon, Inc. v. Liberty Mut. Ins. Co., 558 F.3d 1184, 1190 (10th Cir. 2009). Colorado also applies the "reasonable expectations doctrine" requiring the Court to read the policy consistent with what an ordinary insured would understand. Regional Bank of Colorado, N.A. v. St. Paul Fire & Marine Ins. Co., 35 F.3d 494, 496 (10th Cir. 1994). The Court must construe the terms of a policy as a whole. When the language used in a contract is plain and its meaning is clear, the provision must be enforced as written. Fire Ins. Exch. v. Rael by Rael, 895 P.2d 1139, 1142 (Colo. App. 1995). If the terms in a policy are susceptible to more than one reasonable interpretation, the provision is ambiguous and must be construed against the insurer in a manner that would promote, rather than deny, coverage. Here, the Policy does not outline the methodology of calculating the deductible as CHARTER OAK asserts it correct. It does endorse the methodology of calculating the deductible that CANTERBURY has argued. This Court then must construe the terms of this Policy in accordance with their plain and ordinary meaning, as those terms would be understood by an ordinary person on the street. Not in the convoluted, made up, concocted methodology of CHARTER OAK.
Insurance policies must be construed to meet the reasonable expectations of the insured. Hoang v. Assurance Co. Of America, 149 P.3d 798, 803 (Colo. 2007). Review of insurance policy language is subject to heightened scrutiny because it is "offered on a take it or leave it basis, rather than being fully negotiated by the parties. Hoang, 149 P.3d at 801. A mere disagreement over the interpretation does not create an ambiguity; a provision is ambiguous if it is susceptible on its face to more than one reasonable interpretation. Cary v. United Of Omaha, 108 P.3d 288, 290 (Colo. 2005). Any ambiguity is construed broadly in favor of the insured. Id. Regardless, the insurer is in the position to choose its own policy language "and it must be held to [its] full measure" of the clause, regardless of "whether its promise be for more or less." Aschenbrenner v. U.S. Fidelity & Guaranty Co., 292 U.S. 80, 86 (1934).
CHARTER OAK'S interpretation of how to calculate the deductible is not supported by the Policy. CHARTER OAK'S interpretation is unreasonable and cannot be accepted when reading the policy as a whole. It calculates a single deductible, as opposed to each of the 11 buildings. CHARTER OAK does so to reduce the amount of owed insurance benefits to CANTERBURY. This is a breach of the policy. Colorado law requires policy provisions to be construed in accordance with the reasonable expectations of the insured. Regional Bank of Colorado, N.A., 35 F.3d at 497. Therefore, the meaning must be interpreted in light of what a reasonable policyholder would expect in return for his/her premium. Id. While policyholders certainly understand that disputes over the amount of loss exist, it is unreasonable to think that the insurance company will calculate the Policy deductible in its favor to short the policyholder needed insurance benefits to put them back into a pre loss condition.
If the Court were to accept CHARTER OAKS' position, then it would have sole arbitrary discretion to determine the applicable deductible, for each policyholder, differently under the same Policy language when it best favors CHARTER OAK. Obviously this is not in the insured's best interests and is not what is reasonably expected when the written Policy is purchased or the "Windstorm or Hail Percentage Deductible" Endorsement is read. (See attached Exhibit "B," Form No. MP T1 75 03 06, pg. 1 of 2).
Finally, while CANTERBURY submits that the policy unambiguously outlines the CANTERBURY methodology of calculating the deductible, any ambiguity must be construed in favor of the policyholder and as providing more protections, not less. Here, the deductible calculation Endorsement is intended to, among other things, protect policyholders in knowing how much insurance benefits they may expect to receive in a catastrophes as to properly plan for the appropriate amount of coverage. If the Court finds an ambiguity in the methodology of calculating the deductible it must construe the terms of the Policy in favor of CANTERBURY'S methodology of calculating the deductible, not against.
The post suit payment of owed undisputed insurance benefits being wrongfully withheld by CHARTER OAK constitutes as Confession of Judgment. At least, in part, is a settlement as to the claimed undisputed damages owed when suit was initially filed?
Here, CHARTER OAK never contested liability. The only dispute was as to the extent and amount of the damages, undisputed or otherwise. Then, post suit, when CHARTER OAK conceded it had shorted CANTERBURY $247,459.66 in owed insurance benefits, it tendered the monies. (See attached Exhibit "F"). CHARTER OAK never tendered the post suit monies with any disclaimers or explicit acknowledgments that the payment of undisputed insurance benefits was in compromise of a "doubtful and disputed claim." See, e.g., Bryant v. Sagamore Ins. Co., 597 F. App'x 968, 971 (10th Cir. 2015). The payment of the undisputed insurance benefits post suit is the admission of CHARTER OAK it should have paid the monies pre-suit, which amounts to a confession of judgment. See, Norton v. Ray, 102 Colo. 273, 276 (Colo. 1938).
When CHARTER OAK tendered post suit the owed undisputed insurance benefits on October 3, 2016, it already had all the information, documentation, and reports from CANTERBURY to have supported the payment pre-suit. It withheld the additional insurance benefits nonetheless. In short, CHARTER OAK obtained no new information from CANTERBURY post suit that it did not have pre-suit.
When the insurance company has agreed to settle a disputed case, even in part, it has, in effect, declined to defend its position in the pending suit. Thus, the post suit payment of the claim is the functional equivalent of a confession of judgment or a verdict in favor of the insured. "Requiring the plaintiff to continue litigation in spite of an acceptable offer of settlement merely to avoid having to offset attorney's fees against compensation for the loss puts an unnecessary burden on the judicial system, fails to protect any interest—the injured, the insurer's or the public's—and discourages any attempt at settlement. This literal requirement of the statute exalts form over substance to the detriment of public policy, and such a result is clearly absurd. It is a basic tenet of statutory construction that statutes will not be interpreted so as to yield an absurd result." Wollard v. Lloyd's & Companies of Lloyd's, 439 So.2d 217, 218-19 (Fla. 1983). It cannot be disputed that 132 days post suit, and 17 days after it filed its Affirmative Defenses, asserting its legal position that no more insurance benefits were owed, CHARTER OAK changed its legal position admitting it underpaid on the claim. There is still a continued dispute between the Parties as to the correct amount of all covered damages, but at least now, the dollar difference is much less.
For the foregoing reasons, CANTERBURY respectfully requests this Court enter partial summary judgment in its favor and enter an Order:
1. Granting Plaintiff's Motion for Partial Summary Judgment and Incorporated Memorandum of Law in Support (RE: Policy Interpretation as to Calculation of Deductible) as to how to calculate Deductible;
2. Granting Plaintiff's Motion for Partial Summary Judgment and Incorporated Memorandum of Law in Support (RE: Policy Interpretation as to Calculation of Deductible) on the issues as specifically outlined above in Section III, No.'s 1-4 above;
3. Enter a partial judgment in the amount of $36,641.70 in this matter against Defendant;
4. Enter judgment that the October 5, 2016, post suit payment of $247,459.66 was a confession of judgment;
5. Enter an order reserving on awarding Plaintiff its reasonable attorney's fees and costs in this matter; and
6. Grant any other such relief as the Court deems just and appropriate.
On October 5, 2016, CANTERBURY notified CHARTER OAK it had improperly calculated the insurance policy's deductible for each building, requested that it voluntarily correct its mistake, and then tender the undisputed insurance benefits being withheld in the amount of
Respectfully submitted this 31st day of October, 2016.
