F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                        UNITED STATES COURT OF APPEALS
                                                                               OCT 1 2003
                                    TENTH CIRCUIT
                                                                           PATRICK FISHER
                                                                                     Clerk

 KELLY FINCHER, by her natural father
 and next friend James Fincher,

          Plaintiff-Appellant,
 v.                                                          No. 02-1280
 PRUDENTIAL PROPERTY AND                               (D.C. No. 00-RB-2098)
 CASUALTY INSURANCE COMPANY,                               (D. Colorado)
 a New Jersey Corporation,

          Defendant-Appellee.


                                 ORDER AND JUDGMENT*


Before TACHA, Chief Judge, ANDERSON, and BRISCOE, Circuit Judges.


      Plaintiff Kelly Fincher, appearing through her father and next friend, James

Fincher, appeals the district court’s grant of summary judgment in favor of defendant

Prudential Property and Casualty Insurance Company. We exercise jurisdiction pursuant

to 28 U.S.C. § 1291, and reverse and remand for further proceedings.

                                            I.

      On May 8, 1994, Fincher was riding her bicycle when she was struck and severely


      *
        This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
injured by a vehicle driven by Anthony Bekeshka. At the time of the accident, Bekeshka

was insured under an automobile liability insurance policy issued by Prudential. Because

Fincher was considered by Colorado law to be a pedestrian at the time of the accident, she

fell within the definition of an “insured” under the no-fault provisions of Bekeshka’s

policy and was entitled to personal injury protection (PIP) benefits. Prudential paid PIP

benefits to Fincher, including medical and rehabilitative expenses, until those expenses

reached a total of $100,000, the PIP coverage limits set forth in the Bekeshka policy.

       On September 21, 2000, Fincher filed a putative class action complaint in

Colorado state district court on behalf of herself and all “persons who were entitled to be

offered and paid extended [PIP] benefits by Prudential . . . , as defined under the

Colorado [No-Fault] Act, C.R.S. § 10-4-710, but who were never offered and never paid

th[o]se benefits by Prudential as required by statute.” App. at 17. Fincher’s complaint

alleged that Prudential was obligated under the No-Fault Act to offer its insureds

additional (or “extended”) PIP benefits, “including medical benefits unlimited in time or

amount, and wage loss benefits unlimited in time or amount.” 

Fincher’s

complaint further alleged that Prudential violated this obligation with respect to the

Bekeshka policy because “no option existed allowing [the] insured to select either

unlimited medical benefits or unlimited wage loss benefits, and the highest aggregate

limit available was $150,000.” 

asserted claims for (1) reformation of

contract to include in the Bekeshka policy (as well as in other policies covering class


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members) the extended benefits required under the No-Fault Act, (2) breach of contract,

(3) breach of covenant of good faith and fair dealing, (4) willful and wanton breach of

contract; and (5) deceptive trade practices in violation of the Colorado Consumer

Protection Act.

       On or about October 23, 2000, Prudential removed the case to federal court based

on diversity jurisdiction. Prudential moved for summary judgment, arguing (1) it “did, in

fact, offer extended PIP benefits to the Bekeshkas, but they were rejected in favor of the

basic benefit package,” (2) in any event, “pedestrians were not entitled to extended PIP

benefits until 1998 [when the Colorado Court of Appeals issued its decision in Brennan v.

Farmers Alliance Mutual Insurance Company, 

(Colo. App. 1998)], 6 years

after the Bekeshka policy was issued, and 4 years after the Plaintiff’s accident,” and (3)

Fincher’s damages, if any, were limited by the statutory $200,000 minimum cap on

extended PIP benefits. Suppl. App. at 2.

       On June 10, 2002, the district court granted summary judgment in favor of

Prudential. The court noted that, in Brennan, “the Colorado Court of Appeals held that

pedestrians [we]re entitled to coverage from APIP [extended PIP] benefits under the No-

Fault Act.” App. at 4. According to the district court, it “previously had been unclear as

to whether pedestrians were entitled to such benefits.” 

The court concluded

that “[t]he Brennan rule should not be applied retroactively to Fincher’s 1994 accident.”

In other words, the court concluded that, “at the time of Fincher’s accident,


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Colorado law did not require that pedestrians be covered by [extended PIP] benefits,” and

Fincher could not pursue “claims based on a violation of the [extended PIP] statute when

she [wa]s not entitled to benefits under that statute.” 

                                              II.

       We review the district court’s grant of summary judgment de novo, applying the

same standards as the district court under Federal Rule of Civil Procedure 56(c). Perry v.

Woodward, 

, 1131 (10th Cir. 1999). A grant of summary judgment is

appropriate if there is no genuine issue of material fact and the moving party is entitled to

judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 

, 247-48

(1986). In applying this standard, “the substantive law will identify which facts are

material.” 

Because this is a diversity case, we apply the substantive law of

Colorado, the forum state. See Sapone v. Grand Targhee, Inc., 

, 1100 (10th

Cir. 2002). If “no [Colorado] cases exist on a point, we turn to other state court decisions,

federal decisions, and the general weight and trend of authority.” 

omitted).

                                              III.

                          Overview of No-Fault Act and Brennan

       Before directly addressing the issues raised by Fincher on appeal, we find it

helpful to review the relevant provisions of Colorado’s No-Fault Act and the decision in

Brennan interpreting those provisions. Generally speaking, “[t]he No-Fault Act requires


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that a complying policy include mandatory PIP benefits.” 

.

Section 10-4-706(1) of the Act requires an insurer to provide:

              (b)(I) Compensation without regard to fault, up to a limit of fifty
       thousand dollars per person for any one accident, for payment of all
       reasonable and necessary expenses for medical . . . and nonmedical
       remedial care and treatment . . . performed within five years after the
       accident for bodily injury arising out of the use or operation of a motor
       vehicle . . . .
              (c)(I) Compensation without regard to fault up to a limit of fifty
       thousand dollars per person for any one accident within ten years after such
       accident for payment of the cost of rehabilitation procedures or treatment
       and rehabilitative occupational training necessary because of bodily injury
       arising out of the use or operation of a motor vehicle.

Colo. Rev. Stat. § 10-4-706(1)(b)(I) and (1)(c)(I) (2001).

       Section 10-4-707 of the No-Fault Act outlines persons to whom the minimum PIP

coverages apply. More specifically, § 10-4-707 provides that the minimum PIP coverages

set forth in § 10-4-706 apply “to four groups of people: 1) the named insured, 2) resident

relatives of the named insured, 3) passengers occupying the insured’s vehicle with the

consent of the insured, and 4) pedestrians who are injured by the covered vehicle.”

.

       Section 10-4-710 of the No-Fault Act requires insurers to offer supplemental PIP

coverage to policyholders:

               Every insurer shall offer the following enhanced benefits for
       inclusion in a complying policy, in addition to the basic coverages described
       in section 10-4-706, at the option of the named insured:
               (I) Compensation of all expenses of the type described in section 10-
       4-706(1)(b) without dollar or time limitation; or
               (II) Compensation of all expenses of the type described in section

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       10-4-706(1)(b) without dollar or time limitations and payment of benefits
       equivalent to eighty-five percent of loss of gross income per week from
       work the injured person would have performed had such injured person not
       been injured during the period commencing on the day after the date of the
       accident without dollar or time limitations.

Colo. Rev. Stat. § 10-4-710(2)(a) (2001).

       Prior to Brennan, at least some insurers in Colorado had concluded that § 10-4-

710(2)(a) did not require them to offer extended PIP coverage for pedestrians. The

insurers’ conclusion rested primarily on the fact that (1) § 10-4-710 did not specifically

identify to whom supplemental coverages were applicable, and (2) the list of covered

persons in § 10-4-707 referred only to the minimum PIP coverages in § 10-4-706. See

. The insurers also concluded that “the legislative purpose of

§ 10-4-710 [wa]s to provide policyholders with a wider range of choices” and that “most

insureds d[id] not want to pay additional premiums for coverage for non-family

members.” 

       In Brennan, the parents of an injured pedestrian filed suit against the insurer of the

driver who struck their child, asserting the insurer was obligated under the No-Fault Act

to provide extended PIP benefits to cover the child’s injuries. The trial court reformed

the policy at issue to include extended PIP coverage for pedestrians (which thereby

afforded plaintiffs the right to extended PIP benefits under the policy). The Colorado

Court of Appeals affirmed the trial court’s decision to reform the policy. In doing so, the

court rejected the insurer's position outlined above and concluded the extended PIP


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coverage set forth in § 10-4-710(2)(a) was applicable to pedestrians. 

.

In reaching this conclusion, the court noted that the No-Fault Act, whose purpose was “to

avoid inadequate compensation to all victims of automobile accidents,” was “to be

liberally construed to further its remedial and beneficent purposes.” 

reviewed the language of § 10-4-710 and concluded that it clearly supported extended PIP

coverage for pedestrians:

               Although [the insurer] correctly notes that § 10-4-710(2)(a) does not
       list nor refer to persons who are eligible for coverage, when this section is
       read in context, it is apparent that the extended coverages offered there must
       apply to the categories of persons listed in § 10-4-707(1). Specifically, in
       § 10-4-710, extended coverage is to be made available “in addition to the
       coverage described in § 10-4-706.” The “types” of extended coverage to be
       provided are the “types” described in § 10-4-706(1)(b). And, the coverages
       provided in § 10-4-706(1)(b) apply without distinction to all categories of
       persons listed in § 10-4-707(1). Thus, by the plain terms of these
       provisions, § 10-4-710 describes an option to purchase coverage, but at
       higher limits, for the same persons and under the same conditions
       applicable to mandatory basic PIP coverage.

The court also emphasized that the No-Fault Act imposed a specific duty

on insurers:

              Unlike § 10-4-706, § 10-4-710 provides no mandate to the motor
       vehicle owner or operator; the purchase of the coverages by the insured, and
       therefore, the extent of the coverages, are completely optional. Conversely,
       the directive of § 10-4-710 is to the insurer, not to the insured: all that is
       required is that the insurer offer these extended benefits.
              Thus, although an insurer must offer extended coverages listed in
       § 10-4-710 which apply to all categories of persons specified in § 10-4-707,
       nothing in the No-Fault Act prohibits the named insured from limiting its
       purchase of additional coverage by scope, application, or amount.

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                District court’s construction of No-Fault Act and Brennan

       The district court here concluded that, at the time of Fincher’s accident, Colorado

law did not obligate insurers to offer extended PIP benefits for pedestrians. The district

court based its conclusion on its belief that Brennan, although clarifying that insurers

were obligated under the No-Fault Act to offer extended PIP benefits for pedestrians, was

to be applied prospectively only.

       Fincher contends, and we agree, that the district court’s reasoning is undercut by

our recent decision in Clark v. State Farm Mutual Automobile Insurance Company, 

(10th Cir. 2003), which was filed after the district court's ruling. In Clark, we

dealt with a substantially similar appeal filed by an injured pedestrian against a PIP

insurer. In sum, Clark makes clear that, contrary to the conclusion reached by the district

court, Brennan did not establish a new principle of law, and instead merely construed

§ 10-4-710 of the No-Fault Act to encompass pedestrians. Thus, we conclude that

Prudential was generally obligated at the time of Fincher’s accident to offer extended PIP

benefits for pedestrians in the amounts set forth in the No-Fault Act.

                    Rejection of Prudential’s extended coverage offer

       In a fall-back argument, Prudential contends that, even if it was obligated under

the No-Fault Act to offer extended PIP coverage for pedestrians, the uncontroverted facts

indicate that the Bekeshkas would have rejected it. In support, Prudential notes that it

offered the Bekeshkas a number of extended coverage options (none of which actually


                                              8
satisfied the requirements of the No-Fault Act) and the Bekeshkas rejected all of those

options “because they were retired and on a fixed income, and did not want to pay a

higher premium.” Aplee. Br. at 37 n.9.

       We conclude that Prudential’s arguments are contrary to the decision in Thompson

v. Budget Rent-A-Car Systems, Inc., 

(Colo. App. 1996). In Thompson, an

individual was seriously injured while a passenger in a car rented from defendant Budget.

Budget, a self-insurer under Colorado law, paid PIP benefits to the injured person in

amounts equal to the minimum PIP coverages set forth in the No-Fault Act. The injured

person’s conservator and guardian filed suit against Budget seeking additional PIP

benefits. The trial court held that Budget was obligated under the No-Fault Act to pay

medical and income loss PIP benefits to the injured party without dollar or time

limitation. Budget appealed, asserting in part that the driver (and renter of the vehicle)

would have refused extended PIP coverage if it was offered. The Colorado Court of

Appeals rejected Budget’s argument and affirmed the trial court’s reformation of the

rental agreement/insurance contract. The court held that “[w]hen an insurer fails to offer

the insured optional coverage that it is statutorily required to offer, additional coverage in

conformity with the required offer is incorporated into the agreement by operation of

law.” 

The court also refused to place any reliance on “the driver’s

after-the-fact statement that he would have refused the additional coverage if it had been

offered.” 

the court emphasized that an “insurer has no right to a jury


                                              9
trial to determine whether the insured would have purchased the coverage” because such

a “determination [would] be too speculative” and “would allow insurers to circumvent the

intent of the legislature.” 

v. Illinois Farmers Ins. Co., 

, 88 (Minn. 1981)).

       Although Prudential asserts that Thompson is distinguishable for three reasons,

none of those reasons have merit. First, Prudential asserts that Thompson “does not apply

here because it did not establish pedestrians’ rights to extended PIP benefits.” Aplee. Br.

at 38. While it is true that Thompson involved an injured passenger rather than an injured

pedestrian, that distinction should not result in our treating the two differently.

Thompson’s holding regarding the reformation of an insurance contract is, in our view,

applicable to any situation where an insurer has failed to comply with the No-Fault Act

and offer an insured the extended PIP coverage set forth therein. Second, Prudential

asserts that “[n]othing in the Thompson opinion changes the subsequent Brennan

decision,” which it asserts does not apply here. 

reasons outlined above,

however, it is clear that Brennan does apply and that Prudential was statutorily obligated

to offer to the Bekeshkas extended PIP benefits for pedestrians. Finally, Prudential

asserts this case is factually distinguishable from Thompson because, “[u]nlike

Thompson,” which involved an “after-the-fact affidavit [from the insured] suggesting that

he would not have purchased extended benefits even if they had been offered,” “the

Bekeshkas were offered and declined extended PIP coverage.” 

                                              10
asserts, “[t]here is nothing speculative whatsoever here about the facts surrounding the

Bekeshkas’ purchase decision.” 

ignores the fact that its offer to

the Bekeshkas of extended PIP benefits did not comply with the No-Fault Act (since the

amounts set forth in the offer were insufficient). Thus, like the situation in Thompson, it

would be speculation to conclude the Bekeshkas would have rejected an offer that

actually complied with the No-Fault Act. In any event, Thompson does not allow an

insurer to avoid reformation by asserting factual defenses such as the one now asserted by

Prudential.

                                  Remand for further proceedings

       Having rejected the two arguments forwarded by Prudential on appeal in support

of the district court’s summary judgment ruling, it is apparent that the judgment of the

district court must be reversed and the case remanded to the district court for further

proceedings. Although Fincher, like the plaintiff in Clark, “is entitled to reformation

under Brennan, the district court must also determine [on remand], through the exercise

of its equitable powers, the effective date of reformation.”1 

.

In doing so, the district court

       should consider all appropriate factors, including the following: (1) the
       degree to which reformation from a particular effective date would upset


       1
          In her motion for summary disposition, Fincher asks the panel to conclude “that
extended benefits are incorporated into Prudential’s insurance policy by operation of law
ab initio to the full extent mandated in the No-Fault Act.” Motion for Summary Disp. at
4. Such a ruling, however, would be inconsistent with our decision in Clark.

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       past practices on which the parties may have relied and whether [Prudential]
       anticipated the rule in Brennan; (2) how reformation from a particular
       effective date would further or retard the purpose of the rule in Brennan;
       and (3) the degree of injustice or hardship reformation from a particular
       effective date would cause the parties.

The district court’s decision regarding the effective date of reformation will,

in turn, have an impact on the viability of Fincher’s remaining claims against Prudential.

As was the case in Clark, Fincher’s contract, tort and statutory claims

       will remain viable only if the district court in the exercise of its equitable
       power determines that reformation should occur as of a date preceding its
       order of reformation. Only under those circumstances would there be an
       extant contract, tort, or statutory duty to be breached. Conversely, if
       reformation is ordered to correspond to the date of entry of the order of
       reformation, there would be no pre-existing duty to pay extended PIP
       benefits.

Lastly, the district court should consider Fincher’s motion for class

certification (which was denied as moot in light of its summary judgment ruling).

       The decision is REVERSED and the case is REMANDED to the district court for

further proceedings.

                                                   Entered for the Court

                                                   Mary Beck Briscoe
                                                   Circuit Judge




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