FILED
                                                             United States Court of Appeals
                                                                     Tenth Circuit

                     UNITED STATES COURT OF APPEALS                 April 24, 2009
                                                                 Elisabeth A. Shumaker
                            FOR THE TENTH CIRCUIT                    Clerk of Court



    FLORINDA REED,

                Plaintiff-Appellant,

    v.                                                  No. 08-1243
                                           (D.C. No. 1:07-CV-02123-REB-KLM)
    STATE FARM MUTUAL                                    (D. Colo.)
    AUTOMOBILE INSURANCE
    COMPANY, an Illinois corporation,

                Defendant-Appellee.


                             ORDER AND JUDGMENT *


Before LUCERO, PORFILIO, and ANDERSON, Circuit Judges.



         This case involves the now-repealed Colorado Auto Accident Reparations

Act (“CAARA”). See Colo. Rev. Stat. §§ 10-4-701 to 10-4-726 (repealed July 1,

2003). 1 Florinda Reed seeks reformation of a State Farm Mutual Automobile

*
  After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
1
      CAARA, which prior to repeal governed the sale of automobile insurance
in Colorado, was enacted by the Colorado legislature in 1973 for the purpose of
                                                                     (continued...)
Insurance Co. (“State Farm”) policy issued to Tho Huynh, under which benefits

were paid to Reed after Huynh struck Reed with his automobile while she was

riding her bicycle. Huynh is not a party to this case. The district court dismissed

Reed’s individual claims under Federal Rule of Civil Procedure 12(b)(6) for

failure to state a claim. 2 Exercising jurisdiction under 28 U.S.C. § 1291, we

reverse and remand for further proceedings.

      We review de novo a district court’s dismissal under Rule 12(b)(6). Teigen

v. Renfrow, 

, 1078 (10th Cir. 2007). We assume the truth of all


1
 (...continued)
avoiding inadequate compensation to victims of automobile accidents. Reid v.
Geico Gen. Ins. Co., 

, 1165 (10th Cir. 2007). It was repealed July
1, 2003. 

complaint was originally brought on behalf of herself and all others
similarly situated, but the district court dismissed the case in its entirety. State
Farm invoked both Rules 12(b)(1) and (b)(6) in support of its motion to dismiss.
Although the basis of the district court’s decision is not perfectly clear, we
conclude that the court dismissed Reed’s individual claims pursuant to Rule
12(b)(6). In analyzing the motion, the court summarized State Farm’s argument
as follows: “With respect to plaintiff’s individual claims, defendant maintains
that plaintiff fails to state a cause of action on which relief may be granted
because her damages, if any, were not caused by application of the Pedestrian
Limitation to her.” Order Granting Def.’s Mot. to Dismiss at 6 (emphasis added).
The court then accepted this argument in support of dismissal. We therefore
conclude that the dismissal of Reed’s individual claims was based upon Rule
12(b)(6), rather than Rule 12(b)(1).
       We find further support for this conclusion in that portion of the district
court’s order dismissing the claims Reed purported to bring on behalf of similarly
situated class members. In dismissing those claims, the district court expressly
invoked Rule 12(b)(1). 

reasons, defendant’s motion to dismiss the
class claims pursuant to Fed.R.Civ.P. 12(b)(1) is granted.”). Reed does not
appeal the dismissal of the class claims.

                                        -2-
well-pleaded facts in the complaint and draw all reasonable inferences therefrom

in the light most favorable to the plaintiff. 

will survive

dismissal if it alleges a plausible claim for relief. A claim is “plausible” if the

“[f]actual allegations [are] enough to raise a right to relief above the speculative

level.” Bell Atl. Corp. v. Twombly, 

, 555 (2007).

      According to the complaint, which we accept as true for purposes of this

appeal, in May 1999, Huynh struck Reed with his automobile while she was

riding her bicycle, causing her serious injuries. Huynh’s automobile was insured

by State Farm. As required by CAARA, the applicable automobile insurance

policy included personal injury protection (“PIP”) benefits to compensate injured

persons, such as pedestrians, for medical and rehabilitative expenses and lost

wages resulting from automobile accidents. One of the PIP coverage options,

which State Farm designated as a “P1” level of coverage, was the basic coverage

required by CAARA. State Farm also generally made available to its customers

enhanced PIP coverages, but it failed to offer these enhanced coverages to Huynh.

Instead of offering enhanced PIP to Huynh, State Farm offered him a policy

containing a provision stating that, whatever the level of coverage chosen by the

owner of the policy, a pedestrian who sustained a covered bodily injury was

entitled only to the basic PIP or “P1” level of benefits (the “Pedestrian

Limitation”). The policy purchased by Huynh included an overall level of PIP




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coverage that was greater than the basic PIP coverage, but less than the enhanced

coverages. It also included the Pedestrian Limitation. 3

      Following the accident, State Farm paid Reed PIP benefits at the level of

coverage chosen by Huynh. It did not invoke the Pedestrian Limitation. The

amount paid to Reed was greater than the amount that would have been paid had

the Pedestrian Limitation been applied but less than the amount Reed would have

received under the enhanced PIP coverages that were never offered.

      Reed claims to have incurred PIP-compensable expenses over and above

those paid by State Farm. According to Reed’s complaint, CAARA required State

Farm to offer Huynh extended or enhanced PIP coverage that covered pedestrians

and, because it did not make such an offer, reformation of the insurance policy to

include enhanced coverage is required by operation of law. State Farm filed a

motion to dismiss for failure to state a claim. According to State Farm’s reading

of the complaint, Reed challenged the application of the Pedestrian Limitation.

State Farm argued that because the Pedestrian Limitation was not applied when

the time came to pay benefits, Reed could not demonstrate that State Farm had

caused her any damages.




3
      Reed asserted in her complaint that she did not have a certified copy of
Huynh’s State Farm policy but that “upon information and belief” the policy
contained the level of PIP coverage discussed herein and included the Pedestrian
Limitation.

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         The district court agreed with State Farm. It held that because “the

Pedestrian Limitation was not applied in the calculation of benefits paid to [Reed]

under the policy,” she could not “sustain her individual claims, all of which are

necessarily premised on the application of the Pedestrian Limitation to determine

the benefits due her.” The court therefore held that Reed had failed to state a

claim.

         We cannot agree with the district court’s reasoning. Both State Farm and

the district court misapprehend the nature of Reed’s alleged injury. CAARA

required automobile insurance policies to include certain minimum or basic PIP

benefits to compensate injured persons for medical and rehabilitative expenses

and lost wages resulting from automobile accidents. See Colo. Rev. Stat.

§ 10-4-706(1). CAARA also required an insurer to offer to its insured added or

enhanced PIP coverage. See § 10-4-710(2)(a). Under Colorado law, “[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.” Thompson v. Budget Rent-A-Car-Sys.,

Inc., 

, 990 (Colo. App. 1996) (emphasis added); see Brennan v.

Farmers Alliance Mut. Ins. Co., 

, 554 (Colo. App. 1998) (applying

the ruling in Thompson to a failure to offer extended coverage that included

pedestrians); see also Clark v. State Farm Mut. Auto. Ins. Co., 

,

1241 (10th Cir. 2003) (“[W]hen . . . an insurer fails to offer the insured optional

                                           -5-
coverage that satisfies [CAARA], additional coverage in conformity with the

offer mandated by statute will be incorporated into the policy.” (quotation

omitted) (ellipsis and emphasis in original)).

      Reed’s complaint states a claim for relief under CAARA. Accepting her

factual allegations as true, Reed claims that she was injured due to State Farm’s

failure to offer Huynh enhanced PIP coverages that extended to pedestrians. 4

Huynh was never given the opportunity to purchase such coverage because State

Farm failed to offer it, in violation of CAARA. Under governing Colorado law,

this failure to make the statutorily-required offer entitles Reed to reformation of

the insurance policy to include enhanced PIP coverage. 

. Thus, it is immaterial that State Farm did not apply the Pedestrian

Limitation in Reed’s case. Whether Reed can prove that State Farm in fact failed

to offer enhanced PIP to Huynh is a different matter. But at this stage, Reed has




4
       It is clear that Reed does not claim that the Pedestrian Limitation was
actually applied to her. Application of the Pedestrian Limitation would have
resulted in payment of benefits at the basic PIP level, instead of at the higher
level of coverage actually purchased by Huynh. Because Reed is seeking the
enhanced PIP benefits that CAARA required be offered, she is clearly arguing
that she was injured by the existence of the Pedestrian Limitation in all offered
coverage levels at the time Huynh made his selection. By including that
Limitation in the policy, without offering Huynh enhanced PIP that extended to
pedestrians, State Farm violated CAARA. Thus, Reed argues that she was injured
by this failure, rather than by any later application of the Limitation.

                                         -6-
sufficiently alleged that State Farm failed to make the statutorily-required offer

and that this failure caused her injury.

      The judgment of the district court is REVERSED, and the case is

REMANDED for further proceedings consistent with this order and judgment.



                                                     Entered for the Court


                                                     Carlos F. Lucero
                                                     Circuit Judge




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