Allen v. United Services Automobile Association

MOTION for Summary Judgment

D. Colo.December 13, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:16-cv-01056-RM-NYW JEFFREY ALLEN, an individual, Plaintiff, v. UNITED SERVICES AUTOMOBILE ASSOCIATION, a Texas corporation, Defendant. DEFENDANT UNITED SERVICES AUTOMOBILE ASSOCIATION’S MOTION FOR SUMMARY JUDGMENT Pursuant to Federal Rule of Civil Procedure 56, Defendant United Services Automobile Association (“USAA”) moves for entry of an order granting summary judgment in its favor on all claims asserted by Plaintiff Jeffrey Allen (“Plaintiff”) as follows: PRELIMINARY STATEMENT USAA’s medical payments coverage (“med-pay”) pays for reasonable and necessary medical expenses for treatment received up to one year after an auto accident. In this action, Plaintiff raises two—and only two—alternative theories to challenge the validity of the one-year time limit in an automobile policy USAA issued to Ellen L. Allen. Both of these theories are legally and factually untenable and are, in fact, time-barred. The first theory is that any time limit on med-pay benefits is prohibited by and, thus, void under Colorado law. This theory has been rejected by several courts, including the Tenth Circuit. The second theory is that USAA failed to Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 1 of 22 2 disclose the time limit before Ellen Allen purchased her insurance policy. This theory is also fatally flawed for at least two reasons. First, USAA owed any duty of disclosure to the policyholder or applicant for insurance, Ellen Allen, not Plaintiff. Second, the time limit was fully disclosed in the Policy and other correspondence to Ellen Allen before the Policy became effective and before Plaintiff paid premiums for the Policy. Moreover, the one-year time limit has been in Ms. Allen’s Policy since 2006—nearly ten years prior to Plaintiff filing this lawsuit. Because Plaintiff brings this lawsuit well over three years after USAA disclosed the time limit on med-pay benefits, these claims are also time barred. Finally, Plaintiff presents no viable cause of action to support his claims for declaratory or injunctive relief. Accordingly, summary judgment is warranted on all of Plaintiff’s claims. MOVANT’S STATEMENT OF MATERIAL FACTS 1. Colorado Automobile Policy No. 01037 12 23 7104 8 (the “Policy”), issued by USAA, identifies Ellen L. Allen as the named insured and Plaintiff as a named operator. (Separate Statement of Undisputed Material Facts in Supp. of Def. USAA’s Mot. for Summ. J. (“SOF”) ¶¶ 1-2.) 2. On October 10, 2006, USAA sent Ms. Allen, via U.S. Mail, an Automobile Policy Packet containing a renewal and explanation of changes to the Policy (the “2006 Renewal Packet”). (SOF ¶ 3.) The packet was not returned to USAA as undeliverable. (Id. ¶ 4.) 3. The first page of the 2006 Renewal Packet notified Mrs. Allen, as the policyholder, that her “renewal policy contained some important changes” and advised her to “read the attached form, IMPORTANT CHANGES TO YOUR AUTO POLICY, for details about these changes.” (SOF ¶ 5 (emphasis in original).) Significantly, this form explained Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 2 of 22 3 modifications to the med-pay coverage available under the Policy, as follows: (SOF ¶ 6 (emphasis added).) 4. The 2006 Renewal Packet notified Ms. Allen that the effective date of the revised policy was December 5, 2006. (SOF ¶ 7.) 5. On October 11, 2012, USAA sent Mrs. Allen, via U.S. Mail, another Automobile Policy Packet containing a renewal of her Policy for the period of December 5, 2012, to June 5, 2013 (the “2012 Renewal Packet”), the policy period covering the accident at issue here. (SOF ¶ 10.) The packet was not returned to USAA as undeliverable. (Id. ¶ 11.) 6. The 2012 Renewal Packet included a summary disclosure form intended to provide “a basic guide” to the coverages and exclusions in the Policy. (SOF ¶¶ 12-14.) The disclosure advises the policyholder that it “is a general description,” “not a policy of any kind,” and that “[a]ll coverage is subject to the terms, and exclusions of your policy . . . .” (Id. ¶ 15.) The summary disclosure form further states: PLEASE READ YOUR POLICY FOR COMPLETE DETAILS. THIS SUMMARY DISCLOSURE FORM SHALL NOT BE CONSTRUED TO REPLACE ANY PROVISION OF THE POLICY ITSELF. (Id. ¶ 16 (emphasis in original).) 7. Due to other revisions to the Policy, the 2012 Renewal Packet also included a complete copy of the insurance policy, to be effective December 5, 2012. (SOF ¶¶ 10, 12.) 8. The Policy provides for med-pay coverage of up to $100,000 for each “covered Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 3 of 22 4 person.” (SOF ¶ 18.) In defining the scope of med-pay coverage, the Policy expressly states that covered expenses include only those fees that: (1) are reasonable and medically necessary; (2) are incurred to treat bodily injury sustained by a covered person in an auto accident; and (3) are “incurred for services rendered within one year of the date of the auto accident.” (Id. ¶ 19 (emphasis added).) 9. Plaintiff was injured in a car accident on May 9, 2013. (Class Action Compl. & Jury Demand (“Compl.”) [ECF No. 1] ¶ 52.) According to Plaintiff, USAA denied medical payments coverage in accordance with the Policy’s terms in June 2014. (Id. ¶ 53.) 10. Plaintiff filed this lawsuit on May 9, 2016, asserting claims for violation of the Colorado Consumer Protection Act (“CCPA”) (Colo. Rev. Stat. § 6-1-105), common-law bad- faith breach of an insurance contract, statutory bad-faith denial of a covered insurance benefit (id. §§ 10-3-1115, 10-3-1116), breach of contract, and declaratory relief. (Compl. ¶¶ 67-97.) LEGAL STANDARD Summary judgment is warranted under Federal Rule of Civil Procedure 56 when “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). 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). An issue is “genuine” if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997). ARGUMENT USAA is entitled to summary judgment on all of Plaintiff’s claims because Colorado Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 4 of 22 5 Revised Statute section 10-4-635 (the “Med-Pay Statute”) does not prohibit time limits on benefits, and USAA disclosed the applicable limit to policyholder Ellen Allen before she paid premiums and received coverage under the Policy. Moreover, even if Plaintiff had alleged viable theories to support his claims, each of his claims must still be dismissed as untimely under the applicable statute of limitations, because the disclosures at issue occurred over ten years ago. Finally, Plaintiff’s claim for declaratory relief fails as matter of law, because it is a form of relief, not a separate claim. I. PLAINTIFF CANNOT PROVE THAT USAA ENGAGED IN THE ACTIONABLE CONDUCT REQUIRED FOR ANY OF HIS LEGAL CLAIMS Plaintiff’s claims fail as a matter of law because he cannot establish an essential element of each claim—that USAA engaged in any actionable wrongdoing. To succeed on his breach-of- contract claim, Plaintiff must establish that USAA breached the Policy by failing to perform some contractual term. See W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992). With respect to his CCPA claim, Plaintiff must demonstrate that USAA “knowingly engaged in a deceptive trade practice” as defined under that Act. See Crowe v. Tull, 126 P.3d 196, 204 (Colo. 2006). “To establish the tort of bad faith breach of an insurance contract, [Plaintiff] must show that the insurer acted both unreasonably and with knowledge of or reckless disregard of its unreasonableness.” Pham v. State Farm Mut. Auto. Ins. Co., 70 P.3d 567, 572 (Colo. App. 2003). Finally, with respect to his claim for statutory bad faith, Plaintiff must establish that USAA delayed or denied payment of a covered benefit without a reasonable basis. Colo. Rev. Stat. § 10- 3-1115; Vaccaro v. Am. Family Ins. Grp., 275 P.3d 750, 760 (Colo. App. 2012). Here, while Plaintiff alleges a laundry list of practices to meet the actionable-conduct requirement of his claims for relief (see Compl. ¶¶ 69, 71, 76-77, 83, 95), his allegations of Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 5 of 22 6 wrongdoing ultimately rest on two basic premises that supposedly render the alleged conduct unlawful. First, Plaintiff claims that the Med-Pay Statute prohibits insurers from placing any time limit on statutorily-required med-pay coverage, thus rendering any contractual time limit, including the one in the Policy, void and unenforceable. Second, Plaintiff claims that USAA is liable even if time limits are permitted under Colorado law because USAA did not adequately disclose that any time limit applied to Plaintiff’s med-pay coverage. Because these two foundational premises are legally and factually untenable, as demonstrated below, Plaintiff cannot prove that USAA engaged in any actionable conduct. USAA is, therefore, entitled to summary judgment on Plaintiff’s claims. A. Plaintiff’s Illegality-Based Claims Fail Because Colorado Law Does Not Prohibit Time Limits on Med-Pay Coverage Plaintiff’s contention that Colorado’s Med-Pay Statute requires time-unlimited med-pay coverage, underpins each of his causes of action. For his tort-based claims, Plaintiff alleges that USAA engaged in deceptive trade practices under the CCPA, as well as common-law and statutory bad faith, by failing to offer time-unlimited med-pay coverage, marketing and issuing insurance policies that contain a time limit on med-pay coverage, and by denying med-pay benefits on the basis of that allegedly unenforceable time limit. (Compl. ¶¶ 69, 76-77, 83.) Plaintiff’s breach-of-contract claim also rests on the purported illegality of the Policy’s time limit because Plaintiff must first establish a basis to judicially reform the Policy before he can show that USAA breached it. (See Compl. ¶¶ 94-96.) Only if the Policy is reformed to exclude the time limit and provide for time-unlimited coverage would USAA’s denial of coverage for medical fees incurred beyond the one-year limitation constitute a breach of the Policy. Accordingly, to succeed on any of his illegality-based claims, Plaintiff must establish that Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 6 of 22 7 Colorado’s Med-Pay Statute requires an insurer to offer and provide time-unlimited med-pay coverage. This, he cannot do. And, even if Plaintiff were to succeed in convincing this Court that time-unlimited coverage is required, his claims still fail. The existing legal landscape precludes Plaintiff from meeting the scienter requirement of each of his tort-based claims, and his breach- of-contract claim fails because he cannot show any basis for reforming the Policy retroactively, such that USAA’s previous claim denials would constitute breaches of an existing obligation. 1. The Med-Pay Statute Does not Require that an Insurer Offer or Provide Time-Unlimited Med-Pay Coverage The Med-Pay Statute does not state that time-unlimited med-pay coverage is required. See Colo. Rev. Stat. § 10-4-635. Moreover, every court that has considered the scope of coverage mandated by the Med-Pay Statute has rejected the notion that time-unlimited coverage is required. See Countryman v. Farmers Ins. Exch., 545 F. App’x 762, 766 (10th Cir. 2013) (concluding that the statutory language of the Med-Pay Statute “is more amenable to allowing time limits than prohibiting them” and holding that a time limit on med-pay coverage did not violate that statute); Baker v. Allied Prop. & Cas. Ins. Co., 939 F. Supp. 2d 1091, 1102-03 (D. Colo. 2013) (holding that the insurer did not violate the Med-Pay Statute by imposing a time limit on med-pay coverage required by the statute); Countryman v. Farmers Ins. Exch., 865 F. Supp. 2d 1108, 1110-13 (D. Colo. 2012) (same), aff’d, 545 F. App’x 762 (10th Cir. 2013); Cortez v. USAA GIC Cas. Ins. Co., No. 11CV148, ¶¶ 18-19 (Colo. Dist. Ct., Garfield Cnty., Aug. 31, 2012) (rejecting argument that the Med-Pay Statute mandates “permanent coverage”). 1 Accordingly, there is no basis for concluding that the Med-Pay Statute requires insurers to offer or provide time-unlimited med-pay coverage. Plaintiff’s disagreement with the decisions 1 A copy of the Cortez decision is attached hereto as Exhibit A. Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 7 of 22 8 of every court that has ruled on this issue does not make the Policy’s time limit void as against public policy; nor does it make inclusion and enforcement of that provision unfair, deceptive, or an act of bad faith. As a result, USAA is entitled to judgment as a matter of law on all of Plaintiff’s claims premised on the purported requirement for time-unlimited coverage. 2 2. Existing Case Law Precludes any Finding that USAA Acted with the Knowledge or Intent Required for Plaintiff’s Tort Claims While the Court’s inquiry into Plaintiff’s time-unlimited coverage theory could end here because this Court should reject Plaintiff’s theory, the mere fact that numerous courts have agreed that Colorado’s Med-Pay Statute permits insurers to limit the duration of med-pay coverage also forecloses Plaintiff’s CCPA and bad-faith claims. These prior rulings preclude any finding that USAA acted with the level of wrongful intent or culpability required to succeed on Plaintiff’s tort claims. Thus, even if this Court becomes the first Court to rule that time limits are prohibited, Plaintiff’s CCPA claim fails as a matter of law because he cannot establish that USAA “knowingly engaged in a deceptive trade practice.” Crowe, 126 P.3d at 204 (emphasis added). “Liability [under the CCPA] . . . is dependent upon knowledge or intent existing at the time” the challenged conduct occurred. Id. (recognizing that “[t]he CCPA provides an absolute defense to a misrepresentation caused by negligence or an honest mistake” (internal quotation marks 2 Plaintiff’s breach-of-contract claim fails even if the court were to judicially reform the Policy, because reformation is only retroactive when the insurer should have anticipated that the coverage provided did not comply with Colorado law, a result that is untenable given the current state of Colorado law. May v. Traveler’s Prop. Cas. Co. of Am., 263 F. App’x 673, 681-82 (10th Cir. 2008); Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1244 (10th Cir. 2003); Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550, 556 (Colo. App. 1998) (holding the remedy of reformation is an equitable one within the district court's discretion so that even when the insurance policy is reformed, the contractual obligation to pay may be prospective from the date of the judicial reformation). Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 8 of 22 9 omitted)). Given the current legal landscape, which establishes only that time-limited med-pay coverage is permissible, USAA could not have knowingly engaged in a deceptive trade practice by issuing policies containing a time limit, or by denying coverage in reliance on such a provision. Simply put, USAA cannot knowingly violate a requirement to provide time-unlimited med-pay benefits when there is no indication that such a requirement even exists. See Nguyen v. Am. Family Mut. Ins. Co., No. 15-cv-0639-WJM-KLM, 2015 WL 5867266, at *8 n. 4 (D. Colo. Oct. 8, 2015) (rejecting identical CCPA claim because the statute does not include, and courts have not imposed, a requirement to provide time-unlimited coverage). 3 Plaintiff’s claims for common-law and statutory bad faith fail for similar reasons. To establish a claim for common-law bad faith, Plaintiff must show both that USAA engaged in unreasonable conduct and that it acted with knowledge of or reckless disregard for the unreasonableness of its actions. See Pham, 70 P.3d at 572. A claim of statutory bad faith requires a showing that USAA acted “without a reasonable basis.” Colo. Rev. Stat. § 10-3-1115. Reasonableness is evaluated on an objective basis that accounts for standards of conduct common to the relevant industry. Sipes v. Allstate Indem. Co., 949 F. Supp. 2d 1079, 1085 (D. Colo. 2013). And, for either claim, “[a]n insurer’s decision to deny benefits to its insured must be 3 In Nguyen, Judge Martinez dismissed the majority of the plaintiffs’ claims but left the contract and declaratory judgment claims pending while he certified questions to the Colorado Supreme Court. Nguyen, 2015 WL 5867266, at *12. The Colorado Supreme Court has not agreed to certify the requested questions and has not responded in any way since Judge Martinez’s Order was issued fourteen months ago. As set forth in USAA’s response to Plaintiff’s Motion to Stay (ECF No. 24), these certified questions have no bearing on Plaintiff’s claims in this case. The crux of the certified questions is how a court should determine whether a specific time limit is reasonable. Here, however, Plaintiff has not challenged USAA’s time limit on the grounds of reasonableness, only on the alleged failure to disclose the time limit before Ms. Allen purchased the Policy, a wholly different issue. Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 9 of 22 10 evaluated based on the information before the insurer at the time of that decision,” which information “includes the state of the law.” Nguyen, 2015 WL 5867266, at *11. Here, numerous court decisions establish a legal framework in which time limits on med- pay coverage are permissible and valid. Consequently, it is unsurprising that policy terms limiting the duration of med-pay coverage are common within the insurance industry, as Plaintiff even recognizes. (Compl. ¶ 43 (alleging that “numerous other insurers” have imposed time limits on med-pay coverage”).) USAA, therefore, cannot be deemed to have acted without a reasonable basis, let alone in a knowingly unreasonable manner. See Nguyen, 2015 5867266, at *11; Pham, 70 P.3d at 573-74 (affirming summary judgment on bad faith claim when reliance on statutory language and existing case law was reasonable). Accordingly, Plaintiff’s tort claims also fail to the extent those claims rest on the illegality of time-limited med-pay coverage. USAA is entitled to summary judgment on those claims. B. Plaintiff’s Misrepresentation-Based Claims Fail Because He Cannot Establish Any Actionable Misrepresentation Recognizing that time limits on med-pay coverage have been allowed by all courts to consider the issue, Plaintiff provides an alternative theory for each of his claims. Plaintiff’s second contention, however—that USAA failed to disclose the Policy’s time limit on med-pay coverage in its summary disclosure form—is equally flawed. With respect to his CCPA claim, Plaintiff alleges that USAA engaged in deceptive trade practices by: (i) marketing and issuing policies containing a time limit without disclosing that limit to the insured in advance of the policies’ purchase; and (ii) providing misleading disclosure statements regarding the terms, scope, and availability of med-pay coverage. (Compl. ¶ 69.) The Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 10 of 22 11 alleged failure to disclose the time limit also forms the basis of Plaintiff’s claims for bad faith and breach of contract. (Compl. ¶¶ 76, 83, 94). To be clear, however, Plaintiff does not contend that USAA never disclosed the time limit. He readily admits that the limit is expressly set forth in the Policy itself, which the policyholder received with and at the same time as the summary disclosure form. (Compl. ¶¶ 25-26; SOF ¶¶ 12-13.) Plaintiff’s misrepresentation claim is, therefore, based solely on USAA’s alleged nondisclosure in the summary disclosure. This theory fails for several reasons. First, any duty to disclose was to Mrs. Allen, not Plaintiff, who was neither the policyholder nor an applicant for insurance. Second, USAA’s summary disclosure included the statutorily required language regarding med-pay coverage and was provided to the policyholder, Mrs. Allen, at the statutorily-required time. Third, the text of USAA’s summary disclosure forecloses any claim of misrepresentation because it expressly advised the policyholder to read the complete policy and that all coverage under the Policy was subject to the terms, conditions, and exclusions contained therein. And, fourth, USAA expressly disclosed the time limit in an Important Notice when it first implemented the one-year time limit in 2006 and before the revised policy became effective. 1. USAA’s Duty of Disclosure Was to Mrs. Allen, the Applicant and Policyholder, not to Plaintiff USAA cannot be held liable for nondisclosure in the absence of a duty to disclose. Francis v. Mead Johnson & Co., No. 1:10-cv-00701-JLK, 2010 WL 5313540, at *5 (D. Colo. Dec. 17, 2010). Here, any duty owed by USAA to disclose material facts concerning the scope of coverage available under the Policy ran to the policyholder, Mrs. Allen, not to Plaintiff, merely a covered operator on the policy. Plaintiff appears to rely on statutory disclosure requirements concerning med-pay Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 11 of 22 12 coverage to impose a broad duty of disclosure on USAA. (See, e.g., Compl. ¶¶ 29-30, 33.) His reliance on these requirements, which are embodied in Colorado Revised Statute section 10-4- 636, is misplaced. Under section 10-4-636, insurers are required to provide “applicants for insurance” a summary disclosure form that explains “the major coverages and exclusions” of insurance policies offered for sale, identifies the “general factors considered in cancellation, nonrenewal, and increase-in-premium situations,” and includes certain statutorily-required statements concerning med-pay coverage. Colo. Rev. Stat. §§ 10-4-636(1)(a), (1)(c), (4) (emphasis added). This disclosure form must also include a notice that the “policyholder should read the policy for complete details,” and that the disclosure “shall not be construed to replace any provision of the policy itself.” Id. § 10-4-636(1)(a) (emphasis added). As indicated by the statutory language, the purpose of the summary disclosure required by section 10-4-636 is to provide applicants for insurance and potential policyholders with a general summary of the coverage offered by an insurer. Id. § 10-4-636(1)(c) (specifying that the insured “shall furnish the required disclosure form to applicants”). But, here, Plaintiff was neither the policyholder nor the applicant for insurance. The Policy was instead issued to Mrs. Allen, who was both the applicant for insurance and the policyholder. Thus, any duty of disclosure created by section 10-4-636 was owed to Mrs. Allen as the applicant and policyholder, not to Plaintiff. Accordingly, Plaintiff’s misrepresentation-based claims fail as a matter of law because he cannot establish that USAA owed him any duty of disclosure, that USAA made any representations to him, or even that he relied on any representations by USAA. 2. USAA’s Summary Disclosure Form Complies with the Statutory Requirements for the Content and Timing of Disclosures Colorado Revised Statute section 10-4-636 specifies what an insurer must state regarding Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 12 of 22 13 the availability of medical payments coverage, as well as when the disclosure must be provided to the “applicant for insurance.” Regarding content, section 10-4-636(4) states that the statutorily-required disclosure must specify that: (a) Medical payments coverage pays for reasonable health care expenses incurred for bodily injury caused by an automobile accident, regardless of fault, up to the policy limits chosen by the insured; (b) Medical payments coverage is primary to any health insurance coverage available to an insured when injured in an automobile accident; (c) Medical payments coverage applies to any coinsurance or deductible amount required to be paid by the person's health coverage plan, as defined in section 10- 16-102(34); and (d) An insured who is injured in an automobile accident will not receive benefits from medical payments coverage for any medical expenses incurred as a result of an accident that is the fault of the insured unless medical payments coverage is purchased. Colo. Rev. Stat. § 10-4-636(4). As to timing, the statute provides that an insurer must “furnish the required disclosure form to applicants for insurance coverage at the time of the initial insurance purchase and thereafter on any renewal . . . .” Id. § 10-4-636(1)(c) (emphasis added). USAA’s summary disclosure complies with these requirements. The disclosure form was included in the 2012 Renewal Packet that USAA sent to Mrs. Allen nearly two months before the renewal period began. (SOF ¶ 13.) Further, the disclosure contained in Mrs. Allen’s 2012 Renewal Packet includes each of the statutorily-required statements regarding med-pay coverage. (Id. ¶ 17.) Plaintiff, in fact, does not allege that USAA failed to include any of this statutorily-prescribed language. Instead, he seeks to add a new requirement to this list without any statutory basis for doing so. Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 13 of 22 14 3. The Text of USAA’s Summary Disclosure Forecloses Any Claim of Misrepresentation Plaintiff’s misrepresentation-based claims also fail because USAA did not make any misrepresentations, either affirmatively or by omission. As previously stated, there is no dispute that the Policy expressly set forth and disclosed the applicable time limit on med-pay benefits. (Compl. ¶¶ 25-26.) Plaintiff’s only claim is that the summary disclosure contained in the same mailing as the complete Policy misrepresented the terms of the Policy by omitting the time limit. In other words, Plaintiff essentially claims that he—or rather Ms. Allen as the policyholder—had no obligation to read the Policy itself. This underlying assumption has been flatly refuted by Colorado courts, which acknowledge that an insured is charged with knowledge of the policy’s terms. See Pete’s Satire, Inc. v. Commercial Union Ins. Co., 698 P.2d 1388, 1391 (Colo. App. 1985); Unigard Sec. Ins. Co. v. Mission Ins. Co. Trust, 12 P.3d 296, 300 (Colo. App. 2000); see also Montez v. Am. Family Mut. Ins. Co., No. 04CV6448, 2005 WL 2893870, at *4 (Colo. Dist. Ct., Denver Cnty., June 29, 2005) (recognizing that “plaintiff was charged with knowledge of the policy’s coverages” upon receipt of the policy and that her failure to contact the insurer after receiving the policy was “indicative of the fact” that the coverage stated in the policy was the coverage she intended to purchase). Further, in this case, the policyholder received the Policy and the summary disclosure form in the same packet and at the same time. (SOF ¶¶ 12-13.) Any claim of misrepresentation due to alleged omissions in the summary disclosure is, thus, belied by the fact that the full text of the Policy was available to the policyholder when she obtained the summary disclosure form. That summary disclosure expressly stated that “[a]ll coverage is subject to the terms, conditions, and exclusions of your policy” and advised the policyholder to “PLEASE READ YOUR Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 14 of 22 15 POLICY FOR COMPLETE DETAILS!” and that “THIS SUMMARY DISCLOSURE FORM SHALL NOT BE CONSTRUED TO REPLACE ANY PROVISION IN THE POLICY ITSELF.” (Id. ¶¶ 15-16 (emphasis in original).) This statement, in fact, is statutorily- required, thereby demonstrating “that an insured in Colorado has no right to rely on a summary disclosure, to the exclusion of reading the policy itself.” Nguyen, 2015 WL 5867266, at *10. Thus, Plaintiff’s assumption that the summary disclosure essentially relieved the policyholder of any obligation to read the Policy itself is fundamentally flawed. 4. USAA Expressly Advised the Policyholder of the Time Limit Six Years Before the Applicable Renewal Policy Became Effective Finally, Plaintiff cannot establish as a factual matter that USAA failed to disclose the one-year time limit because USAA expressly disclosed the time limit when the policy change was first implemented in 2006. USAA sent Mrs. Allen, as the policyholder, a renewal packet in October 2006 with an insert titled “IMPORTANT CHANGES TO YOUR AUTO POLICY” that specifically advised her that “[t]he time limit for Medical Payments Coverage is reduced from three years from the date of the accident to one year from the date of the accident.” (SOF ¶¶ 3-6.) This renewal packet was mailed on October 10, 2006, and identified the effective date of the revised policy as December 5, 2006. (Id. ¶¶ 3, 7.) That is, contrary to Plaintiff’s allegation, Ms. Allen received notice of the one-year limit nearly two months before the policy became effective. Ms. Allen not only paid the premiums for this revised policy, indicating her acceptance of the terms, but also continued to renew her policy every six months, including for the Policy effective December 5, 2012, which is at issue here. (Id. ¶¶ 8-9.) Moreover, these undisputed facts establish that the policyholder had full notice of the Policy’s terms, thereby conclusively refuting any allegation that USAA failed to disclose the Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 15 of 22 16 applicable time limit on med-pay coverage. In essence, Plaintiff contends that USAA should have included this one-year limit in the statutorily prescribed summary disclosure form instead of in a separate notice titled “IMPORTANT CHANGES TO YOUR AUTO POLICY,” without any basis for this contention. Consequently, USAA is entitled to summary judgment on Plaintiff’s misrepresentation-based claims. II. PLAINTIFF’S CLAIMS ARE BARRED BY THE STATUTE OF LIMITATIONS USAA is also entitled to summary judgment on each of Plaintiff’s claims on the grounds that they are time-barred because the allegedly illegal or defective disclosure occurred nearly ten years before Plaintiff filed suit. USAA sent the 2006 Renewal Packet that first advised Mrs. Allen, the policyholder, of the Policy’s time limit on med-pay benefits in October 2006; it was not returned as undeliverable. (SOF ¶¶ 3-4.) Accordingly, Plaintiff had constructive knowledge of the applicable time limit in October 2006. Yet, Plaintiff waited until May 2016, nearly 10 years later, before filing this lawsuit. Because the longest applicable limitations period is three years, each of Plaintiff’s claims is time-barred. CCPA claims are subject to a three-year statute of limitations that begins to run when the plaintiff has actual or constructive knowledge of the allegedly deceptive or unfair act. Colo. Rev. Stat. § 6-1-115. Here, as discussed above, Plaintiff’s CCPA claim is based on two premises: (1) that imposing any contractual time limit on med-pay coverage is illegal, such that USAA’s inclusion and enforcement of such a limitation is an unfair or deceptive practice; and (2) that USAA misrepresented the scope of med-pay coverage by failing to disclose the time limit in its summary disclosure. Plaintiff, however, had constructive knowledge of the Policy’s time limit no later than October 2006, nearly 10 years before he filed the Complaint. Thus, whether based on Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 16 of 22 17 the supposed illegality of the time limit or USAA’s alleged misrepresentation of med-pay coverage, Plaintiff’s CCPA claim is time-barred. See Nguyen, 2015 WL 5867266, at *10-11 (holding that identical CCPA claim was time-barred when plaintiff received the policy containing the time limit on med-pay benefits over three years before filing suit). Plaintiff’s breach-of-contract claim, which is based on a request for reformation of the Policy, is also subject to a three-year statute of limitations. Courts facing requests to reform an insurance policy to include statutorily-mandated coverage have applied the statute of limitations prescribed for claims based on the statute at issue. See, e.g., Nelson v. State Farm Mut. Auto. Ins. Co., 419 F.3d 1117, 1120 (10th Cir. 2005) (applying statute’s three-year limitations period to reformation claim based on allegation that insurer failed to offer insurance coverage mandated by that statute). Claims for violation of the Med-Pay Statute must be filed within three years of when the plaintiff learned or should have learned that the insurer did not provide the statutorily- required coverage. See Colo. Rev. Stat. § 13-80-101(j) (specifying three-year limitations period of “[a]ll actions under part 6 of article 4 of title 10, C.R.S.,” which governs auto insurance); cf. Crosby v. Am. Family Mut. Ins. Co., 251 P.3d 1279, 1285 (Colo. App. 2010) (“A claim asserting that, contrary to statutory mandate, an insurer did not offer [certain] coverage to the policyholder accrues when the plaintiff knew or should have known that the insurer did not do so.”) But, as explained above with respect to his CCPA claim, Plaintiff failed to file this action within that three-year window. His breach-of-contract claim is therefore time-barred. Plaintiff’s claims for common-law and statutory bad-faith fare no better, as both are subject to shorter limitations periods. Common-law bad faith claims are subject to Colorado’s two-year statute of limitations for tort claims, which begins to run when the claim accrues. Colo. Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 17 of 22 18 Rev. Stat. § 13-80-102; Cork v. Sentry Ins., 194 P.3d 422, 427 (Colo. App. 2008). A claim accrues under Colorado law when the plaintiff has actual or constructive knowledge of both the nature of the injury and its cause. Id. Here, like his CCPA claim, Plaintiff’s common-law bad- faith claim stems from two practices—the purportedly illegal inclusion and enforcement of the med-pay time limit in the Policy and USAA’s alleged misrepresentation of the scope of med-pay coverage. Because Plaintiff knew (or should have known) in October 2006 that the Policy contained a time limit on med-pay coverage—and, thus, that he was allegedly injured by imposition of that limitation—his common-law bad faith claim expired no later than October 2008, nearly eight before he filed this lawsuit. His claim for common-law bad faith is, therefore, also time-barred. Finally, Plaintiff’s statutory bad-faith claim under Colorado Revised Statute section 10-3- 1116 is subject to the one-year statute of limitations prescribed for actions for penalties. Section 10-3-1116 does not set forth a specific limitation period. However, actions for any penalty are subject to a one-year limitation period that begins to run when the claim accrues. Colo. Rev. Stat. § 13-80-103(1)(d). Numerous state and federal courts have held that section 10-3-1116 creates an action for a penalty. See Hernandez v. Am. Standard Ins. Co. of Wis., No. 11-CV-03076-RBJ, 2013 WL 6633392, at *3-4 (D. Colo. Dec. 16, 2013) (concluding that section 10-3-1116 creates a penalty under the Kruse test); Rooftop Restoration, Inc. v. Ohio Sec. Ins. Co., No. 15-cv- 00620-LTB-KTM, 2015 WL 9185679, at *4 (D. Colo. Dec. 17, 2015) (same); Davis v. Am. Family Mut. Ins. Co., 15CV30020, at 6 (Colo. Dist. Ct., Jefferson Cnty., July 9, 2015) (same). 4 Plaintiff’s claim for statutory bad faith is, therefore, subject to the one-year limitations period for 4 A copy of the Davis opinion is attached hereto as Exhibit B. Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 18 of 22 19 penalties. Plaintiff’s claim for statutory bad faith is clearly barred under the one-year statute of limitations, as that claim “accrue[d] in the same manner as [Plaintiff’s common-law] bad faith claim[].” See Wardcraft Homes, Inc. v. Emp’rs Mut. Cas. Co., No. 13-cv-00789-PAB-KLM, 2014 WL 4852117, at *10 (D. Colo. Sept. 29, 2014). Plaintiff’s statutory and common-law bad faith claims are predicated on the same alleged conduct, i.e., the inclusion and enforcement of the time limit on med-pay benefits, which Plaintiff claims is void as against public policy or as a product of misrepresentation. (Compl. ¶¶ 76, 83-84.) Although Plaintiff alleges that USAA unreasonably denied his claim for med-pay benefits, that allegedly wrongful denial was merely a by-product of USAA’s enforcement of the express terms of the Policy. Thus, Plaintiff should have been aware of the facts underlying his statutory claim—the imposition of the time limit on med-pay coverage—no later than October 2006. Thus, like his common-law claim, Plaintiff’s statutory claim accrued in October 2006, nearly 10 years before he filed this lawsuit. See Gargano v. Owners Ins. Co., No. 12-cv-01109- CMA-BNB, 2014 WL 3843786, at *2 (D. Colo. Aug. 5, 2014) (“‘The point of accrual requires knowledge of the facts essential to the cause of action, not knowledge of the legal theory supporting the cause of action.’” (quoting Murry v. GuideOne Specialty Mut. Ins. Co., 194 P.3d 489, 492 (Colo. App. 2008))). His claim for statutory bad faith is, therefore, untimely. 5 Accordingly, because each of Plaintiff’s claims is time-barred under the applicable statute of limitations, USAA is entitled to summary judgment on all of Plaintiff’s claims. 5 Plaintiff’s statutory claim for bad faith is untimely even if it accrued upon denial of his claim for med-pay benefits. Plaintiff alleges that USAA rejected his claim for med-pay benefits in June 2014, nearly two years before he filed his lawsuit. (Compl. ¶ 53.) Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 19 of 22 20 III. PLAINTIFF’S CLAIM FOR DECLARATORY RELIEF FAILS Plaintiff’s declaratory-relief claim should be dismissed because “a declaratory judgment is a form of relief rather than an independent cause of action.” Savant Homes, Inc. v. Collins, No. 13-cv-2049-WJM-MEH, 2015 WL 899302, at *11 (D. Colo. Feb. 27, 2015) (granting summary judgment on declaratory-judgment claim). Plaintiff has identified a declaratory judgment (and corresponding injunctive relief) as among the remedies he seeks (Compl., Prayer for Relief, ¶ C), yet there is no viable cause of action to support these remedies. As set forth above, no court has held the Med-Pay Statute requires time-unlimited benefits. Further, USAA disclosed the one- year limit to Ms. Allen before her policy became effective in 2006, making Plaintiff’s claims fatally deficient both in substance and in timing. Because Plaintiff has not presented any valid cause of action, the Court “has no authority to issue a declaratory judgment remedy.” Zyburo v. Continental Cas. Co., 60 F. Supp. 3d 531, 534 (S.D.N.Y. 2014) (“If plaintiff does not present a valid cause of action, as determined by state law, then this Court has no authority to issue a declaratory judgment remedy.”) Thus, Plaintiff’s declaratory-relief claim must be dismissed. CONCLUSION For the foregoing reasons, Defendant USAA respectfully requests that the Court enter judgment as a matter of law in favor of USAA on all of Plaintiff’s claims. Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 20 of 22 21 Dated: December 13, 2016. Respectfully submitted, Original signature on file at the law firm of Wheeler Trigg O’Donnell LLP s/ Jeremy A. Moseley John M. Vaught (#9531) Jeremy A. Moseley (#40831) Wheeler Trigg O’Donnell LLP 370 Seventeenth Street, Suite 4500 Denver, CO 80202-5647 Telephone: 303.244.1800 Facsimile: 303.244.1879 Email: vaught@wtotrial.com moseley@wtotrial.com Attorneys for Defendant, United Services Automobile Association Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 21 of 22 CERTIFICATE OF SERVICE (CM/ECF) I HEREBY CERTIFY that on December 13, 2016, I electronically filed the foregoing DEFENDANT UNITED SERVICES AUTOMOBILE ASSOCIATION’S MOTION FOR SUMMARY JUDGMENT with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses:  Jeremy A. Moseley moseley@wtotrial.com, kern@wtotrial.com, vinnola@wtotrial.com  Jessica Joan Cash jcash@fuicellilee.com , kmumby@fuicellilee.com, mmumby@fuicellilee.com  John Mark Vaught vaught@wtotrial.com, kern@wtotrial.com  John Michael DeStefano , III johnd@hbsslaw.com  Robert Bruce Carey rob@hbsslaw.com, clareb@hbsslaw.com, ecfphx@hbsslaw.com s/ Jeremy A. Moseley Case 1:16-cv-01056-RM-NYW Document 30 Filed 12/13/16 USDC Colorado Page 22 of 22 EFILED Document Thís mattercomes before the Corut upon the parties' c(oss motions for determination of a question of law. The Court has reviewed the pertinent pleadings and record, considered the parties' oral arguments and is otherwise firlly advised. Therefore, the Court finds, concludes and orderg as follows: l. This case is a dispuæ over automobile liability insurance policies issued by, and claim adjustment procedures allegedly used by, Defendant USAA Casualty lnsurance Company (USAA). USAA issues automobile liability instuance policies which inciude coverage for nredical payments (in the insurance Índustry, commonly referred to as MedPay coverage). Among other claims, Plaintiff Cortez alleges USAA's policies violate the requirements of $$ 10- 4-635 and -636, C.R.S. because the policies ìmpose a Õne-year time limit on MedPay coverâge. Cortez seeks certification of ¿ class generally consisting of all Colorado policy holders who were not covered bec¿use of the one-year time limit plus, for injunctive relief only. all cunent and future Colorado policyholders, 2. With exceptions not relevant to the present motiono $ 10-4-635, C.R.S., imposes the following obligation on issuers of automobile liability insurancepolicies: [Njo automobile liability or motor vehicle liabilþ policy innting against loss resulting &om liability imposed by law for bodily iqinry or death suffered by a¡ry perSon æising out of the ownership, maintenance, or use of a motor vehicle shall be delivered or issued for delivery in this state unless coverage is provided in the policy or in a supplemental poticy for medical payments with benefits of five thousand dollars for bodily injury, sickness, or disease resulting from the ownership, nraintenance, or use of the motor vehicle. Exhib¡t A to Motion for Summ ary Judgment GARFIELD COI.INTY, COLORADO :DISTRICT COURT Court Address: Garfield County Courthouse 109 8th Street, Suite 104 Glenwood Springs, Colorado 81601 Phone Number: 970-945-5075 Plaintiff(a): EDUARDO CORTEZ, on behalf of himself and all others similarly situated Defendant(s): USAA CASUALW INSURANCE COMPANY I I I v3. u Gârlreld uounty ulstrrct uourt ytn iling Date: Aug 31 2012 12:39PM MD' iling ID: 46215598 .evierv Clerk: N/A Case Nunrber: I lCVl48 Div.: C ORDER determinine QUESTION Of'LAW: Q 10-4-635, C.RS. Case 1:16-cv-01056-RM-NYW Document 30-1 Filed 12/13/16 USDC Colorado Page 1 of 5 Cortez v. USAA Casuaþ I¡surance Company CaseNo.1l CV 148 $ 104-635(1), C.R.S. 3. As related to this requirement, the policies issued by USAA include the following provision: A. Medical Payments Coverage 1. V/e will pay only the reasonable fee for medically necessary and appropriate medical services and the reasonable expense for frureral services. These fees and expenses must: a. Result from BI [bodily injury] sustained by a covered person in an auto accident; and b. Bc incuned for services rendered within one year of the date of the auto accident. USAA Auto Policy (the Policy), Exhibit 1 to Amended Complaint. 4. The parties agree the USAA policies contain the language above. However, the parties disagree whether or no.t the one-year time limit in the Policy is permitted or prohibited as a matter of law by $ 104-635(1), C.R.S. Ilence, the cross motions for determination of a question of law. \Mhen the material facts related to a question of law arc not disputed, the Court may determine the question of law at any time afterthe pleadings are completed. C.RC.P. 56(h). 5. The statute is silent about the time frame during which MedPay coverage must be provided. According to Plaintiff, this silence means the coverage must last forever. According to USAA, the silence means the coverage must be provided for a reasonable period of time and, the USAA argument continues, the one-year coverage provided by the USAA Polþ is reasonable as a matter of law. 6. To apply the statute, the task of the Court is to determine and implement the intent of the legislature. ShelterMut.Ins. Co. v. Mid-Centu$¿lns. Co.,246P.3d 651,660-61 (Colo.2011). Both parties argue the Court need look no further than the piain language of the statute, yet that plain language leads the parties ûo opposite conclusions. Consistent with the discussion below, the Court conciudes the statute is ambiguous. The Court must consider the principles of statutory construction, including the principles applicable to ambiguous stailrtes. 7. As Colorado changed from a no-fault to a fault-based insurance structure, the Colorado iegislature formed the Interim Committee on Automobile lnsurance. The Committee made recommendations in a 2005 report, Exhibit 3 to Plaintiffs Reply to PlaintifPs Rule 56 Motion (ReplÐ. Among other things, the committee recommended trvo new pieces of legislation**one to provide insurance coverage for emergency care without waiting for a determination of fault Page 2 of5 Case 1:16-cv-01056-RM-NYW Document 30-1 Filed 12/13/16 USDC Colorado Page 2 of 5 Cortez v, USAA Casualty Insurance Company Case No. I I CV 148 and anotlrer to provide S5,000 of medical payments insurance coverage without regard to fault. Exhibit 3, p. xii. The legislation proposed by the committee, like the statute now in force, was silent about the dwation of MedPay coverage. Before the submission and ultimate adoption of the present statute, other legislation was proposed. Other legislation included higlrer amounts of coverage but only for emgrgency medical care, Exhibit I to Reply, and higher coverage amounts ($15,000) including all heaith oare expenses but limited to services provided within 5 years of the accident, Exhíbit 7 to Reply. 8. As noted by USAA, some of the record submitted by Plaintiff does not qualify as "legislative history" because it is not history specific to the bill ultimately enacted by the legislature. This includes the bill which imposed a S-year time limit. It is not part of the legislative history that the legislature considered and rejected a time limit. 9. Ffowever, the broader record submitted by Plaintiffretains some relevance because the Corirt must also consider the "object sought to be obtained" and the "circumstances under which the stafute was enacted." ü 2-4-203(1Xb), (c.), C.R.S. In fact, without the Cornmittee Report, Exhibit 3, the record would contain virtually nothing to explain the legislative ohoice to include MedPay benefits for any puqpose other than emergency tauma care. 10. The legislative history for the present statute confinns it was thc result of substantial negotiation and coinpromise. See legislative testimony, Exhibit C to USAA Rule 56 C.ross Motion (Cross Motion). However, this direct legislative history is silent about the issue raised in this cæe-whether or not a time limit may be imposed on the duration of MedPay coverage. 1 1. On the one hand, USAR is correct th¿t the direct legislative history focuses on problems with payment for emergency bauma care provìders. The direct history is virtually silent on other purposes of the legislation. Onthe other hand, if the legislatureos only intent was to provide for emergency trauma providers, it easily could have eliminated the terms of the stanlte which provide coverage for other medical care. The Exhibit 3 Committee Report indicates that, even if emergency üauma care was the most important consideration, coverage for other medical costs was an additional concern. 12. USAA is also correct that the statute recognizes an insurance policy may impose limits of some kind on MedPay coverâge. Initially, the statute provides a complying MedPay provision must cover "medically ùecessary and accident-related tr¿uma care or medical care." $ l0-4- 635(2Xa), C.R.S. Similarly, the first portion of the definition of "medical care" defines such care as "all medically necessa¡y and accident-related health care and rehabilitation services . . . ." $ I 0-4-635(5)(e), C.R.S. If the legislature intended that there be no limits of any kind other than the dollar amount of the coverage, it could have stopped rvith this language. 13. Instead, the legislature included a qualification on the defrnition of "medical care" to care "for which benefits under the terms of the medical payments coverage in the policy are payable." Id. To make the entire st¿tue effective as tequired by $ 2-4-201(1Xb), this qualification must mean something. Page 3 of5 Case 1:16-cv-01056-RM-NYW Document 30-1 Filed 12/13/16 USDC Colorado Page 3 of 5 Cortez v. US.A,4 füsuahy Insu¡ance Comparry CaseNo.ll CV 148 14. In tlre context of contact law. if a contact has no express duration or termination datÊ, its duration is for a reasonable time as determined by all the surrounding circumstances. Cocquyt v. Shower.68 Colo. 89,90, 189 P. 606,607 (1920). 15. Althougb it appears Colorado has not expressly decided the issue in a statutory context, many states apply the same principle to statutes which are silent about time frames: a. In Maineo a statute required fire insurance policies to include a requirement that, as requested by the insurance company, the insured must submit to examûrations under oath by insurancs company representatives. The st¿tute set no deadline for the inswance company's request or the ínsured's submission after zuch a request. The Maine Supreme Court concluded the insuranoe company's request must occur within a reasonable time and the insured's submission to examination must occur within a reasonable time of the request. Marquis v. Farrr-Eamily Mut. Ins. Co.,628 A,zd644,649 (Me. 1993) b. In Maryland, statutes allowed a suwiving spouse to eleot to t¡ke a statutory share of a deceased spouse's estate rather than whatever was bequeathed in the will. By statute, tho other legatees could pay their respective shares of this obligation in cash based on the value of the property in the estate on the date of the spouse's election. The statute was silent about any deadline for other legatees to exercise the choice to pay in cash. lVhere other legatees waited 13 yeæs to make this shoice, the Maryland Court of Appeals soncluded, "we shall infer a reasonable time limit to avoid an absurd and unjust result.'o Grçen v. Nassif, 426 Md. 258, 285,44 A.3d 321, 337 Q012), reconsideration denied'(June 21, 20lZ). c. In New Yorh a statute authorized that payment of medicaid payments, in certain circumstances, could be delayed or suspended until an investigation was completed. The statute imposed no time limit on the completion of the investigation. The New York üial court concluded the investigation must be completed within a reasonable time, Sisnature Health Ctr." LLC v. New York State Dept. of Health 29 Misc. 3d769,777,910 N.Y.S.2d 841,847 (Sup. Ct. 2010) affd. 91 A.D.3d 959, 938 N.Y.S.2d 130 (2012). d. In Louisianq â statute required insurance companies to return certain unearned premiums to insurance premium finance companies within a specified time frame. In some circumstances, the statute further required the {inance companies to refund some monies to the insured. How€ver, the st¿ture imposed oo deadline for the refund. The Louisiana Courl of Appeal held a reasonable time deadline is implied when a statute is silent about the deadline. Louisiana Auto. Fin. Services. lnc. v. Dep't of Econ. Dev.. Ofüce of Fin. Institutior.rs,98-0981 La. App. I Cir. 5114199,743 So. 2d217,220 (La- Ct. App. 1999). Page 4 of5 Case 1:16-cv-01056-RM-NYW Document 30-1 Filed 12/13/16 USDC Colorado Page 4 of 5 Cortez v. USAA Casuahy Insurance Company Case No. 1l CV l4E 16. The Court may consider other law on the same or a similår subject. $ 2-4-203(lxd), C,R.S. \üith respect to the "basic coverage" required by $ l0-4-620, C.R.S., for all Colorado automobile insurance policies, insurance policies may include conditions or exclusions that "are not inconsistent with" the statutory mandates. $ 10-4-623(1), C.R.S. 17. To resolve an ambiguity, the Corut may consider the consequences of a proposed construction of the statute. $ 24-2-3X1)(e), C.R.S. A üild anomalyarises if Plaintiffis conect that MedPay coverage endures forever. MedPay coverage oan be elíminated only if the insured rejects the coverage in writing in a manner which satíslies the statute. However, the insurer is required to keep this written rejection for only three years. $ 10-4-635(l)(b), C.R,S. To authorize the insurer to destroy tho proof of rejection after three years is ttot consistent with a legislative intent that coverage lasts forever in the absence of a rvritten rejectiou. 18. The Court concludes the Med-Pay mandate set forth in $ 10-a-635, C.R.S., requires that the coverage continue for a reasonable time. In the absence of a statutory or regulatory definition of the duration of a reasonable time, an insurance contract may define the duration of the coverage, so long as it is reasonable. 19. Plaintiffalso argues the medical payment ptovision dilutes or limits the mandatory coverage, and therefore, the provision is void as a violation of public policy. Since the Cout has concluded the statute does not mandate pernranent coverage, a reason¿ble time limit does not dilute or limit any mandatory coverage. 20. USAA also asks the Court to approve the l-year time limit in the insurance contract as e matter of law In support of this l-year limit, USAA relies on a secondary source which concludes a l-year limit is "unambiguous" and a Colorado case which merely observed, without discussion, that the policy involved had a l-year time limit. This record is insufficient for the Court to conclude, as a matter of law, that a l-year limit is reasonable. 21. For the reasons set forth above, the Court concludes the MedPay coverage required by $ l0-4-635, C.R.S. must provide coverage for a reasonable period of time. Neither the stah¡te nor the record before the Court demonsbates the one year of coverge set forth in the Policy is reasonâble as a matter of law. This remains a disputed issued of fact not properly resolved under c.R.c.P. só(h). Done onAugus 31,2012. BY THE COURT: S B. BOYD Page 5 ofS COURT Case 1:16-cv-01056-RM-NYW Document 30-1 Filed 12/13/16 USDC Colorado Page 5 of 5 DATE FILED: fuly 9, 2015 3 CASE NUMBER: 2015CV3( A COURT USE ONLY A Case Number: 15CV30020 Division:06 Courtroom: 5B DISTRICT COURT, JEFFERSON COLINTY, COLORADO 100 Jefferson County Parkway Golden, Colorado 8040 1 -6002 AMERICAN FAMILY MUTUAL INSURANCE coMPANY, Defendant(s) v JOHN DAVIS, Plaintiff(s) ORDER RE: PLAINTIFF'S MOTION FOR DETERMINATION OF LAW ANI) DEFENDANT'S BRIEF REGARDING THE ADMISSIBILITY OF APPRAISAL A\ryARD, DISCOVERY FROM THE APPRAISAL PANEL, AND THE STATUTE OF LIMITATIONS OPM THIS MATTER comes before the Court on the parties' cross briefs for a determination of law regarding the admissibility of the appraisal award and discovery of the appraisal process. Defendant also asserts that the statute of limitations bars Plaintiffls claim for violation of C.R.S. $ 10-3-l I l5 and C.R.S. $ l0-3-l l 16. After reviewing the pleadings, applicable law, and being otherwise fully advised, the Court rules as follows. L BACKGROUNI) Plaintiff owns a home located at 8 Blue Fox Court, Littleton, Colorado 80127 (the "Property"). Plaintiff had a home owner's insurance policy on the Property issued by Defendant (the "Policy"). In August 2013, a wind and hailstorm damaged the Property. Plaintiff filed an insurance claim against the Policy for the damage to the home. Defendant inspected the Property. On August 27,2013, Defendant provided Plaintiff an estimate of repairs with a replacement cost value of 511,549.26 and actual cash value of 55,420.26, after deduction of the $2,500 deductible. (Ex. B.) Defendant completed a second estimate on August 29,2013 stating a replacement cost value of $11,833.36 and actual cash value of $5,562.31, after deductible. (Ex.2.) In October 2013, Plaintiff retained C3 Group, Inc. to assist him in the claims process. On Plaintiff s behalf, C3 Group notified Defendant that they contested the amount of loss calculated by Defendant and demanded appraisal. (Ex. D.) Under the Policy, if the parties disagree on the amount of losso either may demand an appraisal of the loss. (Ex. 4.) For an appraisal, each party will choose an appraiser and the two appraisers will choose an umpire. (Id.) The appraisers will separately determine the amount of loss. (Id.) If the appraisers agree on the amount of loss, Defendant will accept that amount. Exhibit B to Motion for Summary Judgment Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 1 of 8 ûd.) If they disagree, they will submit their differences to the umpire and the amount of loss will be determined by agreement from any two of these three persons. (Id.) The parties' appraisers did not agree on the amount of loss and the matter was submitted to the umpire. The appraisal process concluded on April 14,2014 with an award of $69.993.50 for replacement loss and $29,817.47 as actual loss. (Ex. F.) On April 15,2014, Defendant issued supplemental cash payment of $21,755.16. Then after repairs, Defendant paid the recoverable depreciation of $25,460.98. On January 7,2015, Plaintiff initiated this suit asserting claims of statutory bad faith breach of insurance contract pursuant to C.R.S. $ 10-3-1115(1XA) and C.R.S. $ 10-3-1116(l), common law bad faith breach of insurance contract, and breach of contract. After discussion at the case management conference, the Court permitted the parties to file cross-briefs on (a) the extent to which the appraisal amount is admissible as evidence of bad faith, and (b) the extent to which discovery from the appraisers and the umpire is permissible. II. CROSS MOTIONS FOR DETERMINATION OF LA\ry A. LEGAL AUTHORITY Trial courts may issue rulings on determinations of matters of law pursuant to C.R.C.P. 56(h), which provides that, at any time after a case becomes at issue, parties may move for a determination of a question of law and that Court may determine the issue when there is no genuine issue of material fact. Henisse v. First Transit. Inc.,247 P.3d 577,579 (Colo. 20ll). Thus, in determining whether a genuine issue of material fact exists, the nonmoving party is entitled to all inferences that reasonably may be drawn from the undisputed facts, and the court must resolve any doubt of a genuine issue of material fact in favor of the nonmoving party. In re Estate of McCreath,240P.3d4l3,4l7 (Colo. App. 2009). The purpose of C.R.C.P. 56(h) is to 'oallow the court to address issues of law which are not dispositive of a claim (thus warranting summary judgment) but which nonetheless will have asignificantimpactuponthemannerinwhichthelitigationproceeds.''@ U.S., 891 P.2d952,963 n.l4 (Colo. 1995). Resolving these issues enhances "the ability of the parties to prepare for and realistically evaluate their cases." Id.; see also Jones v. Feiger Collision & Killmer,903P.2d27,33 (Colo. App. l99a), rev'd on other grounds,926P.2d1244 (Colo. 1996) (Rule is designed "to save time and expense and simplify the trial."). B. ANALYSIS The parties seek a determination of law regarding the admissibility of the appraisal award and the ability to seek discovery from the appraisers and umpire. 2 Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 2 of 8 i. Appraisol Award Plaintiff argues that the appraisal award is admissible to demonstrate how much damage actually occurred to the Property, thereby showing the unreasonable nature of Defendant's appraisal. Defendant objects to such evidence as irrelevant to the claims at issue. Relevant evidence is "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." C.R.E. 401. "Although relevanto evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issueso or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." C.R.E. 403. For violation of statutory bad faith, Plaintiff must prove that Defendant unreasonably denied or delayed payment of benefits to Plaintiff. Kisselman v. Am. Fam. Mut. Ins. Co., 292 P.3d964,974 (Colo. App.20l1). To prevail on his common-law bad faith claim,'oan insurer acts in bad faith in delaying the processing of or denying a valid claim when the insureros conduct is unreasonable and the insurer knows that the conduct is unreasonable or recklessly disregards the fact that the conduct is unreasonable." Travelers Ins. Co. v. Savio,706 P.2d 1258, 1275 (Colo. 1985). Plaintiff must further prove that Defendant's unreasonable conduct caused Plaintiff s damages. See CJI-Civ .25.2. Here, Plaintiff seeks to show the alleged lack, or inadequacy, of Defendant's initial inspection and estimate. In order to do so, Plaintiff seeks to juxtapose Defendant's assessment with what he contends is the correct damages award: the monetary amount resulting from appraisal. This approach, however, requires a presumption that the umpire's decision correctly identified the amount of appropriate coverage, even though the correct damage assessment (at least for purposes of a bad faith analysis) is one of many factual issues appropriate for jury consideration. Accepting the umpire's award as evidence of Property damage is to allow his expert testimony conclusions without qualification or foundation under C.R.E. 702. Ultimately, the umpire's award is not relevant to show the reasonableness of Defendant's conduct. Further, such evidence could result in an unnecessary and impermissible exploration into the appraisal process, causing jury confusion. C.R.E. 402, 403 and 702 thus render this evidence inadmissible. The Court determines that the amount of the appraisal award is inadmissible as evidence of bad faith or amount of loss in Plaintiffs case in chief. As with any issue in limine, of courseo grounds to admit evidence of this type may arise based on the presentation of evidence and positions asserted at trial. J Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 3 of 8 ii. Discoveryfrom Appraisers and Umpire Defendant argues that the Court should not permit discovery regarding the appraisers and umpires because they do not have information relevant to the issues presented and such discovery is not proportional to the case pursuant to CAPP Rule 1.3. By contrast, Plaintiff concedes that discovery from the appraisers and umpire is generally impermissible under arbitrator immunity. However, he contends that discovery regarding their personal observations of the Property is permissible for fact witness testimony. An arbitrator is 'oan individual appointed to render an award, alone or with others, in a controversy that is subjectto an agreementto arbitrate." C.R.S. S 13-22-201(2). An appraiser meets the defrnition of arbitrator when the appraiser acts in a decision making capacity. See Providence Wash. Ins. Co. v. Gulinson,2l5 P. 154, 155 (Colo. 1923). These individuals are immune from civil liability. C.R.S. ç 13-22-214(l). As such, an arbitrator'oshall not be competent to testiff and may not be required to produce records as to any statement, conduct, decision, or ruling that occurred during the arbitration proceeding" in a judicial proceeding. C.R.S. ç l3-22-214(4Xa). While discovery cannot be elicited on the arbitrator's thought processes, the arbitrator immunity does not forbid all forms of discovery. See Twin Lakes Reservoir & Canal Co. v. Platt Rogers" Inc.,147 P.2d 828, 836 (Colo. 1944) ("Under our view, the questioned evidence was not intended to vary, or add to, the terms of the award nor accomplish such; rather, it was directed to what took place before the arbitrators, what was in controversy, and what matters entered into the decision, and so was properly received."); Nasca v. State Farm Mut. Auto. Ins. Co.,12P.3d 346,349 (Colo. App. 2000). (The Court permitted affidavits from the arbitrators when not used to establish the thought process of the panel members.); see also Treadwell v. Vill. Homes of Colo.. Inc., 222P.3d 398, 400 (Colo. App. 2009) ("[W]here the parties empower an arbitrator to resolve an issueo courts may not review the merits . . . of the arbitration decision."). Plaintiff has presented the Court with no valid basis for discovery over matters addressed by the arbitrators here. As noted in C.R.S. ç l3-22-2I4(4Xa), arbitrator testimony is generally not permitted. Plaintiff establishes no relevance for testimony from any of these individuals outside of their protected roles as participants in the arbitration process. The Court thus declines to allow discovery into these protected and immaterial matters. III. MOTION FOR SUMMARY JUDGMENT Finally, Defendant contends that the statute of limitations bars Plaintiff s statutory claims of bad faith. Defendant does not articulate the procedural basis under which it asserts this argument; howevero the Court construes the argument as a motion for summary judgment.l I Defendant's argument, if successful, is dispositive on Plaintifls claims. Thus, its contention is not appropriate for determination of law, but instead, suitable for an assertion of summary judgment. See Bd. of Cnty Comm'rs v. U.S., 891 P.2d 952,963 n. 14 (Colo. 1995) (The purpose of C.R.C.P. 56(h) is to "allow the court to address issues of law which are not dispositive of a claim (thus warranting summary judgment) but which nonetheless will have a significant impact upon the manner in which the litigation proceeds."). 4 Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 4 of 8 A. LEGAL AUTHORITY Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits [submitted] . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.o' C.R.C.P. 56(c); Miller v. Van Newkirk,628P.2d 143,145 (Colo. App. 1980). A material fact is simply afaú that will affect the outcome of the case. Mt. Emmons Mining Co. v. Town of Crested Butte,690P.2d231,239 (Colo. 1984). The party moving for summary judgment bears the initial burden of presenting the basis for a motion for summary judgment and identi$ing those portions of the record which demonstrate the absence of any genuine issues of material faú or any triable issues of fact. Continental Air Lines. Inc. v. Keenan,T3l P.2d708,712 (Colo. 1987). Once this initial burden has been met, the burden shifts to the nonmoving party to establish that there is a triable issue of fact. Id. at7l3. The nonmoving party must set forth specific facts through affidavits or other means to show that there is a genuine issue for trial, and may not rest upon the mere allegations or denials in the pleadings or simple argument. Burman v. Richmond Homes Ltd., 821P.2d913,917 (Colo. App. 1991). If the nonmoving party cannot muster sufficient evidence to establish that there is a triable issue of material fact, the moving party is entitled to summary judgment as a matter of law. Keenan, 731P.zd at7l3. "Where . . . summary judgment is sought regarding an issue on which the moving party would not bear the burden of persuasion at trial, the moving party can meet its initial burden of production by showing that there is an absence of evidence in the record to support the nonmoving party's case." D.R. Horton. Inc.-Denver v. D & S Landscaping. LLC,2l5 P.3d 1163, 1166-67 (Colo. App. 2008). Once the moving party established this, the burden then shifts to the nonmoving party to establish a triable issue of fact. Id. If the nonmoving party fails to provide sufficient evidence to establish a triable issue of fact, the moving party is entitled to judgment as a matter of law. Id. Summary judgment is a drastic remedy, which should only be granted when there is a clear showing that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. KN Energy" Inc. v. Great Western Sugar Co. , 698 P.2d 769,776 (Colo. 19S5). In assessing a summary judgment motion, a court must view all facts in the light most favorable to the nonmoving party, give the nonmoving party the benefit of all favorable inferences that may reasonably be drawn from the evidence, and resolve all doubts as to the existence of a materialîact against the moving party. Vigil v. Franklin, 81 P.3d 1084, 1086 (Colo. App. 2003), rev'd on other grounds, 103 P.3d 322 (Co\o.2004). B. ANALYSIS Defendant argues that Plaintiff s statutory bad faith claim pursuant to C.R.S. $ 10-3-l I l6 is subject to a one-year statute of limitations, and as such, the claim is untimely. Plaintiff 5 Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 5 of 8 disputes that a one-year statute of limitations applies and even if limited to one-year, genuine issues of fact preclude summary judgment on Plaintiff s claim. i. Applicable Statute of Limitation A common law "bad faith breach of insurance contract claim is a tort claim governed by the two-year statute of limitations" in C.R.S. $ 13-80-102. Cork v. Sentry, 194 P.3d 422,427 (Colo.App.2008). "A bad faith cause of action accrues when both the nature of the injury and its causes are known or should be known through the exercise of reasonable diligence." Id.; see also C.R.S. $ 13-80-108(l). "Even once the elements necessary for accrual are clear, it can be difficult to prove exactly when a plaintiff knew or should have known of both the injury and its causepursuanttosectionl3-80-108(l)." Brodeurv.Am.HomeAssuranceCo.,169P.3dl39, 148 (Colo. 2007). Actions for any penalty 'oshall be commenced within one year after the cause of action acmues." C.R.S. $ l3-80-103(1xd). To determine "whether a statutory claim is one for a penalty, in the context of determining the correct statute of limitation to apply" the court looks "to whether (l) the statute asserted a new and distinct cause of action; (2) the claim would allow recovery without proof of actual damages; and (3) the claim would allow an award in excess of actual damages." Kruse v. McKenna, 178 P.3d 1198, l20l (Colo. 2008). Colorado appellate courts have not directly addressed whether C.R.S. $ l0-3-ll16 is subject to a one-year or two-year statute of limitations. Further, Colorado federal district court's have disagreed on whether a violation of C.R.S. $ l0-3-l116 is a tort or a penalty. Compare Gargano v. Owners Ins. Co., No. I2-CV-01109-CMA-BNB, 2014 WL 1032303, at *3 (D. Colo. Mar. 18,2014) reconsideration denied 2014 WL 3843786 (D. Colo. Aug. 5, 2014) (agreeing with the parties' undisputed position that the two-year statute of limitations period applied to the statutory claim), with Hemandez v. Am. Standard Ins. Co., No. I l-CV-03076-RBJ, 2013 WL 6633392, at *4 (D. Colo. Dec. 16,2013) (finding that a statutory bad faith claim constitutes a penalty). Thus, the Court looks to the three elements from Kruse for a determination of whether the statutory claim is a penalty or a tort. Pursuant to C.R.S. $ l0-3-1116(4), "[t]he action authorized in this section is in addition to, and does not limit or affect, other actions available by statute or common law now or in the future." C.R.S. $ l0-3-ll16(4). Prior courts have also found that C.R.S. $ l0-3-ll15 and C.R.S. $ 10-3-1116 creates a new and distinct cause of action. See e.s., Kisselman,292 P.3d at 974 ("Accordingly, we conclude the General Assembly intended [C.R.S. $ l0-3-ll15 and C.R.S. $ 10-3-1116] to impose a new statutory duty on insurers. . . ."); Vaccaro v. Am. Family Ins. Grp.,275 P.3d 750,756 (Colo. App.2012) ("[C.R.S. $ 10-3- ll15 and C.R.S. $ 10-3-11161 create[s] a right of action separate from the common law tort of bad faith breach of an insurance contract."). The first element from Kruse is met. The Court similarly concludes that that the second and third elements of Kruse are satisfied. The statute requires no proof of actual damages. A claimant must only prove that defendant unreasonably denied or delayed payment of benefits owed. Kisselman, 292 P.3d at 974. Further, C.R.S. $ 10-3-1116 allows for recovery of "reasonable attorney fees and court 6 Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 6 of 8 costs and two times the covered benefit." C.R.S. $ 10-3-1116(l) (emphasis added). Thus, such an award may be in excess of the claimant's actual damages. Accordingly the Court determines that Plaintiff s statutory bad faith claims constitute a penalty and are subject to a one-year statute of limitations pursuant to C.R.S. $ l3-80-103(lXd). ii. Applicatíon of the Statute of Limitations Defendant argues that the statute of limitations began to run on Plaintifls claim on November 21,2013. On this date, Plaintiff retained a public adjuster and advised Defendant that they disagreed with the amount of loss and invoked the appraisal clause. Plaintiff responds that he could not have known all the material facts essential to its claim until Defendant completed processing his claim. He argues that the full extent of the delay and denial of Plaintiffls claim cannot be determined until Defendant made a final determination, which occurred upon Defendant's payment of the appraisal award on April 15,2014. "Ordinarily when a claim accrues and, consequently, whether a claim is barred by the statute of limitations are questions of fact .. .." Jackson v. Am. Family Mut. Ins. Co.,258 P.3d 328,332 (Colo. App. 2011). "However, when the material facts are undisputed and reasonable persons could not disagree about their import, these questions may be decided as a matter of law." [d. Viewing the facts in the light most favorable to Plaintiff and giving Plaintiff the benefit of all favorable inferences, genuine issues of material fact exist regarding when Plaintiff became a\ryare of Defendant's alleged unreasonable delay or denial of his insurance claim. Accordingly, the Court cannot conclude that Plaintiff s claim for violation of C.R.S. $ l0-3-l115 and C.R.S. $ l0-3-11 l6 is barred by the one-year statute of limitations. 7 Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 7 of 8 C. CONCLUSION For these reasons, the Court DENIES Plaintiff s Motion for Determination of Law, and GRANTS IN PART and DENIES IN PART Defendant's Brief Regarding the Admissibility of Appraisal Award, Discovery from the Appraisal Panel and the Statute of Limitations. The Court Orders as follows: Evidence of the appraisal award amount is inadmissible as evidence of the amount of Property damage or of Defendant's bad faith and unreasonable conduct; ii. The Court denies PlaintifPs request for discovery from the appraisers; and llt. The Court holds that PlaintifPs statutory claim is subject to a one-year statute of limitations; however, issues of fact exist which preclude a final determination on whether the statute of limitations bars Plaintiff s claim for violation of C.R.S. $ l0-3-1116. Done in Golden, Colorado this 9th day of July,2015. BY THE COURT: Christopher C. sek District Court Judge 8 Case 1:16-cv-01056-RM-NYW Document 30-2 Filed 12/13/16 USDC Colorado Page 8 of 8