Roberts v. Printup, 04-3141.

• Decision Date: 12 September 2005
• Docket Number: No. 04-3141.,04-3141.
• Citation: 422 F.3d 1211
• Parties: Brenda C. ROBERTS, Plaintiff-Judgment Creditor-Appellant, v. Patrick PRINTUP, Jr., Defendant-Judgment Debtor, Shelter Mutual Insurance Company, Garnishee-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

422 F.3d 1211

Brenda C. ROBERTS, Plaintiff-Judgment Creditor-Appellant, v. Patrick PRINTUP, Jr., Defendant-Judgment Debtor, Shelter Mutual Insurance Company, Garnishee-Appellee.

No. 04-3141.

United States Court of Appeals, Tenth Circuit.

September 12, 2005.

David A. Hoffman (Donald W. Vasos, with him on the briefs), Vasos Law Offices, Shawnee Mission, KS, for Plaintiff-Judgment Creditor-Appellant.

Craig C. Blumreich (Joel W. Riggs with him on the brief), Gehrt & Roberts, Chtd., Topeka, KS, for Garnishee-Appellee.

Before SEYMOUR, HOLLOWAY, and BRISCOE, Circuit Judges.

BRISCOE, Circuit Judge.

Brenda Roberts, a judgment creditor, appeals the district court's grant of summary judgment to Shelter Mutual Insurance Company, garnishee. We exercise jurisdiction pursuant to 28 U.S.C. § 1291, affirm in part, reverse in part and remand.

I. Facts and Procedural History

On April 18, 2000, Roberts obtained insurance from Shelter for a newly-acquired vehicle that was titled and registered to both her and Patrick Printup, Jr., her sixteen-year old son. The insurance policy provided up to $25,000.00 in liability coverage per person for both property damage and bodily injury. The policy also included $4,500.00 in Personal Injury Protection (PIP). Roberts was listed as the insured with Printup listed as an insured driver.

On April 21, 2000, Printup was driving the vehicle and Roberts was a passenger when the brakes apparently failed. Printup drove approximately two blocks, then turned onto a downward sloped alley. He then lost control of the vehicle and struck a utility pole, chain link fence, and park bench. Roberts sustained bodily injuries, and city property was damaged. Roberts' medical bills exceeded $125,000.00. The city's property damage was valued at $250.00.

On April 25, 2000, Printup and/or Roberts contacted Shelter's 1-800 number. One or both of them reported Roberts was hurt in an accident and that Printup's brakes had failed. Shelter coded the accident as a "39," which means a one-car collision with the insured at fault. App. at 44, 70, 187-88. Shelter assigned Lezlie Siebolt to work on the case. Siebolt's supervisor reviewed the file on May 4, 2000, noting Roberts might have a bodily injury claim, that PIP benefits would apply, and that medical information should be collected. Supervisor Gary Dauer indicated he was alerting Siebolt that she needed to consider a potential claim by Roberts against Printup. Dauer noted that Siebolt "need[ed] to look at the total $ for BI exposure." Id. at 59. "BI" appears to refer to the policy's liability bodily injury coverage. Id. at 39, 118.

On May 10, 2000, Siebolt took Roberts' statement. Roberts confirmed she was a passenger in a car driven by Printup, the brakes failed, and she was injured. Concerning Printup's actions, Roberts said "there was nothing really he could do though . . . he did everything I thought he should have." Id. at 64. Based upon this conversation with Roberts, Shelter did not at that time have reason to believe a liability claim against Printup was imminent or inevitable.

After this conversation with Roberts, Shelter notified its PIP unit of the incident. Shelter also paid the $250.00 property damage claim resulting from the accident. On June 23, 2000, Roberts submitted a PIP application to Shelter, and on August 21, 2000, Roberts signed medical authorizations related to her PIP claim. Shelter subsequently paid the first medical bills Roberts submitted, which immediately exhausted the PIP limits. Shelter then closed Roberts' PIP claim.

A factual dispute exists between Shelter and Roberts as to whether Roberts contacted Shelter prior to April 11, 2002, inquiring as to whether she had a right to assert a claim under the liability portion of the insurance policy. Roberts indicates a friend informed her that she might be entitled to additional money. Upon learning this, Roberts contacted Shelter. Roberts "asked about the money that — the 25,000 bodily injury claim and she told me I was not entitled to it and that was the end of the conversation." Id. at 80. Shelter denies this conversation occurred.

On April 11, 2002, Roberts consulted with an attorney, which is when she learned the statute of limitations would soon bar filing a liability claim. Therefore, that same day, Roberts mailed a letter to Shelter's Topeka claims office offering to settle all claims for the $25,000 policy limits. Roberts' letter stated: "I am running out of time and need your answer within ten days." Id. at 220.

On April 16, 2002, Roberts filed a petition in state court. Because she did not want to pursue a lawsuit against her son and anticipated a prompt settlement, she directed the clerk to withhold issuance and service of a summons on Printup. However, when the time for accepting the offer expired without a response from Shelter regarding her offer, Roberts directed the clerk to proceed. Shelter hired a law firm to defend Printup. Printup sought and obtained removal of the action to federal district court.

Roberts' demand letter was marked received on April 15 at Shelter's claims office. The claims office mail handler erroneously concluded the letter related to a PIP claim, which meant that it would be handled by Shelter's PIP department in Columbia, Missouri. On April 21, 2002, the letter was mailed to the PIP department, which in turn mailed Roberts' letter to the Kansas City claims department, where it was received on May 6, 2002.

On May 7, 2002, a Shelter supervisor contacted a Shelter litigation attorney regarding Roberts' demand. The two concluded that upon confirmation of the medical bills, Shelter would pay the limits of its liability coverage. That same day, Siebolt advised Roberts of Shelter's position and requested copies of her medical bills. Shortly thereafter, Shelter offered the $25,000 liability policy limits. Roberts declined the offer.

The district court subsequently approved a settlement and entered judgment in favor of Roberts and against Printup for $1,033,891.60. Printup assigned his rights to an action against Shelter for breach of contract to Roberts. Id. at 256. In return, Printup received a covenant from Roberts not to execute on Printup's personal assets. Shelter paid the $25,000.00 policy limits to Roberts, and the parties agreed that the acceptance of these monies did "not constitute a waiver or estoppel of [Roberts'] right to pursue collection from Shelter of the balance due on the judgment." Id. at 255. Similarly, the parties agreed that Shelter's payment of these monies did "not constitute an admission that it breached its contract with Printup or acted negligently or in bad faith in the handling, investigation, negotiation, and resolution of the claim and lawsuit which Roberts has made and filed against Printup." Id. at 256. Roberts then filed a garnishment proceeding against Shelter to collect the balance of the judgment.

Roberts alleged that Shelter acted negligently or in bad faith in handling the claim against Printup in the following respects: (1) failure to comply with generally accepted standards of care in investigating the liability claim against Printup; (2) failure to properly evaluate the claim; (3) failure to properly document claim activity in the liability claim file; (4) failure to properly train and supervise claims personnel; (5) failure to give equal consideration to the interests of its insured; (6) failure to initiate negotiations for settlement when it was apparent that liability was reasonably clear and damages were in excess of policy limits; and (7) failure to accept, or even respond to, a time-sensitive policy limits offer of settlement allowing it to expire. The district court granted summary judgment to Shelter on all claims. Roberts appeals.

II. Standard of Review

We review the district court's grant of summary judgment de novo, applying the same legal standard used by the district court. Simms v. Okla. ex rel. Dept. of Mental Health and Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir.1999). Summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." FED.R.CIV.P. 56(c). In applying this standard, we view the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving party. Simms, 165 F.3d at 1326.

Citing Land v. Roper Corp., 531 F.2d 445 (10th Cir.1976), Shelter asserts greater weight should be given to the district court's conclusions because a district court sitting in diversity is entitled to deference as to determinations regarding the law of the state in which it sits. We note, contrary to Shelter's argument, that the United States Supreme Court has held that "no form of appellate deference is acceptable," when we are asked to review a district court's determination of state law. Salve Regina College v. Russell, 499 U.S. 225, 238, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991). Accordingly, "[a] federal district court's state-law determinations are entitled to no deference and are reviewed de novo." Woolard v. JLG Industries, Inc., 210 F.3d 1158, 1168 (10th Cir.2000).

III. Negligence/Bad Faith of Insurer in Handling Claim Against Insured

Roberts contends the district court erred in granting summary judgment as to her claims¹ for negligence and bad faith² in Shelter's handling of her claims against Printup.

1. Prior to April 11, 2002

Roberts argues Shelter's obligation to negotiate a settlement in good faith and without negligence was triggered when the covered loss was reported on April 25, 2000 and/or when she presented a claim before April 11, 2002. The district court concluded that under Kansas law Shelter was "under no duty to initiate settlement negotiations prior to a claim being presented." Roberts v. Printup, 338 F.Supp.2d...