Clark v. State Farm Mut. Auto. Ins. Co.

• Citation: 590 F.3d 1134
• Decision Date: 29 December 2009
• Docket Number: No. 07-1466.,No. 07-1454.,07-1454.,07-1466.
• Parties: Ricky Eugene CLARK, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

590 F.3d 1134

Ricky Eugene CLARK, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellee.

No. 07-1454.

No. 07-1466.

United States Court of Appeals, Tenth Circuit.

December 29, 2009.

Robert B. Carey, The Carey Law Firm, Colorado Springs, CO (Steve W. Berman, Hagens Berman LLP, Seattle, WA, L. Dan Rector, Franklin D. Azar & Associates, P.C., Colorado Springs, CO, and Walter H. Sargent, Walter H. Sargent, a professional corporation, Colorado Springs, CO, with him on the briefs) for Appellant.

Michael S. McCarthy (Marie E. Williams with him on the brief), Faegre & Benson LLP, Denver, CO, for Appellee.

Before HENRY, Chief Judge, MURPHY, and TYMKOVICH, Circuit Judges.

TYMKOVICH, Circuit Judge.

In this appeal, we must determine whether a case may proceed as a class action even though the named plaintiff's claim became moot before he filed a motion for class certification. We conclude that the case may not proceed.

In August 2000, Ricky Eugene Clark filed a class action complaint in Colorado state court naming State Farm Mutual Automobile Insurance Company as the defendant. The complaint sought reformation of an automobile insurance contract and damages under various contract, tort, and statutory causes of action. The case was removed to federal court, spent nearly seven years in litigation, and was appealed to this court on several occasions. See Clark v. State Farm Mut. Auto. Ins. Co. (Clark III), 433 F.3d 703, 714 (10th Cir. 2005) aff'g Clark v. State Farm Mut. Auto Ins. Co. (Clark II), 292 F.Supp.2d 1252 (D.Colo.2003); Clark v. State Farm Mut. Auto. Ins. Co. (Clark I), 319 F.3d 1234, 1241 (10th Cir.2003).¹ On remand, the district court reached the merits of Clark's claims, determined he was entitled to judgment, set his damages, and entered judgment in his favor. Then, in 2007, two years after remand of the second appeal and the district court's merits determination, Clark filed a motion for class certification.

The district court denied Clark's motion for class certification. The court also determined that because Clark no longer had any claim against State Farm—and no class had yet been certified—the entire case was moot.

Clark appeals, claiming the district court's conclusions were erroneous. Exercising jurisdiction under 28 U.S.C. § 1291, we agree with the district court that this case is moot and therefore AFFIRM.

I. Background

Both this court and the district court have thoroughly discussed the facts of this case in previous published opinions. See Clark III, 433 F.3d at 706-09; Clark II, 292 F.Supp.2d at 1254-58. We briefly summarize those facts here, and only offer a more thorough discussion of the procedural history as it relates to the issues presented in this appeal.

Clark, a pedestrian, was hit by a car in Pueblo, Colorado. State Farm insured the car's owner. Clark obtained benefits under the State Farm policy's Personal Injury Protection (PIP) coverage, but the amounts were limited to Colorado's statutory minimums by the policy's "Pedestrian Limitation."

After the settlement, in an unrelated case, the Colorado Court of Appeals held that Colorado law requires insurance companies to offer insureds the option of purchasing extended PIP coverage beyond statutory minimums. See Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550 (Colo.Ct.App.1998). If an insurance company fails to offer the extended PIP coverage, the policy must be reformed to include it. Id. at 554. Due to this change in Colorado insurance law, Clark filed suit in state court in 2000, claiming State Farm had not offered extended PIP coverage to the car owner in violation of Brennan, and Clark was therefore entitled to benefits above the statutory minimums. Among other legal theories, Clark alleged reformation of contract, breach of contract, and breach of good faith. In his complaint, Clark purported to represent a class of similarly situated plaintiffs.

State Farm removed the case to federal district court and subsequently filed a motion to dismiss Clark's complaint. The district court granted the motion, reasoning Brennan should not apply retroactively to the policy at issue. Clark appealed. We reversed and remanded, holding that Brennan applied retroactively under the circumstances of the case. See Clark I, 319 F.3d at 1241. We ordered the district court on remand to "decide as an initial matter the effective date of reformation" of the car owner's policy, taking into account the equitable nature of the relief. Id. at 1243. The effective date of reformation was important to the case because if the district court reformed the policy as of some prior date (i.e., if the district court imposed retroactive reformation), Clark's other claims, including breach of contract and breach of good faith, would remain. See id. at 1244. On the other hand, if the district court declined to impose retroactive reformation, Clark's other claims would fail.

On remand, State Farm filed a proposed case management order, requesting the district court to decide the date of reformation of the driver's policy before turning to class certification issues. State Farm acknowledged that the case "could be complete upon determination of the effective date of reformation" and that if the district court decided against retroactive reformation—thereby disposing of Clark's remaining claims—the court would have no need to address class certification. App. Vol. I at 256-57. After hearing oral argument, the district court adopted State Farm's proposed order, stating it would determine class certification issues only "if necessary," and only after holding an evidentiary hearing to establish the date of reformation of the policy. Id. at 260.

Prior to the proposed evidentiary hearing, Clark filed a motion urging the district court to reconsider its case management order. Clark argued that "reformation is in itself relief sought by the class, [and] determination of that issue . . . should be preceded by a class determination so that the entire class benefits from the court's action." App. Vol. II at 487. The district court denied the motion and proceeded with the hearing.

After the three-day hearing—during which the parties presented evidence and argument regarding the appropriate date of reformation—the district court determined that retroactive reformation was inappropriate. See Clark II, 292 F.Supp.2d at 1268. The court awarded Clark damages up to the policy's aggregate limit of $200,000 and dismissed Clark's remaining claims. Id. at 1269. The court also certified its order as final under Federal Rule of Civil Procedure 54(b), noting: "This Order resolves all claims between State Farm and Mr. Clark. However, Mr. Clark also seeks a class certification on behalf of all others similarly situated. . . . Resolution of the issues addressed here on appeal [will] inform [the class certification] analysis." Id. at 1270.

Clark and State Farm both appealed various aspects of the Clark II order. But Clark conspicuously chose not to appeal the district court's case management order, and he failed to raise the issue of whether the district court improperly disposed of his claims without first considering class certification. We affirmed the district court, although recognizing the need for "subsequent class certification proceedings." Clark III, 433 F.3d at 714.

The case returned once again to the district court. The court entered judgment for Clark, and in March 2006, State Farm paid the full amount of PIP benefits awarded to Clark, including post-judgment interest. A year later, on May 14, 2007, Clark moved for class certification. The same day, three parties moved to intervene as named plaintiffs, fearing Clark would be unable to serve as class representative because his claims had been fully adjudicated. The district court denied the motion to intervene, concluding the motion was untimely.²

In September 2007, the district court denied class certification, finding that Clark had failed to satisfy the requirements of Federal Rule of Civil Procedure 23. The court also determined that the case had become moot, because "[a]fter accepting payment in full for the judgment entered in his favor, [Clark] no longer has a personal stake in the outcome of this litigation." App. Vol. XI at 2782. The court held that "[w]ithout a live, concrete controversy," it lacked jurisdiction to hear the case. Id.

II. Discussion

The central question posed by this appeal concerns our subject matter jurisdiction. We review this question de novo. See, e.g., Kan. Judicial Review v. Stout, 519 F.3d 1107, 1115 n. 9 (10th Cir.2008).

A. Legal Framework

Article III of the Constitution limits the jurisdiction of federal courts to "live controversies that exist at all stages of litigation, including appellate review." Mink v. Suthers, 482 F.3d 1244, 1256 (10th Cir.2007) (emphasis in original). We therefore lack power to hear moot claims, including those that have been "fully satisfied" by a monetary judgment. Donald D. Forsht Assoc. v. Transamerica ICS, Inc., 821 F.2d 1556, 1559 (11th Cir.1987); see also Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477-78, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990) (parties must have a personal stake in the outcome of a lawsuit at all stages of litigation). Furthermore, "[a]s a general rule, a suit brought as a class action must be dismissed for mootness when the personal claims of the named plaintiffs are satisfied and no class has been properly certified." Reed v. Heckler, 756 F.2d 779, 785 (10th Cir.1985).³

Nonetheless, the Supreme Court has applied the mootness doctrine less strictly in the class action context. In light of the relative independence of the class entity from any one party, the Court has recognized the more "flexible character of the Art. III mootness doctrine" in the class action context. U.S. Parole Comm'n v. Geraghty, ...