Christoffersen v. United Parcel Serv., Inc.

• Decision Date: 02 April 2014
• Docket Number: Nos. 13–4007,13–4013.,s. 13–4007
• Citation: 747 F.3d 1223
• Parties: Karen CHRISTOFFERSEN; Bart Christoffersen; KC Christoffersen; Jessie Anne Christoffersen; Phyllis Christoffersen; The Estate of Alan Christoffersen, deceased, Plaintiffs–Appellees/ Appellants/Cross–Appellants, v. UNITED PARCEL SERVICE, INC., Defendant–Appellee, and Liberty Mutual Insurance Group, Defendant–Appellant/Cross–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

747 F.3d 1223

Karen CHRISTOFFERSEN; Bart Christoffersen; KC Christoffersen; Jessie Anne Christoffersen; Phyllis Christoffersen; The Estate of Alan Christoffersen, deceased, Plaintiffs–Appellees/ Appellants/Cross–Appellants,

v.UNITED PARCEL SERVICE, INC., Defendant–Appellee,andLiberty Mutual Insurance Group, Defendant–Appellant/Cross–Appellee.

Nos. 13–4007, 13–4013.

United States Court of Appeals,

Tenth Circuit.

April 2, 2014.

David R. Olsen (Paul M. Simmons and Charles T. Conrad, on the briefs) of Dewsnup, King & Olsen, Salt Lake City, UT, for Plaintiffs–Appellees/ Appellants/Cross–Appellants.

John R. Lund (Melinda K. Bowen, on the briefs) of Snow, Christensen & Martineau, Salt Lake City, UT, for Defendant–Appellee United Parcel Service, Inc.

Matthew L. Lalli (Adam C. Buck and Jessica E. Yates, on the briefs) of Snell & Wilmer L.L.P., Salt Lake City, UT, for Defendant–Appellant/Cross–Appellee Liberty Mutual Insurance Group.

Before GORSUCH, MATHESON, and BACHARACH, Circuit Judges.

BACHARACH, Circuit Judge.

Mr. Alan Christoffersen drove a truck for United Parcel Service (UPS) until he was struck and killed by an underinsured motorist. After the accident, Mr. Christoffersen's heirs sued UPS and its automobile insurer (Liberty Mutual Insurance Group), asserting claims for underinsured motorist (UIM) benefits. All parties moved for summary judgment. The district court granted UPS's motion on the ground that Utah's Worker's Compensation Act provided the exclusive remedy. On the claim against Liberty Mutual, the court granted judgment to the heirs for $10,000. Through this judgment, the court effectively awarded partial summary judgment to both sides, holding that: (1) UPS did not validly reject UIM coverage under its 2008 policy, (2) the policy was a “new” policy for purposes of determining UIM coverage, and (3) the heirs were entitled to recover UIM benefits in the amount of $10,000. The heirs and Liberty Mutual appealed.

We conclude that Liberty Mutual did not incur liability because UPS validly rejected UIM coverage; thus, on the claim against Liberty Mutual, we reverse the judgment of $10,000 for the heirs and remand with instructions to grant summary judgment to Liberty Mutual on the entire claim. And we affirm the award of summary judgment to UPS because it was not considered a “self insurer” for purposes of Utah's UIM statute.

I. Background

The parties' appellate arguments require an understanding of Utah's UIM statute, the terms of UPS's automobile insurance policy, and the heirs' claim for UIM coverage.

A. Utah's UIM Statute

Utah's UIM statute ordinarily provides for mandatory UIM coverage of at least $10,000 for one person and $20,000 for two or more persons in a single accident. SeeUtah Code Ann. § 31A–22–305.3(2)(d) (2007 supp.). An exception exists if a named insured rejects UIM coverage by complying with subsection (g) of the statute. Under subsection (g), a named insured must reject UIM coverage “by an express writing to the insurer ... on a form provided by the insurer that includes a reasonable explanation of the purpose of [UIM] coverage and when it would be applicable.” Id. § 31A–22–305.3(2)(g). A rejection remains effective for subsequent renewals of the policy unless the insured makes a written request for UIM coverage. Id.

The statute also establishes rules regarding UIM coverage and requires insurance companies to make certain disclosures about UIM coverage to their insureds. These rules and disclosure requirements vary depending on whether a policy was “new” or “existing” on January 1, 2001.

Subsection (b) of the statute governs new policies. This subsection creates a presumption of UIM coverage in all new policies unless it has been validly rejected under subsection (g). The presumptive amount of coverage is the lesser of: (1) the policy's liability limits, or (2) the maximum UIM coverage available under the policy. Id. § 31A–22–305.3(2)(b). A named insured can waive the presumptive amount (and purchase less UIM coverage) by signing an acknowledgment form that meets certain requirements. Id.

Subsection (h) of the statute governs existing policies. Although UIM coverage is not presumptively included in existing policies, subsection (h) requires insurers to disclose information to insureds that have some UIM coverage, but in an amount less than the liability limits or the maximum available under the policy. Id. § 31A–22–305.3(2)(h).

B. UPS's Automobile Insurance Policy with Liberty Mutual

UPS has long obtained automobile insurance policies from Liberty Mutual. Since 2001, these policies have had deductibles equal to the policy limits. This arrangement leaves much of the risk with UPS, but creates risk for Liberty Mutual by requiring it to pay claims if UPS is unable to do so.

With each policy renewal, UPS decides whether to purchase UIM coverage on a state-by-state basis. Under this arrangement, UPS has chosen to reject UIM coverage in every state where permitted by state law. Utah was one of these states.

In Utah, Liberty Mutual submitted a form to its policyholders that stated:

A new Utah law requires that we provide you with an additional insurance coverage. It is called Underinsured Motorist coverage (hereafter, UIM). This coverage gives you additional insurance benefits if you or others in your automobile are injured in an automobile accident caused by another party who is primarily at fault, but that party does not have enough insurance to compensate you for your injuries. UIM coverage is not the same as the Uninsured Motorist (UM) coverage you may currently have on your policy.

The law states that we must provide you with UIM coverage in minimum amounts of $10,000 for one person in any one accident and $20,000 for two or more persons in any one accident. The form providing the coverage has been added to your policy. Please read this form. The premium charge for this coverage has been included in the total premium amount for your policy renewal. Please refer to your Renewal Notice for the actual premium charge.

The law also allows you to reject UIM coverage if you do not want it. Any rejection of coverage must be done in writing. The rejection will last as long as we are your insurer or until you send us a written request to add the coverage.

Appellant's App. vol. 3, at 686–92.

The accompanying form presented UPS with two options: (1) purchase UIM coverage of at least $10,000 for one person and $20,000 for two or more persons in any one accident, or (2) reject all UIM coverage. UPS took the second option, signing a form (each year) that expressly rejected all UIM coverage in Utah.

C. Mr. Christoffersen's Accident and the Resulting Litigation

The possibility of UIM coverage became significant in 2008 when Mr. Christoffersen was struck and killed by an underinsured motorist. Mr. Christoffersen's heirs lack adequate insurance protection because: (1) they recovered less than $1 million, and (2) their tort claim is valued at roughly $2.8 million. Unable to fully recover from the tortfeasor, Mr. Christoffersen's heirs sued UPS and Liberty Mutual, claiming UIM benefits under the Utah statute.¹

All parties moved for summary judgment. In connection with these motions, UPS argued that it was not a self-insurer and that Utah's Worker's Compensation Act provided the exclusive remedy. Liberty Mutual argued that the policy did not include UIM coverage because it had been rejected by UPS. The heirs asked the court to declare that they were entitled to UIM coverage from one or both of the defendants.

II. Standing

The defendants argue that the heirs lack standing to assert their claims, reasoning that they are not parties to the insurance contract and cannot “reform” the terms in a manner contrary to the contracting parties' intent. These arguments are rejected.

Standing has elements that are constitutional and prudential. N. Laramie Range Alliance v. Fed. Energy Regulatory Comm'n, 733 F.3d 1030, 1033 (10th Cir.2013). The defendants do not distinguish between the two, but seem to base their argument on the Constitution.

Constitutional standing contains three elements: injury-in-fact, causation, and redressability. See WildEarth Guardians v. Pub. Serv. Co. of Colo., 690 F.3d 1174, 1181 (10th Cir.2012). Liberty Mutual points to the “injury-in-fact” requirement, while UPS does not identify the missing element. Appellant's Principal Br. at 26–27 (May 6, 2013) (Liberty Mutual's argument that the heirs lack an injury-in-fact); Br. of Appellee UPS at 32–37 (Aug. 7, 2013) (UPS's argument that the heirs lack standing to reform the insurance contract). However the standing argument is framed, it would remain invalid.

Liberty Mutual relies on the absence of an injury-in-fact. But the evidence suggested inadequate liability insurance to satisfy the heirs' tort claim. Without adequate liability insurance, the fact-finder could infer an injury-in-fact from the heirs' inability to collect UIM coverage from Liberty Mutual.

UPS's argument is also invalid. Like Liberty Mutual, UPS argues that the insurance contract does not contain UIM coverage. From this argument, UPS goes further and contends that non-parties (like Mr. Christoffersen's heirs) cannot seek reformation unless they are considered “third-party beneficiaries.” But this argument confuses the merits of the claims with the heirs' standing.

The heirs are not seeking to reform the contract. Instead, the heirs base their claim on the Utah statutes, arguing that UIM coverage exists—not because the parties thought it was included in the contract—but because coverage arose by operation of law.

To prevail on this claim, the plaintiffs must show a statutory entitlement to UIM coverage. But entitlement to benefits and standing are separate inquiries. See Stacey v. Saunders, 437 So.2d 1230, 1233 n. 3 (Ala.1983) (discussing the distinction between the plaintiffs' potential standing as third-party beneficiaries and their entitlement to benefits). Even if the...