Adamscheck v. Am. Family Mut. Ins. Co.

Decision Date29 March 2016
Docket NumberNo. 15–1125.,15–1125.
Citation818 F.3d 576
Parties Patrick ADAMSCHECK, Plaintiff–Appellee, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant–Appellant.
CourtU.S. Court of Appeals — Tenth Circuit

Debra K. Sutton (Ashley R. Larson with her on the briefs), Sutton Booker, P.C., Denver, CO, for DefendantAppellant.

Steven T. Nolan, Steven T. Nolan, P.C., Colorado Springs, CO (Joseph R. Winston, The Winston Law Firm, P.C., Colorado Springs, CO, with him on the briefs), for PlaintiffAppellee.

Before GORSUCH, MURPHY, and McHUGH, Circuit Judges.


, Circuit Judge.

At the close of a five-day trial, a jury found that DefendantAppellant American Family Mutual Insurance Company (American Family) breached its insurance contract and unreasonably denied payment of underinsured motorist (UIM) benefits to PlaintiffAppellee Patrick Adamscheck. On appeal, American Family challenges three district court rulings: the district court's decision denying American Family's motion for partial summary judgment on the ground that workers' compensation benefits could not be offset against any recovery at trial, the district court's pre-trial decision to exclude American Family's biomechanical engineering expert, and the district court's post-verdict calculation of damages to include the jury's award of $395,561 in UIM benefits, plus twice that amount for statutory damages on the unreasonable-denial-of-benefits claim.

Exercising jurisdiction pursuant to 28 U.S.C. § 1291

, we affirm in part, but vacate the verdict and remand for additional proceedings. We conclude the district court correctly determined that workers' compensation benefits may not be offset against UIM coverage under Colorado law. But the district court failed to fulfill its gatekeeping obligation under Rule 702 of the Federal Rules of Evidence, and therefore erred in excluding American Family's expert. Because the record is inadequate to allow us to perform the district court's gatekeeping function in the first instance, and because we cannot conclude this error was harmless, we vacate the verdict and remand for a new trial. Finally, we do not reach American Family's objection to the calculation of statutory damages, which was not first presented to the district court.


On June 7, 2011, Patrick Adamscheck was driving in Colorado Springs, Colorado, while working as an El Paso County Deputy Sheriff, when he was rear-ended by Ms. Darian Agan. Because he was in the course and scope of his employment at the time of the accident, Mr. Adamscheck received workers' compensation benefits for his injuries.

With American Family's permission, Mr. Adamscheck settled with Ms. Agan for her liability policy limit of $25,000. But Mr. Adamscheck asserted he had severely injured his lower back and, as a result, had incurred damages that exceeded $25,000. In particular, Mr. Adamscheck claimed $185,000 in existing economic damages, which included past medical expenses and lost wages, and also sought recovery of his future medical care, future wage loss, and permanent disability, along with non-economic damages. Thus, in addition to Ms. Agan's policy limits, Mr. Adamscheck made demand under a personal automobile insurance policy issued by American Family (the Policy) for the full $500,000 of his underinsured motorist (UIM) coverage.

American Family offered to settle Mr. Adamscheck's claim for $65,000, but Mr. Adamscheck rejected the offer and filed suit in Colorado state court. He asserted claims for unreasonable denial of benefits pursuant to Colorado state statute, breach of contract, and bad faith. American Family removed the case to the United States District Court for the District of Colorado.

A. Pretrial Rulings

Approximately three months before the final pretrial conference, American Family filed a motion for partial summary judgment, arguing it could not be liable for common law or statutory bad faith because it had properly reduced Mr. Adamscheck's claim by the amounts he had received in workers' compensation benefits. American Family claimed that Colorado law allows insurers to prohibit double recovery for losses already covered by workers' compensation, and that Mr. Adamscheck's policy included such limiting provisions. American Family also asserted that under Colorado's UIM statute, "a Plaintiff would not be legally entitled to recover duplicate damages from a tortfeasor." Finally, American Family relied on public policy to assert a defendant should not be charged twice for the same elements of loss.

American Family therefore argued its offer of $65,000 to Mr. Adamscheck in satisfaction of his claim—which included $12,033 for lost wages and $52,967 for general damages—was not unreasonable. Specifically, it claimed the lost wages portion of the offer was properly limited to the one-third of Mr. Adamscheck's lost wages that had not been paid through workers' compensation. American Family also asserted it had reasonably excluded any amount for future losses from the offer based on video surveillance that proved Mr. Adamscheck's symptoms had resolved and he did not need future care. According to American Family, because the offer was consistent with Colorado law and the Policy, it could not constitute bad faith as a matter of law.

On June 13, 2014, the district court summarily denied American Family's motion. The district court revisited the issue at the final pretrial conference on August 26, 2014, and again at the trial preparation conference on January 5, 2015, but each time the court confirmed its ruling that workers' compensation was "not a defense in this case" and was "not a setoff."

Although American Family stipulated that Ms. Agan was at fault in causing the accident, it disputed the cause and extent of Mr. Adamscheck's injuries. American Family asserted that Mr. Adamscheck had exaggerated his symptoms and that the low-speed impact of the accident could not have caused the extensive injuries he claimed. To the extent Mr. Adamscheck was injured at all, American Family attributed his symptoms to a previous workplace injury. In support, American Family noted Mr. Adamscheck had reported largely the same symptoms after his workplace injury that he now attributed—albeit claiming greater severity—to the traffic accident with Ms. Agan. American Family also relied on evidence that no injuries were reported at the scene of the accident, Mr. Adamscheck's vehicle sustained only $390.60 in damage to the rear bumper, and video surveillance showed Mr. Adamscheck engaging in activities after the accident that, in American Family's view, showed he was misrepresenting the severity of his injuries.

To further support its theory, American Family planned to call a biomechanical engineering expert, Dr. Jeffrey P. Broker. But at the final pretrial conference, the district court excluded Dr. Broker's expert testimony, based on the following exchange:

THE COURT: ... So what are the—I don't do motions in limine. I don't know what you're contemplating here.
MR. WINSTON: Your Honor, I think the motion in limine that we were filing is—they have a biomechanical engineer who I think his opinion is that, given the forces from the accident, he couldn't have been hurt in the type of accident that occurred. And that kind of testimony —there are lots of District Court opinions, and I think there's a Court of Appeals
THE COURT: Well, I wouldn't allow that.
MR. WINSTON: Okay, well, that's what our motion in limine was, that he couldn't have been hurt in the accident because he
THE COURT: Well, I wouldn't allow that kind of testimony. So forget that.
MS. SUTTON: I won't ask that question.
THE COURT: Well, you won't call that witness.
MS. SUTTON: Well, I might give it a shot if you'll let me lay foundation for, I think, some opinion testimony and an explanation for the vehicle dynamics, what happens in a rear-end collision, the nature of the injury he sustained.
THE COURT: You know, every rear-end collision, something happens differently.
MS. SUTTON: It does. And I—
THE COURT: Yeah, it does. And you can make a proffer, but I won't allow that kind of testimony.
THE COURT: You can make a proffer during the trial.

During a subsequent trial preparation conference, the district court reiterated that American Family could submit a written proffer of Dr. Broker's testimony at trial. The court stated it had "already excluded" Dr. Broker's testimony, but would "do it officially on the record in the course of the trial so that it's an appropriate proffer." It then instructed American Family's counsel to submit Dr. Broker's expert report as the proffer. American Family followed the district court's instruction and submitted a written proffer in the form of Dr. Broker's expert report on the first day of trial.

B. Post–Trial Damages Calculation

At the close of trial, the jury returned a verdict in favor of Mr. Adamscheck, awarding $395,561 in UIM benefits and finding that American Family unreasonably denied payment of Mr. Adamscheck's claim.1 The district court dismissed the jury and then in the presence of both parties, applied Colo.Rev.Stat. § 10–3–1116

to calculate the total judgment amount. The district court stated its understanding that, for statutory damages under section 10–3–1116, the amount of the jury verdict would be doubled. Mr. Adamscheck's counsel responded that the double statutory damages were "in addition to the principal." Rather than challenge this position, American Family's counsel stated, "That's my understanding, Your Honor. However, this—." Although it appears the district court interrupted, counsel did not finish her statement or otherwise make an objection to Mr. Adamscheck's proposed calculation of statutory damages.

The district court therefore entered a total judgment of $1,186,683, which included the jury's award of $395,561 on the breach of contract claim, plus twice that amount for the statutory violation. After entering a Final Judgment consistent with its oral ruling, the district court...

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