American Standard Ins. Co. v. Savaiano, CIV.A. 03-RB-93 (MJW).

CourtUnited States District Courts. 10th Circuit. United States District Court of Colorado
Writing for the CourtBlackburn
Citation298 F.Supp.2d 1092
PartiesAMERICAN STANDARD INSURANCE COMPANY, a Wisconsin corporation, and American Family Mutual Insurance Company, a Wisconsin corporation, Plaintiffs, v. Shala SAVAIANO, Defendant.
Docket NumberNo. CIV.A. 03-RB-93 (MJW).,CIV.A. 03-RB-93 (MJW).
Decision Date16 October 2003

Stephanie A. Montague, Lelia Kathleen Chaney, Lambdin & Chaney, LLP, Denver, CO, for Plaintiff.

Stephan C. Kaufman, Kidneigh & Kaufman, P.C., Denver, CO, for Defendant.


BLACKBURN, District Judge.

Pending are cross-motions for summary judgment in the above-captioned action for declaratory judgment concerning an underinsured motorist (UIM) coverage dispute. Specifically at issue is the UIM coverage afforded to a child of divorced parents under the parents' respective automobile insurance policies where the child is in the custody of one parent and visits the other, and the extent of any such coverage. For the reasons stated, the court grants in part the plaintiffs' and defendant's motions for summary judgment.

Summary judgment is appropriate "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). Generally, when applying this standard, the court views the evidence and draws reasonable inferences therefrom in the light most favorable to the nonmoving party. English v. Colorado Dept. of Corr., 248 F.3d 1002, 1007 (10th Cir.2001), quoting Simms v. Oklahoma ex rel. Dept. of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir.1999). No material facts are disputed in this particular action. To the extent any party may infer a dispute regarding any particular fact, the court has conformed its view of the facts to the appropriate standards of review. Interpretation of these contracts for insurance is a question of law for the court. Peterman v. State Farm Mut. Auto. Ins. Co., 8 P.3d 549 (Colo.App.2000).


On September 17, 1999, at the age of 16, defendant Shala Savaiano was injured in a single-car motor vehicle accident while a passenger in a vehicle occupied by two other teenagers. Primary among the issues in this case is whether Savaiano is an insured person under the plaintiffs' policies, which involves a factual/legal question concerning Savaiano's residency status within her father's household. Secondarily, the court must allocate what coverage is available.

At the time of the accident, Savaiano's biological parents were divorced and living in separate households. The parties do not dispute that Savaiano was living in her mother's household at the time of the accident. The decree of dissolution of marriage conferred custody of Savaiano to her mother, with reasonable rights of visitation to her father.

Depositions of Savaiano, her parents, and her sister disclose that, on average, Savaiano would see her father six days every week. She stayed overnight at her father's house nearly every weekend from Friday evening through Sunday evening. During the week she would visit her father's home after school to complete her homework and eat dinner, although she would usually sleep at her mother's house on school nights. On average, Savaiano would sleep at her father's house at least once during the school week, and occasionally would sleep at his house two to three times during the school week. Savaiano had followed this unstructured, ad hoc visitation pattern since 1989 when her parents first separated. Holidays were spent equally with her parents. During the summer Savaiano would spend more time with her father. In the year prior to the motor vehicle accident, Savaiano spent approximately 40 weekends at her father's house and, on average, lived as much in her father's house as at her mother's.

Savaiano had a key to her father's house and could come and go freely. She received mail and phone calls and visits from friends at her father's house to the same extent as at her mother's. Savaiano's father lives in a loft-type dwelling with an open floor plan and no separate bedrooms. Savaiano slept on a futon couch that was her designated sleeping space. Savaiano's father had furnishings within his home designated for storage of her belongings, such as art supplies, videos, and school books, and space within the loft's closet for her clothing. She kept a full wardrobe of clothing and cosmetics at her father's house. Savaiano's pet dog stayed at her father's home. She also kept her bicycle, snowboard, sports, hiking, and camping gear at her father's home. In her deposition Savaiano testified that "all the basic things that I—all the things that you need to live I had at both houses." SAVAIANO DEPOSITION at 8.

Savaiano's father set rules of discipline for the house, including a curfew. Savaiano was assigned chores at her father's house, such as washing dishes, cooking, doing laundry for herself and her father, and cleaning. Savaiano and her father enjoyed a conventional father-daughter relationship, sharing activities and time together shopping, attending movies, hiking, camping, etc. Her father took responsibility for providing his daughter with lunch money, food, clothing, and medical care, and provided the expected parental guidance and instruction.

Following the motor vehicle accident, the tortfeasor's insurer settled with Savaiano for its $100,000 policy limits. Plaintiff American Standard Insurance Company (American Standard) insures a vehicle owned by Savaiano's mother on a policy that provides $100,000 in UIM coverage. Plaintiff American Family Mutual Insurance Company (American Family) insures a vehicle owned by Savaiano's father on a policy that also provides $100,000 in UIM coverage. Defendant has demanded that plaintiffs pay to her $100,000 under each policy as compensation for her injuries resulting from the motor vehicle accident. Plaintiffs dispute both defendant's entitlement to coverage and the extent of coverage in the event defendant proves entitlement. Plaintiffs initiated this declaratory judgment action to resolve the legal disputes between them and the defendant concerning defendant's rights under the subject policies.


At issue in this case is whether defendant is entitled to coverage under one or more of the subject policies, and, if so, the extent of available coverage. In particular, the general question of the coverage available to the defendant is comprised of three discreet issues:

1. Whether defendant is a resident of her father's household for purposes of coverage under the American Family policy;

2. Whether aggregating the UIM limits of the two subject policies constitutes impermissible stacking in violation of § 10-4-609(2), C.R.S; and

3. If defendant is afforded coverage, whether plaintiffs are entitled to a pro rata offset of the tortfeasor's settlement such that the insurer's total remaining liability is equal to $50,000 each.

As to each of these questions, and for the reasons stated herein, the court resolves the issues as follows:

1. Defendant is a resident of her father's household within the meaning of the subject policies;

2. Defendant is entitled to aggregate the UIM limits of the subject policies, for total UIM coverage of $200,000 3. Plaintiff's are entitled to offset the proceeds paid by the tortfeasor against the aggregate UIM coverage; thus, plaintiff's pro rata share of the UIM balance due is $50,000 on each policy.

The court discusses each of the matters in issue serially below.

1. Residency Status

American Family's policy extends UIM coverage to any "relative" of the named insured, Savaiano's father. The policy defines "relative" as "a person living in your household related to you by blood or marriage." Savaiano is related to her father by blood, and, if she is regarded as a matter of law as "living in" her father's household, she is a "relative" entitled to UIM coverage under the American Family policy.1

Though this is a question of first impression for the Colorado judiciary, it is not a novel question of law for the nation's court system. Numerous jurisdictions across the country have addressed the identical legal question, finding, in the context of appropriately apposite facts, that a child of divorced parents who maintains regular contact with both parents' households pursuant to a typical custody/visitation arrangement is regarded as a relative of each parent for insurance purposes.

This being a question of first impression in Colorado, it is the responsibility of a federal district court hearing a diversity case that "[e]xcept in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state." Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Colorado state courts have addressed issues related to the one presented in this case. See Midwest Mutual Insurance Company v. Titus, 849 P.2d 908 (Colo.App.1993); Potter v. State Farm Mutual Automobile Ins. Co., 996 P.2d 781 (Colo.App.2000); Kline v. American States Insurance Company, 924 P.2d 1150 (Colo.App.1996). In the absence of a definitive expression of state law on any matter presented to a federal district court, it is the duty of the court to conscientiously apply state law as the court believes it would be applied in the state courts so that the district court may "make its own determination of what the Supreme Court of [the State] would probably rule in a similar case." King v. Order of United Commercial Travelers, 333 U.S. 153, 161, 68 S.Ct. 488, 492, 92 L.Ed. 608 (1948); Wright & Miller, Federal Practice & Procedure § 4507 (1982). Accordingly, this court resolves this dispute as it conscientiously believes it would be resolved by the Colorado Supreme Court in accordance with the guidance provided by Colorado's statutes and existing...

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3 cases
  • Fire Ins. Exch. v. Pring–Wilson, Civil Action No. 09–11420–PBS.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • December 21, 2011
    ...policy. Two Colorado courts interpreting the words have held the term is ambiguous. Compare Am. Standard Ins. Co. v. Savaiano, 298 F.Supp.2d 1092, 1096 n. 1 (D.Colo.2003) (recognizing that because the language, “living with” is ambiguous, a minor child of divorced parents was covered as a d......
  • Fire Ins. Exch. v. Pring-Wilson, CIVIL ACTION NO. 09-11420-PBS
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • December 21, 2011
    ...policy. Two Colorado courts interpreting the words have held the term is ambiguous. Compare Am. Standard Ins. Co. v. Savaiano, 298 F. Supp. 2d 1092, 1096 n.1 (D. Colo. 2003)(recognizing that because the language, "living with" is ambiguous, a minor child of divorced parents was covered as a......
  • State Farm Mut. Auto. Ins. Co. v. Lee, CIV.A.03-F-1275(CBS).
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • January 27, 2005 least one federal decision from this District appears to reject State Farm's argument. In American Standard Ins. Co. v. Savaiano, 298 F.Supp.2d 1092 (D.Colo.2003), Judge Blackburn rejected the insurer's argument that stacking did not apply under the circumstances of the case. In that cas......

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