Baker v. Allied Prop. & Cas. Ins. Co.

• Citation: 939 F.Supp.2d 1091
• Decision Date: 12 June 2013
• Docket Number: Civil Action No. 12–cv–0010–RBJ.
• Parties: Robert BAKER, Plaintiff, v. ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Allstate Insurance Company, and Nationwide Mutual Insurance Company, Defendants.
• Court: U.S. District Court — District of Colorado

939 F.Supp.2d 1091

Robert BAKER, Plaintiff,

v.ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Allstate Insurance Company, and Nationwide Mutual Insurance Company, Defendants.

Civil Action No. 12–cv–0010–RBJ.

United States District Court,

D. Colorado.

April 5, 2013.

As Amended June 12, 2013.

John Keith Killian, Nicholas W. Mayle, Killian & Davis, P.C., Grand Junction, CO, for Plaintiff.

John Polk Craver, Robin Lynette Bowers, White & Steele, P.C., Denver, CO, Alan Peter Gregory, Anthony Rocco Clapp, Jane Bendle Lucero, Harris, Karstaedt, Jamison & Powers, PC, Englewood, CO, for Defendants.

ORDER on Pending Motions for Partial Summary Judgment

R. BROOKE JACKSON, District Judge.

This case was originally filed in Mesa County District Court (case number 2011 CV4746). [Docket # 1]. Defendants removed the case to this Court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332(a) and 28 U.S.C. § 1441(b). Id. This comes before the Court on defendant Allstate's Motion for Partial Summary Judgment [# 40]; defendant Nationwide's Motion for Partial Summary Judgment Regarding Primacy [# 41]; defendants Allied and Nationwide's Motion for Summary Judgment as to Medical Payments Coverage Claims [# 65]; and defendants Allied and Nationwide's Motion for Summary Judgment Regarding Underinsured Motorist Claims [# 66], in which defendant Allstate joined [# 67]. On March 19, 2013, the Court held oral argument on the four motions and took the matters under advisement. [# 81]. This order addresses all pending motions.

I. Background Facts

Robert and Roberta Baker were involved in a car accident on July 19, 2008, when their 2000 Chrysler car (“Chrysler”) was rear-ended by a vehicle driven by Kelly Cook. The plaintiff, Mr. Baker, was the passenger in the Chrysler. Ms. Cook held an insurance policy with Viking Insurance Company (“Viking Insurance”) with a policy limit of $25,000.

The Chrysler owned by the Bakers and involved in the accident was insured by Allstate for underinsured motorist (“UIM”) benefits up to $100,000 per person. Mr. Baker also had a business auto insurance policy with Nationwide for up to $300,000 per person.¹ The Nationwide policy identifies the “covered auto” under the policy as a 2000 GMC 1500 Pickup truck (“GMC”), which was not involved in the accident. The Nationwide policy also provided for medical payment coverage up to $5,000 per incident. Both policies were in effect on July 19, 2008, the date of the accident.

Mr. Baker accepted Ms. Cook's policy limit with Viking Insurance of $25,000, but he incurred injuries and other losses exceeding the $25,000. Therefore, he made a claim with both Allstate and Nationwide for UIM benefits. Mr. Baker also made claims for medical payment (“med-pay”) benefits with Nationwide. Mr. Baker is now suing Allstate and Nationwide for breach of contract for failure to pay UIM benefits; Nationwide for breach of contract for failure to pay medical payment benefits; and Allstate and Nationwide for bad faith breach of insurance contract and unreasonable denial of the respective benefits.

II. Standard of Review

“Summary judgment is appropriate ‘if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.’ ” Utah Lighthouse Ministry v. Found. for Apologetic Info. & Research, 527 F.3d 1045, 1050 (10th Cir.2008) (quoting Fed.R.Civ.P. 56(c)). When deciding a motion for summary judgment, the Court considers “the factual record, together with all reasonable inferences derived therefrom, in the light most favorable to the non-moving party....” Id. When the movant does not have the ultimate burden at trial, it may succeed on a motion for summary judgment when it has shown the court that there is an absence of evidence to support the nonmoving party's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In challenging such a showing, the non-movant “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

III. Allstate's Motion for Partial Summary Judgment [# 40] and Nationwide's Motion for Partial Summary Judgment Regarding Primacy of UIM Coverage [# 41]

Because Allstate and Nationwide filed cross-motions on the issue of primacy of insurance coverage for UIM benefits [ 40, 41], I resolve both motions together.

A. Relevant Facts

The Chrysler in the July 19, 2008 accident was under a personal Allstate policy held by Mr. Baker. The pertinent portion of the Allstate policy states:

If There Is Other Insurance

If the insured person was in, on, getting into or out of, or getting on or off, a vehicle which is insured for this coverage under another policy, coverage under this policy will be excess. This means that when the insured person is legally entitled to recover damages in excess of the other policy limit, we will only pay the amount by which the limit of liability of this policy exceeds the limit of liability of that policy.

If more than one policy applies to the accident on a primary basis the total benefits payable to any one person will not exceed the maximum benefits payable by the policy with the highest limit for uninsured motorist coverage. We will bear our proportionate share with other uninsured motorist benefits. This applies no matter how many autos or auto policies are involved whether written by Allstate or another company.

[# 40–4] at 11 (“Other Insurance Clause”).

Nationwide's relevant policy comes in two parts. The first part is the Business Auto Coverage Form (“Coverage Form”) that covers that GMC. [# 40–6] at 17, 19, 27. The UIM coverage is added through an Uninsured/Underinsured (“UM/UIM”) Endorsement that modifies the Coverage Form. The Nationwide Coverage Form provides:

For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance.

Id. at 27. The Nationwide UM/UIM Endorsement (“Endorsement”) provides:

1. Other insurance in the Business Auto and Garage Coverage Forms ... are revised as follows:

...

b. The following provisions are added:

...

(2) If there is another applicable insurance available under one or more policies or provisions of coverage:

...

(b) Any insurance we provide with respect to a vehicle owned by the Named Insured or, if the Named Insured is an individual, any “family member”, that is not a covered “auto” for Uninsured Motorist Coverage under this Coverage Form, shall be excess over any other collectible uninsured motorists insurance providing coverage on a primary basis.

[# 40–7] at 21–22.

B. Allstate and Nationwide's Respective Arguments²

Allstate moves for partial summary judgment [# 40] that its UIM policy be considered co-primary with Nationwide's policy. Nationwide, on the other hand, filed a cross-motion for partial summary judgment [# 41] that its UIM policy be considered excess over Allstate's policy.

Allstate's logic is as follows: Allstate's UIM coverage is primary unless the Other Insurance Clause is triggered. The trigger occurs when the insured person “was in ... a vehicle which is insured for this coverage under another policy.” The first inquiry is then whether there is “a vehicle which is insured” for UIM benefits under another policy, i.e. the Nationwide policy.

Looking to the Nationwide policy, the Chrysler is not addressed by the two options in the excess clause of the Coverage Form—it is neither a “covered auto” that Mr. Baker owns nor a “covered auto” that Mr. Baker does not own. The Nationwide Endorsement provides excess UIM benefits when the vehicle is owned by Mr. Baker but not a “covered auto.”

Allstate argues that the Endorsement is void pursuant to DeHerrera v. Sentry Ins. Co., 30 P.3d 167 (Colo.2001), because UIM eligibility under it is tied to a vehicle, not the insured person. Without the Endorsement, Nationwide is left with its Coverage Form. The Coverage Form only shifts from primary coverage to excess coverage when the insurance is for a “covered auto” not owned by Mr. Baker. Because this shifting provision does not apply to the Chrysler, Nationwide's statutorily mandated UIM coverage for Mr. Baker remains primary.

Finally, referring back to the Allstate Other Insurance Clause, Mr. Baker was not “in ... a vehicle which is insured for this coverage under another policy” because the Nationwide policy would not provide coverage on the vehicle—it provides UIM coverage on Mr. Baker. Therefore, the Allstate policy also would be primary. In a case where the insurers' policies are co-primary, the insurers share an “apportionment on an equal basis up to the policy limit of each policy.” Allstate Ins. Co. v. Avis Rent–A–Car Sys., Inc., 947 P.2d 341, 347 (Colo.1997).

Allstate alternatively argues that, even if the Nationwide Endorsement is valid under DeHerrera and applicable as an excess clause, then Allstate and Nationwide would become competing excess insurers. In other words, if Nationwide's policy covers the Chrysler—even as excess—for UIM benefits, Allstate's Other Insurance Clause is triggered, and Allstate's coverage also becomes excess. Competing excess clauses are “mutually repugnant and void.” Shelter Mut. Ins. Co. v. Mid–Century Ins. Co., 246 P.3d 651, 660 (Colo.2011). Essentially, they act to cancel each other out, and the insurers are considered co-primary—i.e., sharing losses on a dollar-for-dollar basis until the policy limits of one is exhausted. Id.;Allstate Ins., 947 P.2d at 347.

Nationwide...