Borrego v. Am. Family Mut. Ins. Co.
| Decision Date | 06 January 2016 |
| Docket Number | Civil Action No. 14-cv-01732-WYD-MJW |
| Parties | JESUS BORREGO and JOANNE BORREGO, Plaintiffs, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Colorado |
THIS MATTER is before the Court on Defendant's Motion for Partial Summary Judgment filed July 24, 2015. A response was filed on August 14, 2015, and a reply was filed on August 28, 2015. For the reasons stated below, Defendant's Motion for Partial Summary Judgment is denied.
By way of background, this action arises out of Plaintiffs' claim to American Family Mutual Insurance Company ["American Family"], under their insurance policy after their home allegedly sustained damage on June 26, 2012 due to the Waldo Canyon Fire. Plaintiffs Jesus and Joanne Borrego ["the Borregos"] assert three claims for relief: (1) breach of the implied covenant of good faith and fair dealing; (2) breach of contract; and (3) violation of Colo. Rev. Stat. § 10-3-1115 and 1116. American Family seeks summary judgment on the second and third claims for relief on the basis that the Borregos did not file suit within the one-year contractual limitation period.
The Borregos had a Homeowners Policy with American Family that provided coverage for certain losses to property located at 5511 Vantage Vista Drive, Colorado Springs, CO 80919 [the "Property"]. The Policy was in force on the date of the loss and was in existence from April 3, 2012 through March 6, 2013.1
The Borregos allege that the property was damaged by the Waldo Canyon Fire which began on June 23, 2012 and damaged their home on June 26, 2012. They opened a claim with American Family under the Homeowner's Policy in June of 2012 and there was a dispute with respect to the extent of the damage. This claim was first reported to American Family by Mrs. Borrego on June 27, 2012. American Family reported the date of loss to be June 23, 2012.2 The Borregos filed suit on June 20, 2014, six days before the two year anniversary of the purported loss or damage.
American Family asserts that pursuant to the policy, suit must be brought within one-year of the date of loss. The Borregos deny this as a legal conclusion, stating this is the very issue in dispute in regard to American Family's motion.
Specifically, the policy provides as follows:
While the Borregos admit that this provision is contained within the policy, they do not admit that this limitation controls, nor do they admit that "suit must be brought within one year of the date of loss". They contend that this language is superseded by statute pursuant to Colo. Rev. Stat. 10-4-110.8(12)(a)(I)-(II), as discussed in the next section.
Assuming the June 23, 2012 loss date, the one year period ended on June 23, 2013. The policy expired on March 3, 2013.
It is undisputed that American Family's adjustment of the claim continued well past the one-year deadline for suit under the policy, and well past the expiration of the policy. Further, American Family issued three payments to the Borregos, months after this one year deadline, and months after the expiration date. Finally, American Family admits that, upon the Borregos' request and after the one year date of loss, it brought a Senior Adjuster to conduct an inspection on October 18, 2013, and that it had two engineers inspect the Borrego residence in August and November 2013.
II. ANALYSIS
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits,. . . show that there is no genuine issue as to any material fact and the ... moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). "A fact is 'material' if. . . it could have aneffect on the outcome of the lawsuit." E.E.O.C. v. Horizon/ CMS Healthcare Corp., 220 F.3d 1184, 1190 (10th Cir. 2000). "A dispute over a material fact is 'genuine' if a rational jury could find in favor of the nonmoving party on the evidence presented." Id.
The burden of showing that no genuine issue of material fact exists is borne by the moving party. Horizon, 220 F.3d at 1190. "'Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.'" Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000) (quotation omitted). When applying the summary judgment standard, the court must "'view the evidence and draw all reasonable inferences therefrom in the light most favorable to the party opposing summary judgment.'" Id. (quotation omitted). All doubts must be resolved in favor of the existence of triable issues of fact. Boren v. Sw. Bell Tel. Co., 933 F.2d 891, 892 (10th Cir. 1991).
As noted previously, American Family claims that the second and third claims are barred based on the fact that the Borregos failed to bring suit within one year as required by the policy. The Borregos do not dispute that the provision exists in the contract, but contend that the policy's one-year limitations period is superseded by statute pursuant to Colo. Rev. Stat. 10-4-110.8(12)(a)(I)-(II). This statute was amended in May 2013 to expand the time within which a policy-holder may bring suit, to the extent the contract of insurance limited that time period to less than the applicable statute of limitations.
Turning to my analysis, under Colorado law the interpretation of an insurance policy's language is a question of law. B & B Livery, Inc. v. Riehl, 960 P.2d 134, 136 (Colo. 1998). A contract must be enforced as written, "unless there is an ambiguity in the . . . language." Cotter Corp. v. American Empire Surplus Lines Ins. Co., 64 P.3d 886, 889 (Colo. App. 2002). Here, the requirement that suit be brought within one-year is not ambiguous, and it is undisputed that the Borregos did not comply with the requirement. Moreover, contractual limitations periods are generally deemed enforceable so long as they are not unreasonable even if, as here, they are shorter than the applicable statute of limitations. See Capitol Fixture & Supply Co. v. Nat'l Fire Ins. Co. of Hartford, 279 P.2d 435, 437 (Colo. 1955) (); Union Health & Accid. Co. v. Welch, 206 P. 709 (Colo. 1922) (); Atchison, T. & S.F. Ry. Co. v. Baldwin, 128 P. 449, 422-23 (Colo. 1911) (). Indeed, in McGlothlen v. Am. Family Mut. Ins. Co., 11-CV-02892-DME-KLM, 2013 WL 1767790, at *5 (D. Colo. Apr. 24, 2013), Judge Ebel enforced the same exact policy provision limiting suits to within one year of the date the loss or damage occurred, holding that the plain language of the contract required a lawsuit against American Family to be commenced within one year of the date of the loss or damage occurred.
Based on the foregoing, American Family contends that the Borregos' second claim for relief is time-barred. Additionally, American Family contends that the thirdclaim predicated on Colo. Rev. Stat. § 10-3-1115 must be dismissed. Pursuant to that statute, an insurer may not "unreasonably delay or deny payment of a claim for benefits owed to or on behalf of a first-party claimant." Colo. Rev. Stat. § 10-3-1115(1)(a) (emphasis added). In this case, American Family contends that no covered benefit is owed due to the failure to commence the suit within one year.
The issue then becomes whether the contractual one-year limitations period was superseded by the passage of Colo. Rev. Stat. 10-4-110.8(12). This statute provides in pertinent part:
The statute became effective on January 1, 2014, after the policy at issue had expired.
The Borregos argue that § 10-4-110.8(12)(a)(I)-(II) reaches back to apply to policies and causes of action prior to its effective date, and that if the legislature had intended that the statute not apply retroactively, it would have included only the language in § 10-4-110.8(12)(b), not (a). The Borregos further assert that because theiraction was not barred by May 10, 2013 (it did not become contractually barred until June 23, 2013), they can proceed on the breach of contract claim under § 10-4-110.8(12)(a)(I)-(II). I find these arguments persuasive, and find from the plain language of the statute that it was intended to apply retroactively to causes of action that were not barred contractually as of May 10, 2013.
American Family notes, however, that at the time of the effective date of the statute, January 1, 2014, and the identified May 10, 2013...
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