Breaux v. American Family Mut. Ins. Co., Civ.A. 04-CV00191EWN.

• Decision Date: 22 September 2005
• Docket Number: No. Civ.A. 04-CV00191EWN.,No. Civ.A. 04-CV00539EWN.,Civ.A. 04-CV00191EWN.,Civ.A. 04-CV00539EWN.
• Citation: 387 F.Supp.2d 1154
• Parties: Kimberly BREAUX, Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant. Lori Chambers, Crystal Hamrick, Martin Persichitte, Robert W. Reffel, and Michael Whitehead, Plaintiffs, v. American Family Mutual Insurance Company, a Wisconsin corporation, Defendant.
• Court: U.S. District Court — District of Colorado

387 F.Supp.2d 1154

Kimberly BREAUX, Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant.

Lori Chambers, Crystal Hamrick, Martin Persichitte, Robert W. Reffel, and Michael Whitehead, Plaintiffs, v. American Family Mutual Insurance Company, a Wisconsin corporation, Defendant.

No. Civ.A. 04-CV00191EWN.

No. Civ.A. 04-CV00539EWN.

United States District Court, D. Colorado.

September 22, 2005.

COPYRIGHT MATERIAL OMITTED

Julie Bettencourt Cliff, Carey Law Firm, Colorado Springs, CO, for Plaintiffs.

Alan Peter Gregory, Robert W. Harris, Harris, Karstaedt, Jamison & Powers, P.C., Englewood, CO, for Defendants.

ORDER AND MEMORANDUM OF DECISION

NOTTINGHAM, District Judge.

This is an insurance case. Plaintiff Kimberly Breaux alleges that by failing to disclose, offer, and provide certain personal injury protection ("PIP") coverage, Defendant American Family Mutual Insurance Company (1) violated the Colorado Auto Accident Reparations Act ("CAARA"), specifically Colorado Revised Statute sections 10 — 4 — 710 and 10 — 4 — 706(4)(a); (2) breached her insurance contract; (3) breached her insurance contract in bad faith; and (4) breached the implied covenant of good faith and fair dealing. This matter is before the court on (1) "Plaintiff's Motion for Partial Summary Judgment," filed November 30, 2004; and (2) Defendant American Family Mutual Insurance Company's Motion for Partial Summary Judgment, filed November 30, 2004.¹ Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332.

FACTS

1. Factual Background

a. Overview of CAARA

Before addressing the issues raised in this case, I review and interpret the relevant portions of CAARA.² Repealed in 2003, CAARA was Colorado's No-Fault Insurance Act. Clark v. State Farm Mut. Auto. Ins. Co., 292 F.Supp.2d 1252, 1258 (D.Colo.2003) (hereinafter "Clark II") (citing Nationwide Mut. Ins. Co. v. United States, 3 F.3d 1392, 1394) (10th Cir.1993). CAARA governed the legal rights of automobile accident victims and their insurers in Colorado and required that motor vehicle owners maintain minimum insurance coverage on their vehicles, including no-fault PIP coverage. See Colo.Rev.Stat. § 10 — 04 — 705 (2002); Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550, 552 (Colo.App.1998). The required mandatory minimum PIP coverage provided for reasonable and necessary medical care, rehabilitative care, lost wages, and death benefits in the event of an accident without regard to fault. See Colo.Rev.Stat. §§ 10 — 04 — 706(1)(b) — (e) (2002). In relevant part, CAARA required insurers to offer coverage providing for:

[c]ompensation without regard to fault, up to a limit of fifty thousand dollars per person for any one accident, for payment of all reasonable and necessary expenses for medical ... and nonmedical remedial care and treatment ... performed within five years after the accident for bodily injury arising out of the use or operation of a motor vehicle;

Colo.Rev.Stat. § 10 — 04 — 706(1)(b)(I)

[c]ompensation without regard to fault up to a limit of fifty thousand dollars per person for any one accident within ten years after such accident for payment of the cost of rehabilitation procedures or treatment and rehabilitative occupational training necessary because of bodily injury arising out of the use or operation of a motor vehicle; [and]

Colo.Rev.Stat. § 10 — 4 — 706(1)(c)(I)

[p]ayment of benefits equivalent to one hundred percent of the first one hundred twenty-five dollars of loss of gross income per week, seventy percent of the next one hundred twenty-five dollars of loss of gross income per week, and sixty percent of any loss of gross income per week in excess thereof, with the total benefit under this subparagraph (I) not exceeding four hundred dollars per week, from work the injured person would have performed had he not been injured during a period commencing the day after the date of the accident, and not exceeding fifty-two additional weeks.

Colo.Rev.Stat. § 10 — 4 — 706(1)(d)(I).

CAARA also required that insurers provide and offer an option for increased PIP coverage in exchange for higher premiums. See Colo.Rev.Stat. § 10 — 04 — 710(1); Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1238 (10th Cir.2003) (hereinafter "Clark I"). Specifically, CAARA required that:

Every insurer shall offer the following enhanced benefits for inclusion in a complying policy, in addition to the basic coverages described in section 10 — 4 — 706, at the option of the named insured:

(I) Compensation of all expenses of the type described in section 10 — 4 — 706(1)(b) without dollar or time limitation; or

(II) Compensation of all expenses of the type described in section 10 — 4 — 706(1)(b) without dollar or time limitation and payment of benefits equivalent to eighty-five percent of loss of gross income per week from work the injured person would have performed had such injured person not been injured during the period commencing on the day after the date of the accident without dollar or time limitations.

Colo.Rev.Stat. § 10 — 04 — 710(2)(a)

The Brennan court noted that the "directive of [section] 10 — 4 — 710 is to the insurer, not the insured: all that is required is that the insurer offer these extended benefits." Brennan, 961 P.2d at 554. Colorado Revised Statutes section 10 — 4 — 710(2)(b) authorized insurers to place an aggregate limit of $200,000 on the total amount payable for complying policies. Colo.Rev.Stat. § 10 — 4 — 710(2)(b).

b. Defendant's Insurance Policies and Practices

Defendant is a Wisconsin corporation licensed to do business in Colorado, and was at all times pertinent engaged in the business of selling automobile insurance policies in the State of Colorado. (Compl. and Jury Demand ¶ 4 [filed Feb. 2, 2004] [hereinafter "Compl."], admitted at Def. Am. Family Mut. Ins. Co.'s Answer, Affirmative Defense, and Jury Demand ¶ 4 [Filed Mar. 2, 2004] [hereinafter "Def.'s Answer"].) On or about February 16, 2000, Plaintiff purchased a Colorado automobile insurance policy from Defendant. (Def.'s Opening Br. in Supp. of Def. Am. Family Mut. Ins. Co.'s Mot. for Partial Summ. J., Statement of Undisputed Material Facts ¶ 1 [filed Nov. 30, 2004] [hereinafter, "Def.'s Br."]; admitted at Pl.'s Resp. to Am. Family's Mot. for Partial Summ. J., Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶ 4 [filed Jan. 21, 2005] [hereinafter "Pl.'s Resp."].)³ Defendant was bound by the obligations and duties imposed by CAARA at the time Plaintiff's contract was created. (Pl.'s Mot. for Partial Summ. J., Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶ 1 [filed Nov. 30, 2004] [hereinafter "Pl.'s Br."]; admitted at Def.'s Resp. Br. in Opp'n to Pl.'s Mot. for Partial Summ. J., Statement of Undisputed Material Facts ¶ 1 [filed Jan. 24, 2005] [hereinafter "Def.'s Resp."].) At the time Plaintiff purchased the policy, Defendant offered for purchase several optional extended PIP coverage options, but did not offer an optional extended PIP coverage option fully compliant with Colorado Revised Statutes section 10 — 4 — 710(2)(a)(II). (Def.'s Br. at 3, Statement of Undisputed Material Facts ¶ 4; deemed admitted in relevant part at Pl.'s Br. at 5; Compl. ¶ 15.)

The parties dispute whether Defendant explained to Plaintiff the availability and benefits of optional extended PIP benefits. Plaintiff alleges that Plaintiff's insurance agent did not explain or offer enhanced PIP benefits when she purchased the policy. (Pl.'s Resp., Resp. to Statement of Undisputed Material Facts, Statement of Disputed Material Facts ¶ 2, Ex. A at 60, 108, 138 [Dep. of Kimberly Breaux].) Plaintiff makes this allegation despite admittedly having signed a waiver in her policy application that states "[t]he agent has explained the benefits of optional, increased limits of [PIP] and I hereby reject any such coverage not applied for." (Pl.'s Resp., Ex. A at 19 — 21 [Dep. of Kimberly Breaux]; Def.'s Br., Statement of Undisputed Material Facts, ¶ 2, Ex.A — 1 at 2 [Automobile Insurance Application].) Defendant alleges that an agent of Defendant's company explained the benefits of optional increased limits of PIP benefits to Plaintiff, and Plaintiff rejected the optional increased limits in writing (Id.)

Plaintiff's policy contained an endorsement reflecting a $200,000 aggregate limit on optional extended PI. (Def.'s Br., Statement of Material Undisputed Material Facts ¶ 4, Ex.A — 2 [PIP Endorsement]; admitted in relevant part at Pl.'s Resp. at 13 — 14; Pl.'s Br. at 6, Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶¶ 6, 7.)

On September 21, 2001, an automobile struck Plaintiff's automobile from behind. (Def.'s Br., Statement of Undisputed Material Facts ¶ 5; deemed admitted at Pl.'s Br., Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶ 8.) As a result, Plaintiff suffered injuries and loss of income. (Id., Statement of Undisputed Material Facts ¶ 5; deemed admitted at Pl.'s Br., Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶ 9.) Plaintiff exhausted the basic PIP benefits available to her under her policy, namely $50,000 in medical expenses, $50,000 in rehabilitation expenses, and wage loss for one year. (Def's Br., Statement of Undisputed Material Facts ¶ 6, deemed admitted at Pl.'s Br., Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶ 10.) Defendant ceased paying benefits to Plaintiff after Plaintiff exhausted the basic PIP benefits available to her under the policy. (Def.'s Br., Statement of Undisputed Material Facts ¶ 6; deemed admitted at Pl.'s Br., Resp. to Statement of Undisputed Material Facts, Statement of Undisputed Material Facts ¶ 10.)

In January 2001, Defendant amended its PIP Endorsement. (Def.'s Br., Statement of...