Olson v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 29 November 2007
• Docket Number: No. 06CA2164.,06CA2164.
• Citation: 174 P.3d 849
• Parties: Mark OLSON, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
• Court: Colorado Court of Appeals

174 P.3d 849

Mark OLSON, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.

No. 06CA2164.

Colorado Court of Appeals, Div. IV.

November 29, 2007.

Sears & Swanson, P.C., Victoria C. Swanson, Colorado Springs, Colorado, for Plaintiff-Appellant.

Fisher, Sweetbaum, Levin & Sands, P.C., Jon F. Sands, Kimberle E. O'Brien, Denver, Colorado, for Defendant-Appellee.

Opinion by Judge BERNARD.

In this uninsured motorist (UM) action, plaintiff, Mark Olson (the insured), appeals the summary judgment in favor of defendant, State Farm Mutual Automobile Insurance Company (the insurance company). We affirm.

I. Background

The following facts are undisputed. On February 27, 2002, the insured was involved in a hit-and-run collision when his vehicle was negligently struck by an unknown motorist. The insured was insured by the insurance company, with UM coverage.

The insured notified the insurance company of the accident. On April 3, 2003, the insurance company acknowledged the insured had a UM claim, and sent the insured a letter offering him $1,000 to settle the UM claim. The insured cashed the check. The insurance company did not advise the insured that, if he disputed the payment of $1,000 as a full and complete settlement of his UM claim, the only way to preserve his UM claim would be to demand arbitration or to file suit against the insurance company within three years of the date of his accident.

In October 2005, the insured sought legal counsel. Subsequently, the insured asked the insurance company to waive the statute of limitations on his UM claim because the insurance company had not informed him of the time limits within which to dispute the UM settlement. The insurance company denied this request.

On November 9, 2005, the insured filed this action asserting a claim for UM benefits, based on breach of contract, and filed claims alleging the insurance company had engaged in bad faith insurance conduct. The insurance company asserted the affirmative defense that the insured's claims were barred by the statute of limitations. The insurance company then moved for summary judgment on all of the insured's claims.

After the insured filed a response and the insurance company filed a reply, the insured moved to file a surreply. The trial court did not rule on this motion.

On September 19, 2006, the trial court granted the insurance company's motion for summary judgment.

II. Summary Judgment

An appellate court reviews a trial court's grant of summary judgment de novo. A.C. Excavating v. Yacht Club II Homeowners Ass'n, 114 P.3d 862, 865 (Colo.2005). Summary judgment is appropriate when the pleadings and supporting documents clearly demonstrate no issue of material fact exists and the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c); Thompson v. Maryland Cas. Co., 84 P.3d 496, 501 (Colo.2004). For summary judgment purposes, a "material fact" is one that will affect the case's outcome. Sender v. Powell, 902 P.2d 947, 950 (Colo.App.1995).

The moving party bears the initial burden of providing the basis for the motion and identifying those portions of the record and any affidavits that demonstrate there is not a genuine issue of material fact. Cont'l Air Lines, Inc. v. Keenan, 731 P.2d 708, 712 (Colo.1987). Whether a genuine issue of material fact exists is a question of law. Churchey v. Adolph Coors Co., 759 P.2d 1336, 1340 (Colo.1988).

In some cases, "equity will toll a statute of limitations if a party fails to disclose information that he or she is legally required to reveal and the other party is prejudiced." Samples-Ehrlich v. Simon, 876 P.2d 108, 110 (Colo.App.1994). Once the statute of limitations has been raised as a defense, the burden is upon the plaintiff to establish the defendant's actions prevented him or her from filing a timely claim. Id.

Issues such as when a cause of action accrues, whether a claim is barred by a statute of limitations, and whether a statute of limitations should be equitably tolled, are issues of fact. See Mastro v. Brodie, 682 P.2d 1162, 1169 (Colo.1984) (when claim accrues for alleged negligent conduct); Terry v. Sullivan, 58 P.3d 1098, 1101 (Colo.App.2002)(statute of limitations and equitable tolling).

However, if the undisputed facts show that a plaintiff discovered the existence of a claim as of a particular date, that a statute of limitations bars the filing of a claim, or that a plaintiff is not entitled to rely on the doctrine of equitable tolling, then summary judgment may be granted. See Trigg v. State Farm Mut. Auto. Ins. Co., 129 P.3d 1099, 1101 (Colo.App.2005)("[I]f undisputed facts demonstrate that the plaintiff had the requisite information as of a particular date, then the issue of whether the statute of limitations bars a particular claim may be decided as a matter of law."); Noel v. Hoover, 12 P.3d 328, 330-31 (Colo.App.2000) (equitable tolling of statute of limitations); Palisades Nat'l Bank v. Williams, 816 P.2d 961, 963 (Colo.App.1991)(discovery of negligent conduct in legal malpractice case).

Here, the insured contends the trial court improperly granted summary judgment because its order was based on findings relating to disputed facts and the improper resolution of undisputed facts in the insurance company's favor. As we explain below, some of the insured's arguments raise issues of law, not of fact, which can be resolved by summary judgment. The remaining issues do not raise questions of material fact.

III. Statute of Limitations

A. Introduction

An insured who alleges a claim against an insurer based on a UM policy must file a claim within three years after the cause of action accrues. § 13-80-107.5(1)(a), C.R.S. 2007. All tort actions for bad faith must be commenced within two years after the cause of action accrues. § 13-80-102(1)(a), C.R.S. 2007; Brodeur v. Am. Home Assurance Co., 169 P.3d 139, 150-51 (Colo.2007).

A cause of action in a UM case accrues "after both the existence of the death, injury, or damage giving rise to the claim and the cause of the death, injury, or damage are known or should have been known by the exercise of reasonable diligence." § 13-80-107.5(3), C.R.S.2007; see Trigg, 129 P.3d at 1101. A claim for bad faith breach of an insurance contract accrues when "both the injury and its cause are known or should have been known by the exercise of reasonable diligence." § 13-80-108(1), C.R.S.2007; see Harmon v. Fred S. James & Co., 899 P.2d 258, 260 (Colo.App.1994).

Here, the insured's complaint alleged that (1) the insured requested UM benefits up to the policy limits; (2) the insurance company breached the insurance contract by failing to pay UM benefits beyond $1,000; (3) the insurance company acted in bad faith because it violated its duties under the Unfair Claims Practices Act, section 10-3-1104(1)(h), C.R.S. 2007; and (4) the insurance company acted in bad faith because (a) it did not advise the insured of the maximum benefits available or the procedures to be followed to obtain those benefits; (b) it did not advise the insured that his acceptance of the $1,000 check would completely settle his claim; (c) it breached its duty of good faith and fair dealing by failing to inform the insured of the running of the statute of limitations; and (d) it unreasonably denied the insured's request to reopen his claim.

The insurance company raises the defense that, because the lawsuit was not filed until November 9, 2005, the insured's claims were barred by the statute of limitations. The insurance company contends:

• The claims for UM benefits and for breach of contract accrued on the date of the accident, and so those claims should have been filed by February 27, 2005, under the three-year statute of limitations found in section 13-80-107.5(1)(a); and

• The bad faith claims accrued when the insurance company sent the insured the letter offering $1,000 to settle the UM claim and the check for that amount, and so those claims should have been filed by April 3, 2005, under the two-year statute of limitations found in section 13-80-102(1)(a). The insured argues his claims are not barred because:

• None of his claims accrued until he consulted an attorney in October 2005;

• His bad faith claim did not accrue until February 27, 2005, when the three-year statute of limitations ran out for his claims for payment of UM benefits and breach of contract, because the insurance company had a duty to inform him when the statute of limitations would run, and he was injured by its failure to have done so; and

• The insurance company committed misconduct that equitably tolled the statute of limitations for all of the insured's claims.

B. Did the Insured's Claims Not Accrue Until He Consulted a Lawyer?

The insured argues none of his claims accrued until he consulted an attorney in October 2005, and first learned of the insurance company's alleged misconduct. We are not persuaded.

In Winkler v. Rocky Mountain Conference, 923 P.2d 152, 159 (Colo.App.1995), a division of this court discussed the kind of information a plaintiff must possess for an action to accrue: "The critical inquiry of when an action accrues is knowledge of the facts essential to the cause of action, not knowledge of the legal theory upon which the action may be brought."

The statutes of limitations at issue here, sections 13-80-107.5(1)(a) and 13-80-108(1), require that the plaintiff use due diligence to find out the relevant circumstances or events. This requirement creates an objective standard, and "does not reward denial or self-induced ignorance." Sulca v. Allstate Ins. Co., 77 P.3d 897, 900 (Colo.App.2003).

As a general matter, ignorance of the law does not expand the statute of limitations for filing suit. See, e.g., Ormiston v. Nelson, 117 F.3d 69, 72 n. 5 (2d Cir.1997); Taylor v. Plousis, 101 F.Supp.2d 255, 270 (D.N.J.2000); Crowder v. Master Fin., Inc., 176 Md.App. 631, 933 A.2d 905, 927 (2007); cf. ...