Pacheco v. Shelter Mut. Ins. Co.

• Decision Date: 02 October 2009
• Docket Number: No. 08-1046.,08-1046.
• Citation: 583 F.3d 735
• Parties: Christina PACHECO, Plaintiff-Appellant, v. SHELTER MUTUAL INSURANCE COMPANY; and Shelter General Insurance Company, a Missouri corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

583 F.3d 735

Christina PACHECO, Plaintiff-Appellant, v. SHELTER MUTUAL INSURANCE COMPANY; and Shelter General Insurance Company, a Missouri corporation, Defendants-Appellees.

No. 08-1046.

United States Court of Appeals, Tenth Circuit.

October 2, 2009.

William Babich of The Law Firm of William Babich, LLC, Denver, CO, for Plaintiff-Appellant.

Steven J. Dawes of Light Harrington & Dawes, P.C., Denver, CO, for Defendants-Appellees.

Before HARTZ, SEYMOUR and TYMKOVICH, Circuit Judges.

SEYMOUR, Circuit Judge.

Christina Pacheco appeals the district court's grant of summary judgment in favor of Shelter Mutual Insurance Company ("Shelter Mutual") and Shelter General Insurance Company ("Shelter General"). We reverse and hold that Shelter General's policy exclusion of resident relatives who own a vehicle from Uninsured Motorist/Underinsured Motorist ("UM/UIM") coverage violates Colorado public policy. In so doing, we agree with the district court that issues of fact remain regarding whether Shelter General properly advised and offered UM/UIM coverage in an amount equal to the bodily injury limits for that policy. Finally, we decline to address Ms. Pacheco's argument that her own Shelter Mutual policy coverage can be stacked with the Shelter General policies issued to her parents, leaving this issue to be addressed in the first instance by the district court on remand.

I.

On August 8, 2000, Ms. Pacheco was injured in an automobile accident caused by an underinsured motorist.¹ She settled with the tortfeasor's insurer for $25,000, the maximum amount recoverable under his policy limits. At the time of the accident, Ms. Pacheco was the named insured on Shelter Mutual policy #5-1-C-3682601-7 ("Policy No. 7"), which covered the vehicle she was operating at the time of the accident. Ms. Pacheco's parents, Bernice and Tino Pacheco, with whom she resided, were the named insureds on Shelter General policies #5-1-C-3682601-5 ("Policy No. 5") and #5-1-C-3682601-6 ("Policy No. 6"). Seeking compensation for her remaining damages, Ms. Pacheco submitted a claim for UM/UIM benefits to her insurer, Shelter Mutual, and to her parents' insurer, Shelter General. Both insurance companies denied coverage, and Ms. Pacheco instituted an arbitration action against Shelter Mutual. The arbitration panel determined she sustained $125,000 in bodily injury damages and awarded her interest on the unpaid amount ($100,000) pursuant to C.R.S. § 13-21-101 and costs. Finding UM/UIM coverage under her policy, the arbitration panel awarded her the UM/UIM policy limit of $50,000 less $25,000 received from the tortfeasor settlement for a total of $25,000. The arbitration panel held that it did not have jurisdiction to determine whether the UM/UIM limits on Policy No. 6 should be increased,² or whether Ms Pacheco could stack coverage from her parents' policies. Shelter Mutual paid Ms. Pacheco the $25,000 but not the costs award.

Ms. Pacheco brought suit in Colorado state court against Shelter Mutual and Shelter General seeking a reformation of Policy No. 6 by asking the court to declare that the policy should be construed to provide a $100,000 limit for UM/UIM coverage because Shelter General failed to properly offer UM/UIM coverage in an amount equal to the bodily injury limits and to obtain rejection of such coverage in writing in accordance with COLO.REV.STAT. § 10-4-609(2). She also asserted that the anti-stacking language in the two policies issued to her parents was not applicable to her situation and that she was therefore entitled to damages resulting from the stacked policies.

Defendants removed the case to federal court and the parties filed cross motions for summary judgment. The court denied Ms. Pacheco's motion, concluding that there were issues of fact as to whether Shelter General met its obligation to Ms. Pacheco's parents to properly advise and offer them UM/UIM coverage in an amount equal to the bodily injury coverage of that policy. The court then granted summary judgment to defendants, holding that Ms. Pacheco was not an insured under her parents' policies. The court relied on the relevant policy provision which provides: "We will pay damages for bodily injury which an insured ... is legally entitled to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle.... Insured means: (a) You and any relative." Aplt.App. at 217-18.³ The policy defines "relative" as "a person related to you by blood, marriage, or adoption and who is a resident of and actually living in your household, provided neither the relative nor the relative's spouse owns, in whole or in part, an auto." Id. at 213, 237 (emphasis added). The policies' definition of relative applies to both bodily injury liability coverage and UM/UIM coverage. The district court noted that although Ms. Pacheco was a relative residing in the home, the non-ownership-of-a-vehicle condition limiting the policy's definition of a "relative" effectively excluded her from coverage.

Because the district court determined Ms. Pacheco was not an insured under her parents' policies, it did not reach the issue of whether those policies could be stacked with hers to allow her to recover the remaining $75,000 in damages. Moreover, the determination that Ms. Pacheco was not an insured effectively mooted the question whether Shelter General had met its obligation to properly advise Ms. Pacheco's parents regarding UM/UIM coverage in an amount equal to bodily injury coverage.

II.

This appeal involves the ever-evolving body of law surrounding uninsured motorist and underinsured motorist coverage in the state of Colorado.⁴ This action arises under a prior version of the UM/UIM Statute, Colorado Revised Statute § 10-4-609 (2000), and the former Colorado Auto Accident Reparation Act ("No-Fault Act"), Colorado Revised Statute § § 10-4-701 to -726 (2000). The No-Fault Act was repealed effective July 1, 2003 pursuant to a sunset provision. See COLO.REV.STAT § 10-4-726, amended by 2001 Colo. Sess. Laws, Ch. 165 § 6 and 2002 Colo. Sess. Laws, Ch. 189 § 1.⁵

The No-Fault Act and the UM/UIM statute worked in tandem to require motor vehicle owners to obtain liability insurance while ensuring that individuals purchasing such coverage had the option of protecting themselves against uninsured and underinsured motorists. As declared by the general assembly, the purpose of the No-Fault Act was to "avoid inadequate compensation to victims of automobile accidents[][and] to require registrants of motor vehicles in this state to procure insurance covering legal liability arising out of ownership or use of such vehicles and also providing benefits to persons occupying such vehicles and to persons injured in accidents involving such vehicles." COLO.REV.STAT. § 10-4-702. The purpose of the UM/UIM statute was "to assure the widespread availability to the insuring public of insurance protection against financial loss caused by negligent financially irresponsible motorists." Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92, 98 (Colo.1995) (en banc) (quoting 1965 Colo. Sess. Laws 333 (Declaration of Purpose)); see also DeHerrera v. Sentry Ins. Co., 30 P.3d 167, 174 (Colo.2001) ("UM/UIM coverage replaces the benefits an innocent injured insured would have recovered from an uninsured or underinsured tortfeasor, if the tortfeasor had been insured for liability coverage to the same extent that the injured insured was covered for UM/UIM benefits.").

The first question we address on appeal is whether a Colorado insurance policy could, in 2000, exclude resident relatives who own a car from UM/UIM coverage. Ms. Pacheco argues that the policy's exclusion violates public policy. We agree. For the reasons that follow, we hold that where Colorado statutory law defined "insured" to include "relatives of the named insured who reside in the same household as the named insured," COLO.REV.STAT. § 10-4-703(6), a policy that attempted to exclude from UM/UIM coverage vehicle-owning relatives meeting that definition is void and unenforceable.

Ms. Pacheco filed a motion with this court to certify this question to the Colorado Supreme Court. She did not request certification in the district court, however, and "[w]e generally will not certify questions to a state supreme court when the requesting party seeks certification only after having received an adverse decision from the district court." In re Midpoint Dev., L.L.C., 466 F.3d 1201, 1207 (10th Cir.2006) (quotation marks omitted). Furthermore, we are not convinced the issue is so novel that its resolution requires further guidance from the Colorado Supreme Court. See Pino v. United States, 507 F.3d 1233, 1236 (10th Cir.2007). After the district court's decision in this case, the Colorado Court of Appeals issued an unpublished opinion directly on point. See State Farm Mut. Auto. Ins. Co. v. Am. Family Mut. Ins. Co., No. 06CA2667 2008 WL 2612412 (Colo.App. July 3, 2008) (unpublished decision) (hereinafter the "Meza" case).⁶ Although the decision does not have precedential value, In re Title and Ballot Title and Submission Clause for 2005-2006 #55, 138 P.3d 273, 276 (Colo.2006) (opinions not selected for publication have no value as precedent); Welby Gardens v. Adams County Bd. of Equalization, 71 P.3d 992, 999 (Colo.2003) (en banc) (same), we consider its reasoning persuasive and in accord with Colorado law.

In Colorado, insurance companies offering bodily injury liability coverage must offer policyholders uninsured/underinsured motorist insurance. COLO.REV.STAT. § 10-4-609(1)(a); Massingill v. State Farm Mut. Auto. Ins. Co., 176 P.3d 816, 820 (Colo.App.2007), cert denied, No. 07SC740, 2008 WL 434588 (Feb. 19, 2008) (en banc). Unlike liability insurance, however, UM/UIM insurance is not mandatory; policyholders may decline coverage. See Massingill, 176 P.3d at 820.

[T]he intent is to put a person injured by an uninsured or underinsured motorist in the...