Ramos v. State Farm Mut. Ins. Co.

Decision Date19 October 2020
Docket NumberCivil Action No. 19-cv-01634-KMT
PartiesKELLY RAMOS, Plaintiff, v. STATE FARM MUTUAL INSURANCE COMPANY, a/k/a STATE FARM INSURANCE COMPANY, Defendant.
CourtU.S. District Court — District of Colorado

KELLY RAMOS, Plaintiff,
v.
STATE FARM MUTUAL INSURANCE COMPANY,
a/k/a STATE FARM INSURANCE COMPANY, Defendant.

Civil Action No. 19-cv-01634-KMT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

October 19, 2020


Magistrate Judge Kathleen M. Tafoya

ORDER

Before the court are two motions: (1) "Defendant State Farm's Preliminary Motion for Summary Judgment or in the Alternative Motion for Partial Summary Judgment on Extra Contractual Claims or in the Alternative Motion to Bifurcate and Stay Discovery;" and (2) "Defendant's Motion for Reconsideration of Order Denying Defendant's Motion for Leave to Amend Its Answer to Add Affirmative Defense." (["Motion for Summary Judgment"], Doc. No. 28; ["Motion for Reconsideration"], Doc. No. 49.) Responses and replies have been filed, as well. (["Summary Judgment Response"], Doc. No. 32; ["Summary Judgment Reply"], Doc. No. 34; ["Reconsideration Response"], Doc. No. 50; ["Reconsideration Reply"], Doc. No. 51.)

STATEMENT OF THE CASE

On December 17, 2015, while driving westbound on Highway 50 in Pueblo, Colorado, Plaintiff Kelly Ramos ["Ramos"] was "struck from the rear by the front of [another] vehicle at a

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high rate of speed." (["Complaint"], Doc. No. 5 at 21 ¶¶ 5-7; Mot. for Summ. J. 2 ¶ 1.) Ramos claims to have sustained numerous injuries from the accident, including "a traumatic brain injury, injury to neck, back, both legs, mouth, and [] severe cognitive and memory issues." (Compl. 3 ¶¶ 11-13.) Her resulting "economic loss" is said to exceed $450,000.00. (Id. at 3 ¶ 15; see Summ. J. Resp. 4 ¶ 8; Summ. J. Reply 4 ¶ 7.)

At the time of the accident, Ramos held a policy with Defendant State Farm Mutual Insurance Company ["State Farm"], which included at least $100,000/300,000 of underinsured motorists' benefits ["UIM"] coverage.2 (Compl. 4 ¶ 20; Mot. for Summ. J. 2 ¶ 2.) The policy provisions governing Plaintiff's UIM coverage stated, in relevant part, as follows:

INSURED'S DUTIES

4. Insured's Duty to Cooperate With Us

a. The insured must cooperate with us and, when asked, assist us in:

(1) making settlements;

(2) securing and giving evidence; and

(3) attending, and getting witnesses to attend, depositions, hearings, and trials.

***

7. Other Duties Under . . . Uninsured Motor Vehicle Coverage . . .

A person making a claim under . . . Uninsured Motor Vehicle Coverage . . . must:

(1) notify us of the claim and give us all the details about the death, injury, treatment, and other information that we may need as soon as reasonably possible after the injured insured is first examined or treated for the injury. If the insured is unable to give us notice, then any other person may give us the required notice;

***

(3) provide written authorization for us to obtain:

(a) medical bills;

(b) medical records;

(c) wage, salary, and employment information; and

(d) any other information we deem necessary to substantiate the claim.

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UNINSURED MOTOR VEHICLE COVERAGE

Consent to Settlement

The insured must inform us of a settlement offer, if any, proposed by or on behalf of the owner or driver of the uninsured . . . or underinsured motor vehicle, and the insured must request our written consent to accept such settlement offer. If we:

1. consent in writing, then the insured may accept such settlement offer.

***

Exclusions

THERE IS NO COVERAGE:

1. FOR AN INSURED WHO, WITHOUT OUR CONSENT, SETTLES WITH ANY PERSON OR ORGANIZATION WHO MAY BE LIABLE FOR THE BODILY INJURY[.]

(Mot. for Summ. J. Ex. A at 2-5.) (emphasis in original).

On February 11, 2016, Ramos reported the December 2015 accident to State Farm, and placed the insurer on notice of a potential UIM claim. (Summ. J. Resp. 2 ¶ 1, Ex. 1 at 39-40; Summ. J. Reply 2 ¶ 1.) Defendant's adjuster immediately opened an investigation into the incident. (See Summ. J. Resp. Ex. 1 ["Claim File"] at 40.) In the claim file, the adjuster recorded that the other driver's insurance carrier, Farmers Insurance, had already accepted liability. (Id.) The adjuster's notes indicated that Plaintiff and her husband, David Ramos,3 intended to pursue damages against Farmers. (Id. at 39-40.)

Then, in August 2017, without notifying State Farm, Plaintiff and her husband commenced a lawsuit against the at-fault driver [the "Underlying Action"]. (Mot. for Summ. J. 4 ¶ 4; see Summ. J. Resp. 1-2.) In connection with that litigation, on January 19, 2018, Plaintiff underwent an independent medical examination ["IME"], which was conducted by Rebekah Martin, M.D. (Mot. for Summ. J. Ex. B; Summ. J. Resp. 5 ¶ 18.) The IME report, dated January

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23, 2018, and Dr. Martin's subsequent addendum, dated July 6, 2018, were thereafter distributed to the parties in the Underlying Action. (Id.) However, neither of Dr. Martin's expert reports were given to State Farm. (Mot. for Summ. J. 5 ¶ 15; see Summ. J. Resp. 1-8.)

Following these events, on August 17, 2018, Plaintiff and her husband executed a General Release, in which they agreed to fully settle the claims of their lawsuit against the at-fault driver, in exchange for $500,000.00. (Mot. for Summ. J. Ex. C; Summ. J. Resp. 7 ¶ 29.) The record shows that Ramos did not notify State Farm of the proffered settlement offer, or obtain the insurer's permission to settle her claims against the at-fault driver, before signing the release. (Mot. for Summ. J. 4 ¶ 7; see Summ. J. Resp. 1-8.) Further, as of that date, Ramos still had not provided State Farm with any litigation documents filed in the Underlying Action. (Id.)

After learning of Ramos's settlement, on September 15, 2018, State Farm performed an asset check on the at-fault driver to determine whether it would have intervened in the Underlying Action. (Claims File 35-36.) On September 26, 2018, State Farm determined that the at-fault driver lacked "any liquid assets." (Id. at 35.) Defendant's claims adjuster concluded, in light of that determination, that she "would have recommended to grant CTS [consent to sue]" in the Underlying Action. (Id.) The adjuster recorded her impression that it "[d]oes not appear that [State Farm] not being notified of suit or settlement has affected [State Farm's] ability to investigate." (Id.) The adjuster, therefore, "recommend[ed] moving forward with the handling of the UIM claim." (Id.) That same day, September 26, 2018, Defendant's claims manager reviewed and affirmed the adjuster's recommendation. (Id. at 34.) The claims manager wrote that she "[a]gree[d] with [the adjuster's] recommendation," and confirmed that it was "ok to proceed." (Id.) By letter dated December 28, 2018, the insurer notified Ramos as follows:

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State Farm[] consents to the settlement of the $500,000.00 policy limits of [the at-fault driver's] liability policy with our insured, Kelly Ann Ramos. State Farm does not intend to pursue subrogation against Farmers or its insured(s) for any payment made from the [UIM] coverage of State Farm Mutual Automobile Insurance Company.

State Farm agrees that by settling the bodily injury claim with Farmers, Kelly Ann Ramos does not prejudice her ability to present an Uninsured Motorist claim with State Farm.

(Mot. for Summ. J. Ex. D.)

Ten days later, on January 7, 2019, Plaintiff's attorney, Richard Orona, contacted State Farm concerning Ramos's pending UIM claim. (Mot. for Summ. J. Ex. E.) Mr. Orona informed State Farm that he would review his records "to determine what medical records, if any, have not already been sent to your office." (Id.) Plaintiff's attorney made clear to the insurer that "[i]f there are records not previously sen[t], I will forward them to you immediately." (Id.)

On February 7, 2019, Mr. Orona sent a demand letter to State Farm for policy limit payment on Ramos's UIM coverage. (Mot. for Summ. J. Ex. F.) In that letter, Plaintiff's attorney referenced the $500,000.00 settlement reached between his client and the at-fault driver in the Underlying Action, explaining that:

[T]he settlement amount reflects a resolution of both Mrs. Ramos and Mr. Ramos' legal claims. To that extent, Mr. Ramos' claim is derived from his economic loss that exceeds $100,000, loss of consortium claim, non-economic claims, etc. The settlement of Mr. Ramos' claim is in excess of $175,000 leaving the remainder of the settlement related to Mrs. Ramos' past, present, and future damages. Clearly, considering the totality of her damages related to medical bills, lost wages, lost profit from her company, future medical treatment, disability, pain and suffering, etc., Mrs. Ramos was not fully compensated from the tortfeasor's settlement.

(Id.) Mr. Orona stated his position that "State Farm has had the necessary information to support payment of UM/UIM policy limits but, as of today, has failed to pay any amounts—disputed or otherwise." (Id.) Plaintiff's attorney then demanded that State Farm pay his client "the benefits

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owed under her insurance policy which amounts to policy limits within ten days of receipt of this correspondence." (Id.)

On March 11, 2019, State Farm responded to Mr. Orona's demand letter. (Mot. for Summ. J. Ex. G.) The insurer notified the attorney that "[a]fter reviewing all documentation on file, [State Farm] believe[s] that Ms. Ramos has been indemnified by the other insurance carrier." (Id.) Seven weeks later, on May 2, 2019, Plaintiff commenced this lawsuit to recover UIM policy benefits. (Doc. No. 1 at 1, Ex. A.)

In her Complaint, Ramos asserts three causes of action: (1) determination and payment of UIM benefits ["breach of contract"]; (2) bad faith breach of insurance contract ["common law bad faith"]; and (3) a violation of Colorado Revised Statutes §§ 10-3-1115 and 10-3-1116 ["statutory bad faith"]. (Compl. 4-7 ¶¶ 19-36.) Prior to the close of discovery, on January 21, 2020, Defendant moved for summary judgment on all three of Plaintiff's claims. (Mot. for Summ. J. 1, 6-12.)

STANDARD OF REVIEW

Summary judgment is appropriate if "the movant shows that there is no genuine dispute as to any material fact and the movant is...

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