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

• Decision Date: 12 September 2008
• Docket Number: No. 07-1241.,07-1241.
• Citation: 540 F.3d 1223
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant-Appellant, v. Leslie BOELLSTORFF, Plaintiff-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

540 F.3d 1223

STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant-Appellant, v. Leslie BOELLSTORFF, Plaintiff-Appellee.

No. 07-1241.

United States Court of Appeals, Tenth Circuit.

September 12, 2008.

Marie E. Williams (Michael S. McCarthy with her on the briefs), Faegre & Benson LLP, Denver, CO, for Defendant-Appellant.

Walter H. Sargent (Robert B. Carey & Julie B. Cliff, The Carey Law Firm, Colorado Springs, CO, with him on the briefs), Colorado Springs, CO, for Plaintiff-Appellee.

Before TACHA, EBEL, and McCONNELL, Circuit Judges.

EBEL, Circuit Judge.

This interlocutory appeal asks us to determine whether the class action tolling doctrine, originally announced by the Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), applies when an individual member of a putative class pursues an independent, individual claim before the district court has decided the class certification issue but after a non-tolled statute of limitations would have run. The district court certified this question, in part, because it involves a legal question about which there is substantial ground for differences of opinion, and so it does; the four circuits that have offered opinions on the issue have split evenly.

Plaintiff-Appellee Leslie Boellstorff ("Boellstorff") initiated an individual action against Defendant-Appellant State Farm Mutual Automobile Insurance Company ("State Farm") over four years after she suffered injuries in a car accident. Boellstorff alleged various violations of the Colorado Auto Accident Reparations Act ("CAARA" or "No Fault Act"), Colo. Rev. Stat § § 10-4-701 to-726 (2002) (repealed effective July 1, 2003).¹ State Farm moved for summary judgment, arguing that Boellstorff's claims were untimely in light of the applicable three-year statute of limitations. Boellstorff countered that her claims were in fact timely, and, alternatively, that a putative class action brought against State Farm even before her accident (captioned Clark v. State Farm Mutual Auto Insurance Company ("Clark" class action), No. 00-cv-01841-LTB (D.Colo. Sept. 19, 2000)) — but alleging the same conduct about which Boellstorff complains — tolled the statute of limitations under American Pipe. State Farm responded to this latter argument by asserting that Boellstorff forfeited any benefit offered by the American Pipe doctrine when she pursued her individual claim prior to the district court's class certification decision in Clark.

The district court concluded that Boellstorff's claims were stale, but were saved nonetheless by the American Pipe tolling doctrine. The court then certified the American Pipe question to us. Because we believe that the Colorado Supreme Court would agree with the district court's conclusion, we affirm the district court's order denying State Farm summary judgement.²

I. BACKGROUND

On September 21, 2001, Boellstorff sustained serious injuries in a car accident while driving her then-husband Brian's Ford Explorer. Brian Boellstorff had procured a Colorado automobile insurance policy from State Farm in May 1998.³ At that time, he selected the minimal level of personal injury protection ("PIP") benefits. The parties do not dispute that Boellstorff was covered by Brian's State Farm automobile insurance policy at the time of her accident.

Within a week after the accident, State Farm sent Boellstorff a letter setting forth the PIP benefits to which she was entitled. This letter listed the minimum PIP benefits selected by Brian when he purchased the State Farm policy; the letter did not discuss the option of procuring enhanced PIP benefits. A few months later, Boellstorff retained the law firm of Abadie & Zimsky to represent her in a suit against another driver involved in her accident.⁴

A. Colorado's Automobile Insurance Statutory Scheme

In 1973, Colorado's legislature enacted the No Fault Act with the stated goal of "avoid[ing] inadequate compensation to victims of automobile accidents." Colo. Rev.Stat. § 10-4-702. The Act provided that all Colorado automobile liability policies must include minimum PIP benefits. See Colo.Rev.Stat. § 10-4-706. More to the point, the No Fault Act mandated that insurers offer to their policyholders the option of purchasing enhanced PIP benefits. Id. § 10-4-710. While the minimum PIP benefits include time and dollar cut-offs, enhanced PIP benefits do not.⁵ See Clark v. State Farm Mut. Auto. Ins. Co. ("Clark I"), 319 F.3d 1234, 1238 (10th Cir.2003) (noting that enhanced "PIP benefits do not place time or dollar limitations on medical expense claims and offer the possibility of greater wage loss reimbursements"). PIP benefits were payable to four classes of individuals: (1) the person named as the insured in the policy; (2) household relatives of the named insured; (3) permissive occupants of the insured vehicle; and (4) pedestrians injured in an accident involving the insured vehicle. Id. § 10-4-707.

The Colorado courts eventually clarified the scope of the No Fault Act's mandate in a series of decisions, including Brennan v. Farmers Alliance Mutual Insurance Co., 961 P.2d 550 (Colo.Ct.App.1998). There, the Colorado Court of Appeals held that Colorado insurers were obligated to offer enhanced PIP coverage to people in all four of the § 10-4-707 categories, not just to the named insured. Id. at 554. These decisions triggered a slew of litigation: many policyholders who had not been offered enhanced coverage — and individuals in the other three § 10-4-707 categories — brought suit under the No Fault Act seeking reformation of their policies to provide benefits without the minimum PIP time and dollar cut-offs. See, e.g., Clark v. State Farm Mut. Auto. Ins. Co. ("Clark II"), 433 F.3d 703, 705 (10th Cir.2005).⁶

B. The Clark Class Action

In August 2000, Ricky Clark filed a putative class action against State Farm in Colorado state court. Clark, a pedestrian who was struck and injured by a vehicle insured by State Farm, alleged that State Farm had routinely failed to offer or pay enhanced PIP benefits as required by the No Fault Act's § 710 and by Brennan. See Clark I, 319 F.3d at 1237.

Clark filed suit on behalf of himself and "[a]ll injured persons covered under a State Farm automobile insurance policy who were not offered extended coverage as required by C.R.S. § 10-4-710 of the Colorado Auto Accident Reparations Act, and who were not provided the additional benefits provided for therein." The parties do not dispute that Clark's original class definition included Boellstorff.⁷ State Farm removed Clark's suit to federal court on September 19, 2000, predicating federal jurisdiction on the parties' diversity. See Clark class action, Dkt. No. 1. The Clark case then oscillated between the U.S. District Court for the District of Colorado and the Tenth Circuit through 2005, resulting in two published opinions from this court. See Clark I, 319 F.3d 1234; Clark II, 433 F.3d 703. Clark finally filed a Motion for Class Certification on May 14, 2007. Clark class action, Dkt. No. 205. The district court denied the motion for class certification on September 18, 2007, approximately a week before State Farm filed its Reply Brief in this appeal. See id. Dkt. No. 227 at 1-2.

C. Boellstorff's Individual Action

Boellstorff brought this individual action against State Farm on October 31, 2005, alleging violations of the No Fault Act that mirrored those alleged in Clark's complaint. As had Clark, she sought (1) reformation of the insurance policy to include enhanced PIP benefits, and (2) damages for alleged breach of contract, willful and wanton breach of contract, and breach of the implied covenant of good faith and fair dealing.

Because Boellstorff filed suit over four years after her accident, State Farm moved to dismiss the case as untimely under the No Fault Act's three-year statute of limitations. See Nelson v. State Farm Mut. Auto. Ins. Co., 419 F.3d 1117, 1120 (10th Cir.2005) ("[W]hen an action for benefits is brought under CAARA, it is subject to CAARA's three-year statute of limitations."). The district court converted the motion to dismiss into a Rule 56 motion for summary judgment and both parties filed supplementary materials. State Farm maintained that Boellstorff's cause of action accrued when she received the letter listing her PIP benefits or, alternatively, when she first retained counsel. Boellstorff countered that her claims were in fact timely. She also asserted that the class action tolling doctrine initially announced in American Pipe saved her claims because the Clark action tolled the statute of limitations.

In an Order dated September 11, 2006, the district court found that Boellstorff's cause of action accrued on September 25, 2001, the date on which State Farm sent her the letter informing her of the PIP benefits to which she was entitled. As such, the No Fault Act's three-year limitations period had expired by the time Boellstorff commenced her individual action. Having held Boellstorff's claims untimely, the court continued on and concluded that American Pipe tolling protected her claims because of the pendency of the Clark action, which was filed before her claims accrued and remained pending at the time Boellstorff filed the instant, individual action. The court rejected State Farm's argument that Boellstorff had forfeited the benefits of the class action tolling doctrine by filing her individual action before the Clark court decided whether to certify a class.

State Farm quickly moved the court to certify the issue for appellate review pursuant to 28 U.S.C. § 1292(b).⁸ The district court accepted this invitation, and, on February 20, 2007, amended its September 11 Order to certify for review this question: "whether the opportunity to invoke the class action toll of American Pipe is lost by a putative class member who commences an individual action prior to a decision as to class certification. . ....