Warren v. Liberty Mut. Fire Ins. Co., Civil Action No. 05-cv-01891-EWN-MEH.
| Decision Date | 15 February 2007 |
| Docket Number | Civil Action No. 05-cv-01891-EWN-MEH. |
| Citation | 505 F.Supp.2d 770 |
| Parties | Kirk WARREN and Kurt Warren, Plaintiffs, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, a Massachusetts insurance company, Defendant. |
| Court | U.S. District Court — District of Colorado |
Julie Bettencourt Cliff, Carey Law Firm, Colorado Springs, CO, for Plaintiffs.
Brian John Spano, Stephen Erik Csajaghy, Rothgerber, Johnson & Lyons, LLP, Denver, CO, for Defendant.
This is an insurance case. Plaintiffs Kirk and Kurt Warren allege that by failing to disclose, offer, and provide certain personal injury protection ("PIP") coverage to Deborah Bannister and Kurt Warren (the "Insureds"), Defendant Liberty Mutual Fire Insurance Company: (1) violated the Colorado Auto Accident Reparations Act ("CAARA"), Colorado Revised Statutes sections 10-4-710(2)(a), 10-4-706(4)(a), and 10-4-111; (2) breached their insurance contract; (3) breached their insurance contracts in statutory and common law bad faith; and (4) breached the implied covenant of good faith and fair dealing. This matter comes before the court on: (1) Defendant's Motion for Summary Judgment and Memorandum Brief in Support Thereof, filed July 14, 2006; (2) Defendant's Motion for Summary Judgment Regarding All Claims of Plaintiff Kurt Warren Based on His Prior Bankruptcy Filing, filed July 14, 2006; and (3) Plaintiffs Motion for Partial Summary Judgment, filed July 17, 2006. Jurisdiction is based upon diversity of citizenship, pursuant to 28 U.S.C. § 1332 (2006).
I. Factual Background
Before turning to the substance of the motions before the court, I discuss the portions of CAARA relevant to this case.1 Repealed in 2003, CAARA was Colorado's No-Fault Insurance Act. See Clark v. State Farm Mut. Auto. Ins. Co., 292 F.Supp.2d 1252, 1258 (D.Colo.2003) ("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; Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550, 552 (Colo.Ct.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).
CAARA also required that insurers provide and offer an option for added PIP (hereinafter "APIP" or "extended PIP") coverage in exchange for higher premiums. See id. § 10-04-710(1); Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1238 (10th Cir.2003) ("Clark I"). Specifically, as relevant to the instant case, CAARA required that:
(2)(a) 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). Moreover, the offer of APIP benefits was required to extend coverage to named insureds, family members, guest occupants, and pedestrians. See Clark I, 319 F.3d at 1241-42; Brennan, 961 P.2d at 553-55; see also Colo.Rev.Stat. § 10-4-707(1). 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." 961 P.2d at 554.
On or about March 5, 1996, Deborah Bannister (n/k/a Deborah Warren), Kurt Warren' s2 purported wife, executed an auto insurance policy (hereinafter "the Policy") with Defendant on behalf of the Insureds. Resp. to Def.'s Mot. for Summ. J., Resp. to Statement of Undisputed Material Facts ¶¶ 4, 6 [filed Aug. 24, 2006] ].) Mr. Warren had authorized Ms. Bannister to apply for and select the appropriate level of insurance coverage on his behalf. At the time she applied for the Policy, Defendant's sales representative, Doug Maxey, traveled to Ms. Bannister's place of work to meet with her; Mr. Warren was not present at the meeting.
At this meeting, Ms. Bannister executed an automobile insurance policy application as well as the fourth page of a Colorado PIP Coverage Options Disclosure Form 146 R3 ("1996 PIP Disclosure Form"), selecting Basic PIP coverage and declining any APIP coverage. 3 The Disclosure Form reads in relevant part:
ADDED PERSONAL INJURY PROTECTION BENEFITS
You may elect to purchase an [A]PIP option, and [A]PIP Work Loss Option, or a combination of these two options applying to you and any family member for a reasonable increase in premium. If you elect either of the following, the $50,000 per person limit of benefits is increased to $200,000 per person for any one accident.
i) [A]PIP MEDICAL EXPENSES provides the same medical expense coverage as Basic PIP except that losses are not limited to those incurred within five (5) years after the accident.
ii) [A]PIP WORK LOSS — provides the same Work Loss Coverage as Basic PIP except there is no 52 week time limitation and coverage is not subject to a weekly dollar limit.
iii) [A]PIP MEDICAL EXPENSES AND ADDED PIP WORK LOSS — provides a combination of i) and ii) above.
(Id., Ex. A-6 at 4 [1996 PIP Disclosure Form] [emphasis in original].) Ms. Bannister declined each of the APIP coverages listed above. (Id.) At the end of their meeting, Mr. Maxey gave Ms. Bannister a thick folder of documents, which she later reviewed. (See Pls.' Mot. for Summ. J., Statement of Undisputed Material Facts ¶ 15 [filed July 17, 2006] ];
At the time Defendant issued the Policy to Ms. Bannister, the only PIP Endorsement certified for use by Defendant was PIP Endorsement PP0561 0395 ("1995 PIP Endorsement"). (Id., Statement of Undisputed Material Facts ¶ 6; admitted at Def.'s Resp., Resp. to Statement of Undisputed Material Facts ¶ 6.) The 1995 PIP Endorsement did not, by its terms, extend APIP coverage to guest occupants and pedestrians or reference a $200,000 aggregate limit. (Id., Statement of Undisputed Material Facts ¶ 6; admitted at Def.'s Resp., Resp. to Statement of Undisputed Material Facts ¶ 6.) Defendant did not modify its PIP Endorsement to comply with the Brennan decision by extending APIP coverage to guest occupants and pedestrians until December 21, 2001. (Id., Statement of Undisputed Material Facts ¶ 12; admitted at Def.'s Resp., Resp. to Statement of Undisputed Material Facts ¶ 12; id., Ex. 12 [Def.'s Notice of Compliance with Brennan] [ Defendant deleted references to the "named insured" or any "family member" in several places within its PIP Endorsement].)
On September 29, 2002, Mr. Warren was driving a 1983 Chevrolet Suburban in which his brother, Kirk Warren, was riding as a passenger, when he lost control and the vehicle rolled over (hereinafter the "Accident"). At the time of the Accident: (1) Kurt Warren and the Suburban he was driving were insured under the Policy; and (2) the Policy, as written, provided state minimum liability limits and basic PIP coverage. Kirk Warren sustained serious injuries and has exhausted basic PIP benefits available under the Policy. Mr. Warren also sustained injuries; the parties dispute whether he has or will exhaust basic PIP benefits available under the Policy. (Id., Statement of Undisputed Material Facts ¶ 14; disputed at Def.'s Resp., Resp. to Statement of Undisputed Material Facts ¶ 14.)
On March 3, 2002, Ms. Bannister and Kurt Warren executed the fourth page of a PIP Coverage Options Disclosure Form ("2003 PIP Disclosure Form"). This form was identical in all relevant respects to the one Ms. Bannister executed when she bought the Policy, except that it did not reference a $200,000 aggregate limit. (See id., Ex. A-14 [2003 PIP Disclosure Form].) Ms. Bannister again elected Basic PIP coverage and did not elect for any APIP coverage. (Id.)
2. Procedural...
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