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Amica Mutual Insurance Co. v. Farhar

February 17, 2006


The opinion of the court was delivered by: Judge Robert E. Blackburn


On February 8, 2006, this matter came before me for trial to the court on plaintiff Amica Mutual Insurance Company's single claim for declaratory relief included in its Complaint [#1], filed January 31, 2005, and identified in the Final Pretrial Order Re: Claims For Declaratory Judgment [#69], filed January 31, 2006.*fn1

I have judicially noticed all relevant adjudicative facts in the file and record of this action, received the stipulations of the parties and the evidence educed at trial, and considered the arguments advanced and the authorities cited by the parties during pretrial and trial proceedings. I now enter the following findings of fact,*fn2 conclusions of law, and orders.


1. I have jurisdiction over the parties to this action pursuant to 28 U.S.C. § 1332 (diversity of citizenship).

2. Venue is proper in the District Court for the District of Colorado.

3. The parties are plaintiff Amica Mutual Insurance Company ("Amica"), a Rhode Island corporation, and defendant Barbara Farhar ("Farhar"), a Colorado resident.

4. In assessing the credibility of each witness who testified at trial, I have considered all facts and circumstances shown by the evidence that affect the credibility of the witness, including the following factors: the witness's means of knowledge, ability to observe, and strength of memory; the manner in which the witness might be affected by the outcome of the litigation; the relationship the witness has to either side in the case; and the extent to which the witness is either supported or contradicted by other witnesses or evidence presented at trial.

5. The central issue in this case is whether the subject contract of automobile insurance reflects an intent to provide Farhar with unlimited extended personal injury protection ("PIP") benefits associated with a car accident in which she was involved on April 12, 2000, or alternatively, whether the failure to include a dollar figure on the endorsement page of the policy was merely a scrivener's error, making it appropriate to reform the policy to show that both parties intended the policy to include a cap on extended PIP benefits of $200,000.

6. In April, 1996, Farhar contacted Amica about purchasing automobile and home insurance. She spoke to Wendy Hawley, an underwriting representative with Amica.

7. Hawley took information from Farhar relevant to an application for automobile insurance. Although she does not remember the phone call specifically, Hawley testified that the questions she asks of all new applicants are dictated by the various screen prompts that she must complete in order to complete the insurance application.

8. Among the items Hawley routinely covered during the application process were a discussion of the two types of PIP insurance Amica offered: basic PIP, which covered medical expenses and work loss up to $50,000; and extended PIP, which expanded that coverage to $200,000. Hawley has never seen any information from Amica indicating that there was any PIP option other than these two, and she has never told an applicant that any other option was available.

9. Farhar testified to the contrary that Hawley never informed her about any specific dollar limits on the amount of extended PIP benefits available under the policy.*fn3 Instead, she recalls simply being told that extended PIP offered greater coverage than basic PIP and that it was advisable that she purchase extended PIP because accidents could be very expensive. She testified that it was her understanding that extended PIP benefits would cover all medical and work loss expenses she might incur as a result of any single accident, as was the case with her health insurance.

10. I find Hawley's testimony regarding the content of her conversation with Farhar to be credible. Although not based on a recollection of the specific conversation with Farhar, the testimony shows that Hawley follows a prescribed and routine practice in taking applications for automobile insurance on behalf of Amica, a practice which she has followed since 1990.

11. By contrast, I find Farhar's testimony regarding her understanding of this initial conversation with Amica not credible. This determination is based on several factors. First, Farhar's explanation of what she understood the coverage to be has subtly evolved over time. At her deposition, Farhar stated initially that she simply intended to purchase whatever the extra insurance was that Amica offered. Several permutations later, Farhar's story had become that she thought she was purchasing unlimited coverage. Farhar's testimony and demeanor on the witness stand further convinces me that her purported understanding is not worthy of credence. Finally, as explained more fully below, the written insurance application Farhar subsequently received from Amica made abundantly clear that her understanding, however conceived and formulated, was wrong.

12. Following the initial phone conversation, Amica sent Farhar a paper application. The plainly worded, single-page form clearly and obviously stated "Added Personal Injury Protection Coverage increases the total amount available to $200,000 for the above listed benefits." (Tr. Exh. 14.) Farhar indicated that she wanted extended PIP for both medical expenses and work loss benefits, signed the form, and returned it to Amica.

13. Amica issued a policy of insurance to Farhar effective April 30, 1996, through April 30, 1997. The cover page of the policy states in bold type "READ YOUR POLICY CAREFULLY." (Tr. Exh. 1 at Amica 0001.) Despite this advisement, Farhar admits that she only scanned the policy.

14. Contained within the policy was an endorsement identified as PP 05 61 03 95. On the first two pages of the endorsement is a schedule of benefits. Section II of that schedule is entitled "ADDED PERSONAL INJURY PROTECTION BENEFITS." Thereunder, the schedule shows that the "Maximum Limit of Liability for the ...

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