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Christoffersen v. United Parcel Service, Inc.

United States Court of Appeals, Tenth Circuit

April 2, 2014

KAREN CHRISTOFFERSEN; BART CHRISTOFFERSEN; KC CHRISTOFFERSEN;
v.
UNITED PARCEL SERVICE, INC., Defendant-Appellee, JESSIE ANNE CHRISTOFFERSEN; PHYLLIS CHRISTOFFERSEN; THE ESTATE OF ALAN CHRISTOFFERSEN, deceased, Plaintiffs-Appellees/Appellants/Cross-Appellants, and LIBERTY MUTUAL INSURANCE GROUP, Defendant-Appellant/Cross-Appellee

Page 1224

Appeal from the United States District Court for the District of Utah. (D.C. No. 2:11-CV-00259-BSJ).

David R. Olsen (Paul M. Simmons and Charles T. Conrad, on the briefs) of Dewsnup, King & Olsen, Salt Lake City, Utah, for Plaintiffs-Appellees/Appellants/Cross-Appellants.

John R. Lund (Melinda K. Bowen, on the briefs) of Snow, Christensen & Martineau, Salt Lake City, Utah, for Defendant-Appellee United Parcel Service, Inc.

Matthew L. Lalli (Adam C. Buck and Jessica E. Yates, on the briefs) of Snell & Wilmer L.L.P., Salt Lake City, Utah, for Defendant-Appellant/Cross-Appellee Liberty Mutual Insurance Group.

Before GORSUCH, MATHESON, and BACHARACH, Circuit Judges.

OPINION

Page 1225

BACHARACH, Circuit Judge.

Mr. Alan Christoffersen drove a truck for United Parcel Service (UPS) until he was struck and killed by an underinsured motorist. After the accident, Mr. Christoffersen's heirs sued UPS and its automobile insurer (Liberty Mutual Insurance Group), asserting claims for underinsured motorist (UIM) benefits. All parties moved for summary judgment. The district court granted UPS's motion on the ground that Utah's Worker's Compensation Act provided the exclusive remedy. On the claim against Liberty Mutual, the court granted judgment to the heirs for $10,000. Through this judgment, the court effectively awarded partial summary judgment to both sides, holding that: (1) UPS did not validly reject UIM coverage under its 2008 policy, (2) the policy was a " new" policy for purposes of determining UIM coverage, and (3) the heirs were entitled to recover UIM benefits in the amount of $10,000. The heirs and Liberty Mutual appealed.

We conclude that Liberty Mutual did not incur liability because UPS validly rejected UIM coverage; thus, on the claim against Liberty Mutual, we reverse the judgment of $10,000 for the heirs and remand with instructions to grant summary judgment to Liberty Mutual on the entire claim. And we affirm the award of summary judgment to UPS because it was not considered a " self insurer" for purposes of Utah's UIM statute.

I. Background

The parties' appellate arguments require an understanding of Utah's UIM statute, the terms of UPS's automobile insurance policy, and the heirs' claim for UIM coverage.

A. Utah's UIM Statute

Utah's UIM statute ordinarily provides for mandatory UIM coverage of at least $10,000 for one person and $20,000 for two or more persons in a single accident. See Utah Code Ann. § 31A-22-305.3(2)(d) (2007 supp.). An exception exists if a named insured rejects UIM coverage by complying with subsection (g) of the statute. Under subsection (g), a named insured must reject UIM coverage " by an express writing to the insurer . . . on a form provided by the insurer that includes a reasonable explanation of the purpose of [UIM] coverage and when it would be applicable." Id. § 31A-22-305.3(2)(g). A rejection remains effective for subsequent renewals of the policy unless the insured makes a written request for UIM coverage. Id.

The statute also establishes rules regarding UIM coverage and requires insurance companies to make certain disclosures about UIM coverage to their insureds. These rules and disclosure requirements vary depending on whether a policy was " new" or " existing" on January 1, 2001.

Subsection (b) of the statute governs new policies. This subsection creates a presumption of UIM coverage in all new policies unless it has been validly rejected under subsection (g). The presumptive amount of coverage is the lesser of: (1) the policy's liability limits, or (2) the maximum UIM coverage available under the policy. Id. § 31A-22-305.3(2)(b). A named insured can waive the presumptive amount (and purchase less UIM coverage) by signing an acknowledgment form that meets certain requirements. Id.

Subsection (h) of the statute governs existing policies. Although UIM coverage is not presumptively included in existing policies, subsection (h) requires insurers to disclose information to insureds that have

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some UIM coverage, but in an amount less than the liability limits or the maximum available under the policy. Id. § 31A-22-305.3(2)(h).

B. UPS's Automobile Insurance Policy with Liberty Mutual

UPS has long obtained automobile insurance policies from Liberty Mutual. Since 2001, these policies have had deductibles equal to the policy limits. This arrangement leaves much of the risk with UPS, but creates risk for Liberty Mutual by requiring it to pay claims if UPS is unable to do so.

With each policy renewal, UPS decides whether to purchase UIM coverage on a state-by-state basis. Under this arrangement, UPS has chosen to reject UIM coverage in every state where permitted by state law. Utah was one of these states.

In Utah, Liberty Mutual submitted a form to its policyholders that stated:

A new Utah law requires that we provide you with an additional insurance coverage. It is called Underinsured Motorist coverage (hereafter, UIM). This coverage gives you additional insurance benefits if you or others in your automobile are injured in an automobile accident caused by another party who is primarily at fault, but that party does not have enough insurance to compensate you for your injuries. UIM coverage is not the same as the Uninsured Motorist (UM) coverage you may currently have on your policy.
The law states that we must provide you with UIM coverage in minimum amounts of $10,000 for one person in any one accident and $20,000 for two or more persons in any one accident. The form providing the coverage has been added to your policy. Please read this form. The premium charge for this coverage has been included in the total premium amount for your policy renewal. Please refer to your Renewal Notice for the actual premium charge.
The law also allows you to reject UIM coverage if you do not want it. Any rejection of coverage must be done in writing. The rejection will last as long as we are your insurer or until you send us a written request to add the coverage.

Appellant's App. vol. 3, at 686-92.

The accompanying form presented UPS with two options: (1) purchase UIM coverage of at least $10,000 for one person and $20,000 for two or more persons in any one accident, or (2) reject all UIM coverage. UPS took the second option, signing a ...


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