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Lays v. American Family Mutual Insurance Company

United States District Court, D. Colorado

April 2, 2015

CARLA LAYS, and ROBERT LAYS, Plaintiffs,


WILLIAM J. MARTÍNEZ, District Judge.

Plaintiffs Carla and Robert Lays (the "Lays") have brought claims of common law bad faith and statutory bad faith (Colo. Rev. Stat. § 10-3-1115) against Defendants American Family Mutual Insurance Company and American Standard Insurance Company of Wisconsin (together, "American Family"). (ECF No. 2.) American Family moves for summary judgment on those claims. (ECF No. 4.) For the reasons stated below, the Court will grant American Family's motion and order the parties to confer with Magistrate Judge Kathleen M. Tafoya to file an Amended Final Pretrial Order that properly addresses the Lays' sole remaining claim (a claim for violation of the Colorado Consumer Protection Act).


Summary judgment is warranted under Federal Rule of Civil Procedure 56 "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). A fact is "material" if, under the relevant substantive law, it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). An issue is "genuine" if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).

In analyzing a motion for summary judgment, a court must view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. See Houston v. Nat'l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).

When, as here, "the moving party does not bear the ultimate burden of persuasion at trial, it may satisfy its burden on a motion for summary judgment by identifying a lack of evidence for the nonmovant on an essential element of the nonmovant's claim." Bausman v. Interstate Brands Corp., 252 F.3d 1111, 1115 (10th Cir. 2001) (internal quotation marks omitted). If the movant meets this burden, the burden shifts to the nonmovant "to go beyond the pleadings and set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671 (internal quotation marks omitted).


The parties do not dispute the following facts.

A. The Lays' UM Claim

The Lays allege they were injured in a February 2008 auto accident. (Defendants' Facts ¶ 1; Plaintiffs' Response ¶ 1.)[1] The Lays' auto insurance policy, issued by American Family, provided uninsured motorist ("UM") benefits of up to $100, 000 per person or $300, 000 per accident. (Defendants' Facts ¶¶ 2-3; Plaintiffs' Response ¶¶ 2-3.)

Robert Lays demanded $150, 000 in UM benefits for his injuries, which he admits was in excess of his policy limits. (Defendants' Facts ¶¶ 5-7; Plaintiffs' Response ¶¶ 5-7.) American Family countered with an offer of $30, 120. (Defendants' Facts ¶ 9; Plaintiffs' Response ¶ 9.) Carla Lays demanded $75, 000 in UM benefits for her injuries. (Defendants' Facts ¶ 4; Plaintiffs' Response ¶ 4.) American Family countered with an offer of $13, 600. (Defendants' Facts ¶ 8; Plaintiffs' Response ¶ 8.)

B. The Lays' State-Court Lawsuit

Negotiations between the Lays and American Family eventually broke down and the Lays filed a lawsuit against American Family in Colorado Springs (El Paso County District Court) on February 4, 2010. (Defendants' Facts ¶¶ 10-11; Plaintiffs' Response ¶¶ 10-11.) The Lays' complaint alleged breach of contract for failure to pay the requested benefits; the Lays did not allege bad faith. (Defendants' Facts ¶¶ 12-13; Plaintiffs' Response ¶¶ 12-13.)

John Scherling, an American Family in-house attorney, represented American Family in the Colorado Springs lawsuit. (Defendants' Facts ¶ 14; Plaintiffs' Response ¶ 14.) On September 16, 2010, Scherling sent a letter to the Lays' counsel which reads in relevant part as follows:

I note that no mediation has been set in this case. Please be advised that we are proceeding with IMEs of your clients [ i.e., independent medical examinations under Colorado Rule of Civil Procedure 35]. That office will be in touch with your office shortly. Of course, the money we spend on IMEs will not be available as settlement proceeds, if any, for your clients.

(ECF No. 4-5 at 1; see also Defendants' Facts ¶ 15; Plaintiffs' Response ¶ 15.)

On November 5, 2010, the Lays moved for leave to amend their complaint in the Colorado Springs lawsuit. (ECF No. 5-1.) Specifically, the Lays wanted to add a bad faith claim based on Scherling's September 2010 letter, which they characterized as follows:

... Mr. Scherling... states that any money paid for the cost of an independent medical examination would be deducted from the amounts both plaintiffs would be owing [ sic ] under their claim for uninsured motorist benefits. The plaintiffs contend that by subtracting costs incurred from uninsured motorist benefits, the Defendant and its ...

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