TRACEY CHECKLEY, individually and on behalf of her minor child James Checkley, Plaintiff - Appellant/Cross-Appellee,
ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellee/Cross-Appellant.
D.C. No. 1:14-CV-02369-RPM (D. Colo.)
Before TYMKOVICH, Chief Judge, KELLY, and LUCERO, Circuit Judges.
ORDER AND JUDGMENT [*]
PAUL J. KELLY, JR. CIRCUIT JUDGE.
In this removed civil action now on appeal, Plaintiff-Appellant and Cross-Appellee Tracey Checkley appeals from the district court's judgment dismissing her complaint and action against Defendant-Appellee and Cross-Appellant Allied Property and Casualty Insurance Co. (Allied). Allied cross-appeals from the district court's judgment denying its motion for attorney's fees. Our jurisdiction arises under 28 U.S.C. § 1291, and we affirm.
On August 28, 2013, Johnny Branner invited sixteen-year-old Plaintiff James Checkley to go four-wheeling near Woodland Park, Colorado. The trip began with Mr. Branner driving his 1999 Jeep Cherokee. Eventually Mr. Branner pulled over and asked Mr. Checkley, who was not licensed, to drive so that Mr. Branner could text his girlfriend. Mr. Checkley agreed. While driving down a dirt and gravel road in Pike National Forest, Mr. Checkley swerved to avoid an animal and struck a tree. Mr. Checkley fractured his hip socket in the accident.
Mr. Checkley and his mother filed a claim with GEICO, which insured the vehicle under Mr. Branner's mother's policy. GEICO denied liability for the Checkleys' claim, however, because Mr. Branner's mother had reported different facts, including that Mr. Checkley was not in the car. The Checkleys then filed a claim with their insurer, Allied, under the uninsured/underinsured motorist (UM/UIM) coverage, which included James Checkley, as a relative of the policy holder. The policy provided that Allied would pay "compensatory damages . . . which are due by law to you or a relative from the owner or driver of an uninsured motor vehicle because of bodily injury suffered by you or a relative." Aplt. App. 95. Allied denied the Checkleys' claim. The Allied policy excluded from the definition of "uninsured motor vehicle" any motor vehicle operated by the insured or a relative. Thus, the policy excluded UM/UIM coverage when the insured or a relative was driving the vehicle at the time of the accident.
After Allied denied this claim, the Checkleys filed suit in Colorado state court against Allied. The complaint alleged: (1) breach of contract; (2) breach of common law duty of good faith and fair dealing (bad faith breach of insurance contract) in denying the claim; and (3) violation of Colorado Revised Statutes sections 10-3-1115 and 10-3-1116. Allied removed the case to federal court and filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). After a hearing, the district court granted the motion, dismissed all three claims, and denied Allied's request for attorney's fees under Colorado Revised Statutes section 13-17-201. Because the Allied policy exclusion precludes the UM/UIM claim and because this exclusion does not violate Colorado public policy, we affirm the district court's dismissal of all of the Checkleys' claims. Because the substantial predicate of the Checkleys' claims is the breach of contract claim, we also affirm the district court's denial of attorney's fees.
Our review is de novo. To survive a motion to dismiss, the plaintiff must allege facts that "if assumed to be true, plausibly suggest the defendant is liable." Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011). A court must not "weigh potential evidence that the parties might present at trial, but . . . assess whether the plaintiff's . . . complaint alone is legally sufficient to state a claim for which relief may be granted." Brokers' Choice of Am., Inc. v. NBC Universal, Inc., 757 F.3d 1125, 1135 (10th Cir. 2014) (internal quotations and citation omitted). We accept all well-pleaded facts as true, along with reasonable inferences from those facts. Colony Ins. Co. v. Burke, 698 F.3d 1222, 1228 (10th Cir. 2012). We review the denial of a request for attorney's fees under a statute de novo. See Corneveaux v. CUNA Mut. Ins. Grp., 76 F.3d 1498 (10th Cir. 1996) (quoting Supre v. Ricketts, 792 F.2d 958, 961 (10th Cir. 1986)). The parties agree that Colorado state law controls in this diversity action.
A. Breach of Contract
The Checkleys contend that by denying UM/UIM coverage, Allied has breached the insurance contract. Applying the exclusion, they argue, would violate Colorado law requiring coverage in this case. Colorado law mandates UM/UIM coverage be offered in every insurance contract. Colo. Rev. Stat. § 10-4-609. This coverage must "include coverage for damage for bodily injury or death that an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle." Id. § 10-4-609(4) (emphasis added). The Checkleys argue the UM/UIM statute requires the contract to include coverage because they are "legally entitled to collect" against Mr. Branner under the theory of negligent entrustment. They rely upon Casebolt v. Cowan, 829 P.2d 352 (Colo. 1992) (en banc), which they maintain recognized such a theory. Because parties cannot contractually limit required coverage, see, e.g., DeHerrera v. Sentry Ins. Co., 30 P.3d 167, 173 (Colo. 2001) (en banc), the Checkleys argue that the exclusion in the policy is void and to deny them coverage would be a breach of contract.
Allied responds that Casebolt recognized the tort of negligent entrustment only in drunk driving cases, so the terms of the insurance policy do not conflict with Colorado public policy or law. Thus, the policy excludes the Checkleys' claim. We need not read Casebolt as narrowly as Allied to conclude that negligent entrustment, as recognized in Colorado, does not bar the exclusion in this case.
In Casebolt, a surviving spouse sued her husband's employer for wrongful death. The husband died driving the employer's vehicle while intoxicated. Casebolt, 829 P.2d at 353. The surviving spouse claimed that the employer knew the decedent had an alcohol problem but still permitted him to drive the company car after drinking. Id. at 354–55. The surviving spouse based her case on a theory of negligent entrustment, and the Colorado Supreme Court ...