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Gosman v. State Farm Mutual Automobile Insurance Co.

United States District Court, D. Colorado

April 13, 2016



WALKER D. MILLER, District Judge.

This matter is before me on a Defendant's second motion for summary judgment filed May 17, 2007 (Docket No. 67). For the reasons that follow, the motion for summary judgment shall be granted in part and denied in part.


Plaintiff brings this action as an insured of Defendant's. Plaintiff obtained automobile insurance from Defendant. Plaintiff's policy included both uninsured motorist and underinsured motorist (UIM) coverage. UIM coverage provides damages for bodily injury when the at-fault party in an accident is underinsured. However, under Plaintiff's policy the UIM benefits are not available if the insured "settles with any person or organization who may be liable for the bodily injury" without the prior consent of Defendant.

On November 30, 2001, Plaintiff Howard Gosman (Plaintiff) was involved in an automobile accident with Patricia Perea a/k/a Patricia Romero (Romero). As a result of the accident, Plaintiff suffered injuries causing over $50, 000 in damages. Plaintiff alleges that both Plaintiff and Romero were insured by State Farm Automobile Insurance Company (State Farm Automobile or Defendant) at the time of the accident. Defendant contends that Plaintiff was insured by Defendant while Romero was insured by State Farm Fire & Casualty Company (State Farm Fire), a distinct and separate entity from Defendant.[1] Because Romero was at fault for the accident and liable for all of Plaintiff's injuries, Plaintiff engaged in settlement negotiations with Romero's insurer to settle his claim for injuries sustained in the accident. Plaintiff alleges that although Defendant insured both drivers, Defendant represented only Romero in these negotiations. Defendant contends that Romero's insurer was State Farm Fire, a separate entity from Defendant. Neither party presents affidavits or deposition testimony concerning whether they are separate legal entities. On January 14, 2003, Plaintiff agreed to settle his claims with Romero for $12, 000 and signed a general release of Romero regarding his bodily injury claims. There is no evidence that State Farm Mutual was involved in or consented to the settlement. Also, Defendant (State Farm Mutual) did not notify Plaintiff of additional benefits he may have been entitled to under his UIM coverage, and Plaintiff did not make a claim for such benefits.

Subsequently, on October 23, 2003, Plaintiff received a form letter from Defendant regarding UIM benefits. This letter was sent out to all of Defendant's insureds to see if they qualified for additional UIM benefits after a change in the applicable law (DeHerrera project). See DeHerrera v. Sentry Ins. Co., 30 P.3d 167, 175-76 (Colo. 2001) (holding, inter alia, that a policy denying UIM coverage because the insured was not in a "car" when injured violated public policy and was void); Jaimes v. State Farm Mut. Auto. Ins. Co., 53 P.3d 743, 746-47 (Colo. Ct. App. 2002) (holding that an insured is entitled to UIM benefits under any policy held by the insured regardless of whether the insured was injured in a vehicle covered by a separate policy with lower UIM benefits).

The letter stated:

The Colorado courts recently ruled that when a policyholder has [uninsured or underinsured motorist coverage (U-coverage)] on one or more of his/her motor vehicles, the U-coverage protects the policyholder, his/her spouse, and relatives who live with the policyholder, regardless of what type of motor vehicle (e.g. motorcycle, snowmobile, ATV, etc.), if any, they occupied at the time of the accident. This means that between 01/01/98 and 01/01/02, if you, your spouse, or a relative living with you at the time was injured in an accident involving an uninsured or underinsured motorist, you may be entitled to U-coverage benefits or additional U-coverage benefits.

Plaintiff completed the attached questionnaire [2] by answering three questions and returned it to Defendant. The three questions were:

(1) Were you, or your spouse, or a relative living in your household at the time, injured in an accident involving any type of motor vehicle between the dates of 01/01/1998 and 01/01/2002?
(2) Was the accident the fault of another person?
(3) Do you, your spouse, or a relative living in your household have damages (expenses for medical care, wages, pain and suffering or other monetary damages) as a result of the injuries you received in the above accident that remain unpaid or unreimbursed?

Plaintiff answered "yes" to each of these questions. The letter stated that if the answer to all three questions was "yes" then the insured "may be entitled to U-coverage benefits or additional U-coverage benefits." It also stated that Defendant would "provide a written response as quickly as possible." Defendant received the Questionnaire back from Plaintiff on November 17, 2003 and confirmed this receipt in a letter date November 19, 2003. The letter also stated that Defendant was "undertaking a review process to evaluate your accident circumstances and determine whether you have applicable uninsured or underinsured motorist coverage (U-coverage)" and that Defendant would contact Plaintiff if it needed additional information to evaluate Plaintiff's UIM coverage.

On December 12, 2003, Kelley Mondragon, Defendant's claim representative, contacted Plaintiff and informed him that he did not qualify for benefits under DeHerrera or Jaimes case law. Defendant seems to allege that this was strictly limited to any benefits under DeHerrera and did not concern any claim by Plaintiff for UIM benefits. Although Plaintiff asserts he was making a UIM claim, he has no memory of the details of this phone call. However, Mondragon's affidavit states that she told Plaintiff "that he did not qualify for UIM benefits because he settled with the ...

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