WENDY L. PEDEN, Plaintiff - Appellant,
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
from the United States District Court For the District of
Colorado (D.C. No. 1:14-CV-00982-LTB-KLM)
Bradley A. Levin, Levin Sitcoff PC, Denver, Colorado (Nelson
A. Waneka, Levin Sitocoff PC, Denver, Colorado, Gary Doehling
and Keller Caubarreaux, Gary Doehling, P.C., Grand Junction,
Colorado, with him on the briefs), for Plaintiff-Appellant.
Heather A. Salg, Harris, Karstaedt, Jamison & Powers,
P.C., Englewood, Colorado, for Defendant-Appellee.
LUCERO, BALDOCK, and BACHARACH, Circuit Judges.
BACHARACH, Circuit Judge.
case involves the handling of a claim under policies
providing underinsured-motorist coverage. The tortfeasor, Mr.
Terrill Graf, bought his fiancée a van for her 50th
birthday. Celebrating the birthday and new purchase, Mr. Graf
drank liquor and then gathered four friends in the van. The
plaintiff, Ms. Wendy Peden, was one of those friends. She
says that she expected Mr. Graf only to show off the van and
to photograph the group. But Mr. Graf drove away with his
friends in the van. He crashed, causing serious injuries to
Ms. Peden. She obtained $240, 000 in insurance benefits. But
Ms. Peden claimed more under her coverage for
insurer (State Farm) initially denied the claim, but
ultimately paid her an additional $350, 000, the maximum
amount that she could receive under the underinsured-motorist
coverage. Ms. Peden sued State Farm under Colorado's
common law and statutory law, claiming an unreasonable denial
or delay in paying benefits. We must decide whether a
reasonable fact-finder could conclude that State Farm
unreasonably denied or delayed payment of benefits. The
district court answered "no." We disagree and
Ms. Peden sought two payments from State Farm: one from Mr.
Graf's liability coverage and one from Ms. Peden's
Peden's injuries triggered Mr. Graf's liability
coverage and Ms. Peden's underinsured-motorist coverage.
State Farm, coincidentally, insured both Mr. Graf for his
liability and Ms. Peden for underinsured- motorist
coverage. Thus, State Farm bore dual responsibilities:
â¢ to indemnify Mr. Graf for liability to his
passengers, including Ms. Peden, and
â¢ to pay Ms. Peden the amount that she was
unable to recoup from Mr. Graf because of his lack of
adequate liability coverage.
Graf's liability coverage had a cap of $500, 000 for the
accident. After investigating, State Farm recognized that Mr.
Graf would likely incur liability to the four passengers for
at least $500, 000; thus, State Farm allocated the $500, 000
among the four passengers in the van. Out of this $500, 000,
Ms. Peden obtained $210, 000. She also obtained another $30,
000 in medical payment benefits.
claimed that Mr. Graf owed more. If Ms. Peden were right, Mr.
Graf would be considered "underinsured, "
triggering coverage for underinsured-motorist benefits. These
benefits totaled $350, 000 from two separate policies:
1. Mr. Graf's fiancée, who owned the van, had
$250, 000 in underinsured-motorist coverage under a State
Farm policy. This coverage extended to Ms. Peden as a
2. Ms. Peden had her own State Farm policy with $100, 000 in
Peden demanded the full $350, 000 from State Farm, which
would have brought her total payments to $590, 000. To
justify this amount, Ms. Peden stated that she had seven
forms of injury, totaling more than $647, 484.76 to $1, 115,
Nature of Injury
1. Past medical bills
$ 114, 352.55
2. Past wage losses
$ 7, 500.00
3. Future wage losses
4. College tuition that Ms. Peden had to forfeit
$ 7, 622.21
5. Noneconomic damages
$ 468, 010 to $936, 030
6. Prejudgment interest
$ 50, 000 (at minimum)
$ 647, 484.76 to $ 1, 115, 504.76 (plus a
"substantial" amount for future wage loss
and an unspecified amount for prejudgment interest)
Farm denied the claim, stating that the prior payment of
$240, 000 had fairly compensated Ms. Peden for the amount
that Mr. Graf owed.
Ms. Peden sued, and the district court granted summary
judgment to State Farm.
Ms. Peden sued State Farm, invoking Colorado common law and
statutory law and alleging an unreasonable denial or delay in
paying benefits. During the litigation, State Farm obtained
additional information and ultimately paid Ms. Peden the
complete $350, 000 in underinsured-motorist coverage.
Ms. Peden had now received the most she could recoup under
the policies, she claimed that State Farm had unreasonably
denied or delayed payment. State Farm moved for summary
judgment, arguing that the handling of the claim was
reasonable as a matter of law; Ms. Peden moved for partial
summary judgment on her statutory claim. The district
court granted State Farm's motion, which led the court to
deny Ms. Peden's motion as moot.
Engaging in de novo review, we apply Colorado
engage in de novo review, viewing the evidence and
drawing all reasonable inferences in favor of Ms. Peden.
Birch v. Polaris Indus., Inc., 812 F.3d 1238, 1251
(10th Cir. 2015). In this manner, we consider whether State
Farm has shown the absence of a genuine dispute of material
fact. Fed.R.Civ.P. 56(a).
assess Ms. Peden's claims under Colorado law. See
Etherton v. Owners Ins. Co., 829 F.3d 1209, 1223 (10th
Cir. 2016) ("When jurisdiction is based on the
parties' diverse citizenship, a federal court must assess
state law claims based on the substantive law of the
state."). In this context, we defer to the decisions of
the Colorado Supreme Court, id., and "follow
the Colorado Court of Appeals' reasoning . . . unless we
are convinced that ...