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MacKinney v. Allstate Fire and Casualty Insurance Co.

United States District Court, D. Colorado

December 1, 2016



          Nina Y. Wang United States Magistrate Judge.

         This matter comes before the court on Defendant Allstate Fire and Casualty Insurance Company's (“Defendant” or “Allstate”) Partial Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) (the “Motion to Dismiss”). [#8, filed June 16, 2016]. This motion is before the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(c) and the Order Referring Case dated July 27, 2016, [#26]. The court concludes that oral argument would not materially assist in disposing of this matter. Accordingly, after carefully considering the partial Motion to Dismiss and associated briefing, the entire case file, and the applicable case law, the partial Motion to Dismiss is GRANTED IN PART and DENIED IN PART.


         Julie A. MacKinney (“Plaintiff” or “Ms. MacKinney”) is a resident of Golden, Colorado, and Allstate is an Illinois corporation with its principal place of business in Illinois. See [#1 at ¶¶ 3-4; #3 at ¶¶ 2-5]. Plaintiff originally filed her Complaint in Jefferson County District Court on or about April 1, 2016. See [#3]. Plaintiff's Complaint alleged three state law causes of action against Defendant for breach of contract, common law bad faith breach of an insurance contract (“common law bad faith”), and violations of Colo. Rev. Stat. (“C.R.S.”) § 10-3-1115 Unreasonable Delay and Denial of Insurance Benefits (“statutory bad faith”). See [#3 at 8-10]. Approximately two months later, Defendant removed the case to this court, based on diversity of citizenship pursuant to 28 U.S.C. § 1332, on June 14, 2016.[1] [#1]. A summary of the events giving rise to this action, drawn from the Complaint and taken as true for the purposes of the pending partial Motion to Dismiss, follows.

         On or about October 6, 2010, Plaintiff' car-through no fault of her own-collided with another driver (“Ms. Mott”), resulting in injuries to the Plaintiff. [#3 at ¶ 1]. As a result of her injuries, Plaintiff's medical bills totaled approximately $250, 000. [Id. at ¶ 18]. Plaintiff alleges that as a “direct and reasonably foreseeable result of [her] Injuries (sic), ” she suffered and will continue to suffer economic and non-economic damages, as well as damages for physical impairment and/or disfigurement. [Id. at ¶ 7]. Further, that because of the automobile accident, Plaintiff is more vulnerable to subsequent injuries. [Id. at ¶ 8].

         At the time of Plaintiff's accident, there were four insurance contracts in effect between her and Defendant. [Id. at ¶ 15]. These included, Policy Numbers 964294702 (the “Auto Policy”), 917977315 (the “KTM Policy”), 964296870 (the “Motorcycle Policy”), and 964296872 (the “Umbrella Policy”). [Id.]. Plaintiff alleges that each contract included provisions for uninsured motorists coverage (“UIM”)[2] for which Plaintiff paid premiums. [Id. at ¶ 16]. Plaintiff avers that the Auto Policy provided $100, 000 in coverage, the KTM and Motorcycle Policies provided $25, 000 in coverage each, and the Umbrella Policy provided $500, 000 in coverage. [Id. at ¶ 17].

         On February 25, 2014, Plaintiff's UIM carrier granted her permission to accept Ms. Mott's offer of $100, 000 in bodily injury coverage, thereby releasing Ms. Mott from further damage liability. [Id. at ¶¶ 19-21]. Plaintiff received Ms. Mott's offer on March 12, 2014; however, Plaintiff alleges that she was “legally entitled to collect an amount from Ms. Mott that exceeded $100, 000.” [Id. at ¶¶ 22-24]. Accordingly, Plaintiff requested UIM benefits from Defendant under her four insurance contracts on June 16, 2014. [Id. at ¶25]. Defendant acknowledged receipt of Plaintiff's request on June 19, 2014, and informed Plaintiff that an offer would be forthcoming in a reasonable amount of time. [Id. at ¶ 26].

         Over the next month and a half, Defendant requested, and Plaintiff submitted, additional medical records and bills. See [id. at ¶¶ 27-30]. On August 4, 2014, Defendant informed Plaintiff that its investigation was on-going, to which Plaintiff replied that she had already documented over $230, 000 in economic losses alone since filing her claim on June 16, 2014. [Id. at ¶¶ 31-32]. In addition, Plaintiff also informed Defendant that the subsequent medical records and bills totaled approximately $25, 000 and that Defendant had not contested over $200, 000 in accident related medical bills. [Id. at ¶ 33].

         On August 19, 2014, Defendant sent a letter to Plaintiff thanking her for “settlement on Claim #1079345491 HCJ (‘Claim 1'), and included releases.” [Id. at ¶ 34]. The next day, Plaintiff left a voicemail with Defendant seeking clarification of its August 19 letter and, on August 22, 2014, Plaintiff wrote Defendant a letter requesting it update its records, as Plaintiff did not agree to settle Claim 1. See [id. at ¶¶ 35-36]. Plaintiff also requested information on the availability of coverage from additional policies. [Id. at ¶ 37]. An Allstate claim's adjuster, Ms. Covak, informed Plaintiff's counsel that an additional policy existed and that she filed an additional claim. [Id. at ¶ 38]. On September 1, 2014, Plaintiff received a Claim Acknowledgement Form for Claim #0338786916 HCJ (“Claim 2”). [Id. at ¶ 39].

         Defendant offered to settle Claim 1 for $100, 000 on September 2, 2014, and informed Plaintiff that Claim 2 was under review. [Id. at ¶¶ 41-42]. Then, on September 17, 2014, Defendant offered to settle Claim 2 for $25, 000. [Id. at ¶ 43]. On September 29, 2014, Defendant again offered to settle Claim 1 for $100, 000, and informed Plaintiff that the Auto Policy and Motorcycle Policy “were the only policies” that provided UIM coverage for Plaintiff's losses (for a settlement total of $125, 000); however, Plaintiff informed Defendant of her coverage under the KTM Policy. [Id. at ¶¶ 44-45, 48]. In addition, Defendant indicated that they were pleased to settle Claim 2 and included releases as to all claims. [Id. at ¶ 46].

         On October 6, 2014, Plaintiff received another Claim Acknowledgement Form for Claim #0342431327 AAF (“Claim 3”). [Id. at ¶ 47]. Defendant offered to settle Claim 3 for $25, 000 (a total settlement of $150, 000) and again included releases for all of Plaintiff's claims. See [id. at ¶¶ 51-53]. Between October 15 and November 17, 2014, Defendant sent repeated requests to Plaintiff to settle Claims 1 and 2, with related releases included. See [id. at ¶¶ 54-63]. Upon receiving the offers to settle and related releases, Plaintiff's counsel sought clarification from Defendant as to why it continually sent releases to Plaintiff before tendering the UIM benefits, but to no avail. See [id. at ¶¶ 54, 60, 62, 64]. Then, on November 18, 2014, Defendant sent Plaintiff $150, 000 in benefits-the total settlement offer under the Auto, Motorcycle, and KTM Policies. See [id. at ¶ 65].

         On December 4, 2014, Defendant responded to Plaintiff's questions regarding the claim releases and stated that the releases “acknowledge that Defendant had met its contractual obligations.” [Id. at ¶ 67]. Despite this response, Plaintiff again sought clarification from Defendant as to why “every time Defendant agreed that more coverage applied to Ms. Mackinney's (sic) loss, Defendant would send a release of all claims.” See [id. at ¶¶ 54, 68-69]. Defendant's counsel responded that Allstate verified that no additional coverage applied to Plaintiff's loss and that Allstate paid in full all available coverage and, once again, requested that Plaintiff sign the claim releases. [Id. at ¶¶ 70-71]. On January 9, 2015, Plaintiff responded that she believed Defendant sought to deprive her of additional coverage by forcing her to sign the claim releases, and again sought clarification as to the included releases. [Id. at ¶ 72-73]. Thirteen days later, Defense counsel responded with a proposed agreement “relating to the releases, ” and informed Plaintiff that Allstate paid the maximum amount of benefits from all applicable policies. [Id. at ¶ 74]. On February 13, 2015, Plaintiff once again requested clarification as to the purpose of the releases. [Id. at ¶ 75].

         Plaintiff alleges that during the claims process, Defendant “failed to acknowledge coverages under multiple policies that it knew would benefit Plaintiff and were applicable to her claim”-specifically, coverage under her Umbrella Policy. [Id. at ¶¶ 76-77]. In addition, Defendant failed to acknowledge or timely respond to Plaintiff's communications regarding her claims, and that Defendant tried to induce Plaintiff to release it from liability and coverage without informing Plaintiff of all available coverage to her claims. See [id. at ¶¶ 78-80]. Accordingly, Plaintiff filed claims for breach of contract for Defendant's failure to provide the contracted-for UIM benefits under Plaintiff's four insurance contracts, common law bad faith for Defendant's unreasonable conduct in settling and/or handling Plaintiff's UIM claims, and statutory bad faith for Defendant's unreasonable delay and denial of Plaintiff's UIM benefits. [Id. at 8-10].

         In response, Defendant filed its partial Motion to Dismiss on June 16, 2016. [#8]. Defendant seeks dismissal of Plaintiff's breach of contract claim because Plaintiff's Umbrella Policy contains no UIM provision and because Defendant performed all of its contractual obligations under the three remaining insurance contracts. See [id. at 5-6]. Defendant also seeks dismissal of Plaintiff's statutory bad faith claim because the one-year statute of limitations bars such a claim. [Id. at 6]. And, lastly, dismissal of Plaintiff's common law bad faith claim because the Umbrella Policy does not provide for UIM benefits and, therefore, Plaintiff cannot maintain any failure to pay claim under that Policy. See [id. at 10]. The court addresses the Parties' arguments below.


         Under Rule 12(b)(6) a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In deciding a motion under Rule 12(b)(6), the court must “accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). However, a plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Plausibility refers “to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.'” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citation omitted). “The burden is on the plaintiff to frame ‘a complaint with enough factual matter (taken as true) to suggest' that he or she is entitled to relief.” Id. The ultimate duty of the court is to “determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).

         Rule 12(b)(6) provides that the court may only consider facts alleged within the complaint. See Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991). Should the court receive and consider materials outside the complaint, the court may convert a Rule 12(b)(6) motion to a motion for summary judgment if the parties have notice of the changed status and the nonmovant responded by supplying its own extrinsic evidence. See Alexander v. Oklahoma, 382 F.3d 1206, 1214 (10th Cir. 2004). However, a district court may consider arguments contained in the memorandum in opposition to dismiss or documents referred to in the complaint that are central to a plaintiff's claim if the Parties' do not dispute their ...

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