United States District Court, D. Colorado
ORDER DENYING SUMMARY JUDGMENT
WILLIAM J. MARTÍNEZ UNITED STATES DISTRICT JUDGE.
insurance dispute case pending under the Court's
diversity jurisdiction, 28 U.S.C. § 1332, Plaintiff
Donald O'Sullivan (Plaintiff, or
“O'Sullivan”) brings claims for breach of
contract, for breach of the duty of good faith and fair
dealing, for unreasonable delay or denial of insurance
benefits in violation of Colorado Revised Statutes
§§ 10-3-1115 & -1116 (i.e.,
“statutory bad faith”), and for exemplary damages
against Defendant Geico Casualty Company (Defendant, or
before the Court is Defendant's Motion for Summary
Judgment (ECF No. 60 (the “Motion, ” or
“Defendant's Motion”), seeking judgment as a
matter of law against all claims. For the reasons set forth
below-centrally because genuine issues of material fact
remain for trial as to Plaintiff's claim for contract
reformation-Defendant's Motion is denied.
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 trier of fact to return a verdict for
the nonmoving party. Allen v. Muskogee, 119 F.3d
837, 839 (10th Cir. 1997).
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.
following facts (and those further detailed in Part
III.A.3.a., below), are undisputed, except where attributed
to one party or another, or to specifically cited evidentiary
was insured by Geico under an automobile insurance policy
effective as of August 17, 2013. (ECF No. 60 at 4, ¶ 1.)
Plaintiff purchased this policy through Geico's website.
Specifically, he first visited www.geico.com on
August 9, 2013 to obtain a rate quote, then returned to
Geico's website to complete the online purchase of the
insurance policy on August 16, 2013. (Id. ¶ 2.)
central dispute raised by Geico's Motion relates to the
information which Geico presented to Plaintiff regarding
uninsured/underinsured (“UM/UIM”) coverage during
and after his visits to Geico's website. Those facts are
further detailed in the analysis below. (See Part
undisputed, however, that during Plaintiff's August 16,
2013 visit to Geico's website, he completed purchase of
an auto insurance policy, and that Geico issued a policy with
an effective date of August 17, 2013. His policy was issued
with limits of $100, 000 per person/$300, 000 per occurrence
(“100/300” lim its) for bodily injury liability
(“BI”) coverage, and limits of $25, 000 per
person/$50, 000 per occurrence (“25/50” limits)
for UM/UIM coverage. (See ECF No. 60 at 14, ¶
39; ECF No. 60-2 at 24.)
position, however, is that he intended to purchase a
policy with the same limits for both BI and UM/UIM
coverage, and that at the time he purchased the insurance
policy, he believed that he had, in fact, purchased a policy
with 100/300 limits for both BI and UM/UIM coverage, rather
than the lower UM/UIM limits he had actually purchased.
(See ECF No. 84-2 at 10 (“I thought that [the
100/300 BI limits] was all my coverage”); id.
covered by his Geico policy, Plaintiff was involved in an
auto accident with an uninsured/underinsured motorist, on May
9, 2014. (ECF No. 60 at 12, ¶ 48; ECF No. 72 at 12,
¶ 30.) After resolving his claims with the other driver
for the full limits of her insurance (ECF No. 72 at 12-13,
¶ 31), Plaintiff filed a claim with Geico seeking
payment of over $164, 000 in medical bills. (Id.
¶ 32.) Geico tendered $25, 000 in payment on
Plaintiff's claim, that is, the full amount of the UM/UIM
coverage limit as written in his insurance policy.
(See ECF No. 72-11 at 2.) Plaintiff, through his
attorney's communications and eventually in this lawsuit,
has demanded that Geico provide UIM coverage up to a higher
limit of $100, 000. Plaintiff argues that when Geico sold
Plaintiff his insurance policy, it did not comply with its
obligation, arising under Colorado Revised Statutes §
10-4-609(2), to offer Plaintiff “the right to obtain
uninsured motorist coverage in an amount equal to the
insured's bodily injury liability limits, ” and
that Geico therefore must provide UM/UIM coverage equal to
his BI coverage limits.
Plaintiff's Claim For Contract Reformation
threshold issue raised in this case is whether Plaintiff is
entitled to reformation of his insurance contract to provide
UIM coverage up to $100, 000, rather than the $25, 000 limit
reflected in the policy as written. “Generally, the
purpose of reformation of an insurance contract is to make
the policy express the true intent of the parties. However,
when a policy is violative of a statute, reformation is also
required to assure that coverage will meet the statutory
minimums.” Clark v. State Farm Mut. Auto. Ins.
Co., 433 F.3d 703, 710 (10th Cir. 2005) (citing
Thompson v. Budget Rent-A-Car Sys., Inc., 940 P.2d
987, 990 (Colo. App.1996)).
Colorado Revised Statutes § 10-4-609(2) &
the contested issue is whether Geico complied with Colorado
Revised Statutes § 10-4-609(2), which requires insurers
to offer potential customers the opportunity to purchase
UM/UIM coverage at limits equal to their BI coverage limits:
Before the policy is issued or renewed, the insurer shall
offer the named insured the right to obtain uninsured
motorist coverage in an amount equal to the insured's
bodily injury liability limits, but in no event shall the
insurer be required to offer limits higher than the
insured's bodily injury liability limits.
Colo. Rev. Stat.§ 10-4-609(2).
Allstate Insurance Co. v. Parfrey, 830 P.2d 905
(Colo. 1992), the Colorado Supreme Court interpreted this
provision, holding that it requires auto insurers to provide
their potential customers with notification “of the
nature and purpose of UM/UIM coverage, ” and must offer
them “the opportunity to purchase such coverage . . .
in an amount equal to [their] [BI] liability limits.”
Id. at 912. Describing how insurers must fulfill
this obligation, the Parfrey court further held that
insurers must “do more than merely make UM/UIM
coverage available” at the higher rates, id.
at 913 (emphasis added), and must provide notification to
their potential customers “in a manner reasonably
calculated to permit the potential purchaser to make an
informed decision, ” about UM/UIM policy limits:
Our determination that an insurer has a one-time duty of
notification and offer does not resolve the extent of
specificity essential to the proper discharge of that duty .
. . . Subsection (2) requires an insurer to do more than
merely make UM/UIM coverage available at a level higher than
the minimum motor vehicle liability limits of $25, 000 per
person and $50, 000 per accident.
In keeping with the legislative purpose of UM/UIM coverage to
protect a person against the risk of inadequate compensation
for injuries and damages caused by an uninsured or
underinsured motorist, we hold that an insurer's duty
of notification and offer must be performed in a manner
reasonably calculated to permit the potential purchaser
to make an informed decision on whether to purchase
UM/UIM coverage higher than the minimum statutory liability
limits of $25, 000 per person and $50, 000 per accident.
Id. (emphasis added).
Parfrey, the question of whether an insurer has
adequately discharged this responsibility depends upon the
facts in each case, but Parfrey identified several
non-exclusive factors that may be informative:
In determining whether an insurer has fulfilled its statutory
duty, a court may appropriately consider such factors as 
the clarity with which the purpose of UM/UIM coverage was
explained to the insured,  whether the explanation was
made orally or in writing,  the specificity of the options
made known to the insured,  the price at which the
different levels of UM/UIM coverage could be purchased, and
 any other circumstances bearing on the adequacy and
clarity of the notification and offer.
Id. However, “[i]n the final analysis, the
determination of the insurer's discharge of its statutory
duty to notify the insured of the availability of higher
UM/UIM coverage and to offer such coverage to the insured
must be resolved under the totality of circumstances.”
Id. at 914. Subsequent cases confirm that in
applying this “totality of the circumstances”
analysis, “no single factor is conclusive.”
Johnson v. State Farm Mut. Auto. Ins. Co.,
158 Fed.App'x 119, 122 (10th Cir. 2005) (internal
quotation marks omitted; alterations incorporated).
Case Law Applying Parfrey
Parfrey's “totality of the
circumstances” test depends upon specific facts in each
case, the Court will review in some detail several cases that
have applied this standard to particular factual records
Parfrey itself, after interpreting §
10-4-609(2) as detailed above, the Colorado Supreme Court
applied this newly-stated rule, noting that the insurer
“would be entitled to judgment as a matter of law only
if it had adequately notified [the insureds] under §
10-4-609(2).” 830 P.2d at 914. The facts there showed
that after initially purchasing both UM/UIM and BI coverage
at statutory minimum levels, the plaintiffs later ...