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O'Sullivan v. Geico Casualty Co.

United States District Court, D. Colorado

March 24, 2017

DONALD O'SULLIVAN, Plaintiff,
v.
GEICO CASUALTY COMPANY, Defendant.

          ORDER ON MOTIONS IN LIMINE

          William J. Martínez United States District Judge

         This insurance dispute is pending under the Court's diversity jurisdiction, 28 U.S.C. § 1332, and set for jury trial commencing April 10, 2017. Plaintiff Donald O'Sullivan (Plaintiff, or “O'Sullivan”) pursues claims for breach of contract, and for unreasonable delay or denial of insurance benefits in violation of Colorado Revised Statutes §§ 10-3-1115 & -1116 (i.e., “statutory bad faith”). Now before the Court are Plaintiff's Motion In Limine (ECF No. 103 (“Plaintiff's Motion”)), and Defendant's Second Amended Motion In Limine (ECF No. 110-1 (“Defendant's Motion”)). For the reasons explained below, each motion is granted in part and denied in part.

         I. PLAINTIFF'S MOTION IN LIMINE

         A. Plaintiff's Health Insurance

         Plaintiff moves to exclude “any evidence or mention of Plaintiff's health insurance, ” pursuant to the collateral source rule, as codified at Colorado Revised Statutes § 10-1-135(10)(a). (ECF No. 103 at 2-3.) Defendant is not opposed. (ECF No. 119 at 1.) Accordingly, Plaintiff's Motion is GRANTED on this point.

         B. Plaintiff's Prior Lawsuit

         Plaintiff moves to exclude evidence of a lawsuit he brought in 2008 or 2009. (ECF No. 103 at 3.) Again, Defendant is not opposed. (ECF No. 119 at 1.) Accordingly, Plaintiff's Motion is granted on this point.

         C. Reasonableness of “Fairly Debatable” Claims

         Plaintiff moves to exclude Defendant's argument to the effect that its conduct in processing Plaintiff's insurance claim was reasonable because Plaintiff's claim for coverage was “fairly debatable.” (ECF No. 119 at 3-4.) In support, Plaintiff cites Nibert v. Geico Casualty Co., ___ P.3d ___, ___ 2017 WL 710504, at *3 (Colo.App. Feb. 23, 2017) for the proposition that “the ‘fairly debatable' issue is not relevant to a statutory delay claim pursuant to [Colo. Rev. Stat. §] 10-3-1116.” (See ECF No. 103 at 3.)

         The Court agrees with Defendant that this statement in Nibert, taken in isolation, is not a correct statement of Colorado law. The preceding paragraphs of the Nibert opinion review previous statutory bad faith cases, which hold that “fair debatability” is “not the sole inquiry in a reasonableness analysis, ” and is “not outcome determinative, ” but remains “a factor in the broader reasonableness inquiry.” Nibert, 2017 WL 710504, at *3 (citing Fisher v. State Farm Mut. Auto. Ins. Co., ___ P.3d ___, ___, 2015 WL 2198515, at * 4-5, cert. granted on other grounds, 2016 WL 3207869 (Colo. June 6, 2016) and Vaccaro v. Am. Family Ins. Grp., 275 P.3d 750, 760 (Colo.App. 2012)).

         Both Fisher and Vaccaro analyzed statutory bad faith claims, and both concluded that the “fair debatability” defense applicable in common law bad faith cases does not imply that an insurance company's denial of a “fairly debatable” claim is necessarily reasonable as a matter of law. Fisher, 2015 WL 2198515, at *4 (“we disagree with State Farm that, under section 10-3-1115, an insurer's decision to delay or deny payment of a “fairly debatable” UIM claim cannot be unreasonable as a matter of law”); Vaccaro, 275 P.3d at 760 (“Even if plaintiff's claim for UIM benefits were ‘fairly debatable' in the common law context, that would not alone establish that defendant's actions here were reasonable as a matter of law.”).

         Therefore, to the extent Nibert suggests that these prior holdings make “fair debatability” irrelevant in a statutory bad faith case, the Court finds this mis-states existing Colorado law, and instead follows the Tenth Circuit's synthesis of the law in Colorado on this issue: in a statutory bad faith claim, “fair debatability can be a relevant but not necessarily a determinative factor as to whether the insurer acted reasonably.” Etherton v. Owners Ins. Co., 829 F.3d 1209, 1227 (10th Cir. 2016).[1]

         Since “fair debatability” is a relevant but not conclusive for the jury's “reasonableness” analysis under § 10-3-1115, Plaintiff's Motion is DENIED on this point.[2] Defendant may present evidence of “fair debatability, ” including through its expert's testimony.

         D. Option Form Mailed to Plaintiff After Policy Purchase

         As detailed in the Court's summary judgment order, Plaintiff purchased his insurance policy through Defendant's website, and Defendant afterwards mailed him certain documents, including an Option Form addressing Plaintiff's option to purchase uninsured/underinsured motorist (“UM/UIM”) coverage at limits equal to his bodily injury (“BI”) limits. (See generally ECF No. 95 at 14-18.) Plaintiff now moves to exclude the Option Form as irrelevant, arguing that Colorado Revised Statutes § 10-4-609(2) requires a sufficient offer of UM/UIM coverage options “[b]efore the policy is issued or renewed” (emphasis added).

         The Court rejects this argument for two reasons. First, as just quoted, the statutory language contemplates an offer made before the policy is issued or renewed. Here, it is undisputed that Plaintiff's policy had renewed prior to his insurance claim, and Defendant may present evidence that it sent one or more Option Forms to Plaintiff prior to or in conjunction with the renewal. Second, the relevant case law contemplates that an “[i]f the insurer fails to discharge its duty prior to the issuance of the policy, the duty continues and can be discharged only by an adequate notification and offer on some future occasion.” Allstate Ins. Co. v. Parfrey, 830 P.2d 905, 912 (Colo. 1992); see also Reid v. Geico Gen. Ins. Co., 499 F.3d 1163, 1168 (10th Cir. 2007) (concluding that, under the Parfrey standard applied to offer of extended personal injury protection (“PIP”) coverage, the Option Form sent to Plaintiff after the policy issuance had contained an adequate offer of enhanced PIP coverage, as required by statute).

         Accordingly, Plaintiff's Motion is DENIED on this point. Defendant may present evidence related to the Option Form(s) sent to Plaintiff after his policy was purchased, as relevant to the “totality of the circumstances” to be considered ...


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