United States District Court, D. Colorado
JERRY ARCHULETA, individually and on behalf of all others similarly situated, Plaintiff,
USAA CASUALTY INSURANCE COMPANY, and UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendants.
ORDER GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON
Brooke Jackson United States District Judge.
Archuleta, a Colorado resident, was injured in a car accident
with an underinsured motorist. He submitted insurance claims
to United Services Automobile Association
(“USAA”) under his policy for medical payments
(“MedPay”) and uninsured/underinsured motorist
(“UM/UIM”) coverage. USAA paid Mr. Archuleta $5,
000 in MedPay benefits and later paid an additional $17, 000
in UM/UIM benefits pursuant to a settlement agreement.
According to Mr. Archuleta, USAA disclosed during the
negotiations that it believed he was entitled to $22, 000 in
UM/UIM coverage, but it subtracted the $5, 000 paid for
MedPay benefits under a “non-duplication”
provision of the insurance policy. With the advice of
counsel, Mr. Archuleta accepted this setoff and signed a
release discharging USAA's duty to pay under the policy.
than a year later, however, the Colorado Supreme Court held
in Calderon v. American Family Mutual Insurance Co.,
383 P.3d 676 (Colo. 2016), that such setoff policies violate
state law. Mr. Archuleta then filed this class action against
USAA and USAA Casualty Insurance Company, alleging that they
have systematically reduced UM/UIM payments by the amount of
MedPay payments in violation of state law since 2008-eight
years before Calderon clarified the law. Defendants
have filed a motion for judgment on the pleadings on the
ground that Mr. Archuleta's signed release is fatal to
his claims. The motion is granted.
Archuleta cannot get out of his settlement agreement.
“Parties to a contract . . . may agree on whatever
terms they see fit so long as such terms do not violate
statutory prohibitions or public policy.” Fox v.
I-10, Ltd., 957 P.2d 1018, 1022 (Colo. 1998). A public
policy will invalidate a contractual provision only if the
policy “clearly outweigh[s]” the interest in
enforcing the contract. FDIC v. Am. Cas. Co., 843
P.2d 1285, 1290 (Colo. 1992).
public policy outweighs the interest in enforcing the
parties' settlement agreement here. Mr. Archuleta argues
that Calderon manifests Colorado's policy of
forbidding setoffs of UM/UIM benefits by MedPay payments. But
this case stands for a more limited proposition: that the
statutory prohibition on UM/UIM insurance policies taking
setoffs refers to “the amount of UM/UIM coverage
available on a particular claim, ” not the coverage
limit in the abstract. Calderon, 383 P.3d at 677.
The present settlement agreement does not concern the amount
of UM/UIM coverage available on Mr. Archuleta's claim,
but rather the amount of money he was willing to accept to
release whatever claim he had.
agreement is not tainted by Mr. Archuleta's allegedly
releasing his entitlement to UM/UIM benefits without a MedPay
setoff. Mr. Archuleta lawfully could have accepted less than
the amount of his UM/UIM coverage, or he could have held out
and conceivably obtained more than this coverage-for example,
if USAA thought it would lose at trial and wanted to save on
attorneys' fees. Calderon says nothing about
either type of agreement. Instead, “[p]ublic policy
favors the settlement of disputes, provided they are fairly
reached.” Davis v. Flatiron Materials Co., 511
P.2d 28, 32 (Colo. 1973).
situation is unlike the other Colorado Supreme Court cases
Mr. Archuleta cites. The line of cases leading up to
Calderon-State Farm Mutual Automobile Insurance
Co. v. Kastner, 77 P.3d 1256 (Colo. 2003), Aetna
Casualty & Surety Co. v. McMichael, 906 P.2d 92
(Colo. 1995), and Newton v. Nationwide Mutual Fire
Insurance Co., 594 P.2d 1042 (Colo. 1979)- involved the
requirements of UM/UIM coverage, not settlements for less (or
more) than the amount of coverage.
Kral v. American Hardware Mutual Insurance Co., 784
P.2d 759, 761 (Colo. 1989), the court discerned a
“strong policy adopted by the General Assembly to
enable an insured who purchases uninsured motorist
protection to receive the benefits of that coverage to the
extent necessary for full compensation for loss caused by the
negligent conduct of a financially irresponsible
motorist.” Id. at 764 (emphasis
added). There the insurance policy (given effect
by a release-trust agreement) included a subrogation clause
requiring the insured to reimburse her insurance company when
she obtained money from a tortfeasor, potentially keeping her
from fully recovering for her loss. But the court did not say
that insured parties were required to accept nothing
less than full compensation for their losses. Holding
otherwise would put an end to settlement negotiations for
UM/UIM claims; why settle a claim if an insured party can
always threaten to run to court afterward and seek the
remainder of the “full compensation” he might
win? Again, this would undermine Colorado public policy that
“favor[s] voluntary agreements to settle legal
disputes.” Gates Corp. v. Bando Chem. Indus.,
Ltd., 4 F.App'x 676, 682 (10th Cir. 2001)
Loffland Bros. v. Industrial Claim Appeals Panel,
770 P.2d 1221 (Colo. 1989), recognized that under the
Workmen's Compensation Act of Colorado, “the
authority of the Director to reopen claims extends to cases
resolved by settlement agreements as well as to cases
resolved by administrative determinations; and to the extent
a settlement agreement purports to abrogate that authority,
it is unenforceable.” Id. at 1226. This case
does not hold that Colorado public policy generally
invalidates agreements releasing legal claims to
event, Mr. Archuleta received all he was entitled to before
Calderon clarified the law. As Calderon
noted, there are two ways to interpret the statutory language
at issue here and, “[w]hen read in isolation, the
phrase might be read either way.” 383 P.3d at 678. Mr.
Archuleta's lawyers surely advised him to accept
USAA's offer with a MedPay setoff because Colorado courts
before Calderon construed the statute to allow such
deductions. See, e.g., Bradford v. USAA Cas.
Ins. Co., 14CA0915, at 4-5 (Colo.App. Aug. 6, 2015)
(unpublished); Calderon v. Am. Family Mut. Ins. Co.,
No. 13CA1185, 2014 WL 2149652, at *4 (Colo.App. 2014),
rev'd, 383 P.3d 676 (Colo. 2016); Levy v.
Am. Family Mut. Ins. Co., 293 P.3d 40, 48 (Colo.App.
2011); Carrion-Kozak v. Alghamdi, No. 13CV92, at 3
(Arapahoe Cty. Dist. Ct. Dec. 13, 2013); Romero v. State
Farm Mut. Auto. Ins. Co., No. 12CV5644, at 2 (El Paso
Cty. Dist. Ct. May 3, 2013); Willyard v. Am. Family Mut.
Ins. Co., No. 11CV931 (Boulder Dist. Ct. May 8, 2012);
Evans v. Am. Family Mut. Ins. Co., No. 11CV2977, at
4 (Denver Dist. Ct. Dec. 21, 2011). Mr. Archuleta's
attorneys gave good advice to accept USAA's offer in
light of the state of the law at the time. Cf. Daigle v.
Shell Oil Co., 972 F.2d 1527, 1543 (10th Cir. 1992).
This agreement cannot be rescinded with the benefit of
Mr. Archuleta's personal allegations concern only USAA,
see Compl., ECF No. 9 at ¶¶ 3, 23-26, he
does not have standing to bring a claim individually or on
behalf of a class against USAA Casualty Insurance Company.
Additionally, since Mr. Archuleta's substantive claim
fails, his request for declaratory relief must be dismissed
reasons set forth above, Defendants' Motion for Judgment
on the Pleadings [ECF No. 31] is GRANTED. Mr. Archuleta's
complaint is dismissed with prejudice. As the prevailing
party, defendants are awarded their reasonable costs pursuant
to Fed.R.Civ.P. 54(d)(1) and D.C.COLO.LCivR 54.1.