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Mischek v. State Farm Mutual Automobile Insurance Co.

United States District Court, D. Colorado

March 27, 2018

PATRICIA MISCHEK, individually and on behalf of all persons similarly situated, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign corporation, Defendant. SKUYA CHRISTENSEN, individually and on behalf of all persons similarly situated, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign corporation, Defendant.

          ORDER

          PHILIP A. BRIMMER United States District Judge

         This matter is before the Court on State Farm Mutual Automobile Insurance Company's Motion for Summary Judgment Re: (1) Enforcement of Settlement; and (2) Accord and Satisfaction [Docket No. 58]. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.[1]

          I. BACKGROUND[2]

         This is a consolidated action for underinsured motorist (“UIM”) benefits. Plaintiffs Patricia Mischek and Skuya Christensen were insured by defendant State Farm Mutual Automobile Insurance Company (“State Farm”) when they were involved in separate collisions with underinsured motorists. Both plaintiffs submitted claims for UIM benefits to State Farm. After the parties settled those claims, the Colorado Supreme Court held, in Calderon v. American Mutual Family Insurance Co., 383 P.3d 676 (Colo. 2016), that Colo. Rev. Stat. § 10-4-609(1)(c) bars insurance companies from reducing the payment owed under an insured's uninsured/underinsured motorist (“UM/UIM”) coverage by amounts paid out under the insured's medical payments (“MedPay”) coverage.[3]Relying on Calderon, plaintiffs filed suit alleging that State Farm had breached the terms of their insurance contracts by unlawfully reducing their UM/UIM benefits by the amount of MedPay benefits awarded following their collisions. The following undisputed facts are material to each plaintiff's claims.

         A. Patricia Mischek

         Prior to the events giving rise to this lawsuit, Ms. Mischek (formerly, Ms. Eheart) purchased an automobile policy from State Farm that included (1) UIM coverage up to $100, 000 per person and (2) MedPay Coverage up to $5, 000 per person. Docket No. 52 at 4-5, ¶ 1. The section of the policy pertaining to UIM coverage contained the following non-duplication provision:

We will pay compensatory damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle or an underinsured motor vehicle. . . . We will not pay any damages . . . that have already been paid as expenses under Medical Payments Coverage of this policy, the medical payments coverage of any other policy, or other similar vehicle insurance.

Docket No. 52-8 at 19; Docket No. 52 at 5, ¶ 4.[4]

         On June 14, 2013, Ms. Mischek was involved in a car accident with an underinsured motorist. Docket No. 52 at 6, ¶ 7. She submitted claims for MedPay and UIM benefits to State Farm pursuant to the terms of her insurance policy. Id. On or about October 25, 2013, Ms. Mischek received a letter from State Farm informing her that State Farm had exhausted her MedPay coverage by paying out $5, 000 for medical expenses incurred as a result of the accident. Id. at 6, ¶ 8; Docket No. 55-5 at 3.[5]

         On March 17, 2015, Ms. Mischek's attorney sent State Farm a letter demanding the “UNDERINSURED MOTORIST POLICY LIMITS for a full and final settlement of all claims which she may have arising out of the June 14, 2013, incident.” Docket No. 52 at 7, ¶ 11; Docket No. 53-6 at 13. On May 8, 2015, State Farm offered Ms. Mischek $64, 000 to settle her UIM claim. Docket No. 52 at 8, ¶ 13. State Farm explained that the offer accounted for Ms. Mischek's $25, 000 settlement with the underinsured motorist and the $5, 000 paid in MedPay benefits. Id.; Docket No. 53-2 at 3. On the same day, State Farm sent a letter to Ms. Mischek's attorney “confirm[ing State Farm's] settlement offer in the amount of $64, 000.” Docket No. 52 at 8, ¶ 13; Docket No. 53-2 at 3; Docket No. 53-9. On May 21, 2015, Ms. Mischek's attorney made a counter-offer in the amount of $95, 000, to which State Farm responded with an offer of $67, 000, “inclusive of all damages.” Docket No. 52 at 8, ¶¶ 14-15; Docket No. 53-10. After Ms. Mischek's attorney demanded $90, 000, State Farm made a final offer in the amount of $70, 531.89. Docket No. 52 at 8, ¶¶ 16-17. Ms. Mischek accepted the offer on May 29, 2015, id., and on June 1, 2015, State Farm sent a letter to her attorney stating, “It is our understanding Ms. Eheart has accepted our offer of $70, 531.89 inclusive of all liens.” Id., ¶ 18; Docket No. 53-11. Ten days later, on June 11, 2015, State Farm sent another letter confirming the parties' settlement and enclosing payment in the amount of $70, 531.89. Docket No. 52 at 8-9, ¶ 20. The letter states:

Enclosed is our payment in the amount of $70, 531.89 for settlement of your Underinsured Motorist Claim. There is no release requested in exchange for our payment. However, this will confirm our agreement settles any and all claims under the Underinsured Motorist Coverage with State Farm arising out of the accident on June 14, 2013.

Docket No. 53-13. The check stub for one of the checks enclosed with the letter bears the notation “Full and final UIM settlement.” Docket No. 55-3 at 2. Ms. Mischek did not return State Farm's payment or challenge the amount of the settlement. Docket No. 52 at 9, ¶ 22; Docket No. 71 at 6.

         On November 7, 2016, the Colorado Supreme Court issued its decision in Calderon. See Calderon, 383 P.3d 676. On November 29, 2016, Ms. Mischek filed her complaint in the District Court for Larimer County, Colorado. Docket No. 1-1 at 1. The case was removed to this Court on December 30, 2016. Docket No. 1. In her first amended complaint, Ms. Mischek asserts a claim for breach of contract on behalf of herself and a class of persons “(a) who were covered for UM/UIM under automobile policies issued by the Defendant in the State of Colorado; (b) who presented claims for payment of Colorado UM/UIM coverage for covered injuries occurring on or after January 1, 2008; and (c) who received UM/UIM payments in a reduced amount due to the Defendant's application of its Med-Pay Reduction Policy.” Docket No. 5 at 3, ¶ 16. Ms. Mischek alleges that State Farm “breached the contract of insurance by applying its Med-Pay Reduction Policy to avoid paying statutorily-mandated UM/UIM benefits to Plaintiff and other class members.” Id. at 5, ¶ 26. She seeks “payment of all UM/UIM benefits due and owing, ” as well as interest, fees, and costs. Id. at 5.

         B. Skuya Christensen

         On November 6, 2014, Ms. Christensen was involved in a car accident with an underinsured motorist. Docket No. 52 at 9, ¶ 23. At the time of the accident, she was covered under two automobile insurance policies issued by State Farm. Id. at 5, 9, ¶¶ 2-3, 25-26. Those policies included UIM motorist coverage of up to $100, 000 per person and MedPay coverage of up to $5, 000 per person. Id. at 5, ¶¶ 2-3. Ms. Christensen filed claims for MedPay benefits and UIM benefits under the policies. Id. at 9, ¶ 23. On April 9, 2015, State Farm sent a letter to Ms. Christensen's attorney stating that Ms. Christensen's MedPay coverage limits had been exhausted due to a $5, 000 final payment sent by State Farm on April 9. Id., ¶ 25; Docket No. 53-17. On November 19, 2015, State Farm sent a letter to Ms. Christensen's attorney stating: “We have completed the evaluation of Ms. Christensen's Underinsured Injury claim. Please contact us as soon as possible so that we may discuss settlement.” Docket No. 52 at 10, ¶ 28; Docket No. 53-19. Four days later, State Farm sent a letter confirming its “settlement offer in the amount of $1, 000.00.” Docket No. 52 at 10, ¶ 29; Docket No. 53-20. On December 13, 2015, Ms. Christensen's attorney acknowledged receipt of State Farm's “November 23, 2015 letter offering $1, 000.00 to settle Ms. Christensen's claim” and requested further information regarding how State Farm calculated the offer. Docket No. 52 at 10, ¶ 30; Docket No. 53-21. State Farm responded with a letter on December 22, 2015 explaining the basis for the settlement amount, including the $5, 000.00 off-set for MedPay benefits that Ms. Christensen had already received. Docket No. 52 at 10, ¶ 31; Docket No. 53-22.[6] On January 4, 2016, Ms. Christensen's attorney sent State Farm a letter challenging State Farm's benefits calculation and asking if it accounted for future pain and suffering, future treatment, permanency, and interest. Docket No. 52 at 11, ¶ 32; Docket No. 53-23. The letter further requested that State Farm “provide an updated evaluation” and “tender the benefits [it had] determined [were] owed at [that] time.” Docket No. 53-23. State Farm made two additional offers of $6, 000 and $10, 016.50 to settle Ms. Christensen's UIM claim. Docket No. 52 at 11, ¶ 33. On February 1, 2016, Ms. Christensen accepted State Farm's ultimate offer of $16, 000. Docket No. 52 at 11, ¶ 34; Docket No. 55-4 at 4.[7] That same day, State Farm sent a letter to Ms. Christensen's attorney confirming that they had “agreed to settle [Ms. Christensen's] underinsured motorist claim for $16, 000, inclusive of all liens” and enclosing payment. Docket No. 52 at 11, ¶ 35; Docket No. 53-24. Ms. Christensen does not dispute that she deposited State Farm's check without challenging the amount. Docket No. 52 at 11, ¶ 36; Docket No. 69 at 3.

         On November 10, 2016, three days after the issuance of the Calderon decision, Ms. Christensen filed her complaint in the District Court for the City and County of Denver. Civil Action No. 17-cv-00041, Docket No. 1-1. On January 4, 2017, State Farm removed the case to this Court. Civil Action No. 17-cv-00041, Docket No. 1. Plaintiff seeks compensatory damages for breach of contract and a declaratory judgment that State Farm wrongfully denied UM/UIM benefits to plaintiff and other similarly situated current and former insureds of State Farm. Civil Action No. 17-cv-00041, Docket No. 4 at 6.

         On May 31, 2017, Ms. Christensen filed a motion for partial summary judgment requesting a ruling that the Colorado Supreme Court's decision in Calderon is retroactive to January 1, 2008. Docket No. 39. On June 20, 2017, State Farm moved for summary judgment on the ground that Calderon does not apply retroactively to support Ms. Christensen's and Ms. Mischek's claims for breach of contract and declaratory relief. Docket No. 52. That same day, State Farm filed a second motion for summary judgment arguing that plaintiffs' claims are barred by their settlements with State Farm and/or by accord and satisfaction. Docket No. 58.

         II. ...


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