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Chavez v. Arizona Automobile Insurance Co.

United States District Court, D. Colorado

May 15, 2018

GEORGIANA CHAVEZ as assignee of Marlena Whicker, Plaintiff,
v.
ARIZONA AUTOMOBILE INSURANCE COMPANY, Defendant.

          ORDER ON MOTION TO DISMISS

          Michael E. Hegarty, United States Magistrate Judge.

         In this “duty to defend and indemnify” action, Plaintiff Georgiana Chavez (“Plaintiff”) sued Marlena Whicker (“Whicker”), the driver of a vehicle allegedly insured by the Defendant Arizona Automobile Insurance Company (“Defendant”), in the District Court for the County of Arapahoe, Colorado and obtained a default judgment against Whicker in the amount of $732, 238.72 with accruing interest.

         Here, Plaintiff, the alleged assignee of all rights Whicker held against Defendant as an “insured” under the subject insurance policy, claims Defendant failed to defend Whicker, failed to pay insurance benefits with respect to the underlying litigation, and acted in bad faith. Defendant moves to dismiss this action asserting that Plaintiff fails to plausibly allege Whicker was an “insured” as defined by the subject policy. The Court finds Defendant improperly relies on a “duty to defend” standard in arguing Plaintiff fails to allege Whicker was an “insured” and, thus, the Court will deny the Defendant's motion.

         BACKGROUND

         I. Statement of Facts

         The following are factual allegations (as opposed to legal conclusions, bare assertions, or merely conclusory allegations) made by the Plaintiff in the operative First Amended Complaint, which are taken as true only for analysis under Fed.R.Civ.P. 12(b)(6) pursuant to Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         On December 4, 2015, Plaintiff was involved in an automobile collision in which she was the passenger of a vehicle rear ended by an automobile operated by Whicker. The owner of the vehicle, Javier Galindo, permitted Whicker to use it. As a result of the collision, Plaintiff sustained serious and permanent injuries.

         At the time of the collision, the vehicle operated by Whicker was allegedly insured under Defendant's Policy No. 56 COAA 000029252 (the “Policy”). Pursuant to the Policy, Defendant agreed to pay $25, 000 per person/$50, 000 per accident to protect its insureds for legal liability to persons such as the Plaintiff. By letter dated June 26, 2015, Plaintiff requested from Defendant a tender of the $25, 000 policy limits. Defendant rejected the offer and failed to tender any payment to Plaintiff.

         On October 1, 2015, Plaintiff filed a lawsuit against Whicker in the District Court for Arapahoe County, Colorado, Civil Action No. 2015CV031667 (“the Underlying Case”), seeking compensatory damages from Whicker. Whicker was served and the Return of Service was provided to Defendant on October 4, 2015. Despite being provided the Return of Service, Defendant did not file a responsive pleading to the underlying complaint nor provide any defense to Whicker.

         A default judgment was entered in the Underlying Case on December 2, 2015. A damages hearing was held on March 18, 2016 before the Honorable John L. Wheeler, who entered an award of damages on March 21, 2016. Judge Wheeler subsequently entered an Order of Judgment against Whicker in the amount of $732, 238.72 with accruing interest.

         Whicker has assigned to Plaintiff her rights and interests to any claims against Defendant for collection of the judgment entered in the Underlying Case, including the rights to prosecute those claims in a civil action and retain the proceeds of such action.[1]

         II. Procedural History

         Based on these factual allegations, Plaintiff claims Defendant breached its insurance contract with Galindo, the owner of the vehicle, who allegedly permitted Whicker to drive the car, and engaged in bad faith by:

a. Its failure to timely review, investigate and settle the claims against Whicker;
b. Its refusal to attempt in good faith to effectuate a prompt, fair and equitable settlement of the claims against Whicker, especially in light of the evidence concerning Whicker's liability and the severity of Plaintiff's injuries.
c. Its failure to provide a defense to Whicker;
d. Its consistent actions placing its own interests above those of its insured, Whicker;
e. Its depriving Whicker of the benefits and protection of the contract of insurance; and
f. Other conduct to be developed during these proceedings.

         Am. Compl. ¶ 27. In response, Defendant filed the present motion seeking to dismiss the action for Plaintiff's failure to allege Whicker is an “insured” entitled to benefits under the Policy, ...


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