Peden v. State Farm Mutual Automobile Insurance Co.

          ORDER

          LEWIS T. BABCOCK, JUDGE.

         This matter is before me on several pre-trial issues raised in Plaintiff's Amended Trial Brief [Doc #156] and in Defendant's Trial Brief [Doc #153] related to the admissibility of proffered evidence and potential arguments at trial. As set forth on the record at the status/scheduling conference on July 13, 2018, I will treat these requests for pretrial rulings as motions in limine and, after consideration of the parties' briefs and responses, I rule as follows.

         I. Background

         Plaintiff Wendy Peden and three other passengers were injured when the 1962 Volkswagen van they were riding in was involved in a single car accident. Plaintiff's claims against the at-fault driver for bodily liability coverage were settled by Defendant State Farm Mutual Automobile Insurance Company (“State Farm”). Because the amount of her compensatory damages exceeded the liability settlement, Plaintiff made a claim to State Farm pursuant to the available under-insured motorists (“UIM”) coverage of $350, 000. State Farm concluded that Plaintiff was fairly compensated for the injuries she sustained, via the liability benefits paid, and thus it denied her UIM claim in February of 2014. Following State Farm's denial, Plaintiff filed this lawsuit asserting claims for: 1) Breach of the Insurance Contract; 2) Common Law Breach of Good Faith and Fair Dealing; and 3) Violation of Colorado Revised Statutes §10-3-1115 and §10-3-1116 (Unreasonable Delay or Denial of Benefits).

         After Plaintiff filed this lawsuit, State Farm re-evaluated Plaintiff's UIM claim - a year after its initial denial - and made an offer of settlement in the amount of $179, 660.01 on February 27, 2015. Then, on May 15, 2015, State Farm paid Plaintiff the remaining $170, 339.99. As such, State Farm has now paid Plaintiff $350, 000, which constitutes the full amount of the UIM benefits available.

         On September 9, 2015, I granted State Farm's Motion for Summary Judgment and dismissed Plaintiff's case on the basis that State Farm's decisions made in adjudicating Plaintiff's UIM claim “were, at the time they were made, reasonable as a matter of law.” [Doc #72] Plaintiff appealed and, on November 15, 2016, Tenth Circuit reversed and remanded. Peden v. State Farm Mut. Auto. Ins. Co., 841 F.3d 887 (2016). The Tenth Circuit ruled that a genuine issue of material facts existed as to whether State Farm adequately investigated whether Plaintiff knew that the at-fault driver was drunk and planning to drive (assumed the risk), and whether State Farm reasonably investigated the damages Plaintiff could obtain against the at-fault driver (adequately investigated his liability to her). Id. at 891-92. The Tenth Circuit also indicated that a genuine issue of material fact existed as to “the reasonableness of State Farm's initial refusal to pay anything for future non-economic damages or future wage loss.” Id. at 894.

         Following remand, on December 14, 2016, I granted Plaintiff's Partial Motion for Summary Judgment in which she sought a legal ruling (as related to her Statutory Unreasonable Delay or Denial of Benefits claim under §10-3-1115 & §10-3-1116) that the “covered benefit” in §10-3-1116(1) means the $350, 000 UIM policy limits that were ultimately paid to her by State Farm. [Doc #88]

         On April 20, 2017, I dismissed Plaintiff's Breach of Contract claim. [Doc #96] And, on November 6, 2017, I dismissed Plaintiff's Bad Faith Breach of Contract Claim upon her Stipulation for Dismissal. [Doc #120] As a result, Plaintiff's only remaining claim is for Unreasonable Delay or Denial of Benefits in violation of §10-3-1115 and §10-3-1116.

         II. Plaintiff's Trial Brief

         In her Amended Trial Brief, Plaintiff seeks rulings on the following potential defense arguments at trial. [Doc #156]

         A. Burden of Proof:

         Plaintiff anticipates that State Farm will argue that it was obligated to pay Plaintiff's UIM claim only if Plaintiff met some burden or level of proof when presenting her claim. Plaintiff argues that the underlying insurance policy only requires her to give State Farm notice of the accident; it does not require specific information to support her claim or impose any burden of proof. Plaintiff asks that I prohibit State Farm from arguing (or implying) to the jury that its duty to investigate, evaluate and pay her UIM benefits were conditioned upon Plaintiff meeting some undefined burden of proof. State Farm responds that the case law is clear that the party seeking UIM benefits has the burden to prove that he or she is entitled to those benefits.

         State Farm is correct that Plaintiff (as the insured) has the burden in UIM breach of contract cases to prove liability and damages at trial. See e.g. Briggs v. Am. Family Mut. Ins. Co., 833 P.2d 859, 861 (Colo.App. 1992)(the insured has the burden to prove that the uninsured motorist was negligent and the extent of the damages). Plaintiff's only claim in this case, however, is for Unreasonable Delay or Denial under §10-3-1115 & 1116 - her breach of contract and bad faith breach of contract claims have both been dismissed. The jury instruction on her remaining claim requires only that Plaintiff prove, by a preponderance of the evidence, that State Farm 1) delayed or denied payment of benefits owed to her, and 2) that such delay or denial was without a reasonable basis. CJI-Civ 25:4.

         In addition, I agree with Plaintiff that she did not have any burden to prove she was entitled to UIM benefits at the time she filed her claim. The case law does not require that she prove anything before triggering State Farm's duty to investigate, evaluate and pay her UIM claim, and the insurance policy only requires that she give State Farm notice of her claim. I conclude that while Plaintiff has the ultimate burden to prove, by a preponderance of the evidence, the elements of her Unreasonable Delay or Denial claim, there was no burden imposed on her at the time she made her claim for UIM benefits. Therefore, State Farm may not argue or imply that Plaintiff was required to meet some requisite burden or level of proof when filing her claim for UIM benefits in order to trigger State Farm's duty to investigate, evaluate and pay her claim.

         B. Failure to Cooperate

         Plaintiff also anticipates that State Farm will argue that she breached her contractual requirement to cooperate, under the insurance policy, when seeking her UIM benefits. Plaintiff asserts that: 1) State Farm's answer does not allege a failure to cooperate affirmative defense; and 2) State Farm's responses to discovery do not substantiate any failure to cooperate.

         State Farm argues that it did in fact raise Plaintiff's failure to cooperate as an affirmative defense in its Answer at Paragraphs 10 & 11, which provided that:

10. Plaintiff's claims are barred, limited or proportionately reduced by the terms and conditions of the insurance policy issued by defendant including, but not limited to, the limits of the subject insurance policy.

11. Plaintiff's claims may be barred or reduced by any failure to satisfy conditions precedent to the right of recovery under the insurance ...