United States District Court, D. Colorado
ORDER GRANTING DEFENDANT'S CROSS-MOTION FOR
SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR
CHRISTINE M. ARGUELLO, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Plaintiff Kelsi Bowers'
Motion for Declaratory Judgment (Doc. # 23) and Defendant
Buckeye State Mutual Insurance Company's Cross-Motion for
Summary Judgment or, Alternatively, Motion for Determination
of Law (Doc. # 24). Both Motions have been fully briefed.
(Doc. ## 31, 33, 37, 46.) The Court exercises jurisdiction
pursuant to 28 U.S.C. 1332 (diversity of citizenship). For
the reasons that follow, the Court grants Defendant's
Motion and denies Plaintiff's Motion.
February 9, 2016, Plaintiff was driving in Northglenn,
Colorado when she was involved in a collision with another
driver. (Doc. # 23 at 2.) As a result of the collision,
Plaintiff sustained serious injuries which required extensive
medical care. (Id.) Police at the scene determined
that the other driver, Joseph Boocker, was at fault and
issued him a citation for careless driving. (Id. at
time of the collision, Plaintiff was driving a 2010 Chevy
Impala ("the Impala"). (Id. at 4.) The
Impala was covered by an automobile insurance policy
("the Policy") that Defendant issued to Danny
Bowers, Plaintiffs Father, who is a resident of Kansas. (Doc.
# 31 at 10.) The Policy had an effective term of April 13,
2015, through April 13, 2016, which included the date of the
collision. (Id.) The Policy indicated that the
"Drivers Covered" were Danny and Janelle Bowers.
(Doc. # 24-9 at 3.) Plaintiff was not a named insured driver
under the Policy at the time of the 2016 accident. (Doc. #
24-8 at 1-14.) On August 3, 2016, Defendant paid Plaintiff
$4, 500 in Personal Injury Protection benefits in accordance
with Defendant's obligations under the Policy. (Doc. # 23
at 6-7; Doc. # 24-1 at 2.)
Policy additionally includes Uninsured Motorist
("UIM") coverage with a policy limit of $100, 000
per person. (Doc. #21-4 at 25; Doc. # 21-16 at 1.) Under the
terms of the UIM provision, an "Insured" is defined
as, among other things, an individual occupying a vehicle
covered by the Policy, such as the Impala Plaintiff was
driving at the time of the February 2016 collision.
(Id.) Further, the Policy defines an
"underinsured motor vehicle" as a vehicle "to
which a bodily injury liability bond or policy applies at the
time of the accident but its limit for bodily injury
liability is less than the limit of liability for this
coverage." (Id.) In effect, the Policy's
UIM provision applies where an insured receives less than
$100, 000 from another driver's insurance company. In
such a case, the insured can use the Policy's UIM
coverage to supplement the compensation from the other
driver at fault for the February 2016 collision, Mr. Boocker,
was insured through Allstate Fire and Casualty Insurance
Company ("Allstate"). (Doc. #21-10 at 3.) In the
fall of 2016, Allstate tendered Mr. Boocker's insurance
policy limits of $100, 000 to Plaintiff in full and final
settlement of Mr. Boocker's liability to Plaintiff. (Doc.
# 23 at 7.) However, the funds Plaintiff received from
Allstate were insufficient to cover the medical costs of her
collision-related injuries. (Id. at 10.) As a
result, Plaintiff informed Defendant that she intended to
pursue a claim for UIM benefits. On October 19, 2016,
Defendant informed Plaintiff that, based on the terms of the
Policy and Kansas law, Plaintiff was not eligible for UIM
benefits. Specifically, Defendant indicated that
"because the $100, 000 per-person limit of [the
Policy's] UM/UIM coverage does not exceed the $100, 000
per-person limit of the [Allstate] policy, there is no
available UIM coverage." (Doc. #21-6 at 2.)
decision that Plaintiff was not entitled to UIM benefits
under the Policy gave rise to the instant action. On June 28,
2018, Plaintiff filed a Motion for Declaratory Judgment
seeking a determination from this Court that Colorado law
controls the interpretation of the Policy's UIM provision
and that under Colorado law, Defendant is obligated to pay
Plaintiff UIM benefits. (Doc. # 23.) Subsequently, on July 2,
2018, Defendant filed a Cross-Motion for Summary Judgment, or
Alternatively, Motion for Determination of Law seeking a
determination from this Court that Kansas law applies and
that under Kansas law and the terms of the Policy, Defendant
is not required to provide UIM benefits to Plaintiff. (Doc. #
DECLARATORY JUDGMENT AND SUMMARY JUDGMENT
the Declaratory Judgment Act, 28 U.S.C. §§
2201-2202, the Court may enter a judgment declaring "the
rights and other legal relations of any interested party
seeking such declaration. . . ." 28 U.S.C. § 2201.
Such a judgment or decree is reviewable as a final judgment.
Id. In the instant case, the parties do not dispute
that the issues can be resolved as a matter of law through a
judgment is warranted when "the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). A fact is "material" if it is
essential to the proper disposition of the claim under the
relevant substantive law. Wright v. Abbot Labs.,
Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). A dispute
is "genuine" if the evidence is such that it might
lead a reasonable jury to return a verdict for the nonmoving
party. Allen v. Muskogee, Okl., 118 F.3d 837, 839
(10th Cir. 1997).
reviewing motions for summary judgment, a court may not
resolve issues of credibility, and must view the evidence in
the light most favorable to the nonmoving party-including all
reasonable inferences from that evidence. Id.
However, conclusory statements based merely on conjecture,
speculation, or subjective belief do not constitute competent
summary judgment evidence. Bones v. Honeywell Int'l,
Inc., 366 F.3d 869, 875 (10th Cir. 2004).
more than one state's law may be applicable to a claim or
issue, a court need not choose which body of law to apply
unless there is an outcome determinative conflict between the
potentially applicable bodies of law. Sec. Serv. Fed.
Credit Union v. First Am. Mortg. Funding, LLC, 861
F.Supp.2d 1256, 1264 (D. Colo. 2012) (citations omitted). In
the instant case, it is undisputed that an outcome
determinative conflict exists between Colorado and Kansas law
with regard to the principles governing underinsured motorist
provisions in insurance policies. Plaintiff argues Colorado
law applies. Defendant, on the other hand, argues that Kansas
GOVERNING CONFLICT OF LAW RULES
as here, a federal court is sitting in diversity
jurisdiction, the conflict of law rules of the forum state
apply. Klaxon Co. v. StentorElec. Mfg. Co., 313 U.S.
487, 498 (1941); Sec. Serv. Fed. Credit Union, 861
F.Supp.2d at 1267. Colorado has adopted the "most
significant relationship" approach set forth in the
Restatement (Second) of Conflicts of Law ("the
Restatement"). Wood Bros. Homes v. Walker Adjustment
Bureau, 601 P.2d 1369, 1372 (Colo. 1979) (contract
claims); First Nat'l Bank v. Rostek, 514 p.2d
314, 320 (Colo. 1973) (tort claims). Under the most
significant relationship approach, the specific Restatement
rule applied to a given conflict of law dispute depends on
the nature of the underlying substantive claim.
instant case, the parties dispute whether Plaintiff has
asserted a tort claim, a contract claim, or both. Plaintiff
raises two claims for relief: (1) declaratory relief that
Colorado law controls in this case; and (2) declaratory
relief that Colorado law does not relieve Defendant of its
obligation to provide Plaintiff with the "coverage for
which she contracted." (Doc. # 4 at 5-6.) Plaintiff
argues that "tort conflict-of-law principles apply here
because the crux of Plaintiffs claim against Defendant is
that [Defendant] acted in bad faith when handling her
claim" and a bad faith breach of contract cause of
action sounds in tort. (Doc. # 37 at 3); see Travelers Prop.
Cas. Co. of Am. v. Stresscon Corp., 2016 CO 22M, ¶
16 (noting it is "well-settled" that "an
insurer's bad faith breach [of contract]. . . gives rise
to tort liability.").
the substantive allegations of the Complaint do not raise an
implication that Defendant breached its contractual
obligations in bad faith. The Colorado Supreme Court has held
that the relevant inquiry as to whether an insurer has
breached its duties of good faith and fair dealing with its
insured is whether "the facts pleaded show the absence
of any reasonable basis for denying the claim, i.e., would a
reasonable insurer under the circumstances have denied or
delayed payment of the claim under the facts and
circumstances." Farmers Grp., Inc. v. Trimble,
691 P.2d 1138, 1142 (Colo. 1984) (citations omitted).
Plaintiffs Complaint, by contrast, alleges not that there was
an absence of any reasonable basis for denying Plaintiffs
claim but that Defendant's cited reasoning behind its
decision is "mistaken." (Doc. # 4 at 5.) Therefore,
despite Plaintiff's assertions to the contrary, there are
no grounds to consider what law would apply to a tortious bad
faith breach of contract claim because Plaintiff's
allegations do not support such a claim.
interpreted in the light most favorable to Plaintiff, at best
Plaintiff states only claims based on breach of contract. As
such, the Court agrees with Defendant that "the crux of
this case is whether benefits are available under the
insurance policy under either Kansas law or Colorado
law." (Doc. # 46 at 12.)
APPLICATION OF SECOND RESTATEMENT PRINCIPLES
Restatement provides the following with regard to insurance
contracts in particular:
The validity of a contract of fire, surety or casualty
insurance and the rights created thereby are determined by
the local law of the state which the parties understood was
to be the principal location of the insured risk during the
term of the policy, unless with respect to the particular
issue, some other state has a more significant relationship
under the principles stated in § 6 to the transaction
and the parties, in which event the local law of the other
state will be applied.
§ 193; Mitchell v. State Farm Fire & Cas.
Co., 902 F.2d 793 (10th Cir. 1990) (noting that under
the "most significant relationship" test, "the
law of the state in which the insured property, object or
other risk is located normally governs issues concerning the
validity or effect of the insurance contract.")
(citations omitted). The insured risk, which is "the
object or activity which is the subject matter of the
insurance, has its principal location ... in the state where
it will be during at least the major portion of the insurance
period." Restatement § 193 cmt. (b). The
Restatement further explains that "in the case of an
automobile liability policy, the parties will usually know
beforehand where the automobile will be garaged at least
during most of the period in question." Id.
The [insurance] policy will usually be solicited in the state
of the insured's domicile and usually the insured risk
will also be located there. In the normal case, therefore,
the policy will have been solicited and delivered and the
last act necessary to make the contract binding will have
taken place in the state where the insured is domiciled or
incorporated, and where the risk is located. This state, in
such a situation, will usually be the state of the applicable
law, at least with respect to most issues.
Id. Finally, the Restatement indicates that if the
insured risk "will be in a particular state for the
major portion of the insurance period, the risk's
principal location is the most important contact to be
considered in the choice of the applicable law . . ."
because that location "has an intimate bearing upon the
risk's nature and extent and is a factor upon which the
terms and conditions of the policy will frequently
depend." Id. at (b-c).
as a caveat, § 193 indicates that circumstances may
exist in which "following the issuance of the policy the
principal location of the risk is shifted to some other
state" in which case "this other state will have a
natural interest in the insurance of the risk and it may be
that its local law should be applied to determine at least
some issues arising under the policy." Id. at
cmt. (d). The stated rationale for the exception from the
standard practice involving insurance contracts is that
"application of the local law of the other state would
hardly be unfair to the insurance company ... if the company
had reason to foresee when it issued the policy that there
might be a shift to another state of the principal location
of the risk." Id. However, the exception is
limited in its application.
have held that the principal location of an insured risk
shifts when: (1) both the insured and the insured risk are
located in a different forum than the one in which the
contract was formed for the majority of the contract term;
(2) the underlying contract is silent as to what law applies;
and (3) the insurer had knowledge that the insured risk had
shifted to another location. See Clay v. Sun Ins. Office,
Ltd., 377 U.S. 179, 182 (1964) (finding Florida law
applied to contract formed in Illinois when the
"contract did not even attempt" to clarify what law
applied and "[s]hortly after the contract was made, [the
insured] moved to Florida and there he lived for several
years . . . [h]is property was there all that time . . .
[and] the [insurer] knew this fact.").
factual circumstances of the instant case show that the
exception to § 193 is inapplicable and the principal
location of the insured risk did not shift.
Location of Insured Risk During the Contract Term
"principal location" of an insured risk is defined
by § 193 Comment (b) as "the state where [the
insured risk] will be during at least the major portion of
the insurance period." Comment (b) notes that "the
significance of the state of the risk's principal
location diminishes with the length of time that it can be
anticipated the chattel will be in other states during the
term of the insurance." However, Comment (b) further
provides that if "the risk will be in a particular state
for the major portion of the insurance period, the ...