United States District Court, D. Colorado
ORDER
Kathleen M Tafoya, United States Magistrate Judge.
Before
the court is Plaintiff's “Motion to Amend
Complaint.” ([“Mot.”], Doc. No. 41.)
Defendant has responded in opposition to Plaintiff's
motion, and Plaintiff has replied. ([“Resp.”],
Doc. No. 44; [“Reply”], Doc. No. 45.)
On July
13, 2018, Plaintiff Kimberly Argo filed this lawsuit, in
Colorado state court, against her automobile insurance
provider, Defendant State Farm Automobile Insurance Company,
to recover policy benefits for underinsured motorists'
coverage [“UIM”]. (Doc. No. 1 at Ex. 7.)
Defendant removed the case to federal court, on August 13,
2018, on the basis of diversity jurisdiction. (Doc. No. 1 at
1-3.)
In her
initial Complaint, Plaintiff alleges that, after she was
injured in an April 19, 2016 car accident, Defendant
unreasonably denied her claim for UIM benefits, in violation
of Colorado Revised Statutes §§ 10-3-1115 and
10-3-1116. (Doc. No. 3 at 1-3.) Plaintiff further alleges
that Defendant's actions amounted to a bad faith breach
of her insurance contract, in violation of Colorado Revised
Statutes §§ 10-3-1104(1)(h)(III)-(VII), (XIV).
(Id. at 3.) Plaintiff seeks to recover: (1) UIM
policy benefits, “including past and future medical
expenses, wage loss, loss of earning capacity, noneconomic
damages, permanent physical impairment, and pre-judgment
interest;” (2) statutory “double damages”
and attorneys' fees under § 10-3-1116; (3)
noneconomic damages “caused by [Defendant]'s
tortious conduct, ” including pain, suffering,
inconvenience, and loss of enjoyment of life; and (4)
statutory and common law interest. (Id. at 4.)
On June
24, 2019, Plaintiff filed a motion for leave to amend her
complaint, asking to add punitive damages. (Mot. 9.)
Plaintiff argues that she should be allowed to amend her
complaint, under Federal Rule of Civil Procedure 15(a),
because Defendant “neglected its duty to handle [her]
UIM claim in good faith, [to] fairly value her claim, and to
do so without unreasonable delay, ” and that
“such negligence was willful and wanton subjecting
Defendant to punitive damages.” (Id. at 6-7.)
The
proposed Amended Complaint, attached as an exhibit to
Plaintiff's motion, does not add any new causes of
action, but instead augments her previous request for relief.
(See Mot. Ex. 9.) In the proposed Amended Complaint,
Plaintiff alleges that “Defendant's bad faith
breach of its contractual agreement and its abuse of the
Insurer-Insured relationship that existed between the parties
subjects Defendant to a claim for punitive and/or exemplary
damages.”[1] (Id. at 3 ¶ 30.) Plaintiff
asks for “punitive and/or exemplary damages in an
amount to be determined at trial, ” in addition to the
relief already requested in her initial complaint.
(Id. at 4.)
Federal
Rule of Civil Procedure 15(a), which applies here,
[2]
provides that “[t]he court should freely give leave [to
amend] when justice so requires.” Fed.R.Civ.P.
15(a)(2). The rule's purpose “is to provide
litigants the maximum opportunity for each claim to be
decided on the merits rather than on procedural
niceties.” Minter v. Prime Equip., 451 F.3d
1196, 1204 (10th Cir. 2006) (internal quotations omitted).
Therefore, “[r]efusing leave to amend is generally only
justified upon a showing of undue delay, undue prejudice to
the opposing party, bad faith or dilatory motive, failure to
cure deficiencies by amendments previously allowed, or
futility of amendment.” Bylin v. Billings, 568
F.3d 1224, 1229 (10th Cir. 2009) (quoting Frank v. U.S.
West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)); see
Foman v. Davis, 371 U.S. 178, 182 (1962) (“If the
underlying facts or circumstances relied upon by a plaintiff
may be a proper subject of relief, he ought to be afforded an
opportunity to test his claims on the merits.”).
Defendant
opposes Plaintiff's motion to amend on several grounds.
First, Defendant argues that Plaintiff has failed to present
prima facie evidence to show that punitive damages
is a triable issue in this case. (Resp. 3.) Specifically,
Defendant contends that Plaintiff has failed to allege that
Defendant's actions or omissions were “willful and
wanton” under Colorado law. (Id. at 6-7.)
Defendant argues that Plaintiff's request for punitive
damages is based, solely, on her “disagreement
regarding the value State Farm placed on her insurance
claim.” (Id. at 6.) It maintains that, under
Colorado law, a “mere disagreement[] regarding the
value of an insurance claim” cannot support a request
for punitive damages. (Id.) Finally, Defendant
argues that, because Plaintiff has already asked for
statutory “double damages” under §
10-3-1116, the “deterrent purpose” of punitive
damages “has already been served” in this case.
(Id. at 8.) Defendant contends that Plaintiff's
assertion of both punitive damages and statutory damages
would “create[] a redundant effect, ” which
“could result in juror confusion, unnecessary costs,
and complications of issues.” (Id. at 9.)
In
diversity cases, the award of punitive damages is a matter of
state law. Klein v. Grynberg, 44 F.3d 1497, 1503
(10th Cir. 1995). Under Colorado law, which applies here,
punitive damages are only available via statute. Ferrer
v. Okbamicael, 390 P.3d 836, 847 (Colo. 2017) (citing
Kaitz v. Dist. Court, 650 P.2d 553, 556 (Colo.
1982)). Colorado Revised Statute § 13-21-102 sets out
the standard for punitive damages in Colorado, providing that
“the injury complained of [must be] attended by
circumstances of fraud, malice, or willful and wanton
conduct.” Colo. Rev. Stat. § 13-21-102(1)(a);
Qwest Services Corp. v. Blood, 252 P.3d 1071, 1092
(Colo. 2011). Section 13-21-102(1.5)(a) provides that a
request for punitive damages “may not be included in
any initial claim for relief, ” but instead “may
be allowed by amendment to the pleadings only after . . . the
plaintiff establishes prima facie proof of a triable
fact.”[3] Colo. Rev. Stat. § 13-21-102(1.5)(a).
“The existence of a triable issue on punitive damages
may be established through discovery, by evidentiary means,
or by an offer of proof.” Leidholt v. Dist.
Court, 619 P.2d 768, 771 (Colo. 1980). The evidence
submitted must show “a reasonable likelihood that the
issue will ultimately be submitted to the jury for
resolution.” Stamp. v. Vail Corp., 172 P.3d
437, 449 (Colo. 2007) (en banc) (quoting Leidholt,
619 P.2d at 771 n. 3). To add punitive damages to her
requested relief, therefore, Plaintiff must set forth
prima facie proof that Defendant acted with
“willful and wanton conduct.”[4] See
Colo. Rev. Stat. § 13-21-102(1.5)(a).
Section
13-21-102(1)(b) defines “willful and wanton
conduct” as “conduct purposefully committed which
the actor must have realized as dangerous, done heedlessly
and recklessly, without regard to consequences, or of the
rights and safety of others.” Colo. Rev. Stat. §
13-21-102(1)(b). “[W]here the defendant is conscious of
his conduct and the existing conditions and knew or should
have known that injury would result, the statutory
requirements of section 13-21-102 are met.”
Qwest, 252 P.3d at 1092 (quoting Coors v. Sec.
Life of Denver Ins. Co., 112 P.3d 59, 66 (Colo. 2005)).
In her
proposed Amended Complaint, Plaintiff alleges that Defendant,
in denying her insurance claim, engaged in “willful and
wanton” conduct, because it “valued the claim
based on assumptions with no records and no investigation to
support its valuation.” (Mot. 3.) Plaintiff alleges,
specifically, that Defendant improperly concluded that she
suffered from pre-existing “degenerative conditions,
” despite “never request[ing] prior records to
determine if [she] was symptomatic prior to the
accident.” (Id. at 3.) Plaintiff further
alleges that Defendant mischaracterized her “SI joint
dysfunction” as a “sprain, ” without any
supporting documentation or investigation, and that in doing
so, it “totally disregarded [her] permanent injuries as
shown in her medical records and through objective
evidence.” (Id.)
In
support of these contentions, Plaintiff has attached an
“Auto Injury Evaluation” form, which was
completed by Defendant. (Mot. Ex. 4.) The “Auto Injury
Form” summarizes Plaintiff's post-accident medical
treatment, and concludes that she suffers from
“degenerative conditions, ” but makes no
reference to her pre-accident medical history. (Id.
at 2-5.) Plaintiff has also submitted deposition testimony by
Defendant's claims adjuster, Scott Blehm. (Mot. Ex. 6.)
Blehm testified that his actions, with respect to
investigating and evaluating Plaintiff's insurance claim,
were deliberate. (Id. at 21:19-22:24.) In addition,
Plaintiff has provided evidence to show that Defendant knew
that it had a duty to “perform a full, fair, and prompt
investigation.” (Mot. Ex. 7 at 23:21-24:3.) Finally,
Plaintiff has submitted an affidavit by an insurance industry
standards expert, which states that Defendant intentionally
“acted unreasonably in the handling of
[Plaintiff]'s claim, ” and that it “did not
perform a reasonable investigation” with respect to
Plaintiff's medical history. (Mot. Ex. 8 at ¶¶
8-9.)
This
evidence, viewed in the light most favorable to Plaintiff,
suffices to make out a prima facie case of willful
and wanton conduct under § 13-21-102. See State Farm
Mut. Auto. Ins. Co. v. Fisher, No. 08-cv-01687, 2009 WL
1011194, at *4 (D. Colo. Apr. 15, 2009) (finding evidence
that insurance claim adjuster “lacked familiarity with
the governing case law, ” as well as expert testimony
that the insurance company “engaged in bad faith”
to be sufficient to show willful and wanton conduct to
support amendment to add punitive damages); Cunningham v.
Standard Fire Ins. Co., No. 07-cv-02538, 2008 WL
4371929, at *1-2 (D. Colo. Sept. 23, 2008) (“The Court
finds that Defendants' alleged failure to engage in any
investigation and/or action on Plaintiff's claims may
demonstrate a prima facie case of heedless or
reckless disregard for the consequences or rights of the
insured.”); Am. Econ. Ins. Co. v. Schoolcraft,
M.D., No. 05-cv-01870, 2007 WL 160951, at *3-4 (D. Colo.
Jan. 17, 2007) (finding deposition testimony that the
insurer's actions were “deliberate, ” coupled
with expert opinion reports stating that the insurer's
actions were unreasonable and contrary to generally accepted
insurance practices, to be sufficient to show willful and
wanton conduct to support punitive damages); see also
Bullock v. Freightliner, LLC, 2009 WL 416506, at *3 (D.
Colo. Feb. 17, 2009) (finding that a plaintiff's
“mere assertion [of] the existence of [a faulty]
sleeper compartment, ” without any supporting evidence,
failed to present prima facie proof of a triable
issue supporting a claim for punitive damages). Therefore,
because Plaintiff has established prima facie proof
on a triable issue, and because leave to amend should be
“freely given, ” Plaintiff may amend her
complaint to request punitive damages.
Defendant
insists, nevertheless, that Plaintiff is not entitled to add
punitive damages to her complaint, because she has already
requested statutory damages under § 10-3-1116. (Resp.
8-9.) In other words, Defendant contends that punitive
damages and statutory damages are mutually exclusive forms of
relief. But Defendant has not identified, nor has the court
found, any authority to support that contention. See
State Farm, 2009 WL 1011194, at ...