Bardill v. Owners Insurance Co.

          S. KATO CREWS JUDGE

          ORDER ADOPTING THE RECOMMENDATION OF UNITED STATES MAGISTRATE

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court on review of the Recommendation by United States Magistrate Judge S. Kato Crews (Doc. # 44), wherein he recommends that this Court deny Defendant Owners Insurance Company’s Motion to Dismiss Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) (Doc. # 23). On September 3, 2019, Defendant filed an Objection to the Recommendation. (Doc. # 45.) Plaintiff Steve Bardill did not respond to the Objection nor did he file any objections to the Recommendation. For the following reasons, Defendant’s objections are overruled. The Court affirms and adopts the Recommendation.

         I. BACKGROUND

         A. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         Magistrate Judge Crews provided a thorough recitation of the factual and procedural background in this case. The Recommendation is incorporated herein by reference, see 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b), and the facts will be repeated only to the extent necessary to address Plaintiff’s objections.

         On November 30, 2015, Plaintiff was a passenger riding in a work vehicle owned by his employer Meyers Heating and Air (“MHA”). (Doc. # 20 at ¶ 7.) On that day, when the work vehicle was stopped at a red traffic light, an “unknown driver” rear-ended the work vehicle and drove away. (Id. at ¶ 8.) Plaintiff reported the accident to the police within 24 hours of the collision. (Id. at ¶ 20.) As a result of the accident, Plaintiff alleges to have “suffered bodily injury resulting in permanent physical impairment” (id. at ¶ 11), economic damages in the form of “medical, rehabilitation, and other health care expenses” (id. at ¶ 12), and noneconomic damages “including, but not limited to past and future pain and suffering, inconvenience, emotional distress, loss of enjoyment of life, and impairment of quality of life” (id. at ¶ 13).

         Prior to the accident, Defendant issued an insurance policy (“Policy”) to Plaintiff’s employer MHA providing “automobile coverage for company employees operating and riding as a passenger in company vehicles and/or while working in the course and scope of employment, including [Uninsured Motorist] benefits, as provided in C.R.S. § 10-4-609.” (Id. at ¶ 15.) The Policy covered the work vehicle involved in the accident. (Id. at ¶ 19); (Doc. # 20-1 at 1); (Doc. # 23-1 at 8.) Moreover, the Policy Section entitled, “Uninsured Motorist Coverage” (“UM Policy”) defined “Uninsured automobile” to include a “hit and run automobile, ” which is one that “causes bodily injury whether or not physical contact is made with the injured person or the automobile the injured person is occupying; and [] whose owner or operator is unknown” as long as the “occurrence involving a hit and run automobile [is] reported to the police within 24 hours of when it takes place.” (Doc. # 20 at ¶ 14); (Doc. # 20-4 at 1 (emphasis omitted).)

         The UM Policy was in effect from January 1, 2015 to January 1, 2016, and specifically, on the date of the accident. (Id. at ¶¶ 15–16.) The UM Policy provided that Defendant would “pay compensatory damages, including, but not limited to loss of consortium, any person is legally entitled to recover from the owner or operator of an uninsured automobile because of bodily injury sustained by an injured person while occupying or using an automobile that is covered by SECTION II – LIABILITY COVERAGE of the policy.” (Doc. # 20-4 at 1 (emphasis in original); (Doc. # 23-2 at 18.) The Policy provided Uninsured Motorist (“UM”) coverage up to $1, 000, 000.00 per person/$1, 000, 000.00 per occurrence. (Id. at ¶ 18.)

         Pertinent to the Recommendation, the UM Policy also provided that any person “seeking coverage under the policy must notify [Defendant] promptly as to how, when and where the accident happened. (Doc. # 23-2 at 20); (Doc. # 20-4 at 3 (emphasis in original).) The “Notify Us Promptly” provision (“Notification Provision”) continued:

Failure of any person entitled to Uninsured Motorist Coverage to comply with these provisions shall invalidate the coverage provided by this policy if we show by a preponderance of evidence that we were prejudiced by the delay.

(Doc. # 23-2 at 20 (emphasis in original)); (Doc. # 20-4 at 3.) The UM Policy also afforded coverage on the condition that the person seeking UM coverage “present a claim for compensatory damages according to the terms and conditions of the policy and conform with any applicable statute of limitations applying to bodily injury claims in the state in which the accident occurred.” (Doc. # 20-4 at 3); (Doc. # 23-2 at 20) (emphasis in original).

         Plaintiff alleges that the UM Policy covered his losses arising from the hit-and-run accident because (1) he “occupied” the covered vehicle with permission from MHA at the time of the accident; (2) the unknown driver who rear-ended the covered vehicle is considered an “uninsured motorist” under the UM Policy; (3) he suffered bodily injury from the accident; (4) he reported the accident to the police within 24 hours; and (5) he made a claim for compensatory damages under the Policy within Colorado’s three-year statute of limitations period for UM claims. (Doc. # 20 at ¶¶ 7–37.)

         On May 4, 2016, Plaintiff’s then-attorney, Bradley Hall, sent Auto-Owners^[1]Insurance a letter providing Defendant notice of Plaintiff’s “uninsured motorist claim under the [] policy” (“First Letter”). (Doc. # 20 at ¶¶ 23–24); (Doc. # 20-5 at 1.) The First Letter provided the Policy Number, name of the insured, date of the accident, and Plaintiff’s name. (Doc. # 20-5 at 1.) Mr. Hall also requested a “complete copy” of Defendant’s “claim file and documentation of the policy limits.” (Id.) Defendant did not respond to the First Letter. (Doc. # 20 at ¶ 25.)

         On September 21, 2016, Mr. Hall sent Defendant another letter (“Second Letter”) advising Defendant that Mr. Hall no longer represented Plaintiff and that Defendant should “direct all future correspondence regarding this case to” Richard Blundell, Plaintiff’s new attorney. (Doc. # 20 at ¶ 26); (Doc. # 20-6 at 1.) The Second Letter provided the Policy Number, name of insured, date of the accident, and Plaintiff’s name. (Id.) Defendant did not respond to the Second Letter. (Doc. # 20 at ¶ 27.)

         On September 18, 2018, Plaintiff’s then-attorney J. Todd Tenge sent Defendant a letter (“Third Letter”) providing Defendant with notice that Mr. Tenge represented Plaintiff “in connection with the injuries, damages, and losses he sustained in an automobile accident on November 30, 2015.” (Doc. # 20-7 at 1.) In the Third Letter, Plaintiff’s counsel also requested “a copy of all applicable insurance policies, including all resident/relatives, together with any endorsements, addenda or amendments thereto” and “a copy of the property damage claims file, and any and all photographs of the Bardill vehicle as well as transcribed copies of all recorded statements.” (Id.) The Third Letter provided the Policy Number, the date of loss, and Plaintiff’s name. (Id.)

         On November 14, 2018, Defendant for the first time responded to Plaintiff’s letters (“Acknowledgment Letter”). (Doc. # 20 at ¶¶ 29–30.) Defendant acknowledged receipt of the Third Letter, provided a claim number for Plaintiff’s UM claim, and declined Plaintiff’s request for copies of the Policy and declaration(s) page. (Doc. # 20-8 at 1.) In the Acknowledgment Letter, Defendant requested an “update on [Plaintiff’s] condition and treatment[, ]” including the “extent of the injuries and the duration of their treatment” in addition to “all medical records, police reports, facts of the incident, and any additional information” that Plaintiff had “amassed on this case.” (Id.) The Acknowledgement Letter was sent to Plaintiff sixteen days before the three-year statute of limitations expired. (Doc. # 20 at ¶ 30.)

         On November 27, 2018, Plaintiff filed suit in Boulder County District Court and asserted one claim for relief, “Contractual Liability of Defendant Auto-Owners Insurance, ” and described the hit-and-run accident and cited the basis for which Plaintiff sought coverage under the UM Policy. (Doc. # 1-5 at 1–4.) On December 26, 2018, Defendant removed Plaintiff’s action to United States District Court for the District of Colorado. (Doc. # 1.) On January 7, 2019, Plaintiff’s counsel sent Defendant another letter (“Demand Letter”) requesting that Defendant evaluate Plaintiff’s claim for UM benefits and demand for UM benefits. (Doc. # 23-4 at 1–6.) The Demand Letter provided a summary of the accident, Plaintiff’s injuries, and damages. (Id.)

         On January 15, 2019, Plaintiff filed his Amended Complaint and asserted four claims for relief: (1) Claim for UM Benefits/Contractual Liability of Defendant Pursuant to Colo. Rev. Stat. § 10-4-609; (2) Breach of Contract; (3) Bad Faith Breach of Insurance Contract; and (4) Violation of Colo. Rev. Stat. §§ 10-3-1115(1) and 10-3-1116(1). (Doc. # 21 at 6–9).

         On February 22, 2019, Defendant filed a Motion to Dismiss Plaintiff’s Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(6) (Doc. # 23). Defendant argued that Plaintiff failed to state claims for relief because (1) with respect to his contractual claims, the Amended Complaint was devoid of allegations establishing that he complied with the Notification Provision and submitted a claim prior to the expiration of the statute of limitations (Doc. # 23 at 4–8); (2) failure to state contractual claims was fatal to his bad faith claims (id. at 8–9); and (3) Plaintiff failed to plead sufficient allegations to support that Defendant owed benefits to Plaintiff in the first place and, as a result, that Defendant unreasonably delayed or denied benefits to Plaintiff (id. at 9–10).

         On March 22, 2019, Plaintiff filed his Response (Doc. # 36), and therein asserted that his Amended Complaint set forth facts supporting that Plaintiff complied with the Policy’s Notification Provision. (Id. at 7.) Moreover, Plaintiff stated that he properly pleaded allegations sufficient to support both his common law bad faith and unreasonable delay claims because the Amended Complaint sets forth “multiple ways” that Defendant failed in claims processing, ...