United States District Court, D. Colorado
ORDER
Kathleen M. Tafoya United States Magistrate Judge
This
matter is before the court on Defendant's “Motion
for Summary Judgment.” ([“Motion”], Doc.
No. 86.) Plaintiff has responded in opposition to the Motion,
and Defendant has replied. ([“Response”], Doc.
No. 89; [“Reply”], Doc. No. 94.)
On
April 2, 2015, Plaintiff Austin Benson was involved in a
single-vehicle car accident. (Doc. No. 13 at 4-7
[“Undisputed Facts”], at 5 ¶ 1.) As a result
of the accident, Plaintiff reportedly suffered various
injuries. ([“Complaint”], Doc. No. 4 at 2 ¶
9.) After settling the liability portion of his claim against
the at-fault party for the maximum limits of that
individual's insurance policy, Plaintiff filed this
lawsuit, on March 9, 2017, against his own automobile
insurance provider, Defendant Allstate Fire and Casualty
Insurance Company [“Allstate”], to recover
underinsured motorist [“UIM”]
benefits.[1] (Undisputed Facts 5 ¶¶ 2-4;
see Compl. 3-8 ¶¶ 11-67.) In his
Complaint, Plaintiff asserts the following causes of action:
(1) unreasonable delay and denial of UIM benefits, pursuant
to C.R.S. §§ 10-3-1115 and 10-3-1116; (2)
declaratory judgment regarding entitlement to UIM benefits;
and (3) bad faith breach of an insurance contract. (Compl.
3-8 ¶¶ 11-67.)
As part
of his original UIM claim, Plaintiff sought compensation for
lost wages, in the amount of $16, 800.00, which he claimed to
have incurred as a result of the car accident.[2](Undisputed Facts
5; Mot. Ex. B at 10.) On June 4, 2018, Defendant received
permission to amend its Answer in this lawsuit, to add an
affirmative defense for insurance fraud relating to
Plaintiff's wage loss claim. (Doc. Nos. 23, 33.)
Specifically, Defendant alleges that Plaintiff made material
misrepresentations with respect to his lost wages, as well as
the reasons for the termination of his employment prior to
the accident. (Doc. No. 23 at 3.) Defendant contends that
those misrepresentations were sufficient to trigger the fraud
clause of Plaintiff's insurance policy, voiding his
coverage thereunder. (Id. at 5.) Defendant now moves
for summary judgment, in its favor, based on that affirmative
defense. (Mot. 8-17.)
STANDARD
OF REVIEW
Summary
judgment is appropriate if “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); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). The moving party bears the initial
burden of showing an absence of evidence to support the
nonmoving party's case. Celotex, 477 U.S. at
325. “Once the moving party meets this burden, the
burden shifts to the nonmoving party to demonstrate a genuine
issue for trial on a material matter.” Concrete
Works, Inc. v. City & County of Denver, 36 F.3d
1513, 1518 (10th Cir. 1994) (citing Celotex, 477
U.S. at 325). The nonmoving party may not rest solely on the
allegations in the pleadings, but instead, must designate
“specific facts showing that there is a genuine issue
for trial.” Celotex, 477 U.S. at 324; see
also Fed. R. Civ. P. 56(c).
“A
‘judge's function' at summary judgment is not
‘to weigh the evidence and determine the truth of the
matter but to determine whether there is a genuine issue for
trial.'” Tolan v. Cotton, 572 U.S. 650,
656 (2014) (quoting Anderson v. Liberty Lobby, 477
U.S. 242, 249 (1986)). Whether there is a genuine dispute as
to a material fact depends upon “whether the evidence
presents a sufficient disagreement to require submission to a
jury, ” or conversely, whether the evidence “is
so one-sided that one party must prevail as a matter of
law.” Carey v. U.S. Postal Service, 812 F.2d
621, 623 (quoting Anderson, 477 U.S. at 251-52). A
disputed fact is “material” if “under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir.1998) (citing Anderson,
477 U.S. at 248). A dispute is “genuine” if the
evidence is such that it might lead a reasonable jury to
return a verdict for the nonmoving party. Thomas v.
Metropolitan Life Ins. Co., 631 F.3d 1153, 1160 (10th
Cir. 2011) (citing Anderson, 477 U.S. at 248).
“Where the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party,
there is no ‘genuine issue for trial.'”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986) (citing First Nat'l Bank of
Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
In
evaluating a motion for summary judgment, a court may
consider admissible evidence only. See Johnson v. Weld
Cnty., 594 F.3d 1202, 1209-10 (10th Cir. 2010). The
factual record and reasonable inferences therefrom are viewed
in the light most favorable to the party opposing summary
judgment. Concrete Works, 36 F.3d at 1517. However,
this standard does not require the court to make unreasonable
inferences in favor of the non-moving party. Carney v.
City & Cnty. of Denver, 534 F.3d 1269, 1276 (10th
Cir. 2008). The nonmovant must establish, at a minimum, an
inference of the presence of each element essential to the
case. Hulsey v. Kmart, Inc., 43 F.3d 555, 557 (10th
Cir. 1994).
ANALYSIS
In its
Motion, Defendant argues that it is entitled to summary
judgment on all of Plaintiff's claims, because Plaintiff
violated his insurance policy's fraud clause. (Mot. 17.)
Defendant contends, specifically, that Plaintiff
“knowingly and intentionally made material
misrepresentations as to whether he quit or was terminated
from his job prior to the accident and his ability or
inability to work.” (Id.) Defendant is adamant
that, pursuant to the terms of the insurance policy,
Plaintiff's “egregious fraudulent conduct voids
coverage of the entire UIM claim.” (Id. at 3.)
The
insurance policy at issue here contains the following clause:
“We may not provide coverage for any insured who has
made fraudulent statements or engaged in fraudulent conduct
in connection with any accident of loss for which coverage is
sought under this policy.” (Mot. Ex. I at 7.)
Such
fraud clauses have been found to be enforceable by both
Colorado and Tenth Circuit courts. See, e.g., Am.
Diver's Supply & Mfg. Corp. v. Boltz, 482 F.2d
795, 797-98 (10th Cir. 1973); Martinez v. Hartford
Underwriters Ins. Co., No. 12-cv-02405-MJW, 2014 WL
2016569, at *2 (D. Colo. May 15, 2014); Nw. Nat'l
Ins. Co. v. Barnhart, 713 P.2d 1360, 1361-62 (Colo.App.
1985). And, importantly, violation of a fraud clause voids
the entire claim, not just the portion to which the fraud
pertains. See Am. Diver's, 482 F.2d at 797
(“[T]he fraud clause intentionally imposes different
standards of responsibility and damages-absolute honesty and
forfeiture of all benefits of the policy and not
merely unintended benefits[.]”) (emphasis in original).
To
establish fraud arising from the violation of a fraud clause,
an insurer must prove three elements: (1) that the insured
misrepresented or omitted some fact; (2) that the
misrepresentation or omission was “material;” and
(3) that there was “intent to deceive on the part of
the insured.” Sunflower Condo. Ass'n, Inc. v.
Owners Ins. Co., No. 16-CV-2946-WJM-NYW, 2018 WL
2196089, at *3 (D. Colo. May 14, 2018) (quoting
Martinez, 2014 WL 2016569, at *2); see Am.
Diver's, 482 F.2d at 797. Here, Defendant argues
that Plaintiff made material, intentional misrepresentations
with respect to two issues: (1) the nature of his separation
from the job he held prior to the car accident; and (2) his
ability to work during the 210 days for which he claimed lost
wages. (Mot. 3.)
A.
Plaintiff's Statements Concerning his ...