Kipling v. State Farm Mutual Automobile Insurance Company
Filing
81
ORDER denying 66 Defendant State Farm's Motion to Reconsider Order Denying Motion for Summary Judgment. by Magistrate Judge Boyd N. Boland on 4/3/13.(bnbcd, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Boyd N. Boland
Civil Action No. 11-cv-01948-BNB-CBS
KATHRYN KIPLING,
Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, d/b/a Minnesota
Division of State Farm Mutual Automobile Insurance Company,
Defendant.
ORDER
______________________________________________________________________________
This matter arises on Defendant State Farm’s Motion to Reconsider Order Denying
Motion for Summary Judgment [Doc. # 66, filed 2/21/2013] (the “Motion to Reconsider”),
which is DENIED.
Christopher Kipling was killed and Kathryn Kipling was seriously injured in a two car
automobile accident. Jose Sanchez, the driver of the other auto, was negligent in causing the
accident and was underinsured. At the time of the accident, the Kiplings were Colorado
residents and the accident occurred in Colorado.
The Kiplings’ auto, a 2005 Chevy Suburban, was provided to Mr. Kipling by his
employer for personal and business use. At the time of the accident, Mr. Kipling was employed
by Quicksilver Express Courier of Colorado, Inc. (“QEC Colorado”), a Colorado corporation,
and was also receiving compensation as a director and shareholder of Quicksilver Express
Courier, Inc. (“QEC”), a Minnesota corporation.1 The Suburban was insured by State Farm, and
the named insured was “Quick Silver Express Courier Inc.” All insurance benefits available
under the policy insuring the Suburban, including underinsured motorist benefits, have been
paid.2
At issue here is whether the plaintiff can recover additional underinsured motorist
benefits under four insurance policies (the “Minnesota Policies”) issued by State Farm and
insuring automobiles (the “Minnesota automobiles”) owned by QEC. The Minnesota Policies
were obtained through an insurance agent located in Minnesota3 and insured the Minnesota
automobiles, which were never driven in Colorado and were not involved in the accident.
1
QEC owns all of the stock of QEC Colorado.
2
Although the named insured under the policy insuring the Suburban is “Quick Silver
Express Courier Inc.,” State Farm does not dispute that the coverage extends to Mr. and Mrs.
Kipling, the intended operators and occupants of the Suburban.
3
The insurance agency involved in obtaining the Minnesota Policies apparently was
located in Minnesota, but State Farm executed the policies in Bloomington, Illinois. As the
Supreme Court noted in Allstate Ins. Co. v. Hague, 449 U.S. 302, 317 (1981), a case initiated in
Minnesota but involving a motorcycle accident in Wisconsin resulting in the death of a
Wisconsin resident:
[T]he policy, which is part of the record, recites that Allstate
signed the policy in Northbrook, Ill. Under some versions of the
hoary rule of lex loci contractus, and depending on the precise
sequence of events, a sequence which is unclear from the record
before us, the law of Illinois arguably might apply to govern
contract construction, even though Illinois would have less contact
with the parties and the occurrence than either Wisconsin or
Minnesota. No party sought application of Illinois law on that
basis in the court below.
2
Coverage does not exist under the plain language of the Minnesota Policies. To the
contrary, the Minnesota Policies purport to provide underinsured motorist coverage only to a
person injured while in one of the Minnesota automobiles, which is not the case here. This case,
however, does not turn on the language of the Minnesota Policies but, instead, on the manner in
which Colorado courts interpret the Colorado underinsured motorist statute, section 10-4609(1)(a), C.R.S.
First, it is undisputed that under Colorado law State Farm is not allowed to tie its
underinsured motorist coverage to occupancy in a particular automobile. DeHerrera v. Sentry
Ins., Co., 30 P.3d 167 (Colo. 2001). The Colorado Supreme Court held in DeHerrera:
The UM/UIM statute contains no provisions excluding protection
for an insured based on the kind of vehicle an insured occupies at
the time of injury. Rather, it simply states that UM/UIM coverage,
if not waived by the named insured, must protect “persons insured
thereunder who are legally entitled to recover damages from
owners or operators of uninsured motor vehicles.” § 10-4-609(1).
This phrase, “‘persons insured thereunder’ means that insurers
must provide UM/UIM coverage for the protection of persons
insured under the liability policy that the insurer is issuing.” Thus,
the statute provides coverage for persons; it does not place
geographical limits on coverage and does not purport to tie
protection against uninsured motorists to occupancy in any kind of
vehicle.
This construction of the UM/UIM statute is consistent with the
effect of UM/UIM coverage limits to act as a replacement for the
liability policy limits of an uninsured motorist who is at fault in a
motor vehicle accident. If a motorist insures a vehicle for liability
coverage, his policy affords protection to all members of the public
injured by negligent conduct “arising out of the use of the motor
vehicle,” irrespective of whether the injured person was a
pedestrian, a bicyclist, a motorcyclist, or an occupant of a car.
Thus, because UM/UIM insurance is designed to protect an
innocent insured as if the person at fault had been insured for
liability, then an injured insured is covered by UM/UIM insurance
“whenever or wherever bodily injury is inflicted upon him by the
3
negligence of an uninsured motorist.” In other words, the injured
insured would have received the benefits of the uninsured or
underinsured tortfeasor’s liability policy without regard to the
injured insured’s location at the time of the injury, had that
uninsured or underinsured motorist been insured.
Id. at 174-75 (internal citations omitted except as indicated)(original emphasis). Under Colorado
law, underinsured motorist coverage cannot be limited only to accidents involving the insured
automobile.
Second, it also is undisputed that Colorado law permits stacking of underinsured motorist
coverage contained in multiple insurance policies. Specifically, section 10-4-609(1)(c), C.R.S.,
provides that “[t]he amount of the coverage available pursuant to this section shall not be
reduced by a setoff from any other coverage, including, but not limited to, legal liability
insurance, medical payments coverage, health insurance, or other uninsured or underinsured
motor vehicle insurance.” (Emphasis added.) State Farm has recognized in this case the
applicability of the stacking provisions of §609(1)(c) by paying to the plaintiff underinsured
motorist benefits available under a State Farm policy insuring “Quicksilver, Inc.” and providing
coverage for a Ford F350 pickup truck that was not involved in the accident. The Ford F350 was
licensed for use in Colorado and the applicable insurance policy selected Colorado law as
controlling.
From this it is apparent, and State Farm does not argue otherwise, that the Kiplings are
entitled to underinsured motorist benefits arising from any and insurance policies issued on QEC
automobiles licensed to be operated in Colorado, where underinsured motorist coverage was not
waived, and to the extent of the greater of all policy limits or the injuries sustained.
But that is not this case. The issue here is whether the Kiplings can recover underinsured
4
motorist benefits contained in insurance policies on QEC automobiles issued by State Farm on
automobiles located in Minnesota, intended to be driven principally in states other than
Colorado, and not involved in the accident . The case does not raise a question of contract
interpretation, as State Farm argues. Rather, it is a question of statutory interpretation--would
Colorado courts apply section 10-4-609, C.R.S., to mean that the Kiplings are entitled to benefits
under the Minnesota Policies.
The answer would not matter if Colorado and Minnesota law were the same. They are
not. Minnesota law ties underinsured motorist coverage to the particular automobile involved in
an accident and does not allow stacking. Specifically, Minn. Stat. § 65B.49, subd. 3a(5)
provides:
If at the time of the accident the injured person is occupying a
motor vehicle, the limit of liability for uninsured and underinsured
motorist coverages available to the injured person is the limit
specified for that motor vehicle.
In addition, Minn. Stat. § 65B.49, subd. 3a(6) states:
Regardless of the number of policies involved, vehicles involved,
persons covered, claims made, vehicles or premiums shown on the
policy, or premiums paid, in no event shall the limit of liability for
uninsured and underinsured motorist coverage for two or more
vehicles be added together to determine the limit of insurance
coverage available to an injured person for any one accident.
Thus, under Minnesota law the Kiplings are not entitled to underinsured motorist benefits arising
from any policy other than that covering the Suburban, which have been fully paid.
The question before me is which state’s law would Colorado courts apply--Colorado,
which disallows tying coverage to a particular vehicle and allows stacking; or Minnesota, which
allows recovery from only one underinsured motorist policy and limits that coverage to the
5
insurance policy of the vehicle involved in the accident.
The public policy underlying the Colorado underinsured motorist statute has been
summarized by the Colorado Supreme Court as follows:
[W]e have consistently held that the legislative intent behind
section 10-4-609 is to give Coloradans the opportunity to recover
compensation for losses from their UIM insurer “in the same
manner” and “to the same extent” as they would recover for such
losses from a tortfeasor who was insured in amounts equal to the
insured’s UIM coverage.
USAA v. Parker,200 P.3d 350, 353 (Colo. 2009). In addition, clauses in insurance contracts that
dilute the underinsured coverage mandated by section 10-4-609 violate Colorado public policy.
State Farm Mutual Automobile Ins. Co. v. Brekke, 105 P.3d 177, 180-81 (Colo. 2004).
The only case involving analogous facts--more limited insurance coverage obtained in
another state for an automobile generally operated there; consistent with the other state’s law but
not with Colorado law; and involving an accident occurring in Colorado with injuries being
sustained by a Colorado resident--is Ranger v. Fortune Ins. Co., 881 P.2d 394 (Colo. App. 1994),
which I relied on in denying State Farm’s Motion for Summary Judgment. In Ranger, a Florida
resident obtained a policy from Fortune Insurance, a Florida corporation, insuring a car licensed
in Florida. As permitted under Florida law, the insurance policy did not include personal injury
protection (“PIP”) benefits. The Florida car was driven to Colorado where it was involved in an
accident. Mr. Ranger--the plaintiff, a Colorado resident, and a passenger in the Florida car--was
injured. The state trial court applied Florida law and determined that no PIP benefits were
payable. The Colorado Court of Appeals reversed, stating:
In the area of multistate tort controversies, Colorado has adopted
the general rule of applying the law of the state having the most
“significant relationship” with the occurrence and the parties as
6
contained in the Restatement (Second) Conflict of Laws § 145
(1971). . . .
[W]hen a tort rule is designed primarily to compensate the victim
for his injuries, the state where the injury occurred, which is often
where the plaintiff resides, may have the greater interest in the
controversy.
Id. at 395.
The Colorado underinsured motorist statute is designed to compensate victims for their
injuries resulting from negligent, underinsured drivers. USAA ,200 P.3d at 353. Consequently,
despite the fact that insurance policies are contracts, the Colorado Court of Appeals
characterized the issue as involving “multistate tort controversies” and applied the most
significant relationship test of § 145 of the Restatement to determine which state’s law to apply.
Here, the state with the most significant relationship to the occurrence is Colorado. See Order
[Doc. # 54] at pp. 10-11. Colorado law prohibits tying underinsured motorist coverage to a
particular automobile and allows stacking of underinsured motorist policies.
The cases cited by State Farm in its Motion to Reconsider are distinguishable and do not
persuade me that a Colorado court would reach a result different from that of the Colorado Court
of Appeals in Ranger. Brekke considered whether a UM policy which required that the
negligence of the underinsured motorist be determined in an “actual trial,” with a concomitant
right to a jury, impermissibly diluted the coverage mandated by section 10-4-609 and held that
the contract provision was contrary to Colorado public policy and unenforceable. 105 P.3d at
180-81. Although the state Supreme Court distinguished contract claims from tort claims in its
analysis, the case provides no guidance on facts similar to those presented here. USAA v. Parker
concerned which of two prejudgment interest rates should apply in an insurance coverage case.
7
200 P.3d at 259-60. In determining that the interest statute applicable to tort claims applied, the
state Supreme Court noted that “although Parker’s right to recover benefits is contractual, the
damages he seeks are damages for personal injuries.” Id. at 360. Again, the case provides no
guidance on the facts of the instant case. Finally, Hock v. New York Life Ins. Co., 876 P.2d
1242 (Colo. 1994), dealt with whether to apply New York or Colorado law to the issue of
rescission of an insurance contract by an out-of-state disability insurer. The Colorado Supreme
Court found that any error by the trial court was harmless, stating that “[a]lthough the laws of
rescission of a contract in New York and Colorado are semantically different, it is a difference
without any significance.” Id. at 1259. Hoch provides no guidance under the facts of this case.
The heart of State Farm’s argument appears in its Reply [Doc. # 76], where State Farm
presents a series of hypothetical fact patterns and contends that the reasoning in my Order
denying its Motion for Summary Judgment would lead to undesirable results. One example will
suffice to make the point. State Farm asserts:
State A legislatively determines that UM insurance applies through
occupancy of a vehicle and is not personal. (The opposite of
Colorado.) State A mandates that policies issued in that State must
be limited to occupancy in a vehicle. A State A resident who has a
complying State Farm policy is a passenger in a friend’s vehicle in
Colorado. Under this Court’s ruling, that State A legislative
declaration is voided and a contract which was issued in that State
is forcibly modified by this Colorado court. The only nexus is that
the State A resident had a State Farm policy and came to Colorado.
This court’s ruling creates the consequence that the mere presence
of an individual in Colorado allows Colorado to forcibly alter the
contract entered into in State A even though the insured vehicle
never came to Colorado. Under the Court’s logic, the Colorado
public policy that coverage is personal, not vehicle-oriented,
allows it to force other States to comply with Colorado laws when
the only nexus is the presence of a foreign citizen in Colorado.
Reply [Doc. # 76] at p. 6.
8
It is not obvious under the hypothetical facts that Colorado would have the most
significant relationship with the occurrence within the meaning of § 145 of the Restatement
(Second) Conflict of Laws resulting to the application of Colorado law. That point aside,
however, State Farm appears to argue that application of the Colorado underinsured motorist
statute to reach the Minnesota Policies is a violation of the dormant Commerce Clause. See,
e.g., Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945). As the Supreme Court noted there:
Although the commerce clause conferred on the national
government power to regulate commerce, its possession of the
power does not exclude all state power of regulation. . . . [I]n the
absence of conflicting legislation by Congress, there is a residuum
of power in the state to make laws governing matters of local
concern which nevertheless in some measure affect interstate
commerce or even, to some extent, regulate it. . . . Thus the states
may regulate matters which, because of their number and diversity,
may never be adequately dealt with by Congress. . . . When the
regulation of matters of local concern is local in character and
effect, and its impact on the national commerce does not seriously
interfere with its operation, and the consequent incentive to deal
with them nationally is slight, such regulation has been generally
held to be within state authority. . . .
But . . . the states have not been deemed to have authority to
impede substantially the free flow of commerce from state to state,
or to regulate those phases of the national commerce which,
because of the need of national uniformity, demand that their
regulation, if any, be prescribed by a single authority.
Id. at 766-67 (internal citations omitted).
9
Whatever else might be said of State Farm’s constitutional argument,4 it is clear that the
issue has not been properly presented. To the contrary, Fed. R. Civ. P. 5.1 requires that a party
challenging the constitutionality of a state statute must, if the state is not a party to the suit, file a
notice of constitutional question and serve the notice on the state attorney general. State Farm
has not complied with those requirements.
Contrary to State Farm’s argument, my Order [Doc. # 54] denying its Motion for
Summary Judgment does not misapprehend controlling law, and State Farm has failed to
persuade me that I should reconsider that Order.
4
Interestingly, in Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981), the Supreme Court held
that the application of the forum state’s (Minnesota) substantive uninsured motorist law was not
constitutionally impermissible even though the motorcycle accident giving rise to the claim
occurred in Wisconsin and involved Wisconsin residents. The rule articulated by the Supreme
Court in Hague is:
[F]or a State’s substantive law to be selected in a constitutionally
permissible manner, that State must have a significant contact or
significant aggregation of contacts, creating state interests, such
that choice of its law is neither arbitrary nor fundamentally unfair.
* * *
Allstate was at all times present and doing business in Minnesota.
By virtue of its presence, Allstate can hardly claim unfamiliarity
with the laws of the host jurisdiction and surprise that the state
courts might apply forum law to litigation in which the company is
involved. Particularly since the company was licensed to do
business in the forum, it must have known it might be sued there,
and that the forum courts would feel bound by forum law.
Moreover, Allstate’s presence in Minnesota gave Minnesota an
interest in regulating the company’s insurance obligations insofar
as they affected . . . a Minnesota resident. . . .
Id. at 312-13, 317-18 (internal quotations and citations omitted).
10
IT IS ORDERED that the Motion to Reconsider [Doc. # 66] is DENIED.
Dated April 3, 2013.
BY THE COURT:
s/ Boyd N. Boland
United States Magistrate Judge
11
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