Gargano v. Owners Insurance Company

Filing 117

ORDER denying 111 Motion for Reconsideration. By Judge Christine M. Arguello on 08/05/2014.(athom, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 12-cv-01109-CMA-BNB
TIFFANY GARGANO,
Plaintiff,
v.
OWNERS INSURANCE COMPANY, d/b/a AUTO OWNERS INSURANCE COMPANY,
Defendant.

ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION

This matter is before the Court on Plaintiff’s Motion for Reconsideration. (Doc. #
111.) For the following reasons, the motion is denied.
I.

BACKGROUND

On May 31, 2009, Plaintiff was involved in a car accident with an uninsured
driver. (Doc. # 19-1 at 29.) On June 1, 2009, Plaintiff’s father submitted a claim for
benefits under Plaintiff’s policy with Defendant. (Id. at 3.) On July 30, 2009, Plaintiff’s
attorneys informed Defendant that Plaintiff was represented by counsel. (Id. at 28.)
Plaintiff filed suit against the at-fault driver in state court on December 16, 2009. (Id. at
43.) On October 22, 2010, Defendant received correspondence in which Plaintiff
articulated an uninsured motorist claim and informed Defendant of the pending litigation
in state court. (Id. at 29.) On December 3, 2010, the uninsured motorist failed to
respond to the lawsuit, and Defendant intervened to represent its interests. (Id. at 51-

54.) The state court entered default judgment due to the uninsured motorist’s failure to
appear, then from May 21-25, 2012, held a hearing to determine Plaintiff’s damages.
(Doc. # 26-3 at 2-7.) Meanwhile, on April 26, 2012, Plaintiff filed the instant action.
(Doc. # 1.) Plaintiff makes two claims against Defendant: common law bad faith and
statutory unreasonable delay under Colo. Rev. Stat. §§ 10-3-1115 and -1116.1
In the instant motion, filed on April 15, 2014, Plaintiff requests that the Court
reconsider its March 18, 2014 Order granting Defendant’s Motion for Leave to Amend
Pleading to Add Statute of Limitations Defense. (Doc. # 108.) Defendant responded
(Doc. # 115), and Plaintiff replied (Doc. # 116). Plaintiff also moves this Court to
reconsider an October 2013 evidentiary ruling and to certify questions to the Colorado
Supreme Court.
II.

STATUTE OF LIMITATIONS DETERMINATION

The Court reviews Plaintiff’s motion to reconsider this Court’s determination that
her claims are barred by the statute of limitations as a motion to alter or amend the
judgment pursuant to Rule 59(e).2 Under Rule 59(e), “[g]rounds warranting a motion to

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Plaintiff initially raised a breach of contract claim, but she voluntarily dismissed that claim once
Defendant had paid the state lawsuit damages. (Doc. # 91 at 22-23.)
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Plaintiff filed a “Motion for Reconsideration,” but the Federal Rules of Civil Procedure do not
recognize such a motion. Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir.1991).
Instead, a litigant seeking reconsideration of an adverse judgment may “file either a motion to
alter or amend the judgment pursuant to Fed. R. Civ. P. 59(e) or a motion seeking relief from
the judgment pursuant to Fed. R. Civ. P. 60(b).” Id. “If a motion is timely under both rules, how
we construe it depends upon the reasons expressed by the movant.” Commonwealth Prop.
Advocates, L.L.C. v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194, 1200 (10th Cir. 2011).
Plaintiff explicitly references Rule 59(e), refers to “clear errors of law,” and filed this motion
within twenty eight days of the Court’s March 18, 2014 Order. (Doc. # 111 at 2.) Therefore, the

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reconsider include (1) an intervening change in controlling law, (2) new evidence
previously unavailable, and (3) the need to correct clear error or prevent manifest
injustice.” Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).
However, reconsideration “is not appropriate to revisit issues already addressed or
advance arguments that could have been raised in prior briefing.” Id.
Plaintiff argues that “the Order contains clear errors of law that produced a
manifestly unjust result . . . .” (Doc. # 111 at 3.) Specifically, Plaintiff asserts that the
Court erred because: (1) the cause of action does not accrue until Plaintiff has
knowledge of each element of the claim; (2) there are additional elements for bad
faith/unreasonable delay of which Plaintiff could not know in 2009;3 and (3) her retention
of counsel did not indicate Plaintiff knew of the facts of her case. (Id. at 6.) In addition
to these three issues, Plaintiff contends that the Order erred by not separately
addressing Defendant’s October 2010 conduct. (Id. at 12.) The Court will address each
of Plaintiff’s arguments in turn.

Court reviews the portion of Plaintiff’s motion that attacks the Court’s determination that her
claims are untimely under Rule 59(e).
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Buried in a footnote, Plaintiff also argues that she requires additional discovery to determine
whether her claims were equitably tolled based on Defendant’s conduct. (Doc. # 111 at 11-12
n.8.) “The statute of limitations may be equitably tolled where the defendant’s wrongful conduct
prevented the plaintiff from asserting his or her claims in a timely manner. . . .” Brodeur v. Am.
Home Assur. Co., 169 P.3d 139, 149 (Colo. 2007) (citation omitted). Plaintiff’s claim accrued
based on what Plaintiff knew or should have known. Plaintiff fails to demonstrate how further
discovery on Defendant’s disclosures is “reasonably calculated to lead to the discovery of
admissible evidence.” See Fed. R. Civ. P. 26(b)(1); see also Monreal v. Potter, 367 F.3d 1224,
1238 (10th Cir. 2004). Thus, the Court rejects Plaintiff’s request for additional discovery.

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A.

ACCRUAL OF PLAINTIFF’S CLAIMS
This Court previously determined that Plaintiff’s claims accrued on July 30, 2009,

when she informed Defendant that she had retained counsel. (Doc. # 108 at 10.)
Plaintiff challenges the Court’s determination of the accrual date, but not the applicable
statute of limitations period.4 (Doc. # 111 at 3.)
To begin, Plaintiff asserts that the Court erred because “the Order does not
separately analyze the requirements of each of [Plaintiff]’s claims nor is there any
determination as to whether the ‘undisputed facts’ satisfy all of the requirements of each
of her claims.” (Id.) As this Court previously determined, the appropriate test is: “The
point of accrual requires knowledge of the facts essential to the cause of action, not
knowledge of the legal theory supporting the cause of action.” Murry v. GuideOne
Specialty Mut. Ins. Co., 194 P.3d 489, 492 (Colo. App. 2008) (citation omitted). In
determining the essential facts, “the focus is on a plaintiff’s knowledge of facts which
would put a reasonable person on notice of the general nature of damage and that the
damage was caused by the [defendant’s] wrongful conduct . . . .” Morris v. Geer, 720
P.2d 994, 997 (Colo. App. 1986); see also Cork v. Sentry Ins., 194 P.3d 422, 427 (Colo.
App. 2008) (“A bad faith cause of action accrues when both the nature of the injury and
its causes are known or should be known through the exercise of reasonable
diligence.”) (citations omitted).

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The parties and this Court agree that Plaintiff’s claims are subject to a two year statute of
limitations. See (Doc. ## 89 at 4, 101 at 2, 108 at 7-8).

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Plaintiff relies on two Colorado Court of Appeals cases, Crosby v. Am. Family
Mut. Ins. Co., 251 P.3d 1279 (Colo. App. 2010), and Morris v. Geer, 720 P.2d 994
(Colo. App. 1986), to argue that the Court must analyze accrual based on each element
of Plaintiff’s claims. However, both of these cases adopt and apply the same standard
set forth in Murry. See Crosby, 251 P.3d at 1285 (plaintiffs’ retention of counsel
triggered accrual of their claims); Morris, 720 P.2d at 997 (claims arising from two
entirely separate negligent actions accrued at different times). Neither case examined
whether the absence of knowledge of an individual element within a claim would
indicate that a cause of action did not accrue, as Plaintiff asserts in this case.5
Substantively, Plaintiff argues that her claims could not accrue until she “knew or
should have known that [Defendant] was acting objectively unreasonable [sic] and with
knowledge of or reckless disregard for the fact that no reasonable basis existed for
delaying the claim.” (Doc. # 111 at 4-5.) Plaintiff argues that “[Defendant] has
presented no evidence . . . that [Plaintiff] knew, or should have known using reasonable
diligence, that [Defendant] had no reasonable basis” for delaying her claim. (Id. at 6.)
According to Plaintiff, these additional facts were impossible for Plaintiff to know in
2009, making it impossible for those claims to accrue in 2009. (Id. at 10-11.) Plaintiff

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Plaintiff parenthetically references a citation within Crosby to Miller v. Armstrong, 817 P.2d
111, 113 (Colo. 1991), as supporting her position. (Doc. # 111 at 3.) However, the Crosby and
Miller courts did not separately analyze each element to determine when the claim accrued.
Instead, the assertion that a court must do so appears to be dicta. See Tate v. Showboat
Marina Casino P’ship, 431 F.3d 580, 582 (7th Cir.2005) (“[T]he holding of a case includes ... the
reasoning essential to that outcome.”).

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could have, but chose not to advance this argument in her prior briefing. As such, the
Court need not revisit this issue.6 See Servants of Paraclete, 204 F.3d at 1012.
Plaintiff further asserts that this court erred by placing undue emphasis on her
retention of counsel as an indication of when she knew or should have known the
essential facts of her claim. She claims that the court failed to explain “how the mere
engagement of counsel produced information . . . sufficient to satisfy the elements of
her . . . claims.” (Doc. # 111at 6.) This argument misinterprets the Court’s ruling. The
Court did not reason that by hiring counsel, Plaintiff knew the essential facts that gave
rise to her claim. Rather, the Court determined that Plaintiff made a claim for coverage
benefits on June 1, 2009, Plaintiff’s counsel informed Defendant that she was
represented on July 30, 2009, and counsel averred to the Court that they made
demands to Defendant for payment on July 30, 2009. Based on these facts, Plaintiff
reasonably knew of the basis for her claims against Defendant in 2009. See Murry, 194
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Even if the Court were to address Plaintiff’s argument, it fails on the merits. The additional
elements to which Plaintiff points do not change the “essential facts” necessary for the claim to
accrue. Although Plaintiff’s common law and statutory claims represent two separate legal
theories by which she might seek relief for the injury caused by Defendant’s conduct, each of
her claims stem from the same injury and cause: Plaintiff had not received benefits (the injury)
because Defendant wrongly refused to pay (the cause). See Daugherty v. Allstate Ins. Co., 55
P.3d 224, 228 (Colo. App. 2002) superseded in part by statute, Colo. Rev. Stat. § 13-80-108, as
recognized in Brodeur v. Am. Home Assur. Co., 169 P.3d 139, 148 n.10 (Colo. 2007).
Defendant’s delay was wrongful if it was unreasonable. See Colo. Rev. Stat. §10-3-1104(h)
(unfair claim settlement practices under common law include “[f]ailing to acknowledge and act
reasonably promptly upon communications with respect to claims arising under insurance
policies . . . .”); Colo. Rev. Stat. §10-3-1115(1) (statutory claim arises if the insurer lacks a
reasonable basis for the delay). Plaintiff should have known that the delay was unreasonable
when she did not receive any communication for payment from Defendant after she filed her
claim in 2009. At the very least, she should have inquired into the reasons for Defendant’s
nonresponsiveness, rather than accepting the silence and initiating her own lawsuit against the
at-fault driver instead of communicating with Defendant. See Murry, 194 P.3d at 492 (adopting
the definition of “[a]ctual knowledge” as knowledge “of such information as would lead a
reasonable person to inquire further.”) (quoting Black’s Law Dictionary 888 (8th ed. 2004).

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P.3d at 492 (plaintiff’s claim accrued when she retained counsel because “[a]n attorney
is presumed to know the law, and an attorney’s knowledge is imputed to the client if it
relates to the proceedings for which the attorney has been employed, as here, the
recovery of insurance benefits.”)
Next, Plaintiff argues that the Court “improperly shifted the burden of proof to
[her] to disprove [Defendant’s] affirmative defense.” (Doc. # 111 at 7). Although
Plaintiff is correct that it is Defendant’s burden to prove its statute of limitations defense,
see Crosby, 251 P.3d at 1283, she misconstrues the Court’s ruling. The Court
concluded that Defendant met its burden. (Doc. # 108 at 10.) The passage quoted by
Plaintiff merely reasoned that Plaintiff did not raise any issues calling into question
whether Defendant had met its burden.
B.

PLAINTIFF’S ADDITIONAL CLAIMS FOR DEFENDANT’S 2010 CONDUCT
Plaintiff argues that this Court “failed to consider whether any other later event

could have given rise to common law bad faith or statutory unreasonable delay claims.”
(Doc. # 111 at 12.) The substance of Plaintiff’s argument is as follows:
For example, [Defendant] admits that it knew of the UM claim in October,
2010; thus, whatever reasons, reasonable or not, that [Defendant] had to
not proceed to adjust her UM claim in good faith ceased to exist as of
October, 2010. But [Defendant] did not proceed to adjust her claim in good
faith. At that point, new claims for common law bad faith and
unreasonable conduct arose.
(Id.) As a threshold matter, Plaintiff seems to conflate two issues: (1) when Defendant
was placed on notice of her UM claim, and (2) whether she has sufficiently alleged
claims that are timely. This problem is compounded by the fact that Plaintiff has failed

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to cite any legal authority for this perfunctory argument. See Snyder v. Am. Kennel
Club, 402 F. App’x 397, 403 (10th Cir. 2010) (“[T]he Snyders cite no legal authority to
support this argument. This alone is grounds for disregarding it.”) (citations omitted);
see also D.C.COLO.LCivR 7.1(d) (“a motion involving a contested issue of law shall . . .
be supported by a recitation of legal authority incorporated into the motion.”) Moreover,
Plaintiff failed to raise this argument in her response to Defendant’s motion regarding its
statute of limitations defense. See Servants of Paraclete, 204 F.3d at 1012
(reconsideration “is not appropriate to revisit issues already addressed or advance
arguments that could have been raised in prior briefing.”).
Even if this Court were to attempt to reconstruct Plaintiff’s argument from her
previous filings, her argument fails. Plaintiff is correct that common law and statutory
bad faith give rise to separate causes of action. Kisselman, 292 P.3d at 972 (a violation
of section 10-3-1115 is “in addition to and different from common law bad faith claims”).
Moreover, Colorado courts have recognized that “each bad faith act constitutes a
separate and distinct tortious act, on which the statute of limitation begins to run anew
when the plaintiff becomes aware of the injury.” Vaccaro v. Am. Family Ins. Grp., 275
P.3d 750, 756 (Colo. App. 2012) as modified on denial of reh’g (Mar. 15, 2012)
(discussing underinsured motorist claims).
Plaintiff fails to point this Court to any specific conduct which would give rise to a
separate and distinct claim. First, as demonstrated above, Plaintiff has failed to allege
specific, non-conclusory allegations of 2010 conduct in its filings on the issue of the
statute of limitations. Second, Plaintiff never articulated separate claims of relief for

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Defendant’s 2010 conduct. In her amended complaint, Plaintiff asserts a total of two
bad faith claims—one based on common law, and the other based on section 1115.7
(Doc. # 5 at 7-9.) Third, even in the Final Pretrial Order, Plaintiff fails to include specific
allegations in her claims, stating only:
[Defendant] acted in bad faith in the handling of her UM claim and
unreasonably delayed payment of those benefits by failing to investigate
and evaluate her claim due to it: (i) not recognizing a claim being made by
[Plaintiff] when it had adequate notice of the claim, (ii) requiring [Plaintiff]
to obtain a judgment against or settlement with the at-fault driver as an
unlawful pre-condition to coverage or payment, and (iii) using its
intervention in [Plaintiff’s] tort action against the at-fault driver as
justification for not investigating and evaluating the claim.
(Doc. # 51 at 2.) The proceedings are well beyond the pleading stage, and are past
discovery. Therefore, Plaintiff’s ambiguous and amorphous claims will not suffice to call
into question this Court’s decision.
Looking back to the amended complaint, the only allegations that Plaintiff makes
regarding 2010 conduct is that,
On Oct. 14, 2010, Gargano provided Owners with an explanation of the
facts of the crash and her damages including provisions of medical
records, medical bills and a description of her non-economic damages.
In violation of insurance industry standards, instead of providing the
insured with an explanation for why Owners would not pay the claim,
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Plaintiff relies on “shotgun pleading,” by which a party pleads several counts or causes of
action, each of which incorporates by reference the entirety of its predecessors. Jacobs v.
Credit Suisse First Boston, No. 11–cv–00042, 2011 WL 4537007, at *6 (D. Colo. Sept. 30,
2011) (unpublished) (finding “shotgun pleading” to be a “defect” contributing to an award of
sanctions). This Court has previously criticized the practice, noting “the shotgun pleader foists
off one of the pleading lawyer’s critical tasks—sifting a mountain of facts down to a handful of
those that are relevant to a given claim—onto the reader.” Id. Courts roundly decry shotgun
pleading as a subject of “great dismay,” “intolerable,” and “in a very real sense ... [an]
obstruction of justice.” Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305
F.3d 1293, 1295–96 n. 9, 10 (11th Cir. 2002).

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Owners decided instead to needless [sic] increase the cost and scope of
the claim as if the insurer owed no duty of good faith to its injured insured.
(Doc. # 5 at 4.) This Court has previously determined that evidence of Defendant’s
litigation conduct was inadmissible because it complied with the state court’s orders and
the procedures in State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177 (Colo. 2004),
and its progeny. (Doc. # 91 at 10:10-11:1.) Thus, Plaintiff’s only remaining allegation
not explicitly barred by the statute of limitations or this Court’s orders on Defendant’s
motions in limine relates to the letter sent by Plaintiff on October 14, 2010.
Plaintiff has not alleged a separate and distinct injury based upon that
correspondence. Plaintiff’s letter did not trigger a separate duty for Defendant to act
under common law or statute, and thus, does not support separate claims for relief.8
Under common law, although a completely independent violation will carry a
separate accrual date, “it is the affirmative act of the insurer in unreasonably refusing to
pay a claim and failing to act in good faith, and not the condition of nonpayment, that
forms the basis for liability in tort.” Farmers Grp., Inc. v. Trimble, 691 P.2d 1138, 1142
(Colo. 1984). “[B]ecause bad faith breach of insurance contract encompasses an entire
course of conduct, an insurer’s ongoing bad faith conduct . . . does not result in any
additional bad faith claims.” Kisselman, 292 P.3d at 975 (internal quotation marks and
citations omitted). Thus, Plaintiff’s claims accrued at the point when she demanded
benefits in 2009 and Defendant did not investigate or pay.

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Further, the content of Plaintiff’s letter demonstrates that Plaintiff did not make a demand for
payment. (Doc. # 19-1 at 29-30.) Instead, Plaintiff simply placed Defendant on notice of her
state court claims against the at-fault driver.

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Citing to Kisselman, Plaintiff argues that even if the 2010 conduct does not
constitute a separate common law claim, it does constitute a separate statutory
violation. Kisselman, however, concerned not a statute of limitations issue, but whether
sections 1115 and 1116 applied prospectively.9 Nonethless, the Court need not
determine whether to extend this reasoning to the statute of limitations context. In
Kisselman, the court explicitly states that the plaintiff specifically “pointed to four specific
instances of [the defendant’s] alleged unreasonable delay occurring after [the statutes’
effective date] . . . .” Id. at 968. Conversely, here, Plaintiff points to no specific 2010
conduct which would constitute a standalone claim. Therefore, because Plaintiff has
failed to allege conduct that would give rise to a timely statutory claim, the Colorado
Appeals Court’s analysis in Kisselman is inapplicable.
III.

PLAINTIFF’S ALTERNATIVE MOTION

In the final pages of her Motion for Reconsideration, Plaintiff tacks on an
additional motion asking this Court to: (1) reconsider its October 2013 evidentiary order,
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This Court questions whether Kisselman would be applicable in light of the policy regarding
statutes of limitation. Unlike a statutory effective date, statutes of limitations “are statutes of
repose; and although affording plaintiffs what the legislature deems a reasonable time to
present their claims, they protect defendants and the courts from having to deal with cases in
which the search for truth may be seriously impaired by the loss of evidence” over time. United
States. v. Kubrick, 444 U.S. 111, 117 (1979). The Court is not convinced that the purpose of
statute of limitations is served by allowing independent claims arise and accrue with each new
letter when the injury underlying the claim falls outside the limitations periods. C.f. Fogle v.
Slack, 419 F. App’x 860, 865-66 (10th Cir. 2011) (“[T]here comes a point at which the delay of a
plaintiff in asserting a claim is sufficiently likely either to impair the accuracy of the fact-finding
process or to upset settled expectations that a substantive claim will be barred”) (citation
omitted). Arguably, the dissimilarity between the purpose of a statutory effective date and that
of the statute of limitations might lead the Colorado Supreme Court to reject Kisselman’s
reasoning in the statute of limitations context. However, the Court need not address that
question, as Plaintiff has failed to identify a separate tortious act.

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and in the alternative, (2) certify questions of law to the Colorado Supreme Court. (Doc.
# 111 at 12-13.)
Plaintiff’s second motion is separate from her motion to reconsider the statute of
limitations issue, and should have been submitted to the Court independently. See
D.C.COLO.LCivR 7.1(d). This alone would be reason to reject Plaintiff’s motion.
Moreover, Plaintiff’s second motion also fails to articulate a permissible basis for relief.
Plaintiff merely restates her previous arguments that were considered and rejected by
this Court. See Servants of Paraclete, 204 F.3d at 1012.
In the alternative, Plaintiff requests that the Court certify questions of law to the
Colorado Supreme Court in order to “reconcile” the “essential holdings of Parsons,
Bucholtz, Savio, and Brekke.” (Doc. # 111 at 13.) Given that the Court has already
resolved the statute of limitations issue, the certification issue is arguably moot. See
Woods v. Nationbuilders Ins. Servs., Inc., No. 11-cv-02151, 2012 WL 4478948, at *9 (D.
Colo. Sept. 27, 2012) (rejecting plaintiff’s request to certify a question when the Court
had already resolved motions for summary judgment on the issue). Regardless,
certification of Plaintiff’s proposed questions would not be appropriate.
“[U]nder the diversity statutes the federal courts have the duty to decide
questions of state law even if difficult or uncertain.” Soc’y of Lloyd’s v. Reinhart, 402
F.3d 982, 1001 (10th Cir. 2005). Federal courts may choose to certify a question
“where the legal question at issue is novel and the applicable state law is unsettled.”
Allstate Ins. Co. v. Brown, 920 F.2d 664, 667 (10th Cir. 1990). Pursuant to Colo. R.
App. P. 21.1, the Colorado Supreme Court may answer a question certified to it by a

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federal court when the question “may be determinative of the cause then pending in the
certifying court and as to which it appears to the certifying court there is no controlling
precedent in the decisions of the Supreme Court.” Colo. App. R. 21.1(a). The decision
by this Court to certify questions is discretionary. See Massengale v. Okla. Bd. of
Exam’rs in Optometry, 30 F.3d 1325, 1331 (10th Cir.1994).
The legal questions at issue in the instant case are not novel and do not stem
from unsettled state law.10 For the reasons addressed above, the underlying Colorado
law is sufficiently settled to enable the Court’s determinations. Thus, certification is
unnecessary. See Woods, 2012 WL 4478948, at *9 (refusing to certify a question to the
Colorado Supreme Court when the question would not be “determinative” of the claims).
IV.

CONCLUSION

Based on the foregoing, it is ORDERED that Plaintiff’s Motion for
Reconsideration is DENIED.
DATED: August 5, 2014
BY THE COURT:

________________________________
CHRISTINE M. ARGUELLO
United States District Judge

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Plaintiff seeks reconciliation of Parsons v. Allstate Ins. Co., 165 P.3d 809 (Colo. App. 2006),
Bucholtz v. Safeco Ins. Co., 773 P.2d 590 (Colo. App. 1988), Travelers Ins. Co. v. Savio, 706
P.2d 1258 (Colo. 1985), and State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177 (Colo.
2004). After examining these decisions, the Court does not see unsettled law, but only the
elucidation of standards for insurer conduct with respect to litigation and the duty to negotiate.

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