Toy v. American Family Mutual Insurance Company

Filing 257

ORDER denying 190 defendant's Motion in Limine Re: No Duty to Provide Confidential Claim Evaluation to Plaintiff's Counsel. By Judge Philip A. Brimmer on 2/6/14.(pabsec)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 12-cv-01683-PAB-MJW
GREGORY TOY,
Plaintiff,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY,
Defendant.

ORDER

This matter is before the Court on the Motion in Limine Re: No Duty to Provide
Confidential Claim Evaluation to Plaintiff’s Counsel [Docket No. 190] filed by defendant
American Family Mutual Insurance Company. Plaintiff Gregory Toy filed a response in
opposition. Docket No. 205-1.
On May 26, 2011, plaintiff’s counsel sent a letter to Vicki Mrowiec, defendant’s
Commercial F/R Claim Desk Senior Adjuster, asking for a written evaluation of plaintiff’s
UIM claim. Docket No. 190-1 at 2-3. Specifically, plaintiff’s counsel asked defendant to
provide information concerning the value it placed on various elements of plaintiff’s
actual damages. Id. On June 1, 2011, plaintiff’s counsel reiterated his requests for
information on plaintiff’s UIM claim and asked for additional clarification regarding the
benefits defendant offset in forming its settlement offer. Docket No. 205-3 at 2-3.
Defendant seeks to preclude plaintiff from arguing that defendant’s adjusters had
a duty to respond to plaintiff’s counsel’s detailed request for the value defendant placed

on various components of plaintiff’s UIM claim. Docket No. 190 at 1. Defendant argues
that Sunahara v. State Farm Mut. Auto. Ins. Co., 280 P.3d 649 (Colo. 2012), stands for
the proposition that an insured has no duty to reveal any internal assessments
regarding an insured’s claim. Docket No. 190 at 2-3. Plaintiff responds by arguing that
Sunahara is distinguishable and that the Unfair Claims Settlement Practices Act
(“UCSPA”), Colo. Rev. Stat. § 10-3-1104(1)(h), requires an insurer to provide a
reasonable explanation for its settlement offers. Docket No. 205-1 at 2. Plaintiff admits
that defendant may argue that it was not required to answer plaintiff’s counsel’s specific
questions, but plaintiff claims that he should be permitted to argue that defendant failed
to provide a reasonable explanation for its settlement offers. Id. at 3-4.
In Sunahara, the insured brought a UIM claim against his insurer seeking to
recover damages under his UIM policy. 280 P.3d at 652. The issue before the
Colorado Supreme Court was whether, in a first-party UIM case, the insurer’s internal
reserves and settlement authority were discoverable. Id. at 656. The court held that
internal reserves and settlement authority were not reasonably calculated to lead to the
discovery of admissible evidence because a UIM insurer is in a position adversarial to
the insured. Id. at 657. However, the court also held:
[R]eserves and settlement authority . . . might be relevant and reasonably
calculated to lead to admissible evidence when a first-party plaintiff sues his
or her insurance company for bad faith or for a declaratory judgment. In bad
faith . . . actions, evidence of reserves and settlement authority could shed
light on whether the insurance company adjusted a claim in good faith, or
promptly investigated, assessed, or settled an underlying claim. UIM actions
differ from bad faith . . . cases because, rather than defending its own
actions, an insurance company in a UIM action must essentially defend the
tortfeasor’s behavior.

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Id. at 657-58 (citations omitted).
Sunahara is distinguishable for two reasons. First, Sunahara concerned a
discovery dispute and did not address an insurer’s duty to provide a reasonable
explanation for its claim handling decision. Second, the court explicitly declined to
extend its holding to situations where, as here, an insured is suing an insurer for bad
faith and the insurer’s own conduct is placed at issue. Thus, the Court rejects
defendant’s interpretation of Sunahara.
Moreover, it is a violation of the UCSPA for an insurer to fail to “promptly provide
a reasonable explanation of the basis in the insurance policy in relation to the facts or
applicable law for a denial of a claim or for the offer of a compromise settlement.” Colo.
Rev. Stat. § 10-3-1104(1)(h)(XIV). Both sides are permitted to argue the degree to
which relevant industry standards require an insurer to explain its claim handling
decisions to an insured. See Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 344
(Colo. 2004) (holding that UCSPA is “valid, but not conclusive, evidence of industry
standards”). Plaintiff may also seek to introduce defendant’s internal policies regarding
the evaluation of claims. Thus, the Court will deny defendant’s motion.1
For the foregoing reasons, it is
ORDERED that defendant’s Motion in Limine Re: No Duty to Provide
Confidential Claim Evaluation to Plaintiff’s Counsel [Docket No. 190] is DENIED.

1

The Court makes no finding as to the scope of an insured’s duty to provide a
reasonable explanation for its claims handling decisions.
3

DATED February 6, 2014.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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