Guyaux-Mitchell v. Old United Casualty Company
ORDER granting in part and denying in part 29 Defendant's Motion for Summary Judgment. The Motion is GRANTED as to Plaintiff's claims related to underinsured boater insurance under the Policy as detailed in this Order. The Motion is DENIED in all other respects. This matter remains pending as to Plaintiff's claims related to medical payments coverage under the Policy. By Judge William J. Martinez on 2/9/2015. (alowe)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 13-cv-1132-WJM-KMT
OLD UNITED CASUALTY COMPANY,
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Defendant’s Motion for Summary Judgment
(“Motion”). (ECF No. 29.) For the reasons set forth below, the Motion is granted in part
and denied in part.
The following relevant facts are undisputed, unless otherwise noted. On June
19, 2012, Plaintiff was floating on an inflatable kayak on Lake Powell in Utah, which
was tethered to a houseboat by a rope. (ECF No. 32-2 at 1-2.) As Plaintiff floated off
of the houseboat’s back side, a nearby powerboat began to reverse in Plaintiff’s
direction. (Id. at 3-4.) The powerboat continued backing toward Plaintiff, eventually
trapping her between the houseboat and another boat m oored along its left side. (Id. at
4.) The powerboat shredded the inflatable kayak, pulled Plaintiff under the water, and
severed her left leg below the hip. (Id. 4-5.) Following the accident, Plaintiff recovered
the limits of the powerboat owner’s umbrella insurance policy. (Id. at 5.) However,
because the umbrella policy proceeds did not fully compensate Plaintiff for her injuries,
Plaintiff sought underinsured boater (“UIB”) and medical payments benefits under the
houseboat’s insurance policy underwritten by Defendant (“the Policy”). (Id. at 5.)
Defendant paid Plaintiff the Policy’s full medical payment coverage limits on
June 3, 2014 (ECF No. 38-2), but has declined to award any UIB benefits to date.
(ECF No. 32.) As a result, on April 29, 2013, Plaintiff initiated this action seeking
damages for Defendant’s breach of contract, bad faith, and violations of Colorado
Revised Statutes §§ 10-3-1115 and 10-3-1116. (ECF No. 1.) On April 24, 2014,
Defendant filed the instant Motion seeking summary judgment on Plaintiff’s claims.
(ECF No. 29.)
II. LEGAL STANDARD
Summary judgment is appropriate only if there is no genuine issue of material
fact and the moving party 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); Henderson v. Inter-Chem
Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). W hether there is a genuine dispute
regarding a material fact depends upon whether the evidence presents a sufficient
disagreement as to require submission to a jury or, conversely, is so one-sided that one
party must prevail as a matter of law. Anderson v. Liberty Lobby, 477 U.S. 242, 248-49
(1986); Carey v. U.S. Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987).
A fact is “material” if it pertains to an element of a claim or defense, and a factual
dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a
reasonable party could return a verdict for either party. Anderson, 477 U.S. at 248.
The Court must examine the facts in the light most favorable to the nonmoving party,
and resolve factual ambiguities against the moving party. Houston v. Nat'l Gen. Ins.
Co., 817 F.2d 83, 85 (10th Cir. 1987). The summary judgment standard thus favors a
right to trial. See id.
Under Colorado law,1 courts construe insurance policies “using general principles
of contract interpretation.” Greystone Constr., Inc. v. Nat’l Fire & Marine Ins. Co., 661
F.3d 1272, 1283 (10th Cir. 2011). Therefore, absent an ambiguity, a policy’s language
is construed according to its plain meaning. Id. However, in recognition of the unique
relationship between insurer and insured, courts “construe ambiguous provisions
against the insurer and in favor of providing coverage to the insured.” Id. (citing Cyprus
Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 299 (Colo. 2003). Courts look to
the policy as a whole to determine whether an ambiguity is present. Cary v. United of
Omaha Life Ins. Co., 108 P.3d 288, 290 (Colo. 2005). Disagreements regarding policy
interpretation do not necessarily signal, or create, an ambiguity. Id. (citing Union Ins.
Co. v. Houtz, 883 P.2d 1057, 1061 (Colo. 1994)). Rather, “[a]n insurance policy is
ambiguous if it is susceptible on its face to more than one reasonable interpretation.” Id.
Neither party objects to the application of Colorado law, or suggests that another
state’s law applies, to the interpretation of the Policy. Federal courts sitting in diversity apply
the forum state’s choice of law principles. U.S. Aviation Underwriters, Inc. v. Pilatus Bus.
Aircraft, Ltd., 582 F.3d 1131, 1143 (10th Cir. 2009). Colorado choice-of-law rules provide that
an insurance contract is governed “by the law of the state with the most significant relationship
to the insurance contract.” Berry & Murphy, P.C. v. Carolina Cas. Ins. Co., 586 F.3d 803, 808
(10th Cir. 2009). Plaintiff states that the Policy “was issued to a Colorado insured, in Colorado,
and Plaintiff was and is a Colorado citizen.” (ECF No. 32 at 20.) Colorado therefore has the
most significant relationship to the Policy. See Berry & Murphy, 586 F.3d at 808.
In the instant case, Plaintiff alleges that she is entitled to UIB benefits under the
Policy, and that, despite receiving the medical payments benefits in full, Defendant’s
delay in payment was unreasonable and constituted bad f aith. (ECF Nos. 1 & 32 at 13, 19-20.) Defendants have moved for summary judgment as to both issues, which the
Court will consider in turn below.
Defendant argues that Plaintiff is barred from receiving UIB benefits based
on the plain language of the Policy, which provides: “We will pay compensatory
damages and expenses only to persons who are injured while on, boarding, or leaving
the covered yacht (unless otherwise specifically excluded under this Policy).” (ECF No.
32-1 at 28 (emphasis added).) “Covered yacht” is discussed in greater detail under the
“Insured property” section of the policy:
Insured property means:
a.) the covered yacht described on the Declarations Page, including the hull,
inboard machinery, outdrive units, outboard motors, auxiliary motors, spars,
sails, rigging, appliances, furniture, and other permanently installed equipment
on board including built-in home entertainment components and televisions; and
all unattached equipment and accessories generally required to be on board
for the use, operation, navigation or maintenance of the yacht; . . .
(Id. at 9 (emphasis in original).)
Defendant argues that “covered yacht” is defined clearly and with particularity,
and indicates that Plaintiff was not “on, boarding, or leaving” the houseboat at the time
of the injury. (ECF No. 29 at 7-8.) In her affidavit, Plaintiff states that at the time of the
accident she was floating on an inflatable kayak that was “tethered to the houseboat by
a rope . . . immediately off of its back/left side.” (ECF No. 32-2 at 2-3.) Plaintiff states
that the term “covered yacht” is undefined, and that the lack of definition “creates the
impression in the mind of a reasonable insured that an inflatable raft attached to the
houseboat becomes part of the houseboat and, accordingly, a person in the raft is
considered to be ‘on’ the covered yacht.” (ECF No. 32 at 31.) The term “covered
yacht” is not elsewhere defined in the Policy.
The Court agrees with Defendant that the Policy language is clear. While
“covered yacht” may be included under the heading of “insured property,” it is
nonetheless defined. The Policy language points to the description of “covered yacht”
on the Policy’s declarations page, which provides the houseboat’s make, model, serial
number, and other basic physical characteristics of the vessel. (ECF No. 32-1 at 1.)
The terms that follow under “insured property” include the houseboat’s fixtures, and
“other permanently installed equipment.” (Id. at 9.) Neither the declarations page nor
the additional descriptors contained under “insured property” expand the definition of
“covered yacht” so as to include an inflatable raft tethered to the houseboat.
Expanding the definition of “covered yacht” to include everything defined as
“insured property” is also unavailing. (Id.) The Policy includes “unattached equipment
and accessories” within the scope of insured property, which itself is defined as:
all detached or easily detachable equipment and accessories used in your
yacht’s use, operation, or maintenance, including but not limited to: oars, oar
locks, paddles, furniture, appliances, anchors, life preservers, extra fuel
containers, lines, seat cushions, fire extinguishers, flares, horns, flags, batteries,
battery chargers, pumps, remote controls, navigational equipment, portable
navigational computer hardware and software, tarpaulins (and similar protective
covers), portable running lights, tie ropes, boarding ladders, and convertible
It does not include . . . personal watercraft including, without limitation,
hydrocycles, jet skis, wave runners, wind-surfers, or similar types of vessels,
unless specifically endorsed on this policy . . . [or] personal effects.
(Id. at 10 (emphasis in original).)
“Personal effects” include “fishing equipment, waterskis, and other sporting equipment.”
(Id.) The exclusions for “personal watercraft” and “other sporting equipment”
encompass the inflatable kayak on which Plaintiff was injured. Therefore, the Court
finds that the kayak is not included in the definition of “covered yacht” under the Policy.
Plaintiff urges the Court to follow the reasoning of several cases in which courts
have interpreted similar uninsured or underinsured provisions in the automobile context.
(ECF No. 32 at 28.) However, all of the cases cited by Plaintiff are from jurisdictions
outside Colorado, and none involve UIB benefits or interpretation of an insurance policy
similar to that at issue here. Plaintiff also cites no authority indicating Colorado courts
would apply an analysis similar to that of the cases cited. Therefore, because the
cases are not analogous to this matter in terms of their facts or applicable law, the
Court declines to apply them here.
Plaintiff raises two additional arguments in her briefing. First, Plaintiff argues that
the Policy’s “hit-and-run” limitation renders the coverage illusory, and therefore the
Court must find that Plaintiff is entitled to UIB benefits. (ECF No. 32 at 23.) The Policy
defines an underinsured watercraft as a “watercraft of any type . . . which is a ‘hit-andrun watercraft.’” (ECF No. 32-1 at 12.) A “hit-and-run watercraft” is defined as “a
watercraft of any type whose operator or owner cannot be identified . . . .” (Id. at 11.)
However, underinsured coverage is not triggered until the claimant has identified the
party who caused the injury, and determined that the party’s insurance coverage is
inadequate to cover the claimant’s loss. Thus, the Court agrees with Plaintiff that if this
provision were given effect, there could never be a claim for underinsured coverage
under the Policy. “[S]uch a clause would in effect allow the insurer to receive premiums
when realistically it is not incurring any risk of liability.” O'Connor v. Proprietors Ins. Co.,
696 P.2d 282, 285 (Colo. 1985). The Court thus gives no legal effect to the “hit-andrun” provision of the Policy. Nevertheless, as discussed above, Plaintiff has failed to
satisfy the valid “on, boarding, or leaving” Policy provision, which is also required to
obtain UIB coverage. Plaintiff has therefore failed to show that she is entitled to UIB
benefits, even ignoring the “hit-and-run” provision.
Second, Plaintiff argues that the UIB exclusion for injuries sustained “while
parasailing, kite-skiing, or any similar sport in which a person(s) or object(s) become
airborne,” indicates that “on, boarding, or leaving” has a broader meaning. (ECF No. 32
at 26-27.) According to Plaintiff, the exclusion implies that some activities conducted off
of the houseboat—such as floating on a tethered raft—are covered if the activity does
not involve becoming “airborne.” (Id. at 27.) Plaintiff states that if it were true that an
insured is not considered “on” the houseboat while floating on a tethered raft, the
exclusion would be meaningless. (Id.)
The Court must interpret the Policy “in its entirety with the end in view of seeking
to harmonize and to give effect to all provisions so that none will be rendered
meaningless.” Copper Mountain, Inc. v. Indus. Sys., Inc., 208 P.3d 692, 697 (Colo.
2009) (quotation marks omitted). In doing so, the Court finds that the decision to
exclude “airborne” activities under the UIB section of the Policy was deliberate, and
does not create an ambiguity in coverage. The Coverage “D” Medical Payments
portion of the Policy supports the Court’s conclusion. That section specifically provides
coverage under circumstances similar to the UIB section for bodily injury sustained
while “occupying, boarding, or leaving a covered yacht.” (ECF No. 32-1 at 27.)
However, medical payments coverage is alternatively provided if the insured is
“engaged in waterskiing, aquaplaning, or similar recreational activities while being
towed from a covered yacht . . . .” (Id. (emphasis added).) If this additional language
were included in the UIB portion of the Policy, Plaintiff would likely be entitled to UIB
benefits. Therefore, the Court finds that Defendant’s decision to provide coverage for
activities conducted off of the houseboat in some circumstances, while excluding
coverage for those same activities under other circumstances, does not reflect
ambiguity or conflict among the Policy provisions, and accordingly does not entitle
Plaintiff to UIB benefits.
Having reviewed the relevant language of the Policy and the facts of this matter,
the Court concludes that Defendant is entitled to summary judgment on Plaintiff’s
claims for UIB benefits, including any claims for breach of contract, bad faith, or
violations of Colorado Revised Statutes §§ 10-3-1115 and 10-3-1116 related to such
Bad Faith and Unreasonable Delay
Defendant further argues that Plaintiff’s claims for bad faith and violations of
Colorado Revised Statutes §§ 10-3-1115 and 10-3-1116 f ail as a matter of law. (ECF
No. 29 at 10-12.) As stated above, the Court agrees with Defendant regarding
Plaintiff’s claim for UIB benefits, because Defendant was not obligated to provide UIB
coverage in this case as a matter of law. However, Plaintiff’s bad faith and Colorado
Revised Statutes §§ 10-3-1115 and 10-3-1116 claim s also apply to medical payments
coverage under the Policy. (ECF No. 32 at 1-2.) Although Defendant paid Plaintiff the
Policy’s full medical payments coverage limits on June 3, 2014 (ECF No. 38-2), Plaintiff
argues that Defendant failed to timely investigate whether medical payments coverage
was available, and unreasonably delayed providing such coverage. (ECF No. 32 at 12.) The Court discusses each claim in turn.
Under Colorado common law, all insurance contracts “contain an implied duty
of good faith and fair dealing.” Goodson v. Am. Standard Ins. Co. of Wis., 89 P.3d 409,
414 (Colo. 2004). “[A] separate action in tort [arises] when the insurer breaches its duty
of good faith and fair dealing.” Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 342
(Colo. 2004) (en banc). “When an insured sues his or her insurer for bad faith breach
of an insurance contract, the insured must prove that (1) the insurer acted
unreasonably under the circumstances, and (2) the insurer either knowingly or
recklessly disregarded the validity of the insured’s claim.” Sanderson v. Am. Family
Mut. Ins. Co., 251 P.3d 1213, 1217 (Colo. App. 2010). “W hat is reasonable under the
circumstances is ordinarily a question of fact for the jury.” Baumann v. Am. Family Mut.
Ins. Co., 2012 WL 122850, at *4 (D. Colo. Jan. 17, 2012).
Here, Defendant argues that Plaintiff cannot show that Defendant acted
unreasonably, or that it knowingly or recklessly disregarded the validity of Plaintiff’s
claim. (ECF No. 38 at 20-21.) Specifically, Defendant argues that Plaintiff’s demand
for medical payments coverage was not made on July 31, 2012, as Plaintiff argues
(ECF No. 32 at 20), but was made on February 12, 2014 during the deposition of Russ
Hodge, the claims adjuster handling Plaintiff’s case. (ECF No. 38 at 21-22). Defendant
asserts that once it did receive Plaintiff’s demand for medical payments benefits, it
immediately investigated coverage and made the full payment to Plaintiff. (Id. at 22.)
Defendant further states that Plaintiff’s Complaint fails to assert any claim for medical
payments coverage or any claim related to Defendant’s conduct related to such
Plaintiff asserts that once Defendant received a demand for coverage under any
portion of the Policy, Defendant had a duty to promptly investigate all possible
coverages, not just those specifically demanded. (ECF No. 32 at 1-2.) Plaintiff’s
position finds support in the deposition testimony of Russ Hodge:
Q. And would you agree that an insurance company needs to look at all possible
coverages and pay under any that may apply whether or not the coverage is
pointed out to you by the insured?
Q. And as you look at Exhibit 1 on the policy now, and specifically this medical
payments coverage that had the $25,000 limit that we looked at earlier, can
you say whether or not this should have been covered or whether you would
have covered it had you looked at it?
A. I don't recall looking at it. It's possible there could have been coverage there.
(Hodge Dep. (ECF No. 32-3) pp. 51, 62.)
Mr. Hodge’s deposition testimony indicates Defendant first received Plaintiff’s claim for
Policy benefits on July 31, 2012 (Id. at p. 69), and the medical payments benefits were
paid on June 3, 2014 (ECF No. 38-2). Mr. Hodge further admitted that he was the only
person handling Plaintiff’s claim. (Hodge Dep. at p. 35.) Given this evidence, a
reasonable jury could find that Defendant’s conduct was unreasonable, and that
Defendant knowingly or recklessly disregard the validity of Plaintiff’s claim. Sanderson,
251 P.3d at 1217.
Mr. Hodge’s deposition testimony also defeats Defendant’s argument that
summary judgment is warranted due to Plaintiff’s failure to specifically allege any claims
related to medical payments coverage in her Complaint. Based on Mr. Hodge’s
testimony, a reasonable jury could find that all of Defendant’s duties under the policy
were triggered once Plaintiff gave notice of her injury, including the duty to investigate
medical payments coverage. Moreover, Plaintiff’s Summary of Claims contained in the
Final Pretrial Order in this matter includes Plaintiff’s claims for medical payments
coverage. (ECF No. 41 at 2.) The Tenth Circuit has held that “the pretrial order is
treated as superceding the pleadings and establishing the issues to be considered at
trial.” Wilson v. Muckala, 303 F.3d 1207, 1215 (10th Cir. 2002) (citation om itted).
Summary judgment on Plaintiff’s bad faith claim is therefore denied.
2. Unreasonable Delay
Plaintiff’s statutory claim is based on Colorado Revised Statutes §§ 10-3-1115
and 10-3-1116, which provide for a cause of action against an insurer that has
unreasonably delayed or denied a claim. This cause of action “is in addition to, and
does not limit or affect, other actions available by statute or common law.” Vaccaro v.
Am. Family Ins. Grp., 275 P.3d 750, 756 (Colo. App. 2012) (internal q uotation marks
omitted). Colorado Revised Statute § 10-3-1115(a) provides that: “A person engaged
in the business of insurance shall not unreasonably delay or deny payment of a claim
for benefits owed to or on behalf of any first-party claimant.” The statute explains that
an insurer’s actions are unreasonable “if the insurer delayed or denied authorizing
payment of a covered benefit without a reasonable basis for that action.” Id. at § 10-31115(2). “Determining reasonableness under the circumstances is ordinarily a question
of fact for the jury but in appropriate circumstances may be decided as a matter of law.”
Tadehara v. State Farm Mut. Auto. Ins. Co., 2011 WL 4048782, at *5 (D. Colo. Sept.
The deposition testimony of Mr. Hodge is equally relevant here and, based on
that testimony, a reasonable jury could find that Defendant unreasonably delayed in
paying Plaintiff’s claim for medical payments benefits. Accordingly, summary judgment
on Plaintiff’s statutory claim is denied.
For the reasons set forth above, the Court ORDERS as follows:
Defendant’s Motion for Summary Judgment (ECF No. 29) is GRANTED IN PART
and DENIED IN PART;
The Motion is GRANTED as to Plaintiff’s claims related to underinsured boater
insurance under the Policy as detailed in this Order;
The Motion is DENIED in all other respects; and
This matter remains pending as to Plaintiff’s claims related to medical payments
coverage under the Policy.
Dated this 9th day of February, 2015.
BY THE COURT:
William J. Martínez
United States District Judge
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