Plaza Insurance Company v. Lester et al

Filing 57

MEMORANDUM OPINION AND ORDER denying 40 Plaintiff's Motion for Summary Judgment. Granting 41 Defendant's Cross-Motion for Partial Summary Judgment on Plaintiff's Claim for Declaratory Relief. Summary judgment shall enter, as a matter of law, in favor of Defendants on Plaintiff's claim seeking a declaratory judgment. Defendants are awarded their costs, by Judge Lewis T. Babcock on 5/13/2015. (ebuch)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
LEWIS T. BABCOCK, JUDGE

Civil Case No. 14-cv-01162-LTB-CBS
PLAZA INSURANCE COMPANY, a Missouri corporation,
Plaintiff,
v.
CAROLYN LESTER,
JAMES BRADEN, and
BONNIE BRADEN,
Defendants.
______________________________________________________________________________
MEMORANDUM OPINION AND ORDER
______________________________________________________________________________
Babcock, J.
This matter is before me on Plaintiff’s Motion for Summary Judgment [Doc #40] and
Defendant’s Cross-Motion for Partial Summary Judgment on Plaintiff’s Claim for Declaratory
Relief. [Doc #41] Oral arguments would not materially assist me in my determination. After
consideration of the parties’ arguments, and for the reason stated, I DENY Plaintiff’s motion, I
GRANT Defendants’ motion, and I ENTER SUMMARY JUDGMENT in favor of Defendants
on Plaintiff’s claim seeking a declaratory judgment.
I. BACKGROUND
On August 24, 2013, Martin Braden was killed in a motor vehicle accident, caused by
Dana Beales, while Martin was working as a tow truck operator for C&J Auto Services (C&J).
Mr. Beales was criminally charged and it is undisputed, at this point, that his conduct constituted
a “felonious killing.”

Martin’s parents – Defendants James and Bonnie Braden – filed a wrongful death action
against Mr. Beales in Weld County District Court on September 20, 2013. After filing the case,
the Bradens became aware that Defendant Carolyn Lester was Martin’s common-law wife. The
Bradens and Ms. Lester participated in a mediation in order to decide how they would divide any
proceeds received from claims arising out of Martin’s death.
Sometime after filing the Weld County lawsuit, the parties discovered that Mr. Beales’
liability insurance policy was limited at $100,000. At the time of the accident, Martin’s
employer, C&J, carried a $1,000,000 underinsured motorist (UIM) policy with Plaintiff Plaza
Insurance Company. As such, Defendants submitted a policy limit demand to Plaintiff, pursuant
to the UIM policy, on February 26, 2014.
The Bradens then agreed to settle their Weld County case against Beale for the $100,000
limit on his liability insurance policy. Plaintiff was made aware of and approved the settlement
with Mr. Beales. The Bradens subsequently moved to dismiss their Weld County case against
Mr. Beales, based on the settlement, and that case was dismissed with prejudice on April 10,
2014.
Two weeks later, on April 24, 2014, Plaintiff filed this case seeking declaratory relief
pursuant to Fed. R. Civ. P. 57 and 28 U.S.C. §2201. Specifically, Plaintiff seeks a declaration
that the “one civil action” rule – set forth in the Colorado Wrongful Death Act at Colo. Rev. Stat.
§13-21-203(1)(a) – precludes a second action against it by Defendants for the wrongful death of
Martin Braden. In the alternative, Plaintiff seeks a declaration that if such an action would be
permitted, the proper plaintiffs would be the Bradens, not Carolyn Lester. [Doc #1] Defendants,
in response, have filed counterclaims – for breach of contract, breach of the implied covenant of

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good faith and fair dealing, violation of Colo. Rev. Stat. §10-3-1115, and fraud – in which they
contend that Plaintiff, by refusing to pay the UIM benefits to Defendant Lester, has committed a
bad faith breach of the insurance policy. [Doc #9]
II. SUMMARY JUDGMENT STANDARD
The parties have now filed cross-motions seeking summary judgment in their favor on
Plaintiff’s declaratory relief claim. Summary judgment is appropriate when the moving party
can demonstrate that there is no genuine issue of material fact and it is entitled to judgment as a
matter of law. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106
S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Jenkins v. Wood, 81 F.3d 988, 990 (10th Cir. 1996).
Because the material facts relevant to the declaratory judgment claim are undisputed, the issue
here is purely a matter of law and the parties agree that determination by summary judgment is
appropriate and warranted.
III. APPLICABLE LAW
A wrongful death claim may be maintained in Colorado pursuant to the Wrongful Death
Act, Colorado Revised Statute §§ 13-21-201-204, which limits such claims in several ways. For
example, it limits the types of plaintiffs that may bring suit as well as the amount of damages that
can be recovered.
At issue in this case is the limitation provided by §13-21-203(1)(a), which states, in
relevant part, that: “[t]here shall be only one civil action . . . for recovery of damages for the
wrongful death of any one decedent.” This limitation is known as the “only one civil action”
provision. Barnhart v. American Furniture Warehouse Co., 338 P.3d 1027, 1030 (Colo. App.
2013), cert. denied, 2014 WL 4322819 (Sept. 2, 2014). The legislative purpose of the “only one

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civil action” provision is to prevent multiple actions for the death of a single decedent, with the
underlying goal of precluding multiple recoveries. Id.
IV. ANALYSIS
In this motion, Plaintiff seeks a ruling in its favor on its declaratory action claim. It
argues that the “only one civil claim” provision in §13-21-203(1)(a) bars Defendants from
bringing an action against it for any UIM benefits, because a wrongful death action was already
commenced and dismissed with prejudice in the Weld County case previously brought by the
Bradens. As such, Plaintiff seeks a declaration that “the ‘one civil action’ rule precludes a
second action for wrongful death with respect to the death of Martin Braden or, in the
alternative, that if a second such action is permitted, then the proper plaintiffs are the same as
those in the first wrongful death action, that is, James Braden and Bonnie Braden, and not
Carolyn Lester.”

In support of its request for summary judgment on its declaratory action

claim, Plaintiff argues that the law in Colorado is clear that the Wrongful Death Act requires all
claims pursuant to the death of one person to be combined into one civil action. Because the
claim for UIM coverage in this case is a claim pursuant to the wrongful death of Martin Braden,
and a civil action has already been filed, settled and closed, Plaintiff argues that any claim by
Defendants for UIM benefits is barred by the “only one civil action” provision.
In response, Defendants argue that the “only one civil action” rule does not negate
Plaintiff’s obligation to pay Defendants the benefits owed under C&J’s UIM policy. They argue
that their requests for payment of those benefits (as set out in their counterclaims in this action)
do not constitute a civil action brought “for recovery of damages for the wrongful death of”
Martin Braden, as prohibited by §13-21-203(1)(a), but instead are actions to enforce the payment
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of a contractual obligation due under an insurance policy held by Martin’s employer at the time
of his death.
The legal authority interpreting and applying the “only one civil action” provision set
forth in §13-21-203(1)(a) is minimal. In 1997, a division of the Colorado Court of Appeals
upheld the dismissal of a medical malpractice action against the physicians who treated a
pedestrian after he was stuck by a car because §13-21-203(1)(a) prohibited it as a second action
after the plaintiffs had previously brought (and settled) a wrongful death action against the car’s
driver. Estate of Kronemeyer v. Meinig, 948 P.2d 119, 121 (Colo. App. 1997). In so doing, the
Court of Appeals concluded that:
the plain language of § 13–21–203(1) clearly and unambiguously reflects the
intent of the General Assembly to permit only one wrongful death action for the
death of one decedent. Pursuing in a sequential manner several wrongful death
actions, against different defendants, and asserting different causes of death, is
prohibited. Therefore, the trial court correctly concluded that the second wrongful
death action in the instant case could not be maintained. Id.
In 2007, the Colorado Supreme Court looked at whether the provision prohibited
multiple actions – one against a surgeon in one county and one against a medical center that
provided post-surgical care in a different county – related to a wrongful death of an individual
caused by the alleged tortious actions of both defendants. The Court found that the provision
leaves “no room for doubt that Colorado law forbids multiple actions for the recovery of
damages for the wrongful death of a decedent.” Hernandez v. Downing, 154 P.3d 1068, 1070
(Colo. 2007). The Supreme Court determined that two actions in two different venues/counties
would result in “two proceedings for the infringement of a right, namely the wrongful death of
[the decadent].” Id. at 1071 (quoting Clough v. Clough, 10 Colo.App. 433, 439, 51 P. 513, 515

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(1897)(defining an action as “a proceeding on the part of one person, as actor, against another,
for the infringement of some right of the first, before a court of justice, in the manner prescribed
by the court or law”)). Because the Wrongful Death Act “avoids the duplicative proceedings and
inconsistent outcomes that could result from multiple actions arising from the wrongful death of
one individual,” the Court in Hernandez v. Downing, supra, ruled that the parties could not bring
cases in two venues, but instead should proceed in one civil action and that one venue was
proper as to both claims. Id.; see also Steedle v. Sereff, 167 P.3d 135 (Colo. 2007)(noting that the
Wrongful Death Act limits damages by requiring that “all claims pursuant to the death of one
person be combined into one civil action,” and ruling that the death itself was the operative
injury, not the harms suffered by the individual family members, under the Colorado
Governmental Immunity Act).
Recently, a division of the Colorado Court of Appeals addressed whether the “only one
civil action” provision of §13-21-203(1)(a) prevented an heir (decedent’s son) from bringing a
wrongful death claim after her surviving spouse had settled such a claim without filing suit.
Barnhart v. American Furniture, supra, 338 P.3d at 1030. The Barnhart v. American Furniture
Court ruled that a spouse’s earlier settlement precluded the son’s subsequent claim because the
“only one civil action” provision “is merely a limit on the number of recoveries that may be
sought – not a requirement that an action must be filed in court for the bar to apply.” Id. at 1033
(relying on the Wrongful Death Act’s “intent to preclude multiple wrongful death recoveries”);
but see Morrison v. Colorado Permanente Medical Group, P.C, 983 F.Supp. 937, 944 (D.Colo.
1997)(ruling that an arbitration proceeding is not a civil action under the Colorado Wrongful

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Death Act and, as such, the civil action against a hospital emergency room could proceed while
arbitration proceedings were held between the plaintiffs and other defendants).
In this case there is no question that the initial case in Weld County was the only civil
action that could be filed in order to obtain damages for the wrongful death of Martin Braden
under Colorado’s Wrongful Death Act. The issue here, however, is whether the subsequent
claim against Martin’s employer’s insurance policy for UIM benefits – brought by the same
potential plaintiffs based on the death of Martin while he was working – constitutes a second
civil action that is barred by §13-21-203(1)(a). Plaintiff argues that any claim against it for UIM
benefits arises from Martin’s wrongful death would result in a second action in violation of the
“only one civil action” provision of §13-21-203(1)(a). See Steedle v. Sereff, supra, 167 P.3d at
138 (ruling that Colorado’s Wrongful Death Act “requires all claims pursuant to the death of one
person to be combined into one civil action”).
Defendants argue, in response, that their claim for UIM benefits under the insurance
policy issued by Plaintiff does not constitute a second civil action as contemplated by §13-21203(1)(a). In support of this position, Plaintiffs assert that their claim for the UIM benefits is
not a judicial proceeding and, as such, is not a “civil action” as set forth in §13-21-203(1)(a).
See generally Hernandez v. Downing, supra, 154 P.3d at 1070 (defining a civil action under the
Wrongful Death Act as “a proceeding on the part of one person, as actor, against another, for the
infringement of some right of the first, before a court of justice, in the manner prescribed by the
court or law”)(quoting Clough v. Clough, supra, 51 P. at 515); see also 1A C.J.S. Actions §7
(2005)(“[a] civil action has been defined as . . . an action which has for its object the recovery of
private or civil rights or compensation for their infraction”). Defendants note that a request for
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UIM benefits is not generally made within the course of a judicial proceeding to redress the
infringement of some right, and does not typically involve a determination of rights or the
prosecution of a wrong. Rather, such claims are resolved according to the terms of the governing
insurance contract, usually without the need for court intervention.
Defendants further argue that any action by them to recover UIM benefits owed under the
insurance policy in this case is not for wrongful death, but rather would be for breach of
Plaintiff’s contractual obligation. See generally Steedle v. Sereff, supra, 167 P.3d at 140
(indicating that a cause of action under the Wrongful Death Act “arises out of tortious acts
which injured the decedent and resulted in the decedent’s death”)(quoting Pizza Hut of America,
Inc. v. Keefe, 900 P.2d 97, 102 (Colo. 1995)). It is uncontested that Plaintiff did not cause
Martin’s death; rather, Plaintiff insured Martin (via his employer) at the time of the accident.
Defendants argue that any legal claims against Plaintiff are not for its tortious conduct, but
instead are for its breach of contract, as set forth in Defendants’ counterclaims in this case, for
Plaintiff’s alleged failure to pay the UIM benefits due under the policy. See Estate of Wright, ex
rel. Wright v. United Services Auto. Ass’n, 53 P.3d 683, 686 (Colo. App. 2001)(noting the
distinction, in a case involving the wrongful death of an insured, of the “contractual liability of
an [UM] insurer, rather than the tort liability of the person who caused the death”).
Furthermore, Defendants note that the terms of the insurance policy support a ruling that
an action to enforce the payment of UIM benefits is not barred by §13-21-203(1)(a). The policy
dictates that Plaintiff’s duty to provide UIM coverage in this case is not triggered until
Defendants reached a tentative policy limits settlement with the tortfeasor. Specifically, the
policy provides that UIM benefits are only available if “[t]he limits of any applicable liability . .
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. policies have been exhausted by payment of judgments or settlements” or “[a] tentative
settlement has been made between an ‘insured’ and the insurer of a[n underinsured] vehicle . . .,
and [Plaintiff has] been given prompt written notice of such tentative settlement.” Defendants’
argue that Plaintiff’s position – that requires that the UIM carrier be joined as a party in the
single wrongful death action against the tortfeasor[s] – is inconsistent with the language of the
policy that dictates the UIM benefits are not available until after the claim against the tortfeasor
is settled. In addition, Defendants contend that the policy terms clearly contemplate that a claim
for UIM benefits is distinct from a wrongful death action because a legal action to recover UIM
benefits is deemed timely if it “commences within two years after the insured settles the
underlying bodily injury claim.” Finally, Defendants argue that forcing a plaintiff to sue for any
UIM benefits in the initial wrongful death action would undercut the purpose of UIM coverage
in that it would not allow the carrier to first fulfill its policy obligation before being sued. See
generally Colo. Rev. Stat. § 10-4-609(4))(mandating UIM coverage for damages the “insured is
legally entitled to collect from the owner or driver of an underinsured motor vehicle”); Estate of
Wright v. United Services Auto. Ass’n, supra, 53 P.3d at 686 (ruling that the purpose of UIM
coverage “is to compensate an innocent insured fully for loss caused by financially irresponsible
motorists, subject to the policy limits, and to place the insured in the same position as if the
uninsured or underinsured motorist had liability coverage equal to that of the insured”)(citations
omitted). Defendants maintain that requiring an insured decedent’s estate to name the UIM
carrier as a defendant to the wrongful death action against the tortfeasor is contrary to the
language of the insurance policy here, as well as the purposes of the Wrongful Death Act and the
Colorado Uninsured/Underinsured Motorist Statutes.

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I agree with Plaintiff that the “only one civil action” statutory provision in §13-21203(1)(a), as well as the law interpreting it, require broad application to bar second lawsuits for
the recovery of damages for the wrongful death of a decedent. See e.g. Hernandez v. Downing,
supra, 154 P.3d at 1070; Barnhart v. American Furniture, supra, 338 P.3d at 1030. However, I
agree with Defendants that any potential lawsuit by them for the breach of a contractual
obligation to pay insurance benefits on the death of an insured is not barred by §13-21-203(1)(a).
Such claim sounds in contract, not in tort, and is governed, in this case, by the terms of the
applicable insurance policy and, if necessary, by Colorado’s UIM statute. See Colo. Rev. Stat.
§10-4-609; see also Estate of Wright v. United Services Auto. Ass’n, supra, 53 P.3d at 686
(ruling that because the decedent’s parents and her estate “would be legally entitled to recover
uncapped noneconomic damages from the driver who caused decedent’s death or from the
driver’s liability insurer, they are entitled to recover the amount of such damages from [the
insurance carrier], subject to policy limits”).
Therefore, I conclude that under the circumstances of this case, Defendants claims for
breach of the UIM insurance policy at issue are not barred by §13-21-203(1)(a) of the Colorado
Wrongful Death Act. In so doing, however, I am not addressing the question of the applicability
of the “only one civil action” provision of §13-21-203(1)(a) to Defendants’ counterclaims based
an insurer’s bad faith breach of the of the duty of good faith and fair dealings, as such claims
arise in tort under Colorado law. See Goodson v. American Standard Ins. Co. of Wisconsin, 89
P.3d 409, 414 (Colo. 2004)(ruling that the special nature of the insurance contract and the
relationship which exists between the insurer and the insured “gives rise to a separate cause of
action arising in tort” for an insurer’s breach of the duty of good faith and fair dealing)(citations

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omitted); Johnson v. Liberty Mut. Fire Ins. Co., 653 F.Supp.2d 1133, 1144 (D.Colo. 2009)(ruling
that every insurance contract is imbued with an implied duty of good faith and fair dealing that is
actionable in tort under Colorado law).
Therefore, I dismiss, as a matter of law, Plaintiff’s request for a declaratory judgment that
this action may not brought against it for UIM benefits for the wrongful death of Martin Braden.
To the extent that Plaintiff also seeks an alternative declaratory judgment that the “proper
plaintiffs” in this suit are James Braden and Bonnie Braden, and not Carolyn Lester, I note that
this question was not addressed by the briefs and, as such, I deny this request and instead will
permit the parties to argue the appropriateness of the opposing parties, and the applicability of
§13-21-203(1)(a) to Defendants’ claims based on Plaintiff’s bad faith breach, in the litigation of
Defendants’ counterclaims.
ACCORDINGLY for the forgoing reasons, I DENY the Plaintiff’s Motion for Summary
Judgment [Doc #40] and I GRANT Defendant’s Cross-Motion for Partial Summary Judgment on
Plaintiff’s Claim for Declaratory Relief [Doc #41]. As a result, SUMMARY JUDGMENT
SHALL ENTER, as a matter of law, in favor of Defendants on Plaintiff’s claim seeking a
declaratory judgment. I AWARD Defendants their costs.

Dated: May

13 , 2015, in Denver, Colorado.
BY THE COURT:
s/Lewis T. Babcock
Lewis T. Babcock, Judge

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