O'Sullivan v. Geico Casualty Company
Filing
152
ORDER Regarding Pre-Trial Legal Issues, Including Those Raised in 142 Proposed Jury Instructions filed by Geico Casualty & 150 Objections filed by Donald O'Sullivan by Judge William J. Martinez on 4/10/2017. (wjmlc2, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 15-cv-1838-WJM-MJW
DONALD O’SULLIVAN,
Plaintiff,
v.
GEICO CASUALTY COMPANY,
Defendant.
ORDER
This insurance dispute is pending under the Court’s diversity jurisdiction, 28
U.S.C. § 1332, and set for jury trial to commence on April 10, 2017. Now before the
Court are Defendant’s Amended Disputed Jury Instructions (ECF No. 142), and
Plaintiff’s Objections thereto (ECF No. 150). Although not filed as a motion, the Court
construes Defendant’s filing, in part, as a Motion for Bifurcation and a Motion to Modify
the Final Pretrial Order. To rule on those requests, and because the issues presented
warrant resolution and clarification before trial begins, the Court enters this Order,
denying Defendant’s request for relief for the reasons explained below.1
I. BACKGROUND
The factual and legal background have been detailed in the Court’s prior Orders.
(See generally ECF Nos. 95, 99.) Familiarity with that background is presumed but a
1
Consistent with the rulings in this Order, the Court will separately address the parties’
requested jury instructions and objections at a jury instruction charging conference to be held at
the close of evidence, in the usual course.
brief recitation of relevant procedural history is helpful here.
In short, Plaintiff alleges that when he purchased an insurance policy from
Defendant in August 2013, Defendant did not provide an offer of
uninsured/underinsured motorist (“UM/UIM”) coverage in a manner that complied with
Colorado law, specifically with the requirements of Colorado Revised Statutes
§ 10-4-609(2), as interpreted in Allstate Insurance Co. v. Parfrey, 830 P.2d 905 (Colo.
1992). As a result, Plaintiff claims that he is entitled to UM/UIM coverage up to a limit
of $100,000 for injuries he suffered in an accident in 2014, while Defendant maintains
that Plaintiff was entitled to only a $25,000 limit for UM/UIM coverage, as the amount
written into Plaintiff’s insurance policy.
In this lawsuit, Plaintiff pursued four claims for relief: (1) breach of contract; (2)
breach of the duty of good faith and fair dealing; (3) unreasonable delay or denial of
insurance benefits, Colo. Rev. Stats. §§ 10-3-11115 & -1116; and (4) exemplary
damages. (See ECF No. 41.) Although not set out as a separate claim for reformation
of contract, Plaintiff also pled that “Geico was required to reform its policy and extend
$100,000 of underinsured motorist benefits to [Plaintiff].” (Id. ¶ 21; see also id. ¶ 36.)
This claim that “Defendant had an obligation to reform the UIM policy to 100k UIM
limits” remained in the Final Pretrial Order as entered July 26, 2016, and remains in the
Amended Final Pretrial Order entered March 23, 2017. (ECF No. 87 at 2; ECF No. 136
at 2–3.)
At the summary judgment phase, Defendant acknowledged that it had “issued a
Policy to [Plaintiff],” and that “Plaintiff . . . filed this action to reform his insurance policy.”
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(ECF No. 60 at 5; id. at 8 ¶ 1.)2 However, Defendant moved for summary judgment,
arguing that it was “entitled to summary judgment . . . as a matter of law, on [Plaintiff’s]
claim for contract reformation,” because Defendant argued the Court should find its
notification and offer of UM/UIM coverage had been sufficient as a matter of law under
Parfrey. (See id. at 32.) The Court disagreed, ruling that Defendant had not shown its
offer of UM/UIM coverage was sufficient as a matter of law, and leaving the issue for
the jury to decide. (See generally ECF No. 95 at 4–21; id. at 22 n.5.)
The parties then entered a number of agreements which Defendant docketed
with the Court as the “Parties’ Stipulations.” (ECF No. 100.) Most significantly for
present purposes, the parties agreed to the following: (a) that the jury would decide
whether Defendant extended a sufficient notification and offer of UM/UIM insurance to
Plaintiff under § 10-4-609(2) and Parfrey; and (b) what consequences would follow from
the jury’s answer to that question:
The parties agree the first issue for the jury to decide is
whether GEICO extended an offer regarding
uninsured/underinsured motorist benefits in a reasonable
manner calculated to permit the insured to make an
informed decision in compliance with Colorado law. If the
Jury answers yes to this question the case is over and the
Plaintiff loses. If the jury answers no to this question, then
they will answer the next question as to whether the delay or
denial was without a reasonable basis. If the jury answers
no to the first question concerning whether a compliant offer
was made, then the parties agree that GEICO will pay the
disputed $75,000 uninsured/underinsured m otorist benefit in
full satisfaction of the breach/reformation of contract claim
regardless of the jury’s answer to the question concerning
2
All citations to docket entries in this Order cite to the page number in the ECF header,
which sometimes differs from a document’s internal pagination, as where documents contain
prefatory materials such as a table of contents.
3
whether the delay or denial was without a reasonable basis,
subject to GEICO’s appellate rights.
(Id. ¶ 1)
In the same stipulations, Plaintiff agreed to dismiss all claims “with the exception
of breach of contract and his claim for Unreasonable Delay and Denial of Benefits,” and
Defendant agreed to dismiss certain defenses. (Id. ¶¶ 2–3; see also ECF No. 6 at 9–10;
ECF No. 44 at 9–10.) The parties further “agree[d] not to try the issue of damages” (id.
at 2) and that if the jury “determines that GEICO’s conduct/offer . . . was delayed or
denied without a reasonable basis the Court will apply the damages penalties on the [§]
10-3-1116 claim after the verdict based on the disputed benefit amount of $75,000.”
(Id. ¶ 6.) The parties also agreed Plaintiff would call only one of his two disclosed
experts, and would do so in his case in chief. (Id. ¶¶ 4–5.) These stipulations were
also reflected, with minimal changes, in the proposed Amended Final Pretrial Order,
which the parties submitted at the Court’s direction, and which the Court entered on
March 23, 2017. (ECF Nos. 105, 113 at 4–5, 136 at 4–5.)
However, in the parties’ subsequent filings, particularly Defendant’s amended
proposed jury instructions (ECF No. 142), the parties take different views of the effect
and consequences of these stipulations. The parties’ disputes implicate what questions
remain to be put to the jury, how the Court should act on Plaintiff’s reformation of
contract claim, which party bears the burden of proof, and whether trial may proceed in
one phase or must be bifurcated. (See ECF No. 142.) These issues require resolution
before trial begins.
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II. ANALYSIS
A.
Status and Effect of the Parties’ Stipulations
Defendant does not explicitly ask the Court to set aside the parties’ stipulations,
but the Court concludes that it could accept Def endant’s positions only by doing so.
Accordingly, the first question to resolve is whether the Court will enforce the
stipulations. “A stipulation is an admission which cannot be disregarded or set aside at
will.” Wheeler v. John Deere Co., 935 F.2d 1090, 1097 (10th Cir. 1991). W hile
stipulations may be withdrawn “to prevent manifest injustice,” this Court is “vested with
broad discretion in determining whether to hold a party to a stipulation or whether the
interests of justice require that the stipulation be set aside.” Id. at 1098.
Here, the Court will enforce the parties’ stipulations. In addition to the f act that
Defendant fails to candidly ask the Court to alter them, the parties’ stipulations were not
only signed by both parties and docketed with the Court but were plainly entered with
the clear purpose of setting the scope and terms of trial. Accordingly, and by Court
Order, the stipulations were then also incorporated into the Amended Final Pretrial
Order. (ECF No. 136.) That Order is the controlling document for trial and can only be
altered “to prevent manifest injustice.” Fed. R. Civ. P. 16(e); Wilson v. Muckala, 303
F.3d 1207, 1215 (10th Cir. 2002). Defendant has not shown that manifest injustice
would occur if the stipulations are enforced or the Pretrial Order is not altered.
Significantly, the parties’ agreement included negotiated concessions by each
side. Plaintiff agreed not to pursue certain of his previously-pled claims, and Defendant
gave up certain defenses. The parties negotiated for a streamlined trial by simplifying
the damages issues to be tried and reducing the number of expert witnesses. In short,
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both parties gave up certain rights and gained certain benefits, including the benefits to
both parties from reducing the anticipated time, complexity, and expense of trial. To put
this in contract law terms, the Court finds that the parties’ stipulations reflected their
negotiated agreement to explicitly-recorded terms and were supported by adequate
consideration. At the March 24, 2017 Final Trial Preparation Conference, counsel for
both parties confirmed this understanding of the stipulations, articulating that the
parties’ stipulations reflected the result of the parties’ settlement negotiations.
Accordingly, the Court treats the stipulations not only as formal stipulations and the
controlling Pretrial Order, but also as a partial settlement agreement. See Yaekle v.
Andrews, 195 P.3d 1101, 1111 (Colo. 2008) (courts enforce settlement agreements
where they constitute enforceable contracts).
In sum, the Court will enforce the unambiguous terms of the parties’ stipulations.
The necessary implications of those stipulations are mostly dispositive of the presentlydisputed issues, as set out below.
B.
Need for Plaintiff to Prove Existence of a Contract
Defendant argues that “the existence of a contract has not been stipulated to,”
and that Plaintiff therefore must prove by a preponderance of the evidence that a
contract exists, before any question of contract reformation and/or breach of contract
may arise. (See ECF No. 142 at 4–5.) This argument fails for two clear reasons.
First, the parties’ stipulations and the Amended Final Pretrial Order expressly
provide that “the first issue for the jury to decide is whether GEICO extended an
[UM/UIM] offer . . . in a reasonable manner.” (ECF No. 136 at 4 (emphasis added).)
Defendant’s new argument that the first issue for jury to decide is actually the existence
6
of a contract thus directly contradicts the parties’ enforceable stipulations, as well as the
controlling Pretrial Order.
Second, Defendant has repeatedly admitted the existence of its contract with
Plaintiff (i.e., the insurance policy) in this case, including in Defendant’s Motion for
Summary Judgment (ECF No. 60 at 3 ¶ 1 (“[Plaintiff] was insured under [a] GEICO
Casualty Policy . . . in effect on the date of the accident”)), and elsewhere in the
operative Pretrial Order (see ECF No. 136 at 2–3). These statements constitute judicial
admissions. Asarco, LLC v. Noranda Mining, Inc., 844 F.3d 1201, 1212 n.3 (10th Cir.
2017) (“Judicial admissions are formal, deliberate declarations which a party or his
attorney makes in a judicial proceeding for the purpose of dispensing with proof of
formal matters or of facts about which there is no real dispute.”). Defendant’s
admission that a contract exists is thus “binding in the entirety of the case,” id., and has
“the effect of withdrawing a fact from issue and dispensing wholly with the need for
proof of the fact.” Guidry v. Sheet Metal Workers Intern. Ass’n, Local 9, 10 F.3d 700,
716 (10th Cir. 1993). Having previously admitted the existence of a contract, Defendant
cannot argue, disingenuously and on the eve of trial, that Plaintiff must prove this longconceded point, “about which there is no real dispute.” Asarco, 844 F.3d at 1212 n.3.
C.
Contract Reformation Claim
Defendant also argues that “Plaintiff’s pleading does not assert a claim for
contract reformation,” and that defendant “does not waive its right to have the Court
judicially reform the contract.” (ECF No. 142 at 1–2.) This argument suggests that in
addition to the two jury determinations to which the parties have stipulated, the trial of
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this matter must incorporate a third step, that is, of the judicial determination of the
equitable remedy of contract reformation.
Initially, the Court disagrees that Plaintiff has not pled a claim for contract
reformation. Contract reformation, although not set out as a separate claim, was
explicitly referenced in Plaintiff’s complaint and amended complaint. Moreover, it is
included in the Amended Final Pretrial Order, which is now the operative pleading. In
addition, contract reformation was the central argument to which Defendant addressed
its motion for summary judgment.
Defendant’s argument is again foreclosed by the unambiguous terms and clear
intent of the parties’ stipulations. The parties stipulated that “If the jury answers no to
. . . whether a compliant offer was made, then the parties agree that GEICO will pay the
disputed $75,000 . . . benefit in full satisfaction of the breach/reform ation of contract
claim.” (ECF No. 100 ¶ 1.) This stipulation both acknowledges that there is a pending
contract reformation claim, and also embodies an express agreement of what result will
follow from the jury’s first determination. Regardless of whether this obligation is
understood as a new contractual agreement, a modification to the parties’ insurance
contract, or an enforceable stipulation as to how the equitable remedy of contract
reformation will be tried and resolved, the result is the same: Defendant has agreed that
it “will pay” the disputed amount, if the jury finds it did not make a sufficient UM/UIM
offer. Further, if the jury concludes that Defendant did not make a sufficient UM/UIM
offer, then Defendant has clearly agreed to have the jury go on to determine in this trial
whether “UM/UIM benefits [were] delayed or denied without a reasonable basis.” (ECF
No. 100 ¶¶ 1, 6.) Since the Court finds that the parties’ stipulations unambiguously
8
reduce the issues to be tried to two jury determinations, it rejects Defendant’s argument
that an additional step of contract reformation must be interjected between the two.
This result is consistent with, and compelled by, the operation of Colorado law on
this issue. As the Court previously ruled, “when a policy is violative of a statute,
reformation is . . . required.” (ECF No. 95 at 4 (emphasis added) (citing Clark v. State
Farm Mut. Auto Ins. Co., 433 F.3d 703, 710 (10th Cir. 2005) and Thompson v. Budget
Rent-A-Car Sys., Inc. 940 P.2d 987, 990 (Colo. App. 1996)); cf. Morris v. Travelers
Indem. Co. of Am., 518 F.3d 755, 758 (10th Cir. 2008) (“Failure to make a compliant
offer of APIP [enhanced personal insurance protection] benef its violates the statute and
results in automatic reformation of the contract to include such additional coverage .”
(emphasis added)).
Thus, given the parties’ stipulations and the procedural history, no separate
phase of judicial proceedings is required to enter contract reformation. It is the required
and automatic consequence of a jury finding that Defendant’s UM/UIM offer was legally
deficient. Even if, as an abstract legal matter, a contract reformation has taken place,
the parties’ stipulations and Colorado law both establish that this follows automatically,
and no separate judicial action or proceeding is required to effect this remedy.
D.
Bifurcation
Related to the argument addressed above, Defendant also argues that a
contract reformation must precede any jury trial on the issue of unreasonable delay or
denial, and further that “if the policy is reformed Defendant must be provided the time
allowed by [Colo. Rev. Stat.] § 10-4-642 to pay the additional benefits due under the
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reformed contract.” (ECF No. 142 at 2.) Therefore, Defendant argues, the trial must be
bifurcated. (Id.)
The Court has twice previously rejected Defendant’s requests for bifurcation in
this case (ECF Nos. 91, 98), and now does so again, for many reasons. First, as
explained above, the Court rejects Defendant’s argument that a separate judicial
determination of contract reformation must be interjected between the two jury
determinations. Given the parties’ stipulations and the procedural history, no separate
judicial proceeding is required to reform the contract before the jury can address
Plaintiff’s unreasonable delay/denial claim under §§ 10-3-1115 & -1116.
Second, the parties’ stipulations evince a clear intention for a single jury trial to
address both: (1) whether Defendant made a sufficient notification and offer regarding
UM/UIM coverage, and (2), if not, whether Defendant unreasonably delayed or denied
paying benefits. (See ECF No. 100 ¶¶ 1 & 6.) Defendant’s last-ditch request for
bifurcation appears to be little more than an expression of buyer’s remorse and an
attempt to back out of the clear terms of its binding stipulation.
Third, Defendant’s request is grossly untimely and procedurally improper. At the
Final Trial Preparation Conference, Defendant never mentioned bifurcation. The Court
granted leave for the parties to file additional disputed jury instructions relating to the
burden of proof. (See infra, part II.E; see also ECF No. 138.) Without first seeking
leave, Defendant submitted, for a third time, its request that “bifurcation . . . must take
place” but without filing a separate motion, instead lodging the request in its brief
regarding jury instructions. (ECF No. 142 at. 2.) This request is entirely untimely,
coming one week before trial, and was also filed in an improper fashion. See
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D.C.COLO.LCivR 7.1(d) (“A motion shall be filed as a separate document.”).
Finally, given the Court’s prior denial of the request for bifurcation, Defendant
fails to raise an argument that either cites or meets the controlling standard for
reconsideration. In this Circuit, grounds warranting a motion to reconsider include (1)
an intervening change in the controlling law, (2) new evidence previously unavailable,
and (3) the need to correct clear error or prevent manifest injustice. Servants of the
Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). Def endant’s request neither
addresses nor meets any of these standards.
E.
Burden of Proof
Finally, the Court turns to the issue which the parties had identified at the Final
Trial Preparation Conference as the justification for allowing an additional round of
proposed jury instructions and authorities, namely, which party bears the burden of
proof on the question of whether Defendant provided an adequate notification and offer
regarding UM/UIM coverage under § 10-4-609(2) and Parfrey. Defendant contends
that the burden remains on Plaintiff as the party who must prove his breach of
contract/contract reformation claim and the party seeking relief (see ECF No. 142 at
4–7), while Plaintiff contends the burden is on Defendant to show that it complied with
the statutory requirement and fulfilled its duty under Parfrey (see ECF No. 150 at 5–7).
In addressing the appropriate sequence of expert disclosures, the Court
previously noted that “[a]s to the adequacy of Geico’s offer of UM/UIM benefits under
Parfrey, this appears to be an issue on which Geico bears the burden of proof.” (ECF
No. 99 at 25 (citing Morris, 518 F.3d at 761 and Johnson v. State Farm Mut. Auto Ins.
11
Co., 158 Fed. App’x 119 (10th Cir. 2005)). In Morris, the Tenth Circuit also cited
favorably to Hill v. Allstate Insurance Co., 479 F.3d 735, 742 (10th Cir. 2007), which in
turn had cited to Johnson, 158 Fed. App’x at 122. All of these decisions, however,
arose at the summary judgment phase.3 The parties have not cited any prior cases
which have gone to trial on the question of the adequacy of an insurer’s UM/UIM offer
under the Parfrey standard, and the Court has not located any.
While the analysis of burdens differs at the summary judgment phase, the Tenth
Circuit’s analysis in Johnson—since favorably cited in two published decisions—is the
most informative starting point. In Johnson, the parties had filed cross-motions for
summary judgment as to the adequacy of the insurer’s offer of insurance under
statutory requirements. In affirming summary judgment for the insurer, the Tenth
Circuit noted without criticism that the parties had “agree[d] that [the insurer] would bear
the ultimate burden of persuasion at trial.” 158 Fed. App’x at 121 (emphasis added).
Thus, at the summary judgment phase, the insurer had the initial burden t o make an
affirmative showing that its offer had been sufficient. See Id. at 121, 122. In Morris, the
Tenth Circuit recapitulated that Hill had “cited Johnson favorably in concluding that [the
insurer] had met its burden to show that it made a compliant offer.” 518 F.3d at 761.
Although this statement does not explicitly distinguish between the burdens at summary
judgment or at trial, the Court now concludes that Johnson, Hill, and Morris, taken
together, reflect that the insurer bears the ultimate burden at trial on the question of
whether its notification and offer regarding a statutorily-required option of insurance
3
The Court addressed these and related cases in detail in denying summary judgment.
(See ECF No. 95 at 6–14.)
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coverage complied with the relevant law (here, § 10-4-609(2) and Parfrey). Especially
given the lack of any contravening authority on this point, the Court must follow this
published authority from the Tenth Circuit, namely Hill and Morris.
Moreover, this allocation of the burden of proof as to the Parfrey question is
consistent with the general principles allocating the burdens of proof between insureds
and insurers, including as to UM/UIM coverage disputes. “The issue of whether an
effective offer of UM/UIM coverage was made is a factual one. Likewise, the validity of
a waiver or rejection of UM/UIM coverage is normally a question of fact to be
determined by a jury. The insurer has the burden of proving that an adequate offer w as
made and that the insured intelligently and know ingly waived uninsured motorist
coverage.” 9 Steven Plitt et al., Couch on Insurance § 122:40 (Dec. 2016 update)
(collecting cases) (emphasis added); see also, e.g., id. § 30:19 (on issue of whether a
policy of insurance has been cancelled, the burden of proof by a preponderance of the
evidence “generally applies,” but “[a]n insurer . . . clearly bears the burden of proof of
compliance with the applicable statute”).
To the extent Defendant argues for a different result based on general principles
regarding burdens of proof (ECF No. 142 at 5–7), the Court finds those arguments are
predicated on the arguments rejected above, namely that Plaintiff must first prove the
existence of a contract and/or that a separate judicial act ref orming the contract is
required. Moreover, as between the more specific authority discussed above and the
general authority regarding burdens of proof relied upon by Defendant, the more
specific authority controls.
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In sum, the Court now explicitly holds that at trial Defendant bears the burden of
showing by a preponderance of the evidence that its notification and offer regarding
UM/UIM coverage were legally sufficient under § 10-4-609(2) and Parfrey.
III. CONCLUSION
For the reasons explained herein, the Court FINDS and ORDERS as follows:
1.
Defendant’s request for bifurcation of trial and/or for reconsideration of the
Court’s previous denials of bifurcation (see ECF No. 142 at 2) is DENIED;
2.
The Court construes Defendant’s Amended Disputed Jury Instructions With
Authority (ECF No. 142) as a request to set aside or modify the parties’
previously-entered stipulations and/or to modify the final pretrial order; as
construed, that request is DENIED; and,
3.
This matter remains set for a jury trial to commence on April 10, 2017. The
Court’s jury instructions and trial procedures will be consistent with Court’s
rulings in this Order.
Dated this 10th day of April, 2017
BY THE COURT:
William J. Martínez
United States District Judge
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