Meadows v. Electric Insurance Company
ORDER denying 11 Motion to Remand to the Jefferson County District Court, by Magistrate Judge Michael E. Hegarty on 2/09/2016.(slibi, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 15-cv-02524-MEH
ELECTRIC INSURANCE COMPANY,
Michael E. Hegarty, United States Magistrate Judge.
Before the Court is Plaintiff’s Objection to Removal from State Court and Motion to Remand
to the Jefferson County District Court [filed November 24, 2015; docket #11]. The parties
consented to this Court’s jurisdiction on December 18, 2015, and the case was reassigned on
December 22, 2015. Dockets ## 16, 18. The matter is fully briefed, and the Court finds oral
argument would not assist in its adjudication of the motion. For the following reasons, Plaintiff’s
motion is denied.
Plaintiff initiated this action in the District Court for the County of Jefferson, Colorado on
October 22, 2015 alleging generally that Defendant breached an insurance contract by denying the
Plaintiff, an insured, the underinsured motorist benefits to which Plaintiff is entitled. Docket #2.
Defendant removed the action to this Court on November 17, 2015 asserting the Court’s diversity
jurisdiction. Docket #1.
Plaintiff objects, not that the Court retains such jurisdiction, but that the insurance contract
contains a provision requiring that the parties “adjudicate” disputes in the county in which the
Plaintiff resides. Defendant counters that the contract provision is specific only to a permissive
arbitration clause, which does not “prohibit litigation elsewhere.” Docket #15 at 2. Further,
Defendant asserts that removal is not a creature of contract and, thus, it is entitled to remove the
action pursuant to federal statute. Id. at 5. Plaintiff replies that the insurance contract is similar to
a contract of adhesion and “a lay person such as the Plaintiff when reading an automobile insurance
contract with terms they have not negotiated would have the reasonable expectation that their
dispute would be determined in a court setting in the county in which they reside rather than in
Federal Court whether the case was arbitrated or litigated.” Docket #19 at 2.
To be removable, a civil action must satisfy the requirements for federal jurisdiction. 28
U.S.C. § 1441(a). Federal jurisdiction in the present removal action is premised on diversity of
citizenship under 28 U.S.C. § 1332. “The courts must rigorously enforce Congress’ intent to restrict
federal jurisdiction in controversies between citizens of different states.” Miera v. Dairyland Ins.
Co., 143 F.3d 1337, 1339 (10th Cir. 1998) (citation omitted). The presumption is therefore “against
removal jurisdiction.” Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995). “It is wellestablished that statutes conferring jurisdiction upon the federal courts, and particularly removal
statutes, are to be narrowly construed in light of [the courts’] constitutional role as limited tribunals.”
Pritchett v. Office Depot, Inc., 404 F.3d 1232, 1235 (10th Cir. 2005).
Where there exist
uncertainties regarding the Court’s jurisdiction, the uncertainties are resolved in favor of remand.
Martin v. Franklin Capital Corp., 251 F.3d 1284, 1290 (10th Cir. 2001).
Plaintiff does not challenge the Court’s jurisdiction over the matter but, rather, argues that
the subject insurance contract governs the selection of a forum for her dispute. Defendant counters
that the forum selection clause in the contract relates solely to arbitration, not litigation, and is
permissive, as opposed to mandatory.
Plaintiff replies that, pursuant to the “reasonable
expectations” doctrine, she had a reasonable expectation that any formal dispute, whether by
arbitration or litigation, would be adjudicated in the county in which she resides (Jefferson County).
First, the Court finds the Plaintiff does not have a “reasonable expectation” under Colorado
law that the forum selection clause applies to litigation of the dispute, in addition to arbitration. The
Colorado Supreme Court has specified “Colorado’s formulation of the doctrine of reasonable
expectations” as follows:
Given insurance policies’ unique nature, which includes significant potential for
insurers to take advantage of or mislead insureds, such policies are subject to
heightened scrutiny, including the doctrine of reasonable expectations, which
obligates insurers to clearly and adequately convey coverage-limiting provisions
to insureds. In Colorado, the reasonable expectations of insureds have succeeded
over exclusionary policy language in two main situations: (1) where an ordinary,
objectively reasonable person would, based on the language of the policy, fail to
understand that he or she is not entitled to the coverage at issue; and (2) where,
because of circumstances attributable to an insurer, an ordinary, objectively
reasonable person would be deceived into believing that he or she is entitled to
coverage, while the insurer would maintain otherwise.
Bailey v. Lincoln Gen. Ins. Co., 255 P.3d 1039, 1048-49 (Colo. 2011) (en banc) (emphasis added).
Thus, in Colorado, the reasonable expectations doctrine is applied to determine the scope of
insurance coverage. Id.; see also Dish Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010,
1015-16 (10th Cir. 2011); Regional Bank of Colo., N.A. v. St. Paul Fire & Marine Ins. Co., 35 F.3d
494, 497 (10th Cir. 1994) (listing cases). The Plaintiff provides no case law, and the Court has
found none, applying the doctrine to a forum selection clause in an insurance contract.
The Court agrees with Plaintiff, though, that “[i]nsurance policies are contracts and must be
construed to carry out the intent of the parties.” Motion, ¶ 15 (citing Bengtson v. USAA Prop. &
Cas. Ins., 3 P.3d 1233 (Colo. App. 2000)).
Whenever possible, the parties’ intent must be ascertained from the policy language
alone. In construing a policy, a court should give words their plain meaning
according to common usage, and avoid strained constructions. Compton v. State
Farm Mutual Automobile Insurance Co., 870 P.2d 545 (Colo. App. 1993).
Unless there is an ambiguity in the terms of a policy, a court should avoid strained
interpretations and should enforce an insurance contract as written. A provision is
ambiguous when it is reasonably susceptible to more than one meaning. Compton v.
State Farm Mutual Automobile Insurance Co., supra. Any ambiguities are to be
construed against the drafter and in favor of the insured. Farmers Insurance
Exchange v. Walther, 902 P.2d 930 (Colo. App. 1995).
Bengtson, 3 P.3d at 1235. Here, the parties agree that the forum selection clause in the subject
contract applies to arbitration of disputes; Plaintiff argues further that the clause can be reasonably
construed as also applying to litigation of disputes. The Court disagrees. The Plaintiff has pointed
to no provision in the contract that permits an interpretation of the clause as applying to anything
other than arbitration. The provision itself reads:
A. If we and an "insured" do not agree:
1. Whether that "insured" is legally entitled to recover damages; or
2. As to the amount of damages which are recoverable by that "insured";
from the owner or operator of an "uninsured motor vehicle", then the matter may be
arbitrated. However, disputes concerning coverage under this Part may not be
Both parties must agree to arbitration. If so agreed, each party will select an
arbitrator. The two arbitrators will select a third. If they cannot agree within 30 days,
either may request that selection be made by a judge of a court having jurisdiction.
B. Each party will:
1. Pay the expenses it incurs; and
2. Bear the expenses of the third arbitrator equally.
C. Unless both parties agree otherwise, arbitration will take place in the county in
which the "insured" lives. Local rules of law as to procedure and evidence will apply.
A decision agreed to by at least two of the arbitrators will be binding as to:
1. Whether the "insured" is legally entitled to recover damages; and
2. The amount of damages. This applies only if the amount does not exceed
the minimum limit for bodily injury liability specified by the financial
responsibility law of the state in which "your covered auto" is principally
garaged. If the amount exceeds that limit, either party may demand the right
to a trial. This demand must be made within 60 days of the arbitrators’ decision. If this demand is not made, the amount of damages agreed to by the
arbitrators will be binding.
Personal Auto Policy, Part C, docket #11-1 at 10. Neither the clause itself nor any other provision
in the contract would lead a reasonable person to believe that all disputes under the contract would
be adjudicated “in the county in which the insured lives,” particularly where the provision specifies
that “disputes concerning coverage under this Part may not be arbitrated.” Id.
In addition, the Court agrees that the clause is “permissive” as opposed to “mandatory.”
“The difference between a mandatory and permissive forum selection clause is that ‘[m]andatory
forum selection clauses contain clear language showing that jurisdiction is appropriate only in the
designated forum.’” Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921, 926 (10th
Cir. 2005) (quoting Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 321 (10th Cir.
1997)). “In contrast, permissive forum selection clauses authorize jurisdiction in a designated forum,
but do not prohibit litigation elsewhere.” Id. at 926-27 (emphasis added). “[W]hen venue is
specified, such as when the parties designate a particular county or tribunal, and the designation is
accompanied by mandatory or obligatory language, a forum selection clause will be enforced as
mandatory.” Id. at 927.
However, “[w]here only jurisdiction is specified, [the court] will
nonetheless enforce a forum selection clause if there is some additional language indicating the
parties’ intent to make venue exclusive.” Id.
Here, the plain language of the forum selection clause specifies that “the matter may be
arbitrated” and “[b]oth parties must agree to arbitration.” Docket #11-1 at 10 (emphasis added).
The clause certainly does not prohibit litigation elsewhere, as it also specifies that “disputes
concerning coverage under this Part may not be arbitrated.” Id. Further, the clause does not waive
Defendant’s right to remove the cause pursuant to 28 U.S.C. § 1441(a). Pine Tel. Co., Inc. v.
Alcatel-Lucent USA, Inc., 486 F. App’x 724, 726 (10th Cir. 2012); see also Milk ‘N’ More, Inc. v.
Beavert, 963 F.2d 1342, 1346 (10th Cir. 1992) (“[A] waiver of one’s statutory right to remove a case
from a state to a federal court must be ‘clear and unequivocal.’”) (citations omitted). Accordingly,
the Court cannot conclude the Plaintiff had a reasonable expectation that disputes under the
insurance contract would be adjudicated in the county in which she resides and, thus, there is no
sound basis on which to justify remand in this case.
Based on the entire record and for the reasons stated above, the Plaintiff’s Motion to Remand
to the Jefferson County District Court [filed November 24, 2015; docket #11] is denied.
Entered and dated at Denver, Colorado, this 9th day of February, 2016.
BY THE COURT:
Michael E. Hegarty
United States Magistrate Judge
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