Allen v. United Services Automobile Association

Filing 33

ORDER denying 22 Motion to Stay. By Magistrate Judge Nina Y. Wang on 12/16/2016. Text Only Entry (nywlc1)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 16-cv-01056-RM-NYW
JEFFREY ALLEN, an individual,
Plaintiff,
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION,
a Texas corporation,
Defendant.

ORDER ON PLAINTIFF’S MOTION TO STAY
Magistrate Judge Nina Y. Wang
This action is before the court on Plaintiff Jeffrey Allen’s “Motion to Stay Pending
Ruling on Certified Questions in Parallel Case” (“Motion to Stay”). [#22, filed August 3, 2016].
The Motion to Stay was referred to the undersigned Magistrate Judge pursuant to the Order
Referring Case dated June 22, 2016 [#11] and the memorandum dated October 24, 2016 [#29].
Upon review and consideration of the Motion, the accompanying briefs, the entire case file, and
the applicable law, this court ORDERS that the Motion to Stay is DENIED.
BACKGROUND
Plaintiff Jeffrey Allen commenced this civil action on May 9, 2016 by filing a Class
Action Complaint against Defendant United Services Automobile Association (“Defendant” or
“USAA”) alleging that USAA “represents that its coverage will cover accident-related injuries
but fails to disclose to its insureds a time limitation on medical payments coverage under their

Colorado medical payment coverages,” in violation of Colorado Revised Statute § 10-4-635
(“Med-Pay statute”). [#1 at ¶ 2]. The action is brought on behalf of all insureds of USAA who
have incurred damages including but not limited to loss of benefits associated with coverage for
medical payments (“Med-Pay”). The class consists of two subclasses: those “who suffered
injuries in a covered automobile accident, and whose claims did not exceed $5,000 or the dollar
amount of Med-Pay coverage provided in the policy, whichever is greater” (the “Denied and
Deterred Claims Subclass”); and those “whose policies remain in effect, or will become
effective, during and/or after the pendency of this litigation, or who are members of the Denied
and Deterred Claims Subclass” (the “Injunction Subclass”). [#1 at 12-13]. Plaintiff asserts the
following five claims for relief: (1) Deceptive Trade Practices-Violation of C.R.S. § 6-1-105(1)
(Plaintiff and All Subclasses); (2) Bad Faith Breach of Insurance Contract (Denied and Deterred
Claims Subclass); (3) Violation of C.R.S. § 10-3-1115 (Denied and Deterred Claims Subclass);
(4) Declaratory Relief (Injunction Subclass); and (5) Breach of Contract (Denied and Deterred
Claims Subclass). Plaintiff invokes federal diversity jurisdiction pursuant to the Class Action
Fairness Act, 28 U.S.C. § 1332(d).
Upon Defendant’s unopposed motion, the court continued the Scheduling Conference
originally set for July 14, 2016 to August 5, 2016. See [#14; 16]. On August 3, 2016, Plaintiff
filed the Motion to Stay, on the basis that another court in this District has certified questions
regarding the legality of Med-Pay time limits directly to the Colorado Supreme Court in a case
he contends is parallel to this one, Nguyen v. American Family Mutual Ins. Co., No. 15-CV00639-WJM-KLM [ECF No. 52] (D. Colo. Oct. 8, 2015). See [#22]. At the Scheduling
Conference, this court discussed the Motion to Stay with the Parties, set a second Scheduling

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Conference, and ordered the Parties to file a status report on or before October 4, 2016. [#23].
The Parties briefed the Motion to Stay, see [#24; #25], and USAA filed an Answer on September
26, 2016. [#26].
The Parties timely submitted their Joint Status Report advising that the Colorado
Supreme Court had not yet ruled on whether to accept the certified questions in Nguyen. [#27].
Plaintiff restated his position that the court should stay the entire case pending a ruling from the
Supreme Court, but conceded that discovery should commence if the court permits USAA to file
an early dispositive motion. [Id.] USAA communicated its intention to file an early motion for
summary judgment as to Mr. Allen’s claims, as well as its position that the motion does not
require the Parties to engage in discovery. Nonetheless, USAA did not object to the Parties
commencing non-class discovery of Mr. Allen’s claims, to the extent Plaintiff believes such
discovery is necessary. [Id.] The Parties represented they would file a proposed scheduling
order in advance of the second Scheduling Conference. [Id.]
The Parties did not submit a proposed scheduling order and this court converted the
October 11, 2016 Scheduling Conference into a Status Conference, at which the undersigned
further discussed with the Parties the Motion to Stay and the need for a pre-trial schedule. See
[#28]. During that October 11 Status Conference, this court set another Scheduling Conference
to be held December 16, 2016. Thereafter, on October 24, 2016, the presiding judge, the
Honorable Raymond P. Moore, referred the Motion to Stay to the undersigned. See [#29]. On
December 13, 2016, USAA filed the Motion for Summary Judgment, seeking entry of summary
judgment on Mr. Allen’s claims. See [#30].

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ANALYSIS
Plaintiff characterizes the theories of liability in this lawsuit as follows: the one-year time
limit on Med-Pay coverage imposed in USAA’s automobile insurance policies is void because it
violates Colorado’s statutory requirements for coverage of all medical expenses; and USAA
failed to disclose the time limit as required by Colorado law. [#22 at 1]. Plaintiff contends that a
stay of this action is appropriate because the questions the Honorable William J. Martinez
certified to the Colorado Supreme Court in Nguyen would allow the Court to clarify the law
underlying the claims advanced here. [Id. at 3].
USAA does not oppose a stay of discovery at this stage, but objects to a stay of the case
in its entirety on the basis that a ruling in Nguyen would have no impact on its Motion for
Summary Judgment. [Id. at 1]; see [#24]. USAA argues that even if the Colorado Supreme
Court accepts the questions for certification, the only question relevant to Mr. Allen’s claims is
whether Colorado law prohibits insurers from imposing a time limit on Med-Pay coverage. [#24
at 1]. USAA contends that this question has been resolved in its favor “by every state and
federal court to have addressed the issue, and there is no reason to believe the Colorado Supreme
Court will diverge from these holdings.” [Id. at 1-2 (emphasis omitted)].
I.

Applicable Law
Whether to stay discovery is a matter left to the sound discretion of the trial court. Wang

v. Hsu, 919 F.2d 130, 130 (10th Cir. 1990). Although courts in this District generally disfavor
the stay of all discovery, see Wason Ranch Corporation v. Hecla Mining Co., No. 07–cv–00267–
EWN–MEH, 2007 WL 1655362, at *1 (D. Colo. June 6, 2007), such a stay may be appropriate
pending the resolution of a dispositive motion. Ellis v. J.R.’s County Stores, Inc., 12–cv–01916–

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CMA–KLM, 2012 WL 6153513, at *1 (D. Colo. Dec. 11, 2012). See also Fed. R. Civ. P. 26(c)
(authorizing the court to issue, for good cause shown, “an order to protect a party or person from
annoyance, embarrassment, oppression, or undue burden or expense”). The Federal Rules of
Civil Procedure do not expressly provide for a stay of proceedings, however the power to stay “is
incidental to the power inherent in every court to control the disposition of the causes on its
docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N.
Am. Co., 299 U.S. 248, 254–55 (1936) (citing Kansas City S. Ry. Co. v. United States, 282 U.S.
760, 763 (1931)).
In determining whether a stay is appropriate, the court weighs interests such as whether
defendants are likely to prevail in the civil action, whether defendants will suffer irreparable
harm, whether the stay will cause substantial harm to other parties to the proceeding, and the
public interests at stake. United Steelworkers of Am. v. Oregon Steel Mills, Inc., 322 F.3d 1222,
1227 (10th Cir. 2003).

The court may also consider plaintiff’s interests in proceeding

expeditiously with the civil action and the potential prejudice to plaintiff of a delay, the burden
on the defendants, and the convenience to the court. String Cheese Incident, LLC v. Stylus
Shows, Inc., No. 1:02–CV–01934–LTB–PA, 2006 WL 894955, at *2 (D. Colo. Mar. 30, 2006)
(citing FDIC v. Renda, No. 85–2216–O, 1987 WL 348635, at *2 (D. Kan. Aug. 6, 1987)).
“[W]hen one issue may be determinative of a case, the court has discretion to stay discovery on
other issues until the critical issue has been decided.” Ellis, 2012 WL 6153513, at *1 (quoting 8
Charles Alan Wright, et al., Federal Practice & Procedure § 2040, at 521–22 (2d ed.1994))
(further citations omitted). See also Chavous v. D.C. Fin. Responsibility & Mgmt. Assistance
Auth., 201 F.R.D. 1, 2 (D.D.C. 2001) (“A stay of discovery pending the determination of a

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dispositive motion is an eminently logical means to prevent wasting the time and effort of all
concerned, and to make the most efficient use of judicial resources.”) (internal quotation marks
and citation omitted).
II.

Application
A.

Similarities Between the Present Case and Nguyen v. American Family Ins.
Co.

In Nguyen v. American Family Ins. Co., plaintiffs Mong-Tuyen Nguyen and Brandi
Wallace asserted identical claims, also in a class action complaint, regarding defendants’
American Family Mutual Insurance Company (“American Family”) and USAA General
Indemnity Company (“USAA General”) inclusion of a one-year time limitation in Med-Pay
coverage. Nguyen, 15-cv-00639-WJM-KLM, [ECF Nos. 1, 50]. Plaintiff Nguyen sued pursuant
to a policy she purchased from American Family; Plaintiff Wallace sued pursuant to a policy
issued by USAA General to her spouse under which she was covered. These plaintiffs’ legal
theories were the same as Mr. Allen’s, i.e., the time limitation violates Colorado law, or the
defendants failed to disclose the time limitation in their summary disclosures.

The same

attorneys who represent Mr. Allen represented the Nguyen plaintiffs, and the same attorneys who
represent USAA here represented USAA General. Compare [#1] with Nguyen, 15-cv-00639WJM-KLM, [ECF 50]. American Family moved to dismiss the complaint for failure to state a
claim, plaintiffs moved the court to certify questions to the Colorado Supreme Court, and USAA
General filed an early motion for partial summary judgment. Nguyen, 15-cv-00639-WJM-KLM,
[ECF Nos. 14, 21, 33]. The plaintiffs’ original complaint in the Nguyen asserted only four
claims. With leave of court and after the motion to dismiss, motion to certify, and motion for
partial summary judgment were fully briefed, plaintiffs added a fifth claim for breach of
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contract; the amended complaint did not moot the then-pending motions. See id. at [ECF Nos.
48, 50].
As is relevant here, USAA General moved for summary judgment1 on several bases: a
time limitation on Med-Pay benefits is not void under Colorado law; to the extent USAA owed a
duty to disclose, it owed that duty to the policyholder or applicant, not Plaintiff Wallace, and
USAA General did disclose the time limitation in the policy; and Plaintiff Wallace’s claims are
time-barred. Id. at [ECF No. 33 at 2]. First, USAA relied on Tenth Circuit, District of Colorado,
and Colorado state opinions and orders to assert that courts have rejected the contention that the
Med-Pay statute prohibits time limits on Med-Pay coverage. Id. at [ECF No. 33 at 6 (citing
Countryman v. Farmers Ins. Exch., 545 F. App’x 762, 766 (10th Cir. 2013); Baker v. Allied
Prop. & Cas. Ins. Co., 939 F. Supp. 2d 1091, 1102-03 (D. Colo. 2013); Cortez v. USAA GIC
Cas. Ins. Co., No. 11CV148, ¶¶ 18-19 (Dist. Ct., Garfield Cnty., Colo. Aug. 31, 2012))]. USAA
General argued it could not “knowingly violate a requirement to provide time-unlimited med-pay
benefits when there is no indication that such a requirement even exists,” id. at [ECF No. 33 at
7], and that Wallace’s inability to demonstrate knowledge or unreasonable conduct as to USAA
General precluded her claims for violation of Colorado Consumer Protection Act (“CCPA”),
Colo. Rev. Stat. § 6-1-105, and for common-law and statutory bad faith. With respect to the
second theory of liability, that USAA General failed to disclose the time limitation in its
summary disclosure, USAA General argued it owed no duty to disclose to Wallace, as opposed
to the policyholder.

USAA General further argued the summary disclosure included the

statutorily required language regarding Med-Pay, and the text of that disclosure expressly
1

The motion was styled “partial” because Nguyen asserted no claims against USAA General; the
motion sought dismissal of all of Wallace’s claims.
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advised the policyholder “that he should read the complete policy and that all coverage under the
Policy was subject to the terms, conditions, and exclusions contained therein.” Id. at [ECF No.
33 at 9]. Finally, USAA General argued that Wallace’s claims were time-barred under the
applicable one-, two-, and three-year statutes of limitations because she did not commence the
action until three and a half years after she had constructive and actual knowledge of the oneyear Med-Pay time limitation. Id. at [ECF No. 33 at 13].
Upon review of the motions and accompanying briefs, Judge Martinez granted USAA
General and American Family’s motions in part and dismissed the CCPA and bad faith claims
with prejudice, and denied the motions without prejudice as to the declaratory judgment and
breach of contract claims. Nguyen, 15-cv-00639-WJM-KLM, [ECF No. 52]. Judge Martinez
also granted the motion to certify in part, and certified the following questions:
a. Does Colorado Revised Statute § 10-4-635 (“Med-Pay statute”), or any other
principle of Colorado law or public policy, prohibit an insurer from imposing
a time limit on coverage provided under the Med-Pay statute?
b. If the answer to the first question is no, does the Med-Pay statute, or any other
principle of Colorado law or public policy, restrict an insurer’s choice of the
time limit to impose?
c. If the answer to the second question is yes, by what standard does a court
judge whether the insurer has imposed a permissible time limit?
Id. at [ECF No. 52 at 26]. Judge Martinez found that even if the Colorado Supreme Court
accepted the questions for certification and ruled “yes” as to the first question, plaintiffs could
not prevail on their CCPA and bad faith claims as a matter of law.2
Similar to Ms. Wallace, Mr. Allen challenges the validity of the one-year Med-Pay
limitation contained in a policy issued to a third party, Ellen Allen. USAA’s pending Motion for
2

Judge Martinez reached this conclusion in part by considering issues not raised by the
defendants, and which this court need not pass on at this time because they do not materially
affect the findings contained herein. See id. at [ECF No. 52 at 16-18].
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Summary Judgment contends, as USAA General’s motion asserted, that any duty of disclosure
was owed to Ms. Allen not Plaintiff; the one-year time limitation was disclosed in the policy; and
Plaintiff filed this lawsuit almost ten years after USAA disclosed the one-year limitation. [#30].
USAA relies on the same cases cited by USAA General to argue that Colorado law does not
prohibit Med-Pay time limitations, and raises the same objection that these rulings “preclude any
finding that USAA acted with the level of wrongful intent or culpability required to succeed on
Plaintiff’s tort claims.” [Id. at 7-8]. USAA also contends that all of Plaintiff’s claims are timebarred. As Ms. Wallace had, Mr. Allen acknowledges that the one-year limit is set forth in the
policy itself, but contests validity based on USAA’s alleged nondisclosure in the summary
disclosure. Compare [id. at 11] with Nguyen, 15-cv-00639-WJM-KLM, [ECF No. 33 at 8].
Specifically, with respect to the breach of contract claim, USAA argues “Plaintiff must first
establish a basis to judicially reform the Policy before he can show that USAA breached it.”
[#30 at 6 (citing #1 at ¶¶ 94-96)]. USAA argues that “[o]nly if the Policy is reformed to exclude
the time limit and provide for time-unlimited coverage would USAA’s denial of coverage for
medical fees incurred beyond the one-year limitation constitute a breach of the Policy.” [#30 at
6]. In addition, USAA posits, “reformation is only retroactive when the insurer should have
anticipated that the coverage provided did not comply with Colorado law,” and Plaintiff cannot
demonstrate this element considering the current state of Colorado law. [Id. at 8 n.2].

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B.

The Parties’ Arguments

Guided by the background set forth above, this court now considers the Parties’
arguments with respect to whether this action should proceed or be stayed. With reference to the
factors articulated in String Cheese Incident, Plaintiff asserts that he is the Party seeking the stay
and will not be prejudiced “as long as the stay applies equally to both parties and all proceedings
in this case.” [#22 at 4]. He argues the “legal allegations” presented here are substantively the
same as in Nguyen, and it “profits no one to repetitively litigate a novel question of state law that
will soon be definitively resolved.” [Id.] Plaintiff asserts that USAA suffers no additional
burden under a stay; rather, a stay allows both Parties to conserve resources3 and similarly spares
the court unnecessary use of judicial resources. Plaintiff posits that the court can better manage
the case, including issues relating to class certification, once the law and scope of his claims are
known; and, if the court moves ahead before the Colorado Supreme Court rules, it may
needlessly duplicate its efforts if the Colorado Supreme Court’s ruling requires the court and the
Parties to revisit the time limit issue. Moreover, “a stay will preserve the status quo until the
legality of USAA’s policy term is known, which will set the scope of the issues for further
briefing and discovery.” [Id.] Finally, Plaintiff acknowledges the final two factors are neutral,
as “there are no nonparties with an interest in whether this case is stayed,” and the “only
potential public interest” is the public’s general interest in a swift and just resolution of claims.
[Id. at 5]. USAA argues that the certified questions concern the reasonableness of the length of
specific Med-Pay time limits, which is not implicated by Plaintiff’s claims, and thus the

3

Plaintiff filed the Motion to Stay and argued that “USAA has barely begun its defense of this
action,” before USAA had filed its Answer or Motion for Summary Judgment.
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questions will not simplify the issues presented here nor conserve resources. See generally
[#24].
Without endorsing USAA’s characterization of the certified questions or the impact the
ruling of the Colorado Supreme Court could have on this case, this court concludes that a stay
will not significantly conserve resources or streamline issues. Judge Martinez anticipated that
answers to the certified questions would impact plaintiffs’ claims for breach of contract and
declaratory relief alone. Notably, USAA General and American Family did not brief the breach
of contract claim in Nguyen because they filed their respective motions before plaintiffs amended
their pleading to add that claim. In this case, USAA has moved for summary judgment on all
claims, including the breach of contract claim, and has presented arguments that were not before
the court in Nguyen.4 The interest of all involved in moving forward to a judicial resolution of
Plaintiff’s claims outweighs the benefit of receiving the relevant but not necessarily dispositive
instruction regarding the Med-Pay statute from the Colorado Supreme Court, particularly
because it is entirely unclear whether the Colorado Supreme Court will accept the questions for
certification, or when.
CONCLUSION
Therefore, based on the reasons set forth above, IT IS ORDERED that:
(1)

The Motion to Stay Pending Ruling on Certified Questions in Parallel Case [#22]
is DENIED; and

4

This court notes that USAA’s Motion for Summary Judgment is pending before Judge Moore
and nothing in this Order should be construed as this court passing on the merits of Plaintiff’s
claims.
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(2)

As stated on the record during the Status Conference held before the court on
December 16, 2016, a Scheduling Conference is SET for February 2, 2017 at
11:00 a.m. before the undersigned Magistrate Judge, with a proposed Scheduling
Order DUE no later than seven (7) days prior to that Scheduling Conference.

DATED December 16, 2016

BY THE COURT:

s/ Nina Y. Wang
Nina Y. Wang
United States Magistrate Judge

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