Auto-Owners Insurance Company v. Unruh et al.
ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT Auto-Owners' Motion for Summary Judgment against David Unruh is GRANTED; and Auto-Owners' Motion for Summary Judgment against Kendall Unruh is DENIED, by Judge Richard P. Matsch on 11/6/17. (ktera)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Senior District Judge Richard P. Matsch
Civil Action No. 16-cv-03091-RPM
AUTO-OWNERS INSURANCE COMPANY,
DAVID UNRUH and
ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Defendants David and Kendall Unruh were seriously injured in a motor vehicle accident
in Colorado Springs, Colorado on August 10, 2014. Just before the accident the Unruhs had been
on a Sunday drive to the mountains and were headed home after having breakfast together. Their
vehicle, a 1965 Chevrolet Corvette driven by David Unruh, was struck head-on by a 2008
Mercedes operated by Megan Allison, a minor, and owned by Jesus Shark. David Unruh held
legal title to the Corvette and the vehicle was being used by the Unruhs solely for their personal
use. Kendall Unruh was a front-seat passenger in the Corvette. According to the Unruhs, Ms.
Allison was immediately recognized as the at-fault driver, and was cited for careless driving
because she was texting while driving and crossed the center line before crashing head-on into
the Unruhs. The Unruhs’ injuries were catastrophic and their combined medical bills exceeded
Ms. Allison was insured under an automobile liability insurance policy issued by United
Services Automobile Association (USAA) to Mr. Shark, which had coverage limits of $100,000
per person and $300,000 per accident. The Unruhs presented claims to USAA for the injuries
caused by Ms. Allison’s negligence and later settled their claims for the available liability
insurance limits of $200,000. The Unruhs did not request or obtain Auto-Owners’ consent before
settling their claims with USAA.
At the time of the accident, the Corvette was insured by State Farm Mutual Automobile
Insurance Company under an automobile insurance policy issued to David Unruh with
uninsured/underinsured motorist (UM/UIM) limits of $100,000 per person and $300,000 per
accident. The Unruhs were also covered under an umbrella insurance policy issued to them by
State Farm Fire & Casualty Company, with UM/UIM coverage limits of $1,000,000. The
Unruhs presented claims for UIM benefits under the State Farm automobile and umbrella
policies, and recovered the full available limits of UIM coverage in the amount of $1,200,000.
The Unruhs, who are husband and wife and reside in the same household, are the coowners, stockholders, and officers of The Car Show, Inc. (The Car Show), which operates a used
car dealership in Colorado Springs. Plaintiff Auto-Owners Insurance Company (Auto-Owners)
issued a “garage liability” policy, with other related coverage, Policy No. 44-605-881-01 (the
Policy), to The Car Show, with effective dates of July 1, 2014 through July 1, 2015. The Policy
includes uninsured/underinsured motorist (UM/UIM) coverage with limits of $1,000,000.
On approximately August 3, 2016, nearly two years after the accident, the Unruhs’
attorney first notified Auto-Owners of the accident and their injuries and demanded payment of
the Policy’s UIM coverage limits. Auto-Owners seeks summary judgment on its claim for
declaratory relief, asserting that the Unruhs are not entitled to UIM benefits. The principal issue
on summary judgment is one of policy interpretation focusing on whether the Unruhs are
“insureds” under the Policy issued to The Car Show. Alternatively, Auto-Owners argues that the
Unruhs’ coverage claims are barred because they settled their liability claims against Ms. Allison
without obtaining Auto-Owners’ consent, allegedly resulting in prejudice to Auto-Owners.
The Declarations Pages in this 217-page Policy, including those concerning the UIM
endorsement, uniformly identify only The Car Show, Inc. as the “Insured,” and do not directly
name the Unruhs as additional “Insureds.” See Policy (Doc. 20-2) at Bates Nos. 000212-217,
However, the Policy also contains an endorsement titled “Drive Other Cars – Broad
Form” (also referred to as “DOC – Broad” coverage). The Declarations page for that
endorsement states “DOC – Broad: DAVID R. UNRUH.” Id. at 000320. The DOC – Broad
Form coverage page provides an additional definition “as it applies to this endorsement only”:
Named individual means:
a. The person shown in the Declarations under DOC-Broad;
b. The spouse of such person if a resident of the same household; and
c. Anyone who resides with such person and who is related to such person by blood,
marriage or adoption. This also includes a ward or foster child who resides with such
Id. at 000424 § 1. The DOC – Broad coverage then provides that “Coverages provided by this
policy and shown in the Declarations under DOC – Broad for the named individual are
extended to such named individual as if they were the first named insured.” Id. § 2.a
These provisions of the DOC – Broad endorsement unambiguously extend coverage to
both David Unruh and Kendall Unruh “as if they were the first named insured” because David is
named in the DOC – Broad Declarations and Kendall is his spouse and a resident of the same
household. Thus, unless coverage is otherwise excluded, each of the Unruhs is a “you” as
defined by the Policy: “You or your means the insured shown in the Declarations and if an
individual, your spouse who resides in the same household.” Id. at 000374 ¶ LL. As such, they
are included as Insureds for purposes of liability coverage the same “as if they were the first
But the DOC – Broad provisions also contain this exclusion from coverage: “This
insurance does not apply . . . To the named individual while operating any auto owned by the
named individual.” Id. § 2.b.(3).1 Just as unambiguously as the DOC – Broad endorsement
extends coverage to the Unruhs, this exclusion takes it away from David Unruh, only, because
there is no dispute that he was operating and owned the Corvette when the accident happened.
This exclusion does not apply to Kendall. Auto-Owners argues that the DOC – Broad
definition of “named individual” is a singular term, meaning that David and Kendall are, jointly,
a single named individual. In other words, Auto-Owners argues that if either of them is the
owner or operator of the subject auto in an accident in which both are involved, then the
exclusion applies to both of them because they are considered to be a single person. In effect,
Auto-Owners argues that Kendall must be considered to be the owner and operator of the vehicle
in conjunction with her husband for purposes of coverage, even though in reality she was
neither. Auto-Owners acknowledges that it knows of no case law interpreting this language in
Auto-Owners’ interpretation of the language of § 2.b.(3) is unreasonable. Words in an
insurance policy are to be given their plain and ordinary meaning unless a contrary intent is
expressed in the contract. Chacon v. American Fam. Ins. Co., 788 P.2d 748, 750 (Colo. 1990).
is no doubt that § 2.b.(3) is an exclusion for purposes of policy interpretation. Its own
terms describe it as such: “This exclusion does not apply to a private chauffeur or domestic
servant of the named individual.”
The plain meaning of “named individual” is a single person. See, e.g., Dictionary.com
Unabridged (November 1, 2017) (defining individual as “a single human being, as distinguished
from a group”). Nothing in the exclusion or its underlying definition suggests that it is intended
to include more than one person, considered jointly, in circumstances such as those presented
here. Given this plain language, each named individual must be considered separately in
determining whether the exclusion applies. The potential absurdity of Auto-Owners’
interpretation is underscored by the additional inclusion of other relatives and even wards and
foster children in the definition of “named individual,” all of whom would be excluded on AutoOwners’ theory that they would be considered to be a single named individual operating an auto
owned by any one of them. Policy at 000424 § 1.c. The Policy simply does not express that
Even if Auto-Owners’ interpretation of the exclusionary language were reasonable, at
most that would create an ambiguity. See Cary v. United of Omaha Life Ins. Co., 108 P.3d 288,
290 (Colo. 2005) (“An insurance policy is ambiguous if it is susceptible on its face to more than
one reasonable interpretation.”). Any ambiguity in an insurance policy is construed in favor of
providing coverage to the insured. Id. Specifically regarding exclusions, “[t]o benefit from an
exclusionary provision in a particular contract of insurance the insurer must establish that the
exemption claimed applies in the particular case and that the exclusions are not subject to any
subtly rewrites this exclusionary language in its reply brief, arguing. “There is no
coverage for Kendall because the Accident occurred while a named individual (David) was
operating an auto owned by that named individual (David).” Doc. 22 at 7 (underlining added).
That wording better supports Auto-Owners’ interpretation than the actual Policy language, which
provides that coverage does not apply to “the named individual while operating any auto
owned by the named individual.” That distinction plainly indicates an intent to exclude only the
single named individual who owns and is operating the auto, and reflects no intent to exclude
every other named individual who may be in the auto at the time. Policy at 000424 § 2.b.(3)
other reasonable interpretations.” Am. Family Mut. Ins. Co. v. Johnson, 816 P.2d 952, 953 (Colo.
1991) (citing Hecla Mining Co. v. New Hampshire Ins. Co., 811 P.2d 1083, 1090 (Colo.1991)).
Auto-Owners has not met that burden, and therefore cannot avoid coverage for Kendall
based on this exclusion.
The Unruhs argue incorrectly that the Policy is unenforceable under Colorado law
because it ties UIM coverage to occupancy of a particular vehicle, rather than covering the
insured person. See, e.g., DeHerrera v. Sentry Ins. Co., 30 P.3d 167, 176 (Colo. 2001). AutoOwners agrees that if either of the Unruhs is covered under the liability portion of The Car
Show’s Policy, then UIM coverage exists as well. Kendall Unruh is included under that liability
coverage by virtue of being a “you” under the Policy. Policy at 000365-66 § B.1.
Auto-Owners argues alternatively that it is entitled to summary judgment because the
Unruhs settled with the at-fault driver without providing Auto-Owners notice of a potential claim
or obtaining permission to settle. An insurer bears the burden of demonstrating by a
preponderance of the evidence that it has been prejudiced by the insured’s failure to provide
notice or obtain consent. See Clementi v. Nationwide Mut. Fire Ins. Co., 16 P.3d 223, 230 (Colo.
2001). Auto-Owners has provided only conclusory argument that the Unruhs’ delay prejudiced
the Auto-Owners’ ability to investigate the accident, including the availability of any other
applicable insurance or potential subrogation rights. Summary judgment is inappropriate given
the factual nature of this claim and Auto-Owners’ failure to provide evidence demonstrating
Based on the foregoing, it is
ORDERED that Auto-Owners’ Motion for Summary Judgment against David Unruh is
GRANTED; and it is
FURTHER ORDERED Auto-Owners’ Motion for Summary Judgment against Kendall
Unruh is DENIED.
DATED: November 6, 2017
BY THE COURT:
s/Richard P. Matsch
Richard P. Matsch, Senior District Judge
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