Roberts v. State Farm Mutual Automible Insurance Company
MEMORANDUM OPINION AND ORDER by Magistrate Judge Nina Y. Wang on 10/9/2019. IT IS ORDERED that: (1) Summary judgment is hereby entered in FAVOR of State Farm and AGAINST Mr. Roberts on Mr. Roberts's breach of contract claim; and (2) Mr. Roberts's breach of contract claim is DIMISSED with prejudice. (nywlc2, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 19-cv-00319-NYW
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
MEMORANDUM OPINION AND ORDER
Magistrate Judge Nina Y. Wang
This matter comes before the court on the Order to Show Cause dated July 10, 2019 [#36],
Plaintiff James Roberts’s (“Plaintiff” or “Mr. Roberts”) Response to the Order to Show Cause (or
“Plaintiff’s Response”), filed July 11, 2019 [#37], and Defendant State Farm Mutual Automobile
Insurance Company’s (“Defendant” or “State Farm”) Response to Plaintiff’s Response to Order
to Show Cause (“Defendant’s Response”), filed July 25, 2019 [#43]. The undersigned Magistrate
Judge considers this matter pursuant to 28 U.S.C. § 636(c) and the Order of Reference for all
purposes [#15]. This court concludes that oral argument will not materially assist in the resolution
of these matters. Accordingly, having reviewed the Parties’ Responses, the applicable case law,
and being sufficiently advised in the premises, the court GRANTS summary judgment in favor of
Defendant and against Plaintiff and DISMISSES with prejudice Plaintiff’s breach of contract
The court has discussed the background of this matter in its prior Memorandum Opinion
and Order and Order to Show Cause, see [#36], and therefore limits its discussion here to only the
most salient facts. This civil action arises out of an insurance dispute between Plaintiff and his
insurer State Farm, stemming from bodily injuries Plaintiff sustained in an automobile collision.
See [#1; #28 at ¶¶ 7-8]. Believing his medical bills were more than the tortfeasor’s own insurance
limits, Plaintiff sought additional underinsured motorist (“UIM”) benefits from State Farm under
Policy Number 069 0807-D08-06J (the “Policy”). See [#28 at ¶ 9].
The Parties exchanged several rounds of correspondence regarding Mr. Roberts’s UIM
claim. See [id. at ¶¶ 10-46]. Specifically, on April 17, 2018, State Farm offered $59,319.45 to
settle Plaintiff’s claim. [Id. at ¶ 11]. Then, on June 12, 2018, State Farm wrote Mr. Roberts and
stated that it had evaluated $23,500 for pain and suffering for Plaintiff’s UIM claim. [Id. at ¶ 14].
Though State Farm tendered benefits in the amount of $35,819.45 under the insurance policy, see
[id. at ¶¶19-20], Plaintiff initiated this civil action asserting claims for breach of contract and
unreasonable delay or denial of an insurance benefit pursuant to Colo. Rev. Stat. § 10-3-1115
(“statutory bad faith”) on February 6, 2019, see [#1]. Following service of the Complaint on
February 11, 2019, Defendant tendered an additional $23,500 in benefits as a reasonable amount
owed to Plaintiff. See [#28 at ¶ 49].
On May 16, 2019, the Parties appeared before the undersigned for a Scheduling
Conference. See [#23]. Relevant here, the court had a discussion with the Parties regarding the
claims Mr. Roberts asserted in this matter:
THE COURT: And so as I understand it, your previous complaint had both a late
payment of the UIM benefits and then a breach of contract based on nonpayment.
They paid the $23,500; is that right?
MR. FRANKL: Correct, Your Honor.
MS. SALG: So, Your Honor, my understanding is that the plaintiff is actually
withdrawing the breach of contract claim, and if that is the case -- so the only case
that’s going to go forward would be the statutory delay/denial claim . . . .
THE COURT: That’s not exactly the way I read the statements of the claim, so Mr.
Frankl, do you want to clarify that?
MR. FRANKL: That is not how I read it either. I’m a little -- as I – I’ve had a
chance to do more research and I found that there are cases which hold that where
there is payment of an amount claimed after a lawsuit is filed, that that can be
deemed a confession under some circumstances. It depends in part on whether State
Farm, either through its witnesses or representatives, basically says the amount was
due all along. And based on that interpretation, I think it’s both breach of contract
and unreasonable denial, but also unreasonable delay now that that money has been
THE COURT: Okay. So it sounds to me, Mr. Frankl, based on that -- so I’m going
to be frank with you. I’m not sure how you can recover on both a breach contract
for delay as well as a statutory delay, but -MR. FRANKL: I can’t.
[#46 at 3:1-5, 3:11-15, 3:17-4:9]. 1 Counsel for Plaintiff later clarified that Plaintiff was not seeking
any additional benefits under the Policy:
MR. FRANKL: No. Basically at this point when the complaint was filed, there was
$23,000 -THE COURT: Right.
MR. FRANKL: -- admittedly unpaid. That has been paid now. So it’s all delay and
whether legally the Court should hold that that is a confession of the unreasonable
denial claim with regard to 23,500.
THE COURT: My understanding then of this case is that Mr. Frankl’s client is not
claiming any additional breach of contract. He is claiming that he was owed
$23,500 and 15,000 and change of MedPay payments that were delayed, but that
he has now been paid everything he is due under the policy.
MR. FRANKL: That -- that is, in essence, correct.
When citing to a transcript, the court cites the document generated by the Electronic Court Filing
(“ECF”) system but the page and line number generated by the transcript.
[Id. at 13:9-15, 14:21-15:1]. The court then directed Plaintiff to file an Amended Complaint to
further clarify the claims asserted. See [#23].
Mr. Roberts filed his Motion to Amend his Complaint on May 31, 2019. See [#25]. Nearly
two weeks later, on June 13, 2019, the Parties appeared before the undersigned for an informal
telephonic discovery dispute conference, at which Mr. Roberts’s counsel again conceded that Mr.
Roberts was not seeking any additional benefits under the Policy:
MR. FRANKL: This is simply a case for unreasonable delay and denial and
statutory bad faith . . . .
THE COURT: my recollection was, our discussion was whether or not he could
pursue a breach of contract claim going forward if his client’s position was that he
had been paid everything that he was due at this point. Mr. Frankl had an argument
as to why there might still be a breach of contract and why he needed to keep his
claim in there.
MR. FRANKL: in connection with a motion to amend, there was a question as to
whether indeed the payment post-filing of the lawsuit on the -- after service of the
lawsuit constituted either a confession or, alternatively, mooted the breach of
contract claim. There remains, no matter what, claims for unreasonable delay and
THE COURT: Mr. Frankl, you correct me if I’m wrong, but I thought you made a
representation to the Court during the scheduling conference that you were not
seeking any additional benefits for your clients; that this was -MR. FRANKL: That is correct and it is still correct.
[#47 at 3:4-5, 4:24-5:4, 6:6-12, 7:17-22]. Because Defendant did not oppose the filing of an
Amended Complaint, the court granted Plaintiff’s Motion to Amend. See [#27]. The Amended
Complaint, like the Complaint, asserts a breach of contract and statutory bad faith claim. See
On June 14, State Farm filed an Answer [#29]; a Motion for Summary Judgment, arguing
that it is entitled to judgment as a matter of law on Plaintiff’s statutory bad faith claim [#30]; and
a Motion to Stay Discovery [#31]. The court issued its Memorandum Opinion and Order and
Order to Show Cause on the Motion for Summary Judgment and Motion to Stay Discovery on July
10, 2019. See [#36]. As to the statutory bad faith claim, the court denied State Farm’s Motion for
Summary Judgment, holding that the timeline of payments tendered by State Farm “alone neither
precludes nor establishes liability for undue delay for the amounts in dispute as a matter of law.”
[Id. at 10]. Although the Motion for Summary Judgment did not address the breach of contract
claim, the court ordered Plaintiff to show cause in writing why summary judgment should not enter
pursuant to Rule 56(f) of the Federal Rules of Civil Procedure in favor of State Farm on the breach
of contract claim given Mr. Roberts’s failure to identify any contractual obligation breached or
any resulting damages. See [id. at 12-13].
Plaintiff filed his Response on July 11, 2019, arguing State Farm’s delay in paying the
remaining $23,500 was unreasonable and a breach of the Policy and allows Mr. Roberts to seek
prejudgment interest on this amount as damages. See [#37]. The court ordered State Farm to
respond by July 18, 2019, later extended to July 25, 2019. See [#38; #42]. State Farm’s Response
contends Mr. Roberts’s breach of contract claim is moot, because he received all benefits owed
under the UIM policy and prejudgment interest is not available when the Parties settle their breach
of contract claim prior to trial. See [#43]. The court prohibited any replies absent leave of court,
and the Parties have not sought leave to do so. See D.C.COLO.LCivR 7.1(d). Thus, the matter is
ripe for disposition and I consider the Parties’ arguments below.
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment is
warranted “if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A dispute is genuine
if there is sufficient evidence so that a rational trier of fact could resolve the issue either way. A
fact is material if under the substantive law it is essential to the proper disposition of the claim.”
Crowe v. ADT Sec. Servs., Inc., 649 F.3d 1189, 1194 (10th Cir. 2011) (internal citations and
quotation marks omitted). It is the movant’s burden to demonstrate that no genuine dispute of
material fact exists for trial, whereas the nonmovant must set forth specific facts establishing a
genuine issue for trial. See Nahno-Lopez v. Houser, 625 F.3d 1279, 1283 (10th Cir. 2010). And
the court will “view the factual record and draw all reasonable inferences therefrom most favorably
to the nonmovant.” Zia Shadows, L.L.C. v. City of Las Cruces, 829 F.3d 1232, 1236 (10th Cir.
2016). But the Federal Rules of Civil Procedure also permit the court to grant summary judgment
“‘on grounds not raised by a party,’ but only ‘after giving notice and a reasonable time to
respond.’” Oldham v. O.K. Farms, Inc., 871 F.3d 1147, 1150 (10th Cir. 2017) (brackets omitted)
(quoting Fed. R. Civ. P. 56(f)(2).
To prevail on a claim for breach of contract under Colorado law, Mr. Roberts must prove:
1. the existence of a contract;
2. his performance;
3. State Farm’s failure to perform and/or breach; and
4. his resulting damages.
See Xtreme Coil Drilling Corp. v. Encana Oil & Gas (USA), Inc., 958 F. Supp. 2d 1238, 1243 (D.
Colo. 2013) (citing W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992)). In its
Memorandum Opinion and Order and Order to Show Cause the court concluded Mr. Roberts
“fail[ed] to identify any contractual obligation that was breached, and he fail[ed] to aver any
resulting damages attributable to a contractual breach now that he has been paid the full amount
of benefits owed under his UIM policy, including but not limited to the $23,500 paid for
noneconomic damages.” [#36 at 12 (emphasis in original)]. The court therefore ordered Mr.
Roberts to show cause in writing why summary judgment should not enter in favor of State Farm
as to the breach of contract claim.
In his Response to the Order to Show Cause, Mr. Roberts states, “Failure to make payment
when due is a breach of a contract. Damages . . . include the amount owed plus interest.” [#37 at
1]. He maintains that Colorado laws and regulations existing at the time the Parties entered the
Policy are incorporated in the Policy, with said laws and regulations requiring State Farm to
perform its obligations under the Policy within a reasonable time and requires a decision on
payment within 60 days of a claim. See [id. at 2]. From what the court can infer, Mr. Roberts
believes State Farm did not do so here and breached the contract, which may entitle Mr. Roberts
to an award of prejudgment interest. See [id.]. To find his breach of contract claim moot, Mr.
Roberts argues, would lead to an absurd result. See [id. at 2-3]. I respectfully disagree.
To be sure, in interpreting contracts, courts “consider the law existing at the time a contract
was executed as a part of the document itself.” McShane v. Stirling Ranch Prop. Owners Ass'n,
Inc., 393 P.3d 978, 982 (Colo. 2017). But the court is unpersuaded by Mr. Roberts’s assertions
that Colorado laws and regulations regarding reasonable investigation and a 60-day payment
decision are incorporated into the Policy as a contractual obligation such that the circumstances
here give rise to a breach of contract claim. Mr. Roberts identifies no authority for this proposition,
and the court’s research similarly yielded none. Rather, Colorado laws and regulations governed
the Parties’ relationship once they entered the Policy. See Sobolewski v. Boselli & Sons, LLC, 342
F. Supp. 3d 1178, 1187 (D. Colo. 2018) (concluding that federal and state wage laws “are merely
incorporated into the terms of the contract” and “impose minimum rules on an employer-employee
relationship once such a legal relationship is formed.”). Colorado law specifically recognizes an
independent tort for an insurer’s violation of these laws and/or regulations. See Goodson v. Am.
Standard Ins. Co. of Wisconsin, 89 P.3d 409, 414 (Colo. 2004) (explaining that an insurer’s breach
of the duty of good faith and fair dealing gives rise to an independent tort); Am. Family Mut. Ins.
Co. v. Allen, 102 P.3d 333, 343 (Colo. 2004) (stating that the Unfair Claims Settlement Practices
Act can serve as evidence of the standard of care governing bad faith claims); Colo. Rev. Stat.
§ 10-3-1115 (providing a civil remedy to insureds for an insurer’s unreasonable delay or denial of
an insurance benefit). Indeed, to the extent that Mr. Roberts’ argument was correct, then every
finding of undue delay would necessarily also be a breach of contract, giving rise to prejudgment
interest—relief that is not contemplated by the Colorado statute.
Further, Mr. Roberts’s counsel clarified on the record (twice) that Mr. Roberts seeks no
additional benefits under the Policy given State Farm’s payment of $23,500. See [#46 at 13:9-15,
14:21-15:1; #47 at 3:4-5, 4:24-5:4, 6:6-12, 7:17-22]. To allow Mr. Roberts to proceed under his
asserted theory, then, would allow him to maintain a breach of contract claim and a statutory bad
faith claim arising from the same nucleus of facts—a position the court has explicitly rejected, see
MacKinney v. Allstate Fire & Cas. Ins. Co., No. 16-CV-01447-NYW, 2016 WL 7034977, at *6
(D. Colo. Dec. 1, 2016), and which Plaintiff’s counsel admittedly conceded Plaintiff could not do,
see [#46 at 3:17-4:9]. Thus, the court again concludes Mr. Roberts fails to prove State Farm
breached the Policy.
Nevertheless, even assuming Mr. Roberts could maintain his breach of contract claim
under the same facts as his statutory bad faith claim, the court finds Mr. Roberts is not entitled to
prejudgment interest and thus has suffered no damages. Mr. Roberts argues that his breach of
contract claim is not moot because the Parties still dispute whether Mr. Roberts is entitled to
prejudgment interest on the withheld but later tendered $23,500. In doing so, Mr. Roberts relies
on USAA v. Parker, 200 P.3d 350 (Colo. 2009). But Parker considered which of two prejudgment
interest statutes governed an award to an insured in a UIM case. Id. at 353. The Colorado Supreme
Court held that prejudgment interest was available to an insured in UIM cases and the “personal
injury statute,” Colo. Rev. Stat. § 13-21-101(1), governed the calculation of that prejudgment
interest. See id. at 353, 358-61. In reaching this conclusion, the Colorado Supreme Court
concluded USAA’s tender of the disputed prejudgment interest after filing its appeal did not moot
the issue. See id. at 356-57. Parker is thus inapposite to this matter.
In its Response, State Farm argues Mr. Roberts cannot recover prejudgment interest
because the Parties’ settled the breach of contract claim when State Farm tendered and Mr. Roberts
accepted the $23,500. See [#43 at 1-3]. Defendant explains that this comports with the Colorado
Supreme Court’s holding in Munoz v. American Family Mutual Insurance Company, 425 P.3d
1128 (Colo. 2018). I respectfully agree.
In Munoz, the Colorado Supreme Court considered whether an insurer was required to pay
prejudgment interest on an accepted settlement of a UIM claim. See 425 P.3d at 1129. There Mr.
Munoz submitted a UIM claim with his insurer and demanded prejudgment interest as part of that
claim. See id. The insurer offered Mr. Munoz a sum-certain for his UIM claim, excluding
prejudgment interest, and Mr. Munoz accepted that amount. See id. After doing so, Mr. Munoz
filed suit seeking a determination that the insurer was required to include prejudgment interest in
The Colorado Supreme Court, like the District Court and Court of Appeals, held Mr.
Munoz was not entitled to prejudgment interest on the amount offered and accepted for his UIM
claim. Munoz, 425 P.3d at 1129-30. This was because prejudgment interest was available only if
Mr. Munoz (1) filed an action, (2) claimed damages and interest in the complaint, (3) a jury or the
court found said damages, and (4) he received judgment in his favor. See id. at 1130. The Colorado
Supreme Court concluded Mr. Munoz could not satisfy these four required elements because of
the pre-suit settlement of his UIM claim, notwithstanding his suit seeking prejudgment interest.
See id. at 1131 (“This reading of the statute is consistent with what we have previously held to be
its purpose: To compensate the plaintiff for the time value of the amount of his or her judgment.”
(internal brackets and quotation marks omitted)). The Colorado Supreme Court also rejected Mr.
Munoz’s reliance on Parker, “But Parker did not hold that an insured is entitled to collect
prejudgment interest when he settles a claim with his insurer. Instead, it pertained to collecting
prejudgment interest from an insurer only after obtaining a judgment against said insurer.” Id. at
1132 (emphasis in original). Accordingly, the Colorado Supreme Court held, “an insured is not
entitled to collect prejudgment interest against an insurer on a settlement.” Id.
While Munoz is not identical to this action given that the insurer paid Mr. Munoz’s UIM
claim prior to suit, I find its reasoning equally applicable here. Plaintiff demanded the $23,500 as
the remaining benefits owed under the Policy; when State Farm did not tender those benefits, Mr.
Roberts filed suit. State Farm then tendered $23,500, and Mr. Roberts has insisted on the record
that he does not seek any additional benefits under the Policy. And because the court is disinclined
to accept Mr. Roberts’s theory of liability on his breach of contract claim, I find Mr. Roberts cannot
prove he suffered damages (because he received all he was owed under the Policy) or that he will
receive a judgment in his favor on his breach of contract claim. Thus, Mr. Roberts’s is not entitled
to prejudgment interest on his breach of contract claim and this claim must fail as a matter of law.
See Munoz, 425 P.3d at 1129-32.
Therefore, for the reasons stated herein, IT IS ORDERED that:
Summary judgment is hereby entered in FAVOR of State Farm and AGAINST
Mr. Roberts on Mr. Roberts’s breach of contract claim; and
Mr. Roberts’s breach of contract claim is DIMISSED with prejudice.
DATED: October 9, 2019
BY THE COURT:
Nina Y. Wang
United States Magistrate Judge
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