American National Property & Casualty v. Checketts et al
MEMORANDUM DECISION AND ORDER - Plaintiffs Motion for Summary Judgment 13 is granted. Counsel for Plaintiff to prepare and submit a suggested form of Judgment within 10 days. Signed by Judge Bruce S. Jenkins on 3/25/2016. (las)
2016 MAR 25 AM 11:21
U.S. DISTRICT COURT
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY,
MEMORANDUM OPINION AND
CHRIS CHECKETTS and SANDRA
Case No. 2:1 l-CV-00250-BSJ
Judge Bruce S. Jenkins
This case came before the court for hearing on June 5, 2014. The Tenth Circuit Court of
Appeals has reversed and remanded Am. Nat. Prop. & Cas. Co. v. Checketts, No. 2:1 l-CV-250
BSJ, 2012 WL 1835866 (D. Utah May 21, 2012), 1 and instructed this court "to reconsider its
decision in light of Utah's revised [Underinsured Motorist (UIM) statute, Utah Code Ann. §
3 lA-22-305.3 (2012)]." 2 A. Joseph Sano and Peter H. Barlow appeared on behalf of Plaintiff
American National Property and Casualty Company ("ANP AC"). Daren G. Mortenson appeared
on behalf of Defendants Chris Checketts and Sandra Checketts,( collectively the "Checketts").
The parties had filed competing briefs as to what remained for decision.
Am. Nat. Prop. & Gas. Co. v. Checketts, No. 2:1 l-CV-250 BSJ, 2012 WL 1835866 (D. Utah May 21, 2012) rev'd
and remanded sub nom. Am. Nat. Prop. & Gas. v. Checketts, 528 F. App'x 851 (10th Cir. 2013).
"The issue on appeal is whether the district court failed to properly consider Utah's revised IBM statute, Utah Code
Ann. § 3 lA-22-305.3 (2012), which became effective while the parties' cross-motions for summary judgment were
pending. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse and remand with instructions for the district
court to reconsider its decision in light of Utah's revised statute." Am. Nat. Prop. & Gas. v. Checketts, 528 F. App'x
851, 851 (10th Cir. 2013).
On September 6, 1996, the Checketts applied for automobile insurance with ANPAC. 3 At
that time, the Checketts rejected Dnderinsured Motorist Bodily Injury Coverage (referred to as
"DIMBI" or "DIM") coverage. 4 While insured by ANP AC, the Checketts added and removed
various vehicles to their policy as well as put their daughter, Alisha, on the insurance as an
additional driver on March 6, 2006. 5 Due to these changes, the premiums paid by the Checketts
varied, sometimes significantly, over the years. 6
On June 18, 2007, Sandra Checketts and her son Jake were involved in an automobile
accident. 7 Sandra and Jake settled their claims for personal injuries and damages against the
other driver, Michael Hedden, for the .limits of his liability policy. 8 The Checketts also made a
demand for UIM benefits with ANPAC $100,000 for Jake's injures and $100,000 for Sandra's
injures. 9 The Checketts allege that they are entitled to a combined total $200,000 ($100,000
each) in UIM benefits on the basis that the rejection of such coverage is invalid and
unenforceable because ANP AC did not make the required DIM notifications and obtain the
appropriate waiver ofUIM coverage in light of Utah Code Ann.§ 31A-22-305 (Supp. 2001)
("2000 UIM statute"). 10 The Checketts assert that because the rejection of UIM coverage is
invalid and unenforceable, they are entitled to UIM coverage in an amount equal to ANP AC
policy's per person liability limit $100,000 because of the absence of new notice. 11
See Def.'s Post-Appeal Br., filed Sept. 9, 2013 (CM/ECF No. 32), at ex. A.
ANPAC denied the Checketts' claim for UIM benefits and filed a declaratory relief
action in this court seeking a judicial detem1ination conceming the validity of the Checketts'
rejection of UIM coverage on March 16, 2011. 12 While this case was being decided before this
court, two important pieces oflaw relevant to this case were promulgated: Iverson v. State Farm
Mutual Insurance Company, 2011UT34, 256 P.3d 222 (Utah 2011) and amendments to Utah
Code Ann.§ 31A-22-305.3(3)(b) (2012) (effective May 8, 2012) ("2012 UIM statute").
In Iverson, the Utah Supreme Court held that Utah Code Ann. § 3 lA-22-305 (Supp.
2001) ("2000 UIM statute") was ambiguous in its meaning of"new policy" and thus it was
appropriate for courts to "tum to other interpretative tools to assign meaning to this tenn." 13
Using legislative history and policy considerations, the Utah Supreme Court found that the 2000
UIM statute contained "a broader definition of 'new policy' that include[ d] not only new
contractual relationships but also material changes to an existing policy that alter the risk
relationship between the insurer and the insured."
The Utah Supreme Court essentially engaged
in a materiality test whereby the totality of the circumstances was examined in order to
determine whether changes to an insurance policy were material enough to "meaningfully alter
the risk relationship between the insurer and the insured."
In the event that changes satisfied the
materiality analysis, it was deemed permissible for a court to determine that a "new policy" had
been established and apply the 2000 UIM statute accordingly.
In addition to Iverson, another development relevant to this case occurred. The Utah
Legislature made amendments to the 2000 UIM statute that became effective May 8, 2012.
Iverson v. State Farm Mut. Ins. Co., 2011UT34, at iJ 15, 256 P.3d 222, 226.
Id. at 227.
See supra note 3.
changes to the 2000 UIM statute specifically defined "new policy," cleared up State ambiguities,
and expressly identified that definition to be retroactive.
Taking these significant changes into account, on May 21, 2012 the district court issued
its ruling, granting in part and denying in part both parties' motions for summary judgment. 17
The court rejected the Checketts argument that ANPAC had failed to comply with the
notification requirements under the 2000 amendment to Utah's 2000 UIM statute because the
Checketts had, in writing, rejected UIM coverage in its entirety. 18 Also, the court found that
ANP AC was under no duty to provide additional UIM infonnation with the first two renewal
notices after January 1, 2001 because the Checketts had rejected UIM coverage in its entirety and
thus, Utah Code Ann. § 31A-22-305(9)(g) did not apply to the Checketts. 19 However, the court
accepted the Checketts' new argument that under Iverson, the addition of their teenage daughter,
Alisha, to their policy as well as other factors, such as adding several vehicles to the policy,
"meaningfully altered the risk relationship" between ANP AC and the Checketts such that a "new
policy" was created, requiring ANPAC to issue a new notice and obtain a new waiver. 20
ANP AC appealed the decision to the Tenth Circuit Court of Appeals 21 and on June 26,
2013, that court reversed the decision of the district court. The Tenth Circuit Court of Appeals
characterized the district court's judgment as holding that the Checketts' oldest daughter, Alisha,
had been added as a new "named insured" and pointed out that was not so. She, according to the
Tenth Circuit Court of Appeals, was added as a new driver. Such did not add a named insured to
their policy. The Tenth Circuit Court of Appeals reversed this court's decision which had granted
the Checketts partial summary judgment and remanded the case for further consideration, with
See Mem. Op. & Ordered, filed May 21 (CM/ECF No. 21), at 21.
Supra note 17 at 12.
See supra note 1 at 4.
See supra note 17 at 19.
See Notice of Appeal, filed June 21, 2012 (CM/ECF No. 23).
directions that this court specifically "reconsider its decision in light of Utah's revised
[Underinsured Motorist (UIM) statute, Utah Code Ann.§ 31A-22-305.3 (2012)]."22
Implicit in the determination by the Court of Appeals that adding Alisha as a new driver
to the policy of the Checketts did not add her as a named insured. It appears no new policy was
created under the old statue as construed which required new notice. It appears to this court that
such a determination obviates the necessity of considering in depth the application of the 2012
legislation. In short, if no notice is required under the old statute as construed, then it is
unnecessary to be concerned with the new statute.
Absent a new policy, the early rejection by the Checketts of uninsured or under insured
coverage remains extant.
While the new legislation purports to clarify definitions and legislative intent, upon
further consideration, one need not be concerned with the statute, retroactive or not,
constitutional or not, claim filed timely or not, because the absence of a new policy leaves the
old notice in place and the old rejection in place. In passing, the new statute clarifies and
fortifies legislative intent.
Thus, for the above reasons, Plaintiffs Motion for Summary Judgment [CM/ECF No. 13]
is GRANTED. Counsel for Plaintiff to prepare and submit a suggested form of Judgment within
so ORDERED this :J.f' .day of March, 2016.
Id. at 851.
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