Cooper v. Shelter Gen. Ins. Co.

653 F.Supp.3d 873

Shawn COOPER, Plaintiff, v. SHELTER GENERAL INSURANCE COMPANY, Defendant.

Civil Action No. 21-cv-02957-REB-MEH

United States District Court, D. Colorado

Signed January 31, 2023

Benjamin T. Norton, Law Office of Ben Norton, Denver, CO, for Plaintiff.

Heather A. Salg, Messner Reeves LLP, Greenwood Village, CO, Kathleen June Mowry, Messner Reeves LLP, Denver, CO, for Defendant.

ORDER RE: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Blackburn, United States District Judge

This matter is before me on Defendant's Motion for Summary Judgment [#24],¹ filed February 25, 2022, as supplemented by Defendant's Supplement to Motion for Summary Judgment [#62], filed November 30, 2022. (See also Order [#61], filed November 10, 2022 (requesting supplemental briefing from the parties).)² I grant the motion in part and deny it in part.

I. JURISDICTION

I have jurisdiction over this matter pursuant to 28 U.S.C. § 1332 (diversity of citizenship).

II. STANDARD OF REVIEW

Summary judgment is proper when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A dispute is "genuine" if the issue could be resolved in favor of either party. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Farthing v. City of Shawnee, 39 F.3d 1131, 1135 (10thCir. 1994). A fact is "material" if it might reasonably affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Farthing, 39 F.3d at 1134.

A party who will not have the burden of proof at trial must show the absence of a genuine fact issue. Concrete Works, Inc. v. City & County of Denver, 36 F.3d 1513, 1517 (10thCir. 1994), cert. denied, 514 U.S. 1004, 115 S.Ct. 1315, 131 L.Ed.2d 196 (1995). Once the motion has been properly supported, the burden shifts to the nonmovant to show, by tendering depositions, affidavits, and other competent evidence, that summary judgment is not proper. Id. at 1518. All the evidence must be viewed in the light most favorable to the party opposing the motion. Simms v. Oklahoma ex rel. Department of Mental Health and Substance Abuse Services, 165 F.3d 1321, 1326 (10th Cir.), cert. denied, 528 U.S. 815, 120 S.Ct. 53, 145 L.Ed.2d 46 (1999).

III. ANALYSIS

On September 25, 2019, plaintiff Shawn Cooper was injured in an automobile accident in Denver, Colorado. Mr. Cooper was insured by defendant Shelter General Insurance Company ("Shelter"); the at-fault driver was uninsured. On April 6, 2021, Mr. Cooper made a claim for uninsured/underinsured motorist (UIM") coverage under the terms of his policy. The following day, the claims adjuster, Virginia Ris, sent counsel a letter acknowledging receipt of Mr. Cooper's "settlement demand packet." (Motion App., Exhs. B & C ¶ 5 at 1.) Mr. Cooper does not contest that characterization of the documents his counsel sent to Shelter (Resp. ¶ II.5. at 3), nor is there any evidence to suggest he did so at the time the letter was received.³

In evaluating the claim, Ms. Ris noted substantiated past medical expenses of $2,256. However, Mr. Cooper's most recent medical bill was from November 2019, more than eighteen months prior, despite the fact that medical records indicated further treatment had been suggested for him. (Motion App., Exh. D at 3.) On April 27, Ms. Ris called Mr. Cooper's attorney to inquire.

I asked if treatment ended in November of 2019 as we do not have any records or bills beyond that date - he advised [insured] did not seek any additional treatment after November of 2019 due to treatment fatigue. At this time, he is simply living with the pain from this loss and it is not clear if he will resume treatment.

(Id., Exh. D at 4.)

Based on the information before her, Ms. Ris estimated Mr. Cooper's damages for past and future pain and suffering at $12,774 to $17,744 and valued his claim at $15,000 to $20,000. On April 27, she offered Mr. Cooper $15,000 on his claim plus a Fisher⁴ payment of $2,256, i.e., the amount of Mr. Cooper's substantiated past medical expenses. (Motion App., Exh. C ¶ 6 at 1-2, Exh. D at 4.) According to Ms. Ris, in response to that proposal, counsel for Mr. Cooper told her he "wanted to see if the parties could settle the case outright before Shelter made any Fisher payment." (Id., Exh. C ¶ 8 at 2.) Mr. Cooper does not contest Ms. Ris's testimony that his counsel made that statement. (See Resp. ¶ II.5. at 3.)

In response to Shelter's opening offer, Mr. Cooper made a counteroffer of $30,000, and Ms. Ris countered at $20,000, the upper limit of her claim evaluation. Counsel told Ms. Ris he would speak to Mr. Cooper about that offer. (Id., Exh. C ¶ at 2-3.) The following day, Mr. Cooper demanded $25,000 and Shelter agreed to that amount. (Id., Exh. C ¶ 10 at 3.)

Ms. Ris subsequently sent Mr. Cooper a letter purportedly confirming the parties' agreement. Attached thereto was a copy of Shelter's Receipt and Trust Agreement (the "Agreement"), which Ms. Ris represented Mr. Cooper needed to sign to allow Shelter to enforce its subrogation rights against the at-fault driver. (Motion App., Exhs. E & F.) In actuality and instead, the Agreement released Shelter from all further liability for damages under the UIM provisions of the insurance policy. (Id., Exh. L.)

Counsel for Mr. Cooper responded the following day:

I'm a little bit confused because I've not seen a UM carrier request such an agreement in the past. Since he's making a claim for first-party benefits, rather than attempting to settle a liability claim, there's really not anything to settle. He should be permitted to leave the claim open and seek additional benefits if he decides to get collision-related insurance in the future[.]

(Motion App., Exh. H at 1.) A month later, counsel asked whether Shelter was willing to "issue payment" of the $25,000 "without cutting off Mr. Cooper's ability to pursue treatment in the future[.]" When Ms. Ris indicated she was inquiring with her supervisor, counsel asked whether Shelter would issue the money as a Fisher payment. (Id., Exh. I.)

On June 14, 2021, Ms. Ris confirmed Shelter would require a signed Agreement to release any payment other than Fisher payments for past medical expenses, which she offered to forward to Mr. Cooper. (Id., Exh. J.) Although Mr. Cooper agreed to assign his rights to Shelter to allow it to pursue the at-fault driver, he declined to sign the Agreement releasing future claims. Instead, he took the position that Shelter already had agreed he was entitled to non-economic benefits of $25,000. (Id., Exh. K.)

Two weeks later, Shelter sent Mr. Cooper a Fisher payment of $2,256, which he concedes represents his past medical expenses. Mr. Cooper again demanded a payment of $25,000. (Id., Exh. C ¶ 16 at 3-4; Exh. M.) Shelter demurred and advised it would keep Mr. Cooper's file open for consideration of any further accident-related treatment he might receive. (Id., Exh. C. ¶ 17 at 4; Exh. N.) This suit followed not long thereafter.

Herein, Mr. Cooper brings claims against Shelter for breach of contract and for common law and statutory bad faith under Colorado law. Shelter initially moved for summary judgment as to all three claims, but in light of Mr. Cooper's arguments response, withdrew its motion with respect to the breach of contract claim. (Reply at 6.)⁵ Accordingly, the motion will be denied as to that claim. I thus turn to the only question before me: whether Shelter is entitled to summary judgment as to Mr. Cooper's bad faith claims.

Because the question whether the insurer's actions were unreasonable is common to both claims, I begin (and, ultimately, end) there. In addition to the statutory provisions of Colorado law creating a cause of action for bad faith breach of insurance contract, see §§ 10-3-1115 & 1116, C.R.S., Colorado recognizes a common law claim for bad faith breach of insurance contract, see Masters v. Safeco Insurance Co. of America, 2021 WL 4326269 at *5 (D. Colo. Sept. 23, 2021); Hyden v. Farmers Insurance Exchange, 20 P.3d 1222, 1226 (Colo. App. 2000). Although related, these rubrics create distinct claims with different legal standards of proof.

Under the statute, an insurer may not "unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant," § 10-3-1115(1)(a), C.R.S. "[T]he only element at issue in the statutory claim is whether an insurer denied benefits without a reasonable basis." Williams v. Owners Insurance Co., 621 Fed. Appx. 914, 919 (10th Cir. 2015) (quoting also Vaccaro v. American Family Insurance Group, 275 P.3d 750, 760 (Colo. App. 2012)) (internal quotation marks omitted). By contrast, to prove a first-party claim of common law bad faith, a plaintiff must show not only that the insurer's conduct in processing or denying a valid claim was unreasonable but also that the insurer knew its conduct was unreasonable or recklessly disregarded the unreasonableness of its conduct. Travelers Insurance Co. v. Savio, 706 P.2d 1258, 1275-76 (Colo. 1985); Hyden, 20 P.3d at 1226. See also Vaccaro, 275 P.3d at 756. Accordingly, a claim of common law bad faith imposes a more exacting standard of proof than a statutory claim. Williams v. Steadfast Insurance Co., 2020 WL 13499467 at *3 (D. Colo. July 27, 2020), adopted, 2020 WL 13499466 (D. Colo. Sept. 23, 2020). See also Riccatone v. Colorado Choice Health Plans, 315 P.3d 203, 210 (Colo. App. 2013) (citing comments during Colorado General Assembly legislative debate describing the common law standard as "too high" and clarifying "the purpose of the bill was to create a less onerous standard in the first-party context").

Under either rubric, an insurer acts unreasonably if it "delay[s] or denie[s] authorizing payment of a covered benefit without a reasonable basis for that...