THANE v. GEICO CASUALTY COMPANY

Civil Action No. 16-cv-02940-CMA-MEH.

JODIE THANE, Plaintiff, v. GEICO CASUALTY COMPANY, Defendant.

United States District Court, D. Colorado.

Editors Note
Applicable Law: 28 U.S.C. § 1332
Cause: 28 U.S.C. § 1332 Diversity - Breach of Contract
Nature of Suit: 110 Insurance
Source: PACER


Attorney(s) appearing for the Case

Jodie Thane, Plaintiff, represented by Donald George Moore , Deisch Marion & Klaus, P.C..

Jodie Thane, Plaintiff, represented by Michael Henry Jackson Born , Franklin D. Azar & Associates, PC-Aurora & Patricia A. Meester , Franklin D. Azar & Associates, PC-Aurora.

Geico Casualty Company, Defendant, represented by Stacy Thompson , Perry Law P.C. & Meloney Cargil Perry , Perry Law P.C..

Kenneth Farrell, Interested Party, represented by Michael Justin Rosenberg , The Gold Law Firm, L.L.C..


ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

CHRISTINE M. ARGUELLO, District Judge.

This case arises out of an insurance coverage dispute and concerns whether Defendant, Geico Casualty Company, breached its contractual duty when it refused to settle a claim invoked against Plaintiff, Jodie Thane, by a third party. Plaintiff's Complaint also asserts a claim for the unreasonable denial of a covered benefit under Colo. Rev. Stat. §§ 10-3-1115 and 10-3-1116. This matter is before the Court on Defendant's Motion for Summary Judgment. (Doc. # 25.) Defendant argues for the dismissal of both of Plaintiff's Claims for Relief because, Defendant contends, they are barred by applicable statute of limitations periods. (Id.) For the following reasons, the Court denies Defendant's Motion.

I. BACKGROUND

The relevant facts, when viewed in the light most favorable to Plaintiff, are as follows. See Allen v. Muskogee, 119 F.3d 837, 839-40 (10th Cir. 1997) (reviewing court must view the evidence in the light most favorable to the nonmoving party); Kidd v. Taos Ski Valley, Inc., 88 F.3d 848, 851 (10th Cir. 1996) (same). On May 25, 2012, Plaintiff Jodie Thane's son, Aaron Thane, Brandon Hanson, and Robert Thane were involved in an automobile accident with Kenneth Farrell, where Mr. Farrell was injured and Aaron Thane was killed. (Doc. # 4 at ¶ 5.) Plaintiff was insured by Defendant through a personal automobile insurance policy with liability limits of $50,000 per person/$100,000 per occurrence. (Id. at ¶ 6.) As a result of his injuries sustained in the accident, Mr. Farrell requested that Geico pay him the $50,000 liability limit. (Id. at ¶ 7.) In exchange for payment of that limit, Mr. Farrell agreed to release Jodie Thane from all liability for the accident. (Id.) Geico refused to pay the $50,000 liability limit, as requested. (Id. at ¶ 8.) Robert Thane, Brandon Hanson, and the Estate of Aaron Thane filed suit against Mr. Farrell, bringing claims of negligence and negligence per se. (Doc. # 26 at 18.) Mr. Farrell responded with claims against the Estate of Aaron Thane for negligence and against Jodie Thane for negligent entrustment. (Id.) It is undisputed that Geico provided a defense to Ms. Thane in the underlying lawsuit. (Doc. # 4 at ¶ 14.) During the course of litigating the lawsuit, Mr. Farrell provided Geico with additional opportunities to settle the claims against Jodie Thane in exchange for payment of the $50,000 liability limit. (Doc. # 4 at ¶ 9.) Geico again refused to do so. (Id.)

Aaron Thane's parents, Jodie and Todd Thane, subsequently filed a separate personal injury and wrongful death action in the Jefferson County District Court, which was consolidated into 12CV2852 on February 6, 2014. (Doc. # 26 at 15, 16.) The case, in which liability and damages were disputed by all parties, was tried before a jury beginning on July 28, 2014. (Id. at 18.) On August 6, 2014, the jury returned a verdict in favor of Mr. Farrell and against Jodie Thane and the Estate of Aaron Thane in the amount of $1.5 million. (Id. at 18, 19.) On August 29, 2014, the district court entered an order of judgment on the jury verdict after reducing the non-economic damages award from $500,000 to $468,010 in accordance with Colo. Rev. Stat. § 13-21-102.5(3)(c). (Id. at 19.) On September 5, 2014, Jodie Thane and the Estate of Aaron Thane filed a motion for a new trial on all issues of liability and damages under Colo. R. Civ. P. 59(d)(5). (Id. at 30-40.) On November 7, 2014, the district court denied the motion for new trial but ordered remittitur of Mr. Farrell's economic damages from $500,000 to $36,216.49, which Mr. Farrell did not contest. (Id. at 18-26; Doc. # 4 at ¶¶ 12, 13.)

On December 24, 2014, Defendant funded an appeal from the judgment on behalf of Jodie Thane and the Estate of Aaron Thane. (Doc. # 26 at 42-50; Doc. # 4 at ¶ 14.) No supersedeas bond was filed during the appeal. (Doc. # 27.) On March 10, 2016, the Colorado Court of Appeals affirmed the district court's ruling. (Doc. # 4 at ¶ 14.) On November 7, 2016, Plaintiff Jodie Thane initiated this lawsuit in the Denver County District Court against Defendant Geico Casualty Company for bad faith breach of an insurance contract and unreasonable denial of payment for benefits owed in violation of Colo. Rev. Stat. § 10-3-1115. (Doc. # 4.) On December 1, 2016, Defendant removed the case to federal court. (Doc. # 1.) On January 25, 2017, Defendant filed the instant motion for summary judgment asserting that both claims are barred by the statute of limitations and must be dismissed as a matter of law. (Doc. # 25.)

II. STANDARD OF REVIEW

Summary judgment is appropriate "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 fact is material "if under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute is "genuine" if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Anderson 477 U.S. at 248. "To defeat a motion for summary judgment, evidence, including testimony, must be based on more than mere speculation, conjecture, or surmise." Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004).

The moving party bears the initial burden of demonstrating an absence of a genuine dispute of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In attempting to meet this standard, a movant who does not bear the ultimate burden of persuasion at trial need not disprove the other party's claim; rather, the movant must simply point the Court to a lack of evidence for the other party on an essential element of that party's claim. Adler 144 F.3d at 671 (citing Celotex 477 U.S. at 325).

Once the movant has met its initial burden, the burden then shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson 477 U.S. at 256. The nonmoving party must then go beyond its pleadings to satisfy its burden by "set[ting] forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.

III. DISCUSSION

A. ACCRUAL OF LIMITATIONS

Neither party disputes that the pertinent statute of limitations for Plaintiffs' claims is two years under Colo. Rev. Stat. § 13-80-102(1)(a). See also Wardcraft Homes, Inc. v. Employers Mut. Cas. Co., 70 F.Supp.3d 1198, 1212 (D. Colo. 2014) ("Bad faith actions must be "commenced within two years after the cause of action accrues."). The crux of the matter in this case is the date that Plaintiff's bad faith failure to settle claim ripened into a workable cause of action which triggered the clock on the statute of limitations — in other words, when the cause of action accrued.

Under Colo. Rev. Stat. § 13-80-108(1), a cause of action begins to accrue "on the date both the injury and its cause are known or should have been known by the exercise of reasonable diligence." Plaintiff argues that the accrual date was March 10, 2016 — the date when the Colorado Court of Appeals affirmed the district court's ruling and made the judgment final and non-appealable. (Doc. # 37 at 3.) Defendant, however, maintains that limitations began to run on the date when the trial court's judgment could have been executed. (Doc. # 25 at 5.) Defendant argues that, because no supersedeas bond was filed, Mr. Farrell could have executed on the judgment fourteen days after it issued — September 12, 2014. (Doc. # 25 at 7.)

In so arguing, Defendant points to Colorado law requiring an appellant to provide a supersedeas bond when seeking to obtain a stay of judgment from the trial court. Colo. R. Civ. P. 62(d); Colo. App. R. 8(a); Colorado Korean Ass'n v. Korean Senior Ass'n of Colorado, 151 P.3d 626, 628 (Colo. App. 2006) ("The posting of a supersedeas bond is required to stay the execution of a trial court's judgment."). Typically, the filing of a motion for new trial, absent the existence of a supersedeas bond, does not alter the date a judgment becomes final nor does it stay execution of a final judgment. See, e.g., Martinez v. Dixon, 710 P.2d 498 (Colo. App. Ct. 1985) (stay of execution had not been entered and, therefore, garnishor was entitled to execution on the judgment even though a motion for new trial was pending); Oman v. Morris, 28 Colo. App. 124, 129 (1970) (unless stayed by the court, a judgment may be executed upon before the new trial motion is decided). It is undisputed that no supersedeas bond was posted following the district court's judgment. (Doc. # 27.)

However, that Mr. Farrell could have executed on his judgment due to Ms. Thane's failure to post the supersedeas bond does not mean that the judgment was final for purposes of Ms. Thane's bad faith claim against Geico. In the narrow context of a bad faith failure to settle claim, the injury does not occur once the judgment becomes enforceable; rather, the injury transpires once the judgment becomes final and nonappealable. See Vanderloop v. Progressive Cas. Ins. Co., 769 F.Supp. 1172, 1175 (D. Colo. 1991) ("[U]nder the circumstances here presented, the action asserting insurance company bad faith failure to settle resulting in an excess liability judgment against the insured accrued when excess liability ultimately was established . . . and the controlling statute of limitations therefore did not commence running, until judgment on appeal became final.").

Defendant's reliance on Brodeur v. Am. Home Assur. Co., 169 P.3d 139 (Colo. 2007) is misplaced. (Doc. # 25 at 9.) Brodeur arose out of a worker's compensation insurer failing to provide benefits to the insured, not out of an automobile liability insurer's alleged failure to settle with a third party on behalf of the insured, which is the case here. Brodeur, 169 P.3d at 147-148. Indeed, the Brodeur court expressly addressed this distinction in its opinion:

Vanderloop is distinguishable from the facts of the instant case, while being consistent with both section 13-80-108(1) and our holding here. In Vanderloop, the injury was not "known" in accordance with section 13-80-108(1) until the final judgment in another action exposed the plaintiff to excess liability. However, the injury alleged here was not dependent on the outcome of any other action. The injury underlying Petitioner's bad faith tort claims was the fact that Brodeur did not receive medical treatment in a timely manner. This injury occurred regardless of the ultimate outcome in the workers' compensation proceeding.

Id. at 148. Similar to the instant case, Vanderloop involved a bad faith claim for failure to settle with a third party within policy limits and, thus, it is more analogous than Brodeur.1 Further, the Tenth Circuit has also held that a cause of action against an insurance company for bad faith failure to settle does not accrue until the judgment is final. Torrez v. State Farm Mut. Auto. Ins. Co., 705 F.2d 1192, 1202 (10th Cir. 1982).

This is the position taken by the majority of states. "The majority rule of courts in other states is that a bad-faith failure-to-settle claim accrues when the excess judgment becomes final and non-appealable. Leading insurance law treatises and practice guides also reflect that majority position." Connelly v. State Farm Mut. Auto. Ins. Co., 135 A.3d 1271, 1276-77 (Del. 2016). In Connelly, the Supreme Court of Delaware posits that this approach reduces the possibility of a conflict of interest between the insurer and the insured because the insured party would not "have to bring a cause of action against the insurer while expecting the insurer to zealously defend her interests in the underlying insurance claim." Id. at 1277-78. This majority rule also "saves the insured litigation costs that may turn out to be unnecessary if the court does not order an excess judgment." Id. at 1278. Likewise, this approach would avoid wasting judicial resources because "it prevents the court from having to address premature claims before the insured can plead damages and the court can assess the reasonableness of the insurer's refusal to settle." Id. In conjunction with the holdings in Vanderloop and Torrez, the Court agrees with the Delaware Supreme Court's reasoning.

Accordingly, this Court finds that Plaintiff's injury, with respect to her bad faith claim, did not occur until the Colorado Court of Appeals affirmed the district court's ruling and judgment became final. As such, the statute of limitations began to accrue on March 10, 2016, and Plaintiff's action, having been filed on November 7, 2016, is timely.2

B. PLAINTIFF'S STATUTORY CLAIMS UNDER §§ 10-3-1115, 10-3-1116

The Court now turns to Plaintiff's claims for violation of §§ 10-3-1115, 10-3-1116. Defendant argues that Plaintiff's second claim for relief, unreasonable denial of payment of covered benefits, is untimely based on a one-year statutory limitations period applicable to penal statutes, § 13-80-103(1)(d). (Doc. # 25 at 8, 9.) Defendant relies on the same accrual date that it did for the bad faith claim — September 12, 2014. Plaintiff does not dispute the application of a one-year limitations period to its claims. Plaintiff instead objects to the Defendant's proposed accrual date, arguing that Colo. Rev. Stat. § 13-80-103 must be read in conjunction with the accrual statute, § 13-80-108, which states that the accrual period begins "when the determination of overpayment or delinquency for which such penalties are assessed is no longer subject to appeal." (Doc. # 37 at 7.)

Claims for violation of §§ 10-3-1115, 10-3-1116, accrue in the same manner as bad faith claims. Wardcraft, 70 F. Supp. 3d at 1213. The Court therefore applies the same accrual date here is it did in the previous analysis — March 10, 2016.3 Because Plaintiff filed this action on November 7, 2016, it is timely.

IV. CONCLUSION

Based on the foregoing, the Court DENIES Defendant's Motion for Summary Judgment (Doc. # 25).

FootNotes


1. Although Defendant utilized Brodeur as its primary authority supporting its argument that the accrual date began when judgment becoming executable, Defendant failed to even acknowledge the distinction between Brodeur and Vanderloop in the context of a bad faith failure to settle claim — a distinction that was expressly mentioned in Brodeur. The Court also notes that Plaintiff did not cite any case in which Colorado courts, or federal courts applying Colorado law, have addressed the accrual date in a bad faith failure to settle claim, instead stating that Colorado courts have not addressed the issue.
2. Because the Court finds that Plaintiff's bad faith claim is timely, the Court need not address the parties' equitable tolling arguments.
3. Accordingly, the Court need not reach the issue of whether 13-80-108(9) applies in this context.

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