Free Motion for Reconsideration - District Court of Colorado - Colorado

Case 1:00-cv-02098-REB-MJW

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Filed 10/03/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 00-cv-02098-REB-MJW KELLY FINCHER, by her guardian, JAMES FINCHER, on behalf of herself and all others similarly situated, Plaintiffs, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, a New Jersey Corporation, Defendant.

PLAINTIFF'S MOTION FOR RECONSIDERATION OF FINDINGS OF FACT, CONCLUSIONS OF LAW, & ORDERS DATED FEBRUARY 28, 2006, AS TO THE IMPOSITION OF THE $200,000 CAP ON BENEFITS

Certificate of Compliance Pursuant to D.C.COLO.LCivR. 7.1(A) - Counsel for the Plaintiff has consulted with counsel for the Defendant regarding this Motion, and Defendant opposes the relief requested herein. Plaintiff, by and through her attorneys of record, respectfully moves the Court to reconsider its ruling of February 28, 2006, including a $200,000 cap in the reformed policy, based on an intervening change, at least insofar as the Court's initial construction is concerned, in the law.

Case 1:00-cv-02098-REB-MJW

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I. Introduction This case concerns the reformation of an insurance policy issued by Defendant Prudential Property and Casualty Insurance Company ("Prudential") to comply with the requirements of the Colorado Automobile Accident Reparations Act ("No-Fault Act"). Plaintiff brought suit against Prudential seeking reformation of the insurance policy because Prudential failed to make an offer of extended personal injury protection ("APIP") benefits that complied with the requirements of Colo. Rev. Stat. § 10-4-710. The case was initially dismissed on summary judgment, but the United States Court of Appeals for the Tenth Circuit reversed in Fincher v. Prudential Property & Casualty Insurance Company, 76 Fed. Appx. 917 (10th Cir. 2003). The Tenth Circuit ordered the policy reformed, and remanded with instructions for the trial court to determine the effective date and terms of the reformation. On February 28, 2006, after a trial to the court, this court entered Findings of Fact, Conclusions of Law, & Orders which established the effective date of reformation and also held that the reformed policy would be subject to a $200,000 aggregate cap. In establishing the cap, the court first noted that Prudential's policy initially contained an impermissibly low cap which had to be "written out of the policy" in order to comply with the No-Fault Act. Findings of Fact, Conclusions of Law, & Orders at 23 (hereafter "Order"). The court went on to consider the equitable factors it applied in determining the date of reformation to decide whether a cap should be applied. In its analysis, the court noted that although Prudential intended to apply the $200,000 statutory cap,

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"Prudential's forms did not provide for such a cap for about five years after 200,000 dollar minimum cap became effective," Order at 25 (emphasis added), which was well after the date Kelly Fincher was injured and therefore covered by the Prudential policy. Despite concluding that Prudential was "less than vigilant in ensuring that its forms reflected the proper cap after the law changed," Order at 26, the court, based on its analysis of the equitable factors, found that despite the absence of an express $200,000 cap the reformed policy should be capped. Order at 29. II. Basis for the Motion to Reconsider The decision to grant or deny a motion for reconsideration is soundly within the trial court's discretion. GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1386 (10th Cir. 1997); Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997). Motions for reconsideration are warranted on the ground that there has been an intervening change in controlling law. Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). 1 Colorado substantive law governs this dispute, and "decisions of a state's intermediate appellate courts are some evidence of how the state supreme court would decide the issue" and are therefore relevant authority. Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1240 (10th Cir. 2003) ("Clark I"). On March 9, 2006, shortly after the trial court issued its order, the Colorado Court of Appeals decided Snipes v. American Family Mutual Insurance Co., 134 P.3d 556 (Colo.

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Although these cases deal directly with motions under Fed. R. Civ. P. 59(e), they are still relevant to this motion. Rule 59(e) only allows reconsideration of final judgments, and therefore is not applicable here. However, "it is well within the court's discretion to revise interlocutory orders prior to entry of final judgment." Sump v. Fingerhut, Inc., 208 F.R.D. 324, 327 (D. Kan. 2002) (citing to Fed. R. Civ. P. 54(b)). In doing so, courts "routinely turn to the standards established under Rule 59(e) for instruction." Id.

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Case 1:00-cv-02098-REB-MJW

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App. 2006) which directly addressed the question of when a reformed insurance policy should include the statutory cap. Because this is an intervening change in the controlling case law, it is appropriate for this court to reconsider its holding with regard to the inclusion of a $200,000 cap in the reformed policy in light of the decision in Snipes. III. Under the ruling in Snipes, Prudential is not entitled to a cap in the reformed policy because it did not include a compliant cap in its policies or forms. The Colorado Court of Appeals in Snipes clearly enunciated the standard for determining when a reformed policy should be capped under Colorado law: "Whether the enhanced benefits available under the reformed policy would be capped at $200,000, as permitted by § 10-4-710(2)(b), depend[s] on whether the policy itself so provide[s]." Snipes, 134 P.3d at 558. The Snipes holding is consistent with the analysis in previous cases, including Thompson v. Budget Rent-A-Car Systems, 940 P.2d 987 (Colo. App. 1996), and Clark v. State Farm Mutual Automobile Insurance Co., 433 F.3d 703, 710-11 (10th Cir. 2005) ("Clark III") ("Thompson makes clear . . . that when an insurer does not include an aggregate cap in that policy agreement, the insurer cannot take advantage of the possible cap."). The Snipes decision clarifies that Colorado law mandates that a reformed policy can only be capped if the original policy provided for a cap. In other words, if the policy contained a statutorily compliant cap, it may be enforced. If it did not, one may not be written in. As the most recent decision directly on point from an appellate court in Colorado, the holding in Snipes should be given significant consideration and should be applied to this case. 4

Case 1:00-cv-02098-REB-MJW

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Under the holding in Snipes, Prudential cannot take advantage of the statutory cap because the policy itself did not contain one. As this court found in its Order, "Prudential's forms did not provide for such a cap for about five years after 200,000 dollar minimum cap became effective." Order at 25. The Prudential policy at issue in this case had only the defective cap which was stricken because it violated the No-Fault Act. See Order at 23; see also Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92, 100 (Colo. 1995) (policy provisions that limit statutorily mandated coverage are void). Therefore, under the clear mandate of Snipes, a cap cannot be read into the policy now, regardless of what Prudential's intent may have been. Because Prudential failed to properly include a cap in the policies it issued, it cannot ask this court to write one in to the reformed policy. This result is reinforced by the analysis employed by the Colorado Supreme Court in a ruling issued just yesterday. In Roberts v. American Family Mutual Insurance Co., No. 05SC57 (Colo. October 2, 2006) (slip opinion attached hereto as Exhibit A), the court considered whether uninsured motorist anti-stacking language that would have been permitted by law, but was not part of the policy issued to the insured, would be enforced. Reasoning that "the insurance policy itself determines the extent of the agreed-upon coverage," the court ruled that the insurer could not take advantage of a permissible anti-stacking provision it could have, but did not, include in its policy language. Id. at p. 6. Here, just as in Roberts, the Prudential policy in effect on the date

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of the accident did not include the cap permitted by law, and Roberts makes clear that it is not appropriate to read into the policy that which Prudential chose not to include. III. Conclusion Based on the foregoing, Plaintiff respectfully moves this court to reconsider its holding that the reformed policy should be capped at $200,000. Because of the intervening change in or clarification of the law, as announced in Snipes, Plaintiff requests that the court reconsider its previous order and order the policy reformed to include unlimited medical and wage-loss benefits because Prudential's policy did not include a $200,000 cap. Respectfully submitted this 3rd day of October, 2006.

s/Robert B. Carey Robert B. Carey Leif Garrison The Carey Law Firm 2301 East Pikes Peak Ave. Colorado Springs, Colorado 80909 Phone: (719) 635-0377 Fax: (719) 635-2920 Email: [email protected] Steve W. Berman, WSBA #12536 HAGENS BERMAN, L.L.P. 1301 Fifth Avenue, Suite 2900 Seattle, WA 98101 L. Dan Rector FRANKLIN D. AZAR & ASSOCIATES, PC 5536 Library Lane Colorado Springs, CO 80918 Attorneys for Plaintiff 6

Case 1:00-cv-02098-REB-MJW

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Filed 10/03/2006

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CERTIFICATE OF SERVICE I hereby certify that on this 3rd day of October, 2006, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF System, which will send notification to the following email addresses: [email protected] [email protected]

s/Robert B. Carey Robert B. Carey Leif Garrison The Carey Law Firm 2301 East Pikes Peak Ave. Colorado Springs, Colorado 80909 Phone: (719) 635-0377 Fax: (719) 635-2920 Email: [email protected]

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