Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01143-JLK

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-K-1143 (CBS)

DOLLY LAU, Plaintiff, vs. ALLSTATE INSURANCE COMPANY, Defendant.

ALLSTATE'S RESPONSE TO PLAINTIFF'S MOTION TO AMEND OR ALTER JUDGMENT RE: PREJUDGMENT INTEREST AND QUANTIFICATION OF JURY VERDICT PURSUANT TO F.R.C.P. 59(e)

Defendant, Allstate Insurance Company, through its attorneys, Walberg, Dagner & Tucker, P.C., responds to Plaintiff's Motion to Amend or Alter the Judgment, objecting to the interest calculations and the basis of Plaintiff's assertion that her judgment should be in the amount of $11,017. In support of its objections, Allstate states as follows: Plaintiff's Motion claims that she is not seeking to set aside or change the jury's findings. She is, however, seeking to imply into them conclusions that are not contained in the jury's responses on the verdict form. She thereby seeks to claim the benefit of having met her burden of proof on certain issues without actually having done so. Allstate submits that she is not entitled to that benefit.

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A. UIM award amounts are, as specifically noted by Plaintiff, damages under contract. These verdict amounts are not subject to the interest statute concerning personal injury awards. Interest on contract damages does not accrue from the date of the accident, but rather from the date of the denial of benefits by Allstate. Allstate agrees that the matter is governed by Colorado law. However, Allstate disagrees as to the Colorado law that is applicable to Ms. Lau's interest claims. The damages sought here were for breach of contract. Under Colorado law, the statutory interest available to Ms. Lau is that which is awarded on a contract claim. "One who is damaged by a breach of contract is entitled under § 5-12-102 to interest from the date of the breach." Peterman v. State Farm Mut. Auto. Ins. Co., 8 P.3d 549 (Colo.App. 2000); C.R.S. § 5-12-102. According to the court in Bowen v. Farmers, statutory prejudgment interest on an underinsured motorist (UIM) claim runs from the date of insurer's breach of contract by refusal to pay, not from date of parties' stipulation as to tortfeasor's liability and amount of damages, nor from date of automobile accident giving rise to claim. Bowen v. Farmers Ins. Exchange, 929 P.2d 14 (Colo. App.1996), certiorari denied. In this case, demand for UIM benefits was initially made in September of 2003. At that time, Ms. Lau's counsel valued the claim in excess of $600,000. The UIM adjuster, Ms. Susan Mullins, initiated an investigation into Ms. Lau's claims. After obtaining substantial additional information, Ms. Mullins completed that investigation on or about March 25, 2004. On that date, Ms. Mullins advised Ms. Lau's counsel of her conclusion that the underlying $25,000 settlement with State Farm had fully compensated Ms. Lau. The jury concluded that Allstate did not act in bad faith in delaying or denying payment of UIM benefits. Thus, it cannot be said that this decision should have been made at an earlier date.

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Assuming that the claim had a value of $30,000 as of that date, the earliest time at which Allstate could be charged with a wrongful withholding of payment under its contract would have been March 25, 2004. Pursuant to C.R.S. §5-12-102 and Bowen, if the additional $5,000 amount was "wrongly withheld" on March 25, 2004, and applying the 8% interest figure from the proper statute, Ms. Lau is entitled to only the following interest amounts: Principal $5,000 $5,400.00 Interest $400.00 $379.92 New Principal Balance $5,400.00 $5,779.92 (321 days @ $1.18)

3/25/04 to 3/25/05 3/25/05 to 2/9/06

Similarly, the calculation of interest on the wage loss is not subject to the personal injury statute, but is subject to the statute pertaining to interest on contract damages. The same date of accrual would apply, that being the date on which Allstate initially declined to make any payment of UIM benefits. Ms. Lau would then be entitled to 8% per annum on the lost wage award as follows: Principal $852.00 $920.16 Interest $68.16 $64.20 New Principal Balance $920.16 $984.34 (321 days @ $.20)

3/25/04 to 3/25/05 3/25/05 to 2/9/06

In addition, it should be noted that Allstate made an offer of Judgment to Ms. Lau on December 20, 2004, in the amount of $10,000. This amount would have fully compensated Ms. Lau for the damages sought and any amount wrongfully withheld, such that interest should rightfully be abated as of that date.

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B. Plaintiff has failed to meet her burden of proving that any medical expense remains unpaid. The jury verdict form, completed by the jury and not objected to by Plaintiff, asked the jury to answer the following question: (a) First, please enter the total amount of reasonable and necessary medical expenses you find Ms. Lau has incurred and will incur during the first five years after the collision as a result of the collision (i.e. from the date of the collision on September 28, 2001 to September 28, 2006). If you find Ms. Lau has failed to prove she has incurred or will incur any medical expenses during the first five years after the collision, please enter "0." (Emphasis supplied) The jury entered: $27,081. Plaintiff notes that the medical expense log offered into evidence reflects only $25,933.18 in medical expenses actually paid by Allstate as of the date of trial. Plaintiff then claims that because there was minimal evidence of future expenses, and the total amount of medical expense which the jury found Ms. Lau had or would incur was $1,147.82 less than had actually been paid, the court must conclude that the balance of $1,147.83 represents past expenses that had not been paid by Allstate. Plaintiff's position relies upon several inaccurate statements and assumptions. The first is Plaintiff's claim that Allstate paid only $25,933.18. Although this is the amount reflected on the medical expense log found on Exhibit 8-1, Allstate also paid $333.82 in medical mileage reimbursement as reflected on Exhibit 8-3. The mileage expense is a part of the medical expense owed and paid by Allstate and considered by the jury. The second inaccurate statement is that there was evidence of only $560.00 in anticipated future medial expense. In fact, the testimony was that Ms. Lau should receive one OMT treatment per month at $80.00 per session. Her PIP benefit period expired on September 28, 2006, leaving 8 -4-

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months of treatments. At $80.00 per treatment, this would amount to $640.00. Since Ms. Lau is also entitled to mileage for these visits, Plaintiff's effort to limit the possible amount to $560 is improper. Taking these facts into account, the following math is relevant: Jury verdict past and future medical $27,081.00 Allstate's past medical payments Allstate's past mileage payments Cost of future OMT treatment Balance - $25,933.18 -$ -$ $ 333.86 640.00 173.96 (before mileage claims)

Since the jury was aware that Ms. Lau had been paid certain mileage allowances, it is not unreasonable to assume that the balance was intended as a mileage allotment for OMT or health club visits. Plaintiff's arguments apparently fail to consider the possibility that the jury might allow her future mileage payments. More importantly, however, Ms. Lau herself testified that all of her medical expenses had been paid as of the date of trial, except for one $80.00 bill for an OMT treatment received in late 2005. Allstate has no obligation under the PIP law as it existed at the time of the accident, to pay medical expenses that have not been incurred and submitted. C.R.S. §10-4-708(1) required only that a bill be paid within 45 days of proper submission for payment. The jury verdict form, however, required the jury to include future payments within the total figure. These future amounts are not due from Allstate to the providers or to Ms. Lau until they are actually incurred and submitted for payment. Thus, the jury may have determined that Ms. Lau would be entitled to proceed to 8 OMT visits and submit the billing and the mileage to Allstate, but the jury's verdict does not require the -5-

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conclusion that any amount due remained unpaid at the time of trial. Consequently the entire argument by Plaintiff for inclusion of $1,147.82 in the final judgment against Allstate is without support in the verdict form. Contrary to Plaintiff's argument, this amount could reflect the jury's belief that Plaintiff would be entitled to payment for future treatment and mileage expense. Since Plaintiff failed to request that the jury differentiate between past and future amounts, she cannot now ask the court to decide the issue as it suits her. C. Plaintiff has also failed to prove entitlement to judgment in the amount of $293.48, or the entitlement to any interest award as a result of the jury's finding that Allstate failed to pay benefits of $293.48 within 30-45 days of receiving proof of the fact and amount of the expense. Plaintiff's Motion suggests that the $293.48 must be considered an unpaid amount by including it within her claim that the $1,147.82 "difference" referred to above. She does not make a claim for interest on this amount. This is likely due to her failure to submit a jury verdict form which actually asked the jury for the information necessary to justify such judgment or award. The form as agreed to by Plaintiff indicates only that at some time, benefits in the amount recorded were either not paid, or were paid late. Since Plaintiff has not proven that they were not paid, and has not proven when, or for how long they were overdue, she cannot now make any claim for interest which might have accrued. Nor, indeed, can she claim that this amount itself should be included in the judgment since the jury verdict form does not actually establish that these amounts were not paid. Where Plaintiff has the burden of proof as to an issue, but has failed to request that issue be specifically determined by a jury, the right to that determination is waived, and the lack of finding by the jury operates as a finding against Plaintiff. Kavanaugh v. Greenlee Tool Co., 944 F.2d 7,

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11-12 (1st Cir.1991); Reorganized Church of Jesus Christ of Latter Day Saints v. U.S. Gypsum Co., 882 F.2d 335, 338 (8th Cir.1989); Reo Industries, Inc. v. Pangaea Resource Corp., 800 F.2d 498, 501 (5th Cir.1986); Gelfand v. Strohecker, Inc. 150 F.Supp. 655 (D.C.Ohio, 1956) citing Masters v. N.Y. Central R. Co., 70 N.E.2d 898 (Ohio); S.W.2d 139 (Tex.Civ.App. 1964) As a result, Allstate contends that Plaintiff is entitled to only nominal damages of $1.00 as a result of the jury's finding that at some time, Allstate failed to pay $293.48 in benefits within 30 to 45 days of receiving reasonable proof of the fact and amount of the bills. Plaintiff's failure to request special interrogatories sufficient to determine when such payments were due, or for how long they were overdue, or if they were actually paid or not, works as a waiver of any right to entry of judgment for the benefits themselves, or for interest on the amount since no period of time can be established during which such interest would have accrued. D. Plaintiff's claim that the jury's special finding regarding rehabilitation expenses entitles her to judgment for $1,400 is unsupported by the verdict form itself. The jury was asked to answer the following question: (b) Next, enter the total amount of reasonable and necessary rehabilitation expenses you find Ms. Lau has incurred or will incur during the first ten years after the collision as a result of the collision (i.e. From the date of the collision on Sept3ember28, 2001 to September 28 2011). If you find Ms. Lau has failed to prove she has incurred or will incur any rehabilitation expenses during the ten years after the collision please enter "0." (Emphasis supplied) The jury entered $1,400. Here again, Plaintiff claims that this "must be" for past expenses not paid. However, the instruction directs the jury to include future expenses and the jury heard evidence that Ms. Lau would Golden State Mut. Life Ins. Co. v. Kelley, 380

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need both a health club membership and OMT treatments for life, which, according to her own experts, could be considered rehabilitative. Since her rehabilitation coverage does not expire for an additional 5 years, the jury was certainly at liberty to conclude that she would need an additional $1,400 in rehabilitative care after the expiration of her medical coverage in September of 2006. For reasons similar to those noted above, the jury's verdict simply does not support an entry of judgment for the amount of $1,400. Ms. Lau testified that all of her bills had been paid except for one single OMT bill for $80.00. Even if a doctor suggested that an earlier exercise program would have been appropriate, such amounts are not due under the PIP statute until incurred and submitted. C.R.S. §10-4-708(1). Further, the jury interrogatory itself asks the jury to determine the total of expenses Ms. Lau "has incurred" or "will incur," not those which some doctor speculated she might have needed but did not incur or submit. There is no evidence of unpaid rehabilitation expenses, but ample evidence of claimed future expenses. The verdict does not support the conclusion that these expenses were incurred and unpaid. The law does not require Allstate to pay them in advance. Plaintiff failed to ask the jury to determine if these were past or future expenses and may not, now, claim one over the other for convenience. E. Conclusion: Based upon the facts noted above, Plaintiff is entitled to a judgment on the jury's verdict as follows: Non- Economic Loss: Principal $5,000 $5,400.00 Interest $400.00s $379.92 New Principal Balance $5,400.00 $5,779.92 (321 days @ $1.18)

3/25/04 to 3/25/05 3/25/05 to 2/9/06

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Case 1:04-cv-01143-JLK

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Economic Loss: Principal $852.00 $920.16 Interest $68.16 $64.20 New Principal Balance $920.16 $984.34 (321 days @ $.20)

3/25/04 to 3/25/05 3/25/05 to 2/9/06

Nominal Damages for late payment of PIP expenses: Total Damages: $5,779.92 $ 984.34 $ 1.00 $6,765.36

$1.00

Wherefore, Allstate requests that judgment for Plaintiff be limited to the amounts set forth above for the reasons stated. Allstate will respond to the requests for attorney fees and costs in separate pleadings responsive to the separate pleadings filed on these issues by Plaintiff. DATED: March 3, 2006 Respectfully submitted, WALBERG, DAGNER & TUCKER, P.C.

By:

/s/Deana R. Dagner Deana R. Dagner Walberg, Dagner & Tucker, P.C. Quebec Centre II 7400 E Caley Ave Suite 300 Centennial, CO 80111-6714 303-694-9300 ofc 303-694-9370 fax [email protected] Attorneys for Defendant Allstate

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CERTIFICATE OF MAILING I hereby certify that a true copy of the foregoing ALLSTATE'S RESPONSE TO PLAINTIFF'S MOTION TO AMEND OR ALTER JUDGMENT RE: PREJUDGMENT INTEREST AND QUANTIFICATION OF JURY VERDICT PURSUANT TO F.R.C.P. 59(e) was placed in the U.S. Mail, with postage prepaid, on March 3, 2006, copies addressed to: Pete Cordova, Esq. P.O. Box 1124 1604 H. Street Salida, CO 81201 Clerk of the Court United States District Court District of Colorado Alfred A. Arraj United States Courthouse 901 19th Street, Room A105 Denver CO 80294-3589 /s/Deana R. Dagner Deana R. Dagner

I:\CASES\B\B04007\POST TRIAL\RESPONSE RE INTEREST AND QUANTIFICATION.WPD

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