Free Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-CV-00865-REB-CBS ESTATE OF APRIL HILL, SCOTT HILL, personal representative; SCOTT HILL, as Conservator of the Estate of Katelyn Hill; and SCOTT HILL, individually, Plaintiffs, v. ALLSTATE INSURANCE COMPANY; MERASTAR INSURANCE COMPANY; and PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendants.

PLAINTIFF'S OPPOSITION TO DEFENDANT ALLSTATE INSURANCE COMPANY'S JOINDER IN MERASTAR'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE CLAIMS FOR LOST WAGES

Plaintiff Scott Hill ("Hill"), as Conservator of the Estate of Katelyn Hill ("Katelyn"), by his undersigned attorneys, responds in opposition to the joinder filed by Defendant Allstate Insurance Company ("Allstate").1 I. INTRODUCTION

Katelyn Hill was seriously injured in an accident involving a car insured by Allstate, thereby becoming an insured of Allstate under the Colorado Automobile
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To the extent this Court allows, Plaintiff requests that this response be read as an implicit motion to reconsider its order granting summary judgment on wage losses to Merastar Insurance Company ("Merastar"), as Allstate has incorporated Merastar's facts and analysis into its motion to join in Merastar's Motion for Partial Summary Judgment.

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Accident Reparations Act (the No Fault Act). Katelyn was also insured as a resident relative under a policy issued by Merastar to her father, Scott Hill.2 Plaintiff Hill brought this lawsuit to establish that both the Allstate policy and the Merastar policy contain extended Personal Injury Protection (extended PIP) coverage, unlimited in time and amount in accordance with the No Fault Act. The issue of whether the policies contain unlimited coverage has not yet been adjudicated. Merastar moved for summary judgment as to wage loss claims, on the basis that Katelyn was unemployed at the time of the accident. (Merastar's Mot. Summ. J. on Claims of Estate of Katelyn Hill for Lost Wages (Merastar's MPSJ) at 1-2.) This Court approved and adopted the reasons, arguments, and authorities Merastar presented, and incorporated them into an order granting summary judgment to Merastar as to wage losses. (Order of Aug. 9, 2005 Grant. Summ. J. For Lost Wages (Order of Aug. 9).) Allstate moved to join in Merastar's partial summary judgment motion after the order granting it was received. (Allstate's Joinder in Merastar's Mot. Part. Summ. J. (Allstate's MPSJ).) As did Merastar, Allstate bases its right for summary judgment on the sole fact that Katelyn was not employed at the time of the accident. (Id. ¶ 5.)3 Plaintiff Hill respectfully requests this Court to deny summary judgment as to wage losses, because dismissing all possible wage loss claims presupposes the nonexistence of unlimited extended PIP coverage, which issue has not yet been adjudicated. Summary judgment is only appropriate where the movant is entitled to
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This statement should be taken to correct the opening statement in Plaintiff's response to Merastar's Motion for Partial Summary Judgment, which should have stated that Katelyn was insured as a resident relative under the Merastar policy. 3 Allstate incorporated relevant sections, such as facts and legal analysis, of Merastar's partial summary judgment motion (Allstate's MPSJ ¶¶ 2, 6, 7), so this response refers, when necessary, to Merastar's motion and reply for the reasons, arguments, and authorities this Court incorporated into its order granting summary judgment as to wage losses. 2

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judgment as a matter of law. Fed. R. Civ. P. 56. Further, all inferences "must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). With inferences drawn in favor of Hill, Allstate cannot be entitled to judgment as a matter of law that a wage loss claim is impossible, prior to a determination that the policies do not provide unlimited coverage. Allstate's motion for summary judgment should be denied. II. STATEMENT OF UNDISPUTED MATERIAL FACTS

Hill agrees with Allstate's statement of undisputed facts, specifically its incorporation of Merastar's statement of undisputed facts, as well as the fact that John Paul purchased an Allstate policy under which Hill seeks to recover lost wages, and that Katelyn Hill was not employed at the time of the accident. (See Allstate's MPSJ ¶¶ 2-5.) Hill adds the undisputed fact that the existence or non-existence of unlimited extended PIP coverage in the Allstate and Merastar policies has not yet been adjudicated. Thus, the existence of unlimited extended PIP coverage in each policy, separately, remains disputed fact. III. ARGUMENT

Summary judgment can only be granted when there is "no genuine issue as to any material fact and [] the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Summary judgment should be especially disfavored in insurance coverage disputes, where public policy dictates a duty of the courts to maximize, rather than minimize, coverage. Hill's wage loss claims derive from the allegation that each insurance policy contains extended PIP coverage, both for medical expenses and for wage loss, unlimited in time and amount. Under Colorado law, if it is determined that the policies provide wage loss coverage unlimited in time and amount, Katelyn can potentially provide evidence of actual work loss, at any time within the period in which

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the insurers are obligated to pay. Until a determination of the obligation period for wage losses is made, this Court cannot say that Katelyn will never be able to provide evidence of actual wage loss. The obligation period for wage loss claims is, therefore, a material fact as to whether Katelyn has a valid wage loss claim. The obligation period for wage loss claims, which depends on a determination of the scope of PIP coverage in the two policies, is genuinely disputed. In fact, this entire litigation is about the scope of the PIP coverage in the two policies at issue. This Court should not be misled by the fact that, under breach of contract law, all compensatory damage claims, including future claims, are to be liquidated, even if some speculation as to amount is required. A. This Court's Duty Is To Maximize Coverage Federal courts sitting in diversity are to apply substantive state law "to the end that the result obtained in federal court is the result that would have been reached if this litigation had been pursued in a Colorado court." Perlmutter v. United States Gypsum Co., 54 F.3d 659, 662 (10th Cir. 1995). In so doing, they are to "regard the pronouncements of the Supreme Court of Colorado as authoritative statements of Colorado law," and follow Colorado Appellate decisions unless there is "compelling reason to disregard [them]." Id. The Colorado Supreme Court has clearly emphasized that the legislative intent behind the No Fault Act, as exemplified by its stated purpose of avoiding inadequate compensation to automobile accident victims, is "to maximize, not minimize insurance coverage." Sachtjen v. Am. Family Mut. Ins. Co., 49 P.3d 1146, 1150 (Colo. 2002) (en banc) (quoting Allstate Ins. Co. v. Smith, 902 P.2d 1386, 1387-88 (Colo. 1995) (en banc)). To this end, "[t]he Act should be liberally construed to further its remedial and beneficent purposes." Allstate v Smith, 902 P.2d at 1387. This Court's duty, in applying Colorado insurance law, is to strive to find, rather than to deny, coverage. This is

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especially critical at the summary judgment stage, because "summary judgment is a drastic remedy" to be "awarded with care" . . . and with pleadings and inferences viewed in the light most favorable to the non-movant. Conaway v. Smith, 853 F.2d 789, 792 n.4 (10th Cir. 1988). B. Under A Policy Containing Unlimited PIP Coverage, Katelyn Has A Valid Wage Loss Claim, Despite Being Unemployed At The Time Of The Accident The Colorado Court of Appeals has made clear an automobile insurer's obligation to pay wage losses regardless of employment status at the time of the accident. Bailey v. Mid-Century Ins. Co., 902 P.2d 411 (Colo. App. 1995); Bondi v. Liberty Mut. Ins. Co., 757 P.2d 1101 (Colo. App. 1988). In Bondi, it was undisputed that the plaintiff was not employed at the time of the accident, had not been employed for the previous two years, and sought work loss wages under C.R.S. § 10-4-706(1)(d)(I) (1987 Repl. Vol. 4A). Bondi, 757 P.2d at 1101. The statute under which the plaintiff sought wage loss benefits specified that the benefits were for "work the injured would have performed had he not been injured during a period commencing the day after the date of the accident, and not exceeding fifty-two additional weeks." Id. at 1102 (quoting § 10-4-706(1)(d)(I)). The plaintiff claimed she was entitled to work loss benefits "because she was a college graduate with an earning capacity of $ 25,000 per year." Id. The court "conclude[d] that plaintiff [was] not entitled to benefits for lost wages based upon earning capacity." Id. (emphasis added). The Bondi court based its conclusion on the fact that the statute was specific regarding dollar amounts and starting time of the calculation, leaving no room for speculation. Id. The Bondi court gave deference to the interpretation of "work loss" in the Uniform Motor Vehicle Accident Reparations Act by the National Conference of Commissioners, which distinguished between actual loss of earnings and earning capacity, while noting that the interpretation was not conclusive. Id. Ultimately, the 5

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Bondi court held that the "plaintiff failed to meet her burden of proof with regard to actual lost wages." Id. (emphasis added). The Bondi court specifically based this conclusion on the facts that "plaintiff was neither employed at the time of the accident nor did she have any offer of employment at a time certain which would show an actual amount of loss." Id. (emphasis added). The Bondi court specifically did not say that the plaintiff could not have shown actual wage losses, only that she did not show actual wage losses. The Bondi court refused "earning capacity" as sufficient evidence of actual work losses, but would have accepted either actual employment at the time of the accident, or an offer of employment, as sufficient evidence. Thus, the Bondi court specifically disregarded "unemployed at the time of the accident" as a reason to preclude a wage loss claim. The Bondi court considered the possibility of a wage loss claim despite the fact that the plaintiff was unemployed at the time of the accident, and granted summary judgment to the insurer because the plaintiff had not provided sufficient evidence of wage losses within the time period of the insurer's wage loss obligation. In Bailey, the Colorado Court of Appeals clarified further the Bondi separation of an automobile insurer's obligation for wage loss from the employment status of the insured at the time of the accident. In Bailey, it was undisputed that the plaintiff was not employed at the time of the accident, did not have an offer of employment at the time of the accident, was later offered and accepted employment with a former employer, quit the employment alleging that he could no longer perform the work because of his automobile accident injuries, and sought work loss wages under C.R.S. § 10-4-706(1)(d)(I) (1994 Repl.Vol. 4A). Bailey, 902 P.2d at 412. The lower court had granted summary judgment to the insurer based on the fact that the plaintiff was not employed, nor had an employment offer, at the time of the accident, relying on the

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Bondi decision. Id. The Bailey court reversed the lower court's decision, specifically because it agreed with the plaintiff that the statute did not bar a lost wages claim for an insured who obtained employment within the covered period, but could not maintain the employment because of the injuries sustained in the accident. Id. The Bailey court remanded the decision because "if [the plaintiff] can show that his inability to perform his work duties was causally related to the injuries incurred from the accidents, he then will be able to show actual lost wages for the period from [the date of quitting employment to the end of the 52 weeks from the accident]." Id. (emphasis added). The Bailey court specifically refused to accept the employment status of the insured at the time of the accident, including any requirement for an existing offer, as grounds for the insurer to deny a wage loss claim. Rather, the Bailey court specifically allowed consideration of any employment within the obligation period, that could not be maintained due to the injuries from the accident, to serve as evidence of actual lost wages. In the present case, Hill claims that PIP coverage, unlimited in time and amount, is incorporated in the policies as a matter of law, due to a failure to properly offer the coverages that the No Fault Act requires insurers to offer. (Compl. ¶¶ 33, 35; First Am. Compl. ¶¶ 12,13, 34, 35.) If Hill is correct, then under the policies at issue, the obligation period is from the date of the accident until Katelyn is no longer employable for reasons other than her automobile accident-related injuries. If there were no question as to PIP coverage being unlimited in time and amount, and no question of breach, it is obvious an unemployed injured insured could, at some point in the future, make a valid claim for lost wages. For example, suppose a named insured selected, and paid for, extended PIP coverage, from an insurer that did not place any limit on coverage in the automobile insurance policy. Suppose an unemployed child became an

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injured insured under the policy, and the insurer paid all bills within the time required by statute. Suppose the injured insured became of a wage-earning age, still within the "unlimited" time period, began employment, but had to quit the job because of the accident-related injuries. Under Bondi and Bailey, the insurer would owe wage loss benefits, if the injured insured could show that the inability to work was causally related to the accident injuries. The calculation of wage loss would be from the time the injured insured quit the job, until the obligation period ended. Similarly, under a policy with unlimited in time wage loss coverage, Katelyn has the right under Bailey to seek employment at a later date, and, if she is unable to maintain the employment because of her accident-related injuries, to seek a wage loss claim at that time. Hill's rehabilitation expert projects that while Katelyn, absent her injuries, would likely have entered the full-time work force between the ages of 20 to 24, having worked part-time as a student prior to then, she is now, post-accident, likely to be "limited both in the kind of work she can do, and in the amount of work she can do." (Woodard Aff. of Aug. 29, 2005 (Ex. 1) at 2.) Katelyn is potentially able to secure gainful employment, however limited it might be, and, under an unlimited-in-time wage loss coverage where no breach had occurred, would have the capability of establishing, years from now, actual wage losses, if she could not maintain the employment because of her injuries. The only way Katelyn cannot have a valid wage loss claim is if the obligation period, or the amount of coverage, is limited. However, the scope of the coverage, both the obligation period and the amount of coverage, has not yet been adjudicated, and hence remains in genuine dispute. C. Summary Judgment Should Be Denied Because The Scope Of Coverage In Each Policy Is A Material Fact That Is Genuinely Disputed Summary judgment is only appropriate where there is no need for a trial, because "a reasonable trier of fact could not return a verdict for the nonmoving party." 8

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White v. York Int'l Corp., 45 F.3d 357, 360 (10th Cir. 1995). The only way there can be no valid wage loss claim in the present suit is by determining that either the amount or time period of wage loss coverage is limited. This Court will be holding a trial on exactly this issue. In light of the need for a trial as to the scope of coverage in the policies, summary judgment as to one portion of the scope of the coverage is inappropriate at the present time. Allstate's and Merastar's argument that, as a matter of law, Katelyn cannot have a valid wage loss claim, due to her employment status at the time of the accident (see, e.g., Merastar's MPSJ at 2-3), assumes that the policies contain wage loss obligation periods fixed in time, or a limit on benefits. Under Bailey, a limit on the obligation period, or on the total amount to be paid, is the only way to know with certainty, prior to the end of the obligation period, that an injured insured cannot provide evidence of actual wage losses within the obligation period. Should coverage be found to be unlimited in time, then, under Bailey, if Defendants had not breached by denying medical expense benefits, Defendants would need to wait out the wage loss obligation period to see whether actual wage losses are, in fact, proven. The fact that, under breach of contract law, all damages, including future damages, are liquidated, does not change the analysis of whether wage loss benefits are due. This fact, whether the scope of the policies includes limited or unlimited wage loss coverage, is exactly the question at issue in this lawsuit, and remains genuinely disputed. Litigation continues on exactly this fact, and either policy, separately, could be found to have an unlimited obligation period for wage loss claims. Until such time as the scope of the coverage is determined, summary judgment as to wage loss claims is inappropriate.

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D.

The Fact That, On Breach Of Contract, All Compensatory Damages Are To Be Liquidated, Even If Doing So Requires Speculation, Does Not Negate The Validity Of The Work Loss Claim Allstate and Merastar maintain that Hill's wage loss claim must be denied

because it will be speculative. (See, e.g., Merastar's MPSJ at 9, 10.) However, under Colorado law, the requirement is that "[i]n a breach of contract action, damages must be established with reasonable certainty by a preponderance of evidence." Tait v. Hartford Underwriters Ins. Co., 49 P.3d 337, 341 (Colo. App. 2001). In Tait, the plaintiff was awarded $100,000 in economic damages, despite medical expenses of only $12,000 at the time of the trial and "no expert testimony or other evidence concerning lost wages, lost business opportunity, lost business value, diminished earning capacity, or future expenses." Id. The jury had been instructed to include in economic losses "any economic losses which [insured] has had or will probably have in the future, including, unpaid medical, rehabilitative, or essential services, if any." Id (emphasis added).4 The Tait court specifically found that the award was reasonable, despite having been a "rough approximation, [because] it is necessarily so." Id. Similar to the plaintiff in Tait, Hill need not establish with certainty exactly what Katelyn's wage loss will be, because this is a breach of contract suit. Under Tait, Hill need only establish damages "with reasonable certainty by a preponderance of the evidence." Hill is prepared to put on expert testimony as to the fact that Katelyn will be able to work, but will earn less than she would have earned without her injuries, due to the nature of her injuries. (Ex. 1.). Because this is a breach of contract suit, Hill will need to put on evidence now, about damage that is anticipated to occur in fifteen years. Calculating future wage losses now does not mean the wage losses are not actual

The Tait court was not concerned with a wage loss claim, as the plaintiff was elderly. However, there is no reason to distinguish one type of future economic claim from the other. 10

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wage losses; rather it means that, because the losses are being calculated in advance of the actual loss, they must necessarily be a rough approximation, as noted by the Tait court. The fact that actual wage losses will need to be approximated due to the breach of Allstate and Merastar does not mean that there is not, or cannot be, any future actual wage loss. IV. CONCLUSION

Allstate is entitled to summary judgment only if it is entitled to judgment as a matter of law, in the absence of genuine issues of material fact. While the material facts underlying Hill's wage loss claims are not in dispute, including Katelyn's employment status at the time of the accident, the scope of coverage in the policy remains in dispute. Allstate is not entitled to summary judgment merely because Katelyn was not employed on the date of the accident, because Colorado law provides that evidence of actual wage loss can occur anytime within the applicable period, which, in this case, is alleged to be unlimited in time. Allstate is not entitled to summary judgment on an argument that Katelyn's future wage loss is one of earning capacity, because Katelyn is entitled to provide evidence of actual work loss at any time during the work loss obligation period. The duration of the work loss obligation period is a material fact that is genuinely disputed, in fact, serves as the basis for this entire lawsuit. Summary judgment as to the work loss claims should not be granted when such a material fact is so clearly disputed. The fact that Hill, under a breach of contract claim, will need to speculate as to the damages amount of future actual work losses does not change the analysis as to the validity of the work loss claim. Hill, therefore, respectfully requests that this Court deny Allstate's Motion For Partial Summary Judgment, and reconsider this Court's order granting summary judgment on the work loss claims to Merastar.

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Respectfully submitted this 29th day of August, 2005. By: _/s Co Horgan__________________ Robert B. Carey Co Horgan Hagens Berman Sobol. Shapiro, LLP 2425 East Camelback Rd, Suite 650 Phoenix, AZ 85016 (602) 840-5900 FAX: 602-840-3012

Cindi R. Ten Pas The Carey Law Firm 2301 East Pikes Peak Avenue Colorado Springs, CO 80909 (719) 635-0377

Kenneth A. Senn, Esq. Law Offices of Kenneth A. Senn 3620 Oakhill Drive Titusville, FL 32780 Attorneys for Plaintiff

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on August 29, 2005, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Alma M. Lugto ([email protected]) John Mark Vaught ([email protected]) Michael D. Alper ([email protected]) Meghan Frei Berglind ([email protected]) Terence M. Ridley ([email protected]) Attorneys for Defendant Allstate Insurance Company Alan E. Popkin ([email protected]) David W. Sobelman ([email protected]) Elizabeth L. Morton ([email protected]) Gregory Scot Tamkin ([email protected]) Michael K. Alston ([email protected]) Attorneys for Defendant Merastar Insurance Company Clifton J. Latiolais, Jr. ([email protected]) Casey A Quillen ([email protected]) Attorney for Defendant Prudential Insurance Company of America Cindy Rae Ten Pas ([email protected]) Kenneth Alan Senn ([email protected]) Robert Bruce Carey ([email protected]) Attorneys for Plaintiffs and I certify I have FAXed the document to the following non-email CM/ECF participant: Marian Elizabeth Lokey (Fax: 303-629-3450) Attorney for Defendant Merastar Insurance Company s/Co Horgan Co Horgan, Esq. Hagens Berman Sobol Shapiro LLP 2425 E. Camelback Rd. Suite 650 Phoenix, AZ 85016 Telephone: (602) 840-5900 FAX: (602) 840-3012 E-mail: [email protected] Attorney for Plaintiffs ________________________________

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