Eckard v. State Farm Mutual Automobile

Appellate Case: 21-1258 Document: 010110644003 Date Filed: 02/11/2022 Page: 1
FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS February 11, 2022
Christopher M. Wolpert
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
MELINDA ECKARD,
Plaintiff - Appellant,
No. 21-1258
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,
Defendant - Appellee.
_________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:20-CV-00274-DDD-SKC)
_________________________________
Submitted on the briefs:*
Ronald L. Wilcox of Wilcox Law Firm, LLC, Denver, Colorado, for Plaintiff-Appellant.
Karen H. Wheeler, Jami A. Maul, Nicholas J. Deaver, and Sean T. Carlson of Wheeler
Law, P.C, Greenwood Village, Colorado, for Defendant-Appellee.
_________________________________
Before HOLMES, KELLY, and CARSON, Circuit Judges.
_________________________________
KELLY, Circuit Judge.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
Appellate Case: 21-1258 Document: 010110644003 Date Filed: 02/11/2022 Page: 2
_________________________________
This diversity case arises out of a claim for underinsured motorist (UIM)
benefits by Plaintiff-Appellant Melinda Eckard (insured) against her insurer,
Defendant-Appellee State Farm Mutual Automobile Insurance Company (State
Farm). On summary judgment, the district court held that Ms. Eckard’s suit was time
barred by Colorado Revised Statutes § 13-80-107.5(1)(b). Exercising our jurisdiction
under 28 U.S.C. § 1291, we reverse and remand for further proceedings.
Background
On March 12, 2016, Ms. Eckard and Jonathan Grzelak were involved in an
automobile accident. Aplt. App. 20–23. Mr. Grzelak’s policy with Permanent
General Assurance Corporation (Permanent) had a personal injury liability coverage
limit of $25,000 per person. This was insufficient to cover Ms. Eckard’s injuries and
damages, which were $300,000 and counting. Aplt. App. 30–31. Ms. Eckard’s State
Farm policy had UIM coverage for $250,000 and required State Farm’s written
consent to settle with an underinsured motorist. Aplt. App. 30–31. The policy
provided, “There is no coverage for any insured who, without our written consent,
settles with any person or organization who may be liable for the bodily injury or
property damage.” Aplt. App. 71.
On October 11, 2017, Ms. Eckard’s attorney received settlement documents
and a check for policy limits from Permanent. Aplt. App. 54, 57. On November 1,
State Farm faxed to Ms. Eckard’s lawyer permission to settle. Aplt. App. 55–56.
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Then, on November 7, Ms. Eckard and her husband signed the settlement agreement
and endorsed the check. Aplt. App. 56.
Ms. Eckard filed suit on October 29, 2019, claiming breach of contract by
State Farm for failure to pay UIM benefits in connection with the accident. Aplt.
App. 27. State Farm moved for summary judgment on limitations grounds. Aplt.
App. 7–8. The applicable statute bars UIM claims brought more than “two years
after the insured received payment of the settlement.” Colo. Rev. Stat. § 13-80-
107.5(1)(b). Concluding that Ms. Eckard had “received payment of the settlement”
on October 11 when her lawyer received the check and finding no genuine issues of
material fact, the district court granted summary judgment to State Farm. Aplt. App.
94–100. On appeal, Ms. Eckard argues that the district court erred in disregarding
contrary authority from the Colorado Court of Appeals and in its construction of the
statute.
Discussion
We review summary judgment decisions de novo, viewing the facts in the light
most favorable to the nonmovant and drawing all reasonable inferences in her favor.
Tabor v. Hilti, Inc., 703 F.3d 1206, 1215 (10th Cir. 2013). Summary judgment is
warranted “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).
State Farm argues that October 11, 2017, was when Ms. Eckard “received payment of
the settlement” because that was the day her lawyer received Permanent’s settlement
agreement and check. Aplee. Br. at 18. Ms. Eckard contends that the operative day
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was November 7, 2017, when she and her husband executed the settlement agreement
and check. Aplt. Br. at 13–15. Because Ms. Eckard filed this suit on October 29,
2019, the date when Ms. Eckard “received payment of the settlement” determines
whether § 13-80-107.5(1)(b) bars her claim.
Sitting in diversity, this court must follow the Erie doctrine and apply
Colorado’s interpretation of “received payment of the settlement” in § 13-80-
107.5(1)(b). See Sinclair Wyo. Refining Co. v. A&B Builders, Ltd., 989 F.3d 747,
765–66 (10th Cir. 2021). Without definition from the state legislature, we look to the
highest state court’s understanding. Id. at 766. Because the Colorado Supreme Court
has not interpreted this provision, we must predict how that court would interpret it.
Id. State appellate court decisions may guide us in this process, Reeves v. Enter.
Prod. Partners, 17 F.4th 1008, 1012 (10th Cir. 2021), especially where they bind all
lower state courts, Gooding v. Wilson, 405 U.S. 518, 525 n.3 (1972), as is the case
here, Colo. R. App. P. 35(e). These decisions do not bind us, but we look to them
unless we are “convinced by other persuasive data that the highest court of the state
would decide otherwise.” Stickley v. State Farm Mut. Auto. Ins., 505 F.3d 1070,
1077 (10th Cir. 2007) (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237
(1940)).
The Colorado Court of Appeals has interpreted § 13-80-107.5(1)(b) in two
cases: Stoesz v. State Farm Mutual Automobile Insurance Co., 410 P.3d 583 (Colo.
App. 2015), and Kovac v. Farmers Insurance Exchange, 401 P.3d 112 (Colo. App.
2017), cert. denied, 2017 WL 3593981 (Colo. Aug. 21, 2017) (en banc). In Stoesz,
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the Colorado Court of Appeals addressed the fact that § 13-80-107.5(1)(b) includes
the word “payment” twice. 410 P.3d at 585–86. First, “payment of either the
liability claim settlement or judgment within the time limit specified” is one way that
an insured person can preserve a UIM claim stemming from underlying bodily injury
beyond the general “three years after the cause of action accrues.” Colo. Rev. Stat.
§ 13-80-107.5(1)(b). Second, the statute explains that the window for preserved
claims is “within two years after the insured received payment of the settlement or
judgment on the underlying bodily injury liability claim.” Id. Stoesz focused on the
first use of “payment” in the statute, which is not the provision at issue here. 410
P.3d at 585–88. But the Stoesz court made an important observation relevant to this
case: that the Colorado legislature “is presumed to have intended a difference
between the[se different uses of the word payment].” Id. at 587.
Two years after Stoesz, the Colorado Court of Appeals in Kovac considered
the meaning of “received payment of the settlement.” 401 P.3d at 114–17. That case
involved a UIM claim by Ms. Kovac against Farmers Insurance Exchange (Farmers).
Id. at 113–14. As here, the parties disputed the date that constituted “received
payment of the settlement” and thus triggered the limitations period. Id. Ms. Kovac
(like Ms. Eckard here) argued that she “received payment of the settlement” when
she executed the settlement papers and endorsed the check, while Farmers (like State
Farm here) argued that it was the day Ms. Kovac’s lawyer received settlement papers
and a check from the UIM’s insurance company. Id. The Kovac court decided the
operative time was when Ms. Kovac accepted the settlement agreement, which it
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directly equated to “received payment of the settlement.” Id. at 115. The court
explained that because Ms. Kovac was not legally entitled to any money until she
accepted the settlement agreement, “[t]he date on which Kovac ‘received payment’
was thus the date that she accepted the settlement agreement . . . and was legally
entitled to the funds.” Id.1
Finding Kovac’s reading persuasive and lacking any evidence convincing us
that the Colorado Supreme Court would have a different understanding of the phrase
“received payment of the settlement” in § 13-80-107.5(1)(b), we apply Kovac’s
interpretation. Therefore, Ms. Eckard “received payment of the settlement” when she
accepted the settlement agreement and endorsed the check on November 7, 2017.
See id.
But State Farm still argues that Kovac is distinguishable, contending that
“there is no evidence that [Permanent] made the acceptance of the check conditional
on the signing of the release or that the signing of the release was the explicitly
authorized method of acceptance of the agreement.” Aplee. Br. at 9–13. At this
stage, the evidence certainly suggests that the only authorized method of acceptance
of the agreement was signing the release. Aplt. App. 81 (explaining that the Release
1
The Kovac court followed a federal case that interpreted § 13-80-107.5(1)(b)
in the same way. See Westby v. State Farm Mut. Auto. Ins. Co., No. 15-CV-00076,
2016 WL 471357 (D. Colo. Feb. 8, 2016). The Kovac court found persuasive the
federal court’s observation that “[i]t is a matter of common sense that the insured
cannot receive settlement funds until after the parties have completed the settlement
because up until . . . the agreement is finalized, the insured is not legally entitled to
any money.” 401 P.3d at 115 (quoting Westby, 2016 WL 471357, at *6).
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is “for and in consideration of the sum of Twenty Five Thousand Dollars
($25,000.00)”).2 Further, if the parties dispute methods of acceptance of the
settlement, that is a genuine dispute of material fact that would make summary
judgment inappropriate.3
State Farm also submits that Ms. Eckard’s situation is distinguishable from
Ms. Kovac’s because “the terms of [Ms. Kovac’s] offer explicitly stated she could
have the money only if she accepted the offer.” Aplee. Br. at 11. State Farm
suggests that this is a material difference, but that argument must fail because it rests
upon a misunderstanding of Colorado contract law. In Colorado, settlement
2
State Farm’s argument that “the check Ms. Eckard ‘received’ [on October 11]
was ‘payment’ of the underlying liability settlement,” Aplt. Br. at 6–7, would mean
that Ms. Eckard had settled with Permanent without State Farm’s permission, which
would — conveniently for State Farm — mean that she had voided her UM/UIM
coverage with State Farm. Aplt. App. 71. It makes no sense that a third party could
void Ms. Eckard’s coverage with State Farm by sending her a check that she did not
endorse or cash.
3
The same conclusion, that summary judgment is inappropriate, applies to the
dispute below over the date that Ms. Eckard executed the check. See Aplt. App. 37–
38 (the check). Compare Aplt. App. 9, 39–40, 85 (State Farm’s contention that Ms.
Eckard executed the check on October 11 and her testimony thereto), with Aplt. App.
54, 56, 64–689 (Ms. Eckard’s contention that she executed the check on November 7
and evidence thereto). State Farm does not directly address this in its brief before
this court. On the one hand, this silence suggests State Farm has abandoned its
argument that the check was executed on October 11. State Farm still suggests that
other methods of accepting the settlement agreement were possible, Aplee. Br. at 9–
13, but without arguing that the check was executed on October 11 as acceptance, it
does not offer any method of acceptance actually taken by Ms. Eckard other than the
November 7 execution of the settlement agreement. Even if State Farm preserved the
argument that the check was executed on October 11, because Ms. Eckard has met
her burden in responding with evidence it was not, this would merely create a
genuine dispute of material fact that would defeat summary judgment. Talley v.
Time, Inc., 923 F.3d 878, 893–94 (10th Cir. 2019).
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agreements are contracts that must be formed, construed, and enforced like other
contracts. Kovac, 401 P.3d at 116 (citing Yaekle v. Andrews, 195 P.3d 1101, 1111
(Colo. 2008)); cf. Restatement (Second) of Contracts § 30(2) (Am. L. Inst. 1981)
(“Unless otherwise indicated by the language or the circumstances, an offer invites
acceptance in any manner and by any medium reasonable in the circumstances.”).
Here, the record does not include any reasonable medium of acceptance other than
the execution of the settlement agreement.4 In fact, the only reasonable medium of
acceptance would be executing the settlement agreement by its terms “for and in
consideration of the sum of Twenty Five Thousand Dollars ($25,000.00),” clearly
referring to the check for that amount sent with the settlement papers.
Conclusion
The district court granted summary judgment to State Farm because it
incorrectly found as a matter of law that Ms. Eckard “received payment of the
settlement” when her lawyer received the settlement agreement and check on October
11, 2019. As we have explained, Ms. Eckard actually “received payment of the
settlement” when she executed the settlement agreement and authorized the check on
November 7, 2019. As a result, § 13-80-107.5(1)(b) does not bar Ms. Eckard’s UIM
claim against State Farm.
4
This is considering that State Farm has abandoned its argument that the
check was executed on October 11 as acceptance of the settlement agreement. Again,
even if it preserved or raised this argument, it would only defeat summary judgment
by creating a genuine dispute of material fact concerning the date that the check was
executed.
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REVERSED and REMANDED for further proceedings.
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