BRENDA MCCRACKEN; CHRISTA HECHT, individually and on behalf of all others similarly situated, Plaintiffs - Appellants,
PROGRESSIVE DIRECT INSURANCE COMPANY; PROGRESSIVE PREFERRED INSURANCE COMPANY, Defendants - Appellees. JERRY ARCHULETA, individually and on behalf of all others similarly situated, Plaintiff - Appellant,
USAA CASUALTY INSURANCE COMPANY; UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendants - Appellees.
from the United States District Court for the District of
Colorado (D.C. No. 1:17-CV-00114-CMA-STV) and (D.C. No.
A. Waneka, of Levin Sitcoff PC, Denver, Colorado (Bradley A.
Levin and Susan S. Minamizono, of Levin Sitcoff PC, Denver,
Colorado, and Keith R. Scranton and Patricia A. Meester, of
Franklin D. Azar and Associates, P.C., Aurora, Colorado, with
him on the briefs), for Plaintiff-Appellants.
D. Collignon (Sammantha J. Tillotson with her on the brief),
of Baker & Hostetler LLP, Denver, Colorado, for
Progressive Direct Insurance Company and Progressive
Preferred Insurance Company, Defendants-Appellees.
D. Collignon, of Baker & Hostetler LLP, Denver, Colorado
(Michael Mulvaney, Thomas Butler, and Taryn Hodinka, of
Maynard Cooper & Gale, Birmingham, Alabama, and Jon F.
Sands and Marilyn S. Chappell, of Sweetbaum Sands Anderson
PC, Denver, Colorado, with her on the brief), for USAA
Casualty Insurance Company and United Services Automobile
LUCERO, PHILLIPS, and MORITZ, Circuit Judges.
MORITZ, CIRCUIT JUDGE.
plaintiffs in these consolidated appeals each settled a claim
under their automobile-insurance policies with the
defendants. But now the plaintiffs maintain that the
defendants illegally reduced their settlement offers by
taking into account certain benefits they had previously paid
the plaintiffs. The district courts dismissed the
plaintiffs' putative class-action lawsuits after
concluding the plaintiffs each waived their rights to collect
further damages from the defendants on their settled claims.
reverse in part and remand to the district court with
instructions to vacate its judgment in favor of USAA Casualty
Insurance Company because it lacked jurisdiction to hear the
claims against that defendant. Otherwise, we affirm.
cases involve the interplay between two categories of
automobile insurance that insurers must offer under Colorado
law: uninsured/underinsured-motorist (UM/UIM) coverage and
medical payments (MedPay) coverage. See Colo. Rev.
Stat. §§ 10-4-609(1)(a), 10-4-635(1)(a). UM/UIM
coverage insures the policyholder for injuries caused by a
third-party driver without sufficient insurance to cover the
policyholder's injury. See Colo. Rev. Stat.
§ 10-4-609(1)(a), (4). MedPay coverage insures the
policyholder for any bodily injury "resulting from the
ownership, maintenance, or use of [a] motor vehicle,"
regardless of fault. § 10-4-635(1)(a).
2007, the Colorado legislature amended its insurance law to
mandate that "the amount of the coverage available"
under UM/UIM policies "shall not be reduced by a setoff
from any other coverage, including"
MedPay. An Act Concerning the Payment of Uninsured
Motor Vehicle Insurance as Excess to Other Insurance, §
1, 2007 Colo. Legis. Serv. 1921, 1921 (2007) (codified at
§ 10-4-609(1)(c)). This amendment initially caused some
confusion. Focusing on the word "coverage" in
§ 10-4-609(1)(c), a number of Colorado courts held that
the amendment only prohibited insurers from taking a setoff
from a UM/UIM claim if the setoff would effectively reduce
the amount of coverage available. See, e.g.,
Carrion-Kozak v. Alghamdi, No. 13CV92, slip op. at 2
(Arapahoe Cty., Colo. Dist. Ct. Dec. 13, 2013) ("While
[§ 10-4-609(1)(c)] prohibits a setoff which reduces
coverage, it does not prohibit a setoff which merely adjusts
the amount an insurer must pay to prevent a double
recovery."); Willyard v. Am. Family Mut. Ins.
Co., No. 11CV931, slip op. at 4 (Boulder Cty., Colo.
Dist. Ct. May 8, 2012) (upholding insurance contract that
"allows for a setoff of the amount paid"
in MedPay but "does not affect the coverage available
under either the [MedPay] or the [UM/UIM] benefits
policy"). In other words, these courts held that if a
policyholder's UM/UIM claim exceeded the maximum amount
of coverage available under the policy, then the insurer owed
the maximum coverage amount without a setoff because taking a
setoff in such a situation would effectively reduce the
maximum amount of coverage available under the UM/UIM policy.
See Carrion-Kozak, slip op. at 3; Willyard,
slip op. at 4. But in cases in which the policyholder's
claims were for amounts less than their coverage limits,
these courts held that a setoff was proper to prevent double
recovery. See Carrion-Kozak, slip op. at 3;
Willyard, slip op. at 4. And because such claims
don't meet or exceed the coverage limit, taking the
setoff in such cases wouldn't have affected the coverage
limit. Carrion-Kozak, slip op. at 3;
Willyard, slip op. at 4.
November 2016, the Colorado Supreme Court issued an opinion
that contravened this understanding. See Calderon v. Am.
Family Mut. Ins. Co., 383 P.3d 676 (Colo. 2016). The
plaintiff in Calderon had an insurance policy with
the defendant that included $300, 000 in UM/UIM coverage and
$5, 000 in MedPay coverage. Id. at 677. After the
plaintiff sustained injuries in a collision with an uninsured
driver, the defendant paid the plaintiff's full $5, 000
in MedPay benefits. Id. Yet the parties couldn't
agree on how much the defendant owed the plaintiff in UM/UIM
benefits. Id. A jury eventually awarded the
plaintiff about $68, 000. Id. Following the approach
many courts took at the time, the trial court reduced the
jury's award by $5, 000 to set off the MedPay benefits
the plaintiff had already received. Id.
plaintiff appealed, and the Colorado Court of Appeals held
that the setoff was proper under § 10-4-609(1)(c).
Id. The Colorado Supreme Court granted certiorari
and reversed. Id. It held that §
10-4-609(1)(c)'s prohibition on setoffs "refers not
to the coverage limit but rather to the amount of UM/UIM
coverage available on a particular claim." Id.
Thus, under Calderon, the amount a policyholder may
claim in UM/UIM benefits is unaffected by any MedPay benefits
the policyholder previously received.
plaintiffs in the cases before us each settled a UM/UIM claim
after § 10-4-609(1)(c)'s effective date but before
the Colorado Supreme Court issued Calderon. The
parties thus reached these settlements under the
pre-Calderon understanding of § 10-4-609(1)(c).
Archuleta's Claim and Settlement
Archuleta held an insurance policy from the United Services
Automobile Association (USAA). The policy included $5, 000 in
MedPay coverage and $50, 000 per person in UM/UIM coverage.
Archuleta submitted claims to USAA for MedPay and UM/UIM
benefits in November 2012 after an underinsured driver
injured him in a collision. USAA paid Archuleta $5, 000 to
satisfy his MedPay claim. It then paid Archuleta $17, 000 in
May 2015 to settle his UM/UIM claim.
parties agree that when USAA calculated this settlement, it
took a $5, 000 setoff to account for the MedPay benefits it
had previously paid Archuleta. In other words, USAA
determined that Archuleta incurred $22, 000 in injuries and
then reduced that amount by the $5, 000 it had already paid,
arriving at $17, 000. Archuleta accepted the $17, 000
settlement and signed a form "releas[ing] and forever
discharg[ing]" USAA "from any and all claims"
he had arising from the November 2012 collision. App. 679.