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American Family Mutual Insurance Co. v. Orozco

United States District Court, D. Utah

November 13, 2018

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff,
v.
NICOLAS OROZCO and EVA GONZALEZ, Defendants.

          MEMORANDUM DECISION AND ORDER

          DALE A. KIMBALL, United States District Judge.

          This matter is before the court on Plaintiff American Family Insurance Company's Motion for Summary Judgment [Docket No. 24], and Defendants Nicolas Orozco and Eva Gonzalez's Motion for Discovery Under Federal Rule of Civil Procedure 56(d) [Docket No. 32]. On November 1, 2018, the court held a hearing on the motions. At the hearing, Plaintiff was represented by Bryan J. Stoddard and Defendants were represented by Darren Davis. The court took the motions under advisement. The court has carefully considered the materials submitted by the parties and the facts and law relevant to the motions. Now being fully advised, the court issues the following Memorandum Decision and Order.

         BACKGROUND

         This is a declaratory judgment action regarding uninsured motorist insurance coverage for a car accident. On July 16, 2013, Plaintiff American Family issued an automobile insurance policy to Nicolas Orozco for a 2012 Toyota Camry. Defendants Nicolas Orozco and Eva Gonzalez were occupants in the Toyota Camry on October 1, 2013, when an accident occurred. The next day, Orozco called American Family to report the accident. He reported that the vehicle at fault had rear-ended his Toyota Camry and fled the accident scene. Orozco further reported that he and Gonzalez were injured in the accident and had already received some medical care.

         On November 6, 2013, Samuel Adams with the Adams Davis law firm sent American Family a letter stating that Orozco and Gonzalez had retained the firm in connection with the October 1, 2013 automobile accident in which they were struck by a hit and run motorist. The letter informed American Family that both Orozco and Gonzales sustained multiple injuries and were receiving medical treatment for them. Mr. Adams further stated that they would “accumulate all of their medical records and bills and . . . present them to [American Family] when we understand the full nature and extent of the injuries.” On November 8, 2013, Mr. Adams sent American Family another letter regarding the accident which stated that he would be submitting medical bills and claims to American Family for payment under the PIP portion of the Policy.

         On November 25, 2013, American Family sent the Adams Davis law firm a letter indicating that Gonzalez's $3000 PIP benefits had been exhausted based on a $3000 payment to LDS Hospital for Gonzalez's treatment. On December 20, 2013, American Family sent Adams Davis a letter indicating that Orozco's $3000 PIP benefits were exhausted based on payments to LDS Hospital and the Injury Recovery Center for Orozco's treatment.

         On December 27, 2013, American Family sent Adams Davis two letters, one for each claimant, stating that the “claim file” had been transferred to Tracy Huiras, a casualty claim adjuster, for continued handling. She informed Adams Davis that if they would like to discuss their clients' “claims, ” she could be reached at the number provided. She also asked that Adams Davis' clients complete authorizations for American Family to obtain updated medical or wage loss information. Adams Davis did not respond to that request, and American Family resent those letters on January 22, 2014. Adams Davis did not respond to the second letter either. Defendants point out that the policy did not require Defendants to sign releases for purposes of American Family's investigation of claims.

         On October 7, 2014, American Family sent Adams Davis a letter stating that it “first received notice of this claim on October 2, 2013.” The letter advised Adams Davis that there was a question as to whether coverage under the Policy would apply to the loss and that American Family must conduct a complete investigation of the circumstances of the claim before determining whether the Policy provides coverage. The letter then explained that the Policy required the claimants to comply with certain duties, otherwise American Family had no duty to provide coverage. The letter also stated that American Family was “willing to proceed with the investigation of this claim as is necessary or advisable. The Company is willing to proceed with this investigation on the condition that any such act or actions taken by it shall not be a waiver of any right or shall not be an admission of any liability as to any coverage under” the Policy.

         Adams Davis did not respond to the reservation of rights letter. Gonzalez's medical treatment was still ongoing in 2014 and her medical providers were still evaluating the full nature and extent of her injuries. Orozco's medical treatment was still ongoing in 2017 and his medical providers were still evaluating the full nature and extent of his injuries.

         On April 19, 2016, American Family sent two letters, one for each claimant, stating: “Please forward any additional medical information you have received since our last correspondence. If your client has completed treatment, please contact me to discuss the possibility of settlement. Your cooperation will help us accumulate the necessary materials that will ultimately result in timely settlement decisions. We look forward to hearing from you so we can continue to move this case toward settlement.”

         On November 23, 2016, American Family sent two more similar letters for each Defendant. There is no correspondence in the record demonstrating that Defendants ever responded to these letters.

         On April 13, 2017, Tracy Huiras at American Family had a telephone conversation with attorney York Major at Adams Davis concerning the application of the statute of limitations to Orozco's and Gonzalez's uninsured motorist claims. After the conversation, American Family sent a letter to Adams Davis, stating: “It appears the statute of limitations has expired on this uninsured motorist bodily injury claim. We are following up from our phone call with York Major today requesting notification if you had preserved the statute of limitations on this claim.”

         Up to April 13, 2017, based on the letters back and forth, Defendants' understanding was that American Family had not denied their claims and were still considering, processing, and evaluating the claims. However, on April 18, 2017, Adams Davis sent American Family a letter invoking binding uninsured motorist arbitration under Utah Code Ann. § 31A-22-305(9)(a)(I). On August 28, 2017, American Family filed this declaratory ...


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