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Kipling v. State Farm Mutual

United States Court of Appeals, Tenth Circuit

December 29, 2014

KATHRYN KIPLING, Plaintiff - Appellee,
STATE FARM MUTUAL, AUTOMOBILE INSURANCE COMPANY, d/b/a Minnesota Division of State Farm Mutual Automobile Insurance Company, Defendant - Appellant


Franklin D. Patterson of Frank Patterson & Associates, P.C., Greenwood Village, Colorado, for Defendant - Appellant.

Bradley A. Levin (Kerri J. Atencio with him on the brief), of Roberts Levin Rosenberg PC, Denver, Colorado, for Plaintiff - Appellee.

Before BRISCOE, Chief Judge, HARTZ and HOLMES, Circuit Judges.


Page 1307

HARTZ, Circuit Judge.


The question before us is one of conflict of laws. Plaintiff Kathryn Kipling sued State Farm Automobile Insurance Company in Colorado federal district court for breach of contract because it did not pay her benefits under four insurance policies issued in Minnesota. The court determined that she would be entitled to benefits under Colorado law but not under Minnesota law. It then applied tort conflict-of-laws principles to rule that Colorado law governed. We hold that the court erred by not applying contract conflict-of-laws principles. With appellate jurisdiction under 28 U.S.C. § 1291, we reverse the judgment below and remand for further consideration.


Plaintiff and her husband Christopher Kipling resided in Colorado. On July 27, 2009, she was injured and he was killed in a motor-vehicle collision in Colorado. Their vehicle was a 2005 Chevy Suburban provided by Mr. Kipling's employer, Quicksilver Express Courier, Inc. (Quicksilver), for his business and personal use. Quicksilver is incorporated in Minnesota but has a wholly owned subsidiary in Colorado, Quicksilver Express Courier of Colorado, Inc. (Quicksilver Colorado).

The sole cause of the accident was the negligence of the driver of the vehicle that collided with the Suburban. But the driver of that vehicle had inadequate liability insurance to cover the Kiplings' damages. Plaintiff therefore sought underinsured motorist (UIM) benefits under several State Farm policies. The obvious policy to collect on was the policy on the Suburban issued in Colorado to Quicksilver (although the address on the policy was that of Quicksilver Colorado). State Farm paid the UIM benefits available under that policy and also under a separate policy issued in Colorado by State Farm to Quicksilver on a 2005 Ford pickup.

The dispute in this case concerns Plaintiff's request for additional UIM benefits under four State Farm policies issued in Minnesota to Quicksilver (the Minnesota Policies). The address for Quicksilver on the policies was in Minnesota. The policies insured four vehicles provided to four Minnesota employees of Quicksilver.

Page 1308

They were obtained through an insurance agent in Minnesota but executed by State Farm in Illinois. Neither Plaintiff nor her husband was a named insured on any policy, and the vehicles were never driven in Colorado. Each of the policies describes the covered vehicle on the declaration page as " YOUR CAR," Aplee. Supp. App. at 107, 113, 119, 125, and the UIM coverage provision defines insured to mean " any person while occupying: (a) your car; (b) a newly acquired car; or (c) a temporary substitute car," id. at 110, 116, 122, 128 (emphasis omitted). Under this provision the Kiplings would not be eligible for UIM coverage under any of the Minnesota policies because they were not occupying any of the insured vehicles when they were injured. State Farm denied the claims.

On July 27, 2011, Plaintiff filed in the United States District Court for the District of Colorado a breach-of-contract claim against State Farm, invoking diversity jurisdiction, 28 U.S.C. § 1332, and seeking payment of UIM benefits. State Farm filed a motion for summary judgment arguing that Minnesota law applied and prohibited stacking of UIM policies (that is, obtaining UIM benefits under more than one policy) and that the Kiplings did not meet the definition of insured under the language of the policies. Plaintiff argued that Colorado law applied, permitted stacking, and prohibited a policy from limiting UIM coverage to those occupying the covered vehicle at the time of the accident, as in the Minnesota policies. The parties did not dispute that if Minnesota law applied, Plaintiff was not entitled to coverage. The district court denied the summary-judgment motion, agreeing with Plaintiff that Colorado law applied.

After denying a motion for reconsideration by State Farm, the district court conducted a jury trial to determine damages and entered judgment on the verdict. State Farm filed a motion to alter or amend the judgment under Fed.R.Civ.P. 59(e), arguing that even under Colorado law it would not have to pay UIM benefits because Colorado law did not prohibit the policy from tying UIM coverage to occupancy of the insured vehicle. The district court denied the motion as " an improper attempt to advance a new argument which could and should have been raised prior to trial and the entry of judgment." Aplt. App., Vol. 2 at 311. It further stated that even if the motion had been appropriate, the court did not agree that Colorado law required altering the judgment.

State Farm raises two arguments on appeal: (1) even under Colorado law the Minnesota Policies would not provide UIM benefits to Plaintiff because Colorado law does not prohibit tying UIM coverage to occupancy of the insured vehicle and (2) the district court erred in applying tort conflict-of-laws principles in resolving which state's substantive law governed Plaintiff's claim. We reject the first argument because it was not timely raised below. But we agree with the second and therefore reverse and remand for the district court to apply contract conflict-of-laws principles to determine whether Minnesota or Colorado substantive law governs.


A. Coverage Under Colorado Law

State Farm contends on appeal that the district court erred in concluding that Colorado law prohibits tying UIM coverage to occupancy of the insured vehicle. It argues that " the policy provisions which define an insured as a person occupying the business named insured's vehicle as shown on the declaration page are valid and not contrary to the [Colorado UIM] ...

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