A federal district court in Colorado has rejected a lawsuit claiming that an insurer that disclosed some information about uninsured motorist benefits to its insureds should be held liable for failing to disclose even more.
The Case
Truman H. Weaver and Patty Funk, Colorado residents, asserted in the lawsuit they filed against State Farm Mutual Automobile Insurance Company that when they went to purchase automobile liability insurance from State Farm for three vehicles – a 2012 Chevrolet Impala, a 1991 Chevrolet pickup truck, and a 1996 Suzuki motorcycle – State Farm sent them two identical forms separately pertaining to the 1991 pickup truck and the 1996 motorcycle that were titled, "Colorado Uninsured Motor Vehicle Coverage (Acknowledgment of Coverage Selection or Rejection)" ("UM Rejection Form"). According to Mr. Weaver and Ms. Funk, the two forms had the following identical language in the second paragraph (the "Second Paragraph") regarding uninsured motorist ("UM") coverage:
Uninsured Motor Vehicle Coverage for bodily injury, sickness, or disease, including death, selected on one policy insuring a motor vehicle owned and insured by you or any family member who resides in your household will apply to any accident for which the selected Uninsured Motor Vehicle Coverage is payable for that bodily injury, sickness, or disease, including death. The described vehicle on that one policy need not be involved in the accident for Uninsured Motor Vehicle Coverage to apply.
Mr. Weaver and Ms. Funk rejected the UM coverage for both vehicles. State Farm then issued policies on the three vehicles that provided for liability and UM insurance on the 2012 Impala and for only liability insurance on the 1991 pickup truck and 1996 motorcycle.
Mr. Weaver was injured in a two-vehicle accident, and the other driver's insurance was insufficient to cover his medical expenses. State Farm paid Mr. Weaver $100,000 in UM benefits, which was the maximum available under the policy in which he and Ms. Funk had accepted UM coverage.
Mr. Weaver and Ms. Funk contended that if they had not rejected UM insurance on the other two policies, Mr. Weaver would have been able to "stack" that coverage, meaning that he would have been entitled to coverage on all three policies, resulting in an additional $125,000 in coverage.
In their lawsuit, Mr. Weaver and Ms. Funk asserted a claim for "fraudulent nondisclosure" against State Farm. They conceded that Colorado law did not require an insurer to provide any information regarding the rejection of UM insurance, but based their claim on the inclusion of the admittedly truthful, but allegedly fraudulently incomplete, Second Paragraph in the UM Rejection Form.
Mr. Weaver and Ms. Funk contended that State Farm's inclusion of the Second Paragraph created a "greater duty to disclose additional information" about UM coverage – in particular, that additional UM insurance could be "stacked" to entitle them to additional benefits. They argued that when State Farm "voluntarily provided the information in [the Second Paragraph] in the UM Rejection Forms, it had the duty to simultaneously . . . disclose to [Mr. Weaver and Ms. Funk] all material facts bearing on the negative effect that such rejection . . . would have on the total amount of UM coverage" to which Mr. Weaver and Ms. Funk would be entitled in the event they were injured by an uninsured motorist.
State Farm moved to dismiss.
The District Court's Decision
The district court granted the motion.
In its decision, the court said that it found "no binding, nor even persuasive, authority defining the scope of the duty to disclose additional, complete information after the disclosure of partial information."
The court rejected the argument by Mr. Weaver and Ms. Funk that the Second Paragraph was only a half-truth because it did not disclose the distinct feature that additional UM insurance could be "stacked."
In the court's opinion, "[n]othing about the Second Paragraph was a half-truth."
Concluding that the Second Paragraph did not in "equity and good conscience" require State Farm to disclose that UM insurance could be stacked, the court dismissed Mr. Weaver and Ms. Funk's claims.
The case is Weaver v. State Farm Mutual Automobile Ins. Co., No. 17-cv-02208-MEH (D. Colo. March 27, 2018).