Schniedwind v. American Family Mutual Insurance, 157 F. Supp. 3d 944

Background

Plaintiff owned a homeowner’s policy from American Family with a contractual one-year suit limitation measured from the date of loss (policy period: Nov 4, 2011–Nov 4, 2012).
Plaintiff alleges covered damage from the Waldo Canyon fire on June 26, 2012, filed an insurance claim in June 2012, and sued American Family on June 20, 2014.
The policy’s one-year suit clause would bar suit filed nearly two years after the loss unless Colorado’s Homeowner’s Insurance Reform Act § 10-4-110.8(12) displaces contractual short limitations.
Section 110.8(12), enacted May 10, 2013, provides that homeowners may sue within the statutory limitations period despite any shorter contractual period, but it does not revive claims already contractually barred as of May 10, 2013.
American Family moved for partial summary judgment arguing the suit is time-barred and that § 110.8(12) does not apply retroactively to expired policies and is unconstitutional if applied retroactively.
The court concluded § 110.8(12) retroactively applies to causes of action not contractually barred as of May 10, 2013, and that applying the statute to this claim does not violate the Contract Clause or Colorado’s retrospective-law prohibition.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 10-4-110.8(12) overrides a policy one-year suit limitation	§ 110.8(12) displaces any contractual shorter limitations period for causes of action not barred by contract as of May 10, 2013	Policy’s one-year clause bars this suit filed in 2014	Held for Plaintiff: statute applies to causes of action not contractually barred on May 10, 2013, so plaintiff may sue within the statutory limitation
Whether the statute applies retroactively to policies that expired before May 10, 2013	Applies to causes of action (not barred by contract as of May 10, 2013) regardless of whether the policy term expired	The statute was not intended to reach expired policies because it is silent on them	Held for Plaintiff: statute focuses on causes of action and applies where the contractual bar had not attached by May 10, 2013, regardless of policy expiration
Whether retroactive application violates Colorado’s prohibition on retrospective laws or impairs vested rights	Plaintiff: no vested right in enforceability of a contractual limitations clause because its enforceability depended on common law and legislative power over limitations	American Family: one-year limitation was a vested contractual right that cannot be abrogated retroactively	Held for Plaintiff: no vested right in contractual ability to shorten limitations; retroactive application is permissible under DeWitt factors
Whether retroactive application violates the Contract Clause (Colorado and U.S.)	Plaintiff: statute furthers a legitimate public purpose regulating insurance and restoring homeowners’ rights; is reasonable	American Family: retroactive impairment of contract obligations; unconstitutional	Held for Plaintiff: assuming substantial impairment, statute serves significant public purpose and is reasonably related to that purpose, so no Contract Clause violation

Key Cases Cited

Grant Family Farms, Inc. v. Colo. Farm Bureau Mut. Ins. Co., 155 P.3d 537 (Colo. App. 2006) (pre-Act authority upholding contractual shortening of limitations periods)
Ficarra v. Dep’t of Regulatory Agencies, Div. of Ins., 849 P.2d 6 (Colo. 1993) (definition and limits of retroactive application of statutes)
City of Golden v. Parker, 138 P.3d 285 (Colo. 2006) (analysis of vested rights and retroactivity in statutory changes)
City of Colo. Springs v. Powell, 156 P.3d 461 (Colo. 2007) (presumption that statutes operate prospectively absent clear legislative intent)
Greystone Constr., Inc. v. Nat’l Fire & Marine Ins. Co., 661 F.3d 1272 (10th Cir. 2011) (distinguishes application where statute expressly limited applicability to policies in existence)
Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983) (Contract Clause two-step test: substantial impairment then legitimate public purpose and reasonable adjustment)
Campanelli v. Allstate Life Ins. Co., 322 F.3d 1086 (9th Cir. 2003) (upholding revival statutes in regulated insurance context as serving legitimate public purpose)
Serrano v. Aetna Ins. Co., 233 Conn. 437 (Conn. 1995) (upholding statute disallowing enforcement of short contractual suit limits for underinsured motorist policies)
In re Estate of DeWitt, 54 P.3d 849 (Colo. 2002) (factors for determining whether a right is vested under Colorado law)