                                                                          FILED
                                                              United States Court of Appeals
                                                                      Tenth Circuit

                                                                    February 4, 2008
                      UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
                                                                      Clerk of Court
                                 TENTH CIRCUIT


 CAROLYN MAY,

          Plaintiff-Appellant,
                                                        No. 06-1531
 v.                                         (D.Ct. No. 05-cv-00214-WYD-CBS)
                                                         (D. Colo.)
 TRAVELERS PROPERTY
 CASUALTY COMPANY OF
 AMERICA, a Connecticut corporation,
 f/k/a The Travelers Indemnity
 Company of Illinois,

          Defendant-Appellee.


                             ORDER AND JUDGMENT *


Before MURPHY, Circuit Judge, BRORBY, Senior Circuit Judge, and
MCCONNELL, Circuit Judge.



      Carolyn May, a Colorado resident and passenger injured in a motor vehicle

accident, sued the insurer of the vehicle, Travelers Property Casualty Company of

America (Travelers), a Connecticut corporation. Mrs. May sought reformation of

the insurance policy for added personal injury protection (APIP) benefits in


      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
conjunction with the now repealed Colorado Auto Accident Reparations Act,

Colo. Rev. Stat. §§ 10-4-701 to -726 (repealed July 1, 2003) (“No Fault Act” or

“Act”). In addition to her reformation claim, Mrs. May brought claims for breach

of contract and bad faith. In an order on the parties’ cross motions for partial

summary judgment, the district court granted Mrs. May’s request for reformation

of the insurance policy as a matter of law but determined reformation was subject

to a $200,000 aggregate per person, per accident, limit – as provided in the

policy. In a second summary judgment order, the district court determined the

effective reformation date of the insurance policy occurred on the date of the

court’s initial order on partial summary judgment, and therefore, all of Mrs.

May’s remaining claims involving bad faith and breach of contract failed as a

matter of law because Travelers promptly paid the additional benefits due her

following the court’s reformation order. Mrs. May now appeals from the district

court’s summary judgment orders on issues held in favor of Travelers. On appeal,

we exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.



                                   I. Background

      As background, in 1973, the Colorado legislature enacted the No Fault Act

for the purpose of avoiding inadequate compensation to victims of automobile

accidents. See Reid v. Geico Gen. Ins. Co., 499 F.3d 1163, 1165 (10th Cir. 2007).

The Act required complying policies to include certain minimum or basic

                                         -2-
personal injury protection (PIP) benefits to compensate injured persons for

medical expenses and lost wages. Id. This initial basic level of PIP included, but

was not limited to, $50,000 for medical services per person for any one accident,

regardless of fault, if performed within five years of the accident; and $50,000 for

rehabilitative services per person for any one accident, regardless of fault, if

performed within ten years of the accident. See Colo. Rev. Stat. § 10-4-

706(1)(b)-(c); Stickley v. State Farm Mut. Auto. Ins. Co., 505 F.3d. 1070, 1072-73

(10th Cir. 2007). By 1992, the Act also “allowed an insurer to offer an

‘alternative to the minimum coverages’ known as a ‘reduced’ PIP policy” which

reduced the above coverage to up to $25,000 per person for any one accident for

identified types of medical procedures, if performed within five years of the

accident. Stickley, 505 F.3d at 1073 (relying on Colo. Rev. Stat. § 10-4-

706(3)(b)(I) (2001)).



      Also by 1992, § 10-4-710 of the Act required insurers to “offer,” in

exchange for higher premiums, optional APIP coverage. See Colo. Rev. Stat

§ 10-4-710(2)(a) (2001); Stickley, 505 F.3d at 1074. Specifically, § 10-4-

710(2)(a) stated:

      Every insurer shall offer the following enhanced benefits for
      inclusion in a complying policy, in addition to the basic coverages
      described in section 10-4-706, at the option of the named insured:

      (I) Compensation of all expenses of the type described in section 10-

                                          -3-
       4-706(1)(b) without dollar or time limitation; or

       (II) Compensation of all expenses of the type described in section 10-
       4-706(1)(b) without dollar or time limitations and payment of
       benefits equivalent to eighty-five percent of loss of gross income per
       week from work the injured person would have performed had such
       injured person not been injured during the period commencing on the
       day after the date of the accident without dollar or time limitations.


Colo. Rev. Stat. § 10-4-710(2)(a) (2001) (emphasis added). The Colorado Court

of Appeals noted the directive of § 10-4-710 was to the insurer, not the insured,

stating “all that is required is that the insurer offer these extended benefits.”

Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550, 554 (Colo. Ct. App.

1998). 1



       Section 10-4-710 also stated:

       A complying policy may provide that all benefits set forth in section
       10-4-706(1)(b) to (1)(e) and in this section are subject to an
       aggregate limit of two hundred thousand dollars payable on account
       of injury to or death of any one person as a result of any one
       accident arising out of the use or operation of a motor vehicle.

Colo. Rev. Stat. § 10-4-710(2)(b) (2001) (emphasis added). Based on this


       1
         In Brennan, the insurer claimed § 10-4-710(2)(a) did not require APIP
coverage be provided to pedestrians given the statute did not specify to whom the
coverage was applicable. 961 P.2d at 553. The Colorado Court of Appeals
disagreed, holding extended coverage applied to all categories of persons listed in
§ 10-4-707(1), including pedestrians, and that under § 10-4-710(2) the insurer
must offer extended coverages to these persons. Id. at 554. Because the insurer
did not offer APIP coverage which included pedestrian coverage, the court
reformed the policy to include such coverage. Id.

                                           -4-
language, “[s]ection 710(2)(b) permitted an enhanced policy to have an aggregate

limit of $200,000 for any one person as a result of any one accident.” Stickley,

505 F.3d. at 1074 n.5.



      On November 26, 2001, Mrs. May was injured while riding as a passenger

in a vehicle driven by her husband, Shawn May. At the time of the accident, she

was insured as a “resident relative” under her husband’s insurance policy with

Travelers and entitled, under the Declarations provisions, to receive reduced or

basic PIP benefits pursuant to the policy. Travelers paid the PIP benefits.



      Following Travelers’ payment of PIP benefits, Mrs. May sent Travelers a

demand letter for APIP benefits, without a dollar or time limitation, which she

claimed Travelers was required to offer by statute, but failed to do. After

Travelers denied her claim for APIP benefits, she filed a complaint requesting

reformation of the insurance policy to include APIP benefits, contending

Travelers failed to meet the statutory requirement of offering her husband APIP

coverage at the time he purchased the insurance policy, either by providing a

written or oral explanation of APIP benefits or obtaining a signed application or

selection form from Mr. May evidencing his knowledge of securing APIP benefit




                                         -5-
coverage. 2 Mrs. May also brought claims for breach of contract, statutory bad

faith, breach of the implied covenant of good faith and fair dealing, and common

law bad faith, based on Travelers’ denial of APIP benefits. Following discovery,

the parties filed cross-motions for partial summary judgment under Rule 56 of the

Federal Rules of Civil Procedure on Mrs. May’s request for reformation of the

policy for unlimited, aggregate APIP benefits.



      In addressing the reformation issue, the district court determined no

material facts were in dispute regarding the manner or circumstances surrounding

Travelers’ offer of APIP benefits to Mr. May. These facts established an

employee who worked for an agent insurance company under contract with

Travelers had a face-to-face meeting with Mr. May. Although she did not recall

much of the meeting, she testified her normal procedure would have been to go

over coverages with the insured and inform him that, in addition to basic PIP,


      2
         Mrs. May also sought reformation for APIP benefits because the policy
failed to include pedestrian and non-family occupants coverage, making the
policy noncompliant with the No Fault Act. However, the district court denied
this claim, explaining that even though Travelers failed to properly extend APIP
benefits to pedestrians and non-family-member occupants, Mrs. May was not
entitled to reformation of the policy on those grounds because she was not a
pedestrian or non-family occupant seeking such benefits, but a “resident relative”
already covered by the policy. Mrs. May did not appeal this issue. We further
note the district court’s decision is in accord with our holding in Wilson v. Titan
Indemnity Co., 508 F.3d 971, 973-74 (10th Cir. 2007) (declining to reform
insurance policy for insured’s own injuries because the insurer’s alleged failure to
offer coverage concerned only passengers and pedestrians).

                                        -6-
“[t]here [were] other limits available if you wanted them at a premium.” Apt.

App. at 96-97, 490-91. When asked whether she was aware of the specific

requirement that an insurer offer APIP benefits, she stated “[t]hat doesn’t sound

familiar.” Apt. App. at 153, 491. While she did not provide Mr. May with any

forms or documents, she testified her normal practice was to review available

coverages with an applicant using her computer screen, which listed all available

coverages, but did not describe them.



      The undisputed facts also established Mr. May later returned to the same

agency and met with another agent employee, who also did not provide Mr. May

with any documents or forms, but testified it was his practice to inform customers

that basic PIP was mandatory and APIP was available with an aggregate cap. He

recalled Mr. May asked whether he had to take the basic PIP, to which the agent

responded it was mandatory. The agent testified he also informed Mr. May other

options were available and answered affirmatively when Mr. May asked if they

“cost more money.” Apt. App. at 107-08. According to the agent, Mr. May said

he did not want to know about those other options because he wanted “to get in as

cheap as [he could]” due to financial difficulties. Apt. App. at 108, 491.

Nevertheless, the agent did sell Mr. May uninsured/underinsured motorist

(UM/UIM) coverage, but in persuading Mr. May to buy it, the agent incorrectly

stated such coverage was backup for not having enough PIP coverage.

                                         -7-
      A review of the Declarations portion of the insurance policy establishes Mr.

May was issued a form of basic PIP coverage, described in the Endorsement

portion of the policy under Section I(Q), with amended provisions under Section

II(QA). Section I(Q) stated Travelers would: “[P]ay, in accordance with the

Colorado Auto Accident Reparations Act [No Fault Act], personal injury

protection benefits for an ‘insured’ who sustains ‘bodily injury.’ The ‘bodily

injury’ must be caused by an accident arising out of the use or operation of a

‘motor vehicle.’” Apt. App. at 18, 31, 123. Section IV of the policy’s

Endorsement portion described “Added Personal Injury Protection Options,” and

stated: “If an Added Personal Injury Protection Coverage Option ‘R’ is shown on

the Declarations, the provisions of Section I are amended as follows, but only

with respect to any amounts payable thereunder because of ‘bodily injury’ to an

‘insured’ who is a ‘named insured’ or ‘family member.’” Apt. App. at 18.

Section IV then briefly described the medical and work loss options available

under APIP coverage, and stated: “The maximum aggregate amount payable for

medical expenses, rehabilitation expenses, work loss, essential services expenses,

and death compensation combined for Personal Injury Protection and Added

Personal Injury Protection Benefits shall not exceed two hundred thousand dollars

($200,000).” Apt. App. at 38. As evidenced by the Declarations provision and

other facts presented, Mr. May never purchased the APIP coverage described in

the Endorsement section of his policy.

                                         -8-
      In applying the relevant law to the circumstances presented, the district

court noted § 710 of the No Fault Act required Travelers to offer Mr. May APIP

coverage but that neither § 710 nor the other related statutes defined the manner

in which such an offer must be made. While § 710 did not expressly require

insurers to provide a written explanation of APIP benefits or obtain a signed

selection form, the district court determined, under the Colorado Supreme Court’s

decision in Allstate Insurance Co. v. Parfrey, 830 P.2d 905, 913 (Colo. 1992),

such facts may be relevant in determining whether an offer of APIP benefits was

made in a commercially reasonable manner calculated to permit the potential

purchaser to make an informed decision.



      The district court found Travelers, through its agents, made an offer of

APIP benefits by informing Mr. May additional APIP coverage was available for

an additional premium. However, the district court found no evidence

establishing Travelers provided Mr. May with a quote for APIP benefits, a PIP

selection form or other written materials describing APIP benefits, or a

substantive written or oral description of available APIP benefits. Rather, it

found Travelers persuaded Mr. May to purchase UM/UIM coverage on the

incorrect premise it would provide backup coverage for his PIP coverage. Based

on these circumstances, the district court found Travelers did not communicate its

offer of APIP benefits in a manner reasonably calculated to permit the potential

                                         -9-
purchaser to make an informed decision, as required under Parfrey, and therefore,

Mrs. May was entitled to reformation of the policy as a matter of law for

additional coverage. Neither party disputes this decision on appeal.



      Turning to the amount of APIP benefits available, the district court

considered Mrs. May’s argument for unlimited aggregate benefits and Travelers’

counter-argument that such benefits should be capped at the $200,000 aggregate

limit set out in the policy. In rendering its decision, the district court noted that

by statute the policy was in compliance with the law since it capped the total

aggregate amount payable at $200,000 – the same cap amount sanctioned in

§ 710(2)(b). It then pointed out the policy described Travelers’ liability for PIP

benefits as applying to bodily injury sustained by any insured in any one motor

vehicle accident, and therefore, the basic PIP liability limits would be replaced

with the $200,000 aggregate limit applicable to any insured in any one motor

vehicle accident as provided in the policy’s Endorsement section. Thus, the

district court determined Mrs. May was entitled to reformation of the policy for

APIP benefits, subject to the $200,000 aggregate per person, per accident, policy

limit. By order issued September 26, 2006, it granted Mrs. May’s motion for

partial summary judgment on the issue of reformation and granted Travelers’

motion for summary judgment on the amount of aggregate APIP coverage.

Because the parties did not raise the bad faith and breach of contract issues in

                                          -10-
their partial summary judgment motions, the district court did not address them,

leaving them for future resolution.



      Following the district court’s order, Travelers paid Mrs. May the sum of

$93,132.20, which was the difference between the basic PIP benefits it previously

paid her and the $200,000 aggregate APIP cap. Travelers then filed a second

summary judgment motion requesting resolution of the remaining breach of

contract and bad faith issues. In so doing, it maintained reformation occurred on

September 26, 2006 – the date of the initial summary judgment order, and

therefore, Mrs. May’s bad faith and breach of contract claims must fail because it

promptly paid the reformation amount due her after that date. In response, Mrs.

May argued no effective date of reformation was needed and, instead, the policy

was reformed ab initio – as of the date of the issuance of the policy – or,

alternatively, on the date of the November 26, 2001 accident.



      The district court rejected Mrs. May’s contention the policy was reformed

ab initio, holding contract reformation is an equitable remedy with the

formulation of such a remedy resting within its sound discretion. The district

court then determined that while Travelers made an offer of APIP benefits, the

issue on the sufficiency of that offer was “fairly debatable” or a “close case.”

Apt. App. at 628. In support, it explained Travelers had a reasonable basis on

                                         -11-
which to deny Mrs. May’s initial claim to APIP benefits because prior cases, such

as Brennan, which construed the No Fault Act in regards to APIP benefits, dealt

only with reformation in regards to an insurer’s failure to offer APIP benefits

covering injured pedestrians, as required by the Act. It reasoned that Brennan put

insurance carriers on notice that failure to offer APIP to the same class of

individuals entitled to “Basic PIP,” such as pedestrians, was deficient, and

therefore, a case could be made for retroactive reformation in those types of

cases. However, because this case did not involve a failure to offer APIP benefits

to pedestrians, but an actual offer of APIP benefits in a commercially

unreasonable manner in conjunction with Parfrey, the district court reasoned that

it did not matter if Travelers anticipated the rule in Brennan and its progeny

concerning the failure to offer APIP coverage to pedestrians and other non-

insured classes.



      Instead of Brennan, the district court explained, the applicable case for

resolution of the reformation issue was Parfrey. However, because little or no

case law applied the Parfrey commercially reasonable test to an offer of APIP

benefits under § 710 of the Act, and other recent cases made it difficult for an

insurer to determine whether its conduct was “commercially reasonable” under

the “totality of the circumstances,” the district court determined Travelers should

not necessarily have anticipated the conduct of its agents, in the manner in which

                                         -12-
they offered APIP benefits to Mr. May, was unreasonable. The district court

determined “[t]he evidence presented in the parties’ cross-motions did not

unequivocally demonstrate[] that the offer of APIP [benefits] to Mr. May was

unreasonable,” but that it “was a close case that required careful scrutiny and a

weighing of the particular facts and circumstances ....” Apt. App. at 627-28.

Relying on Clark v. State Farm Mutual Automobile Insurance Co., 319 F.3d 1234

(10th Cir. 2003) (Clark I); and Clark v. State Farm Mutual Automobile Insurance

Co., 292 F. Supp. 2d 1252, 1267 (D. Colo. 2003) (Clark II), the district court held

that “[w]here the reformation was not predestined by case law, a retroactive

reformation inequitably would hold Travelers liable for coverage it could not

foresee during a time it reasonably did not know of such exposure.” Apt. App. at

626, 628 (quotation marks and citation omitted).



      After determining Travelers was unaware of its legal obligation until

resolution of the reformation issue in its prior summary judgment order and that

retroactive reformation would pose a substantial hardship on Travelers, the

district court held the date of reformation of the insurance policy was September

26, 2006 – the date of its initial summary judgment order. As a result, it

determined Mrs. May’s remaining claims for bad faith and breach of contract

must fail as a matter of law given Travelers promptly paid the additional benefits

due to her up to the maximum APIP aggregate benefit amount of $200,000

                                         -13-
following the summary judgment order.



                                    II. Discussion

      On appeal, Mrs. May raises three issues, asking whether the trial court

erred in: 1) “establishing an effective date of reformation where Colorado case

law calls for the automatic incorporation of statutory benefits absent special

circumstances not present here”; 2) “establishing the date of its order as the date

of reformation without a hearing and where there was no uncertainty concerning

the statutory obligation to make a reasonable offer of coverage”; and 3) “applying

an aggregate limit of $200,000 where the original policy did not contain a cap

that was applicable or compliant.” Apt. Br. at 2.



                               A. Reformation Issues

      We begin with the first two issues concerning the date of reformation. Mrs.

May’s first premise in support of her claim for ab initio reformation is that

reformation back to the date of the insurance policy is a rule of law in Colorado

when an insurer violates a known statutory duty to offer coverage. She contends

Travelers’ statutory obligation to make an adequate offer of APIP benefits was

known, clear, and established, so that it should have reasonably anticipated its

obligation to make such an offer.




                                         -14-
      Alternatively, Mrs. May claims the district court should have selected an

earlier reformation date based on the facts presented and applicable case law. In

either case, she contends the district court erred in selecting the date of its initial

summary judgment order as the reformation date. She also contends the district

court incorrectly determined it was “fairly debatable” whether Travelers should

have known it needed to make a more definitive or adequate offer and therefore

improperly relied on Clark I and Brennan for the proposition that where the issue

of reformation is “fairly debatable” the date of reformation should be the date on

which the reformation issue was resolved. For the first time on appeal, Mrs. May

also claims further fact finding was required on the issue of whether Travelers

had a reasonable belief it was not required to pay APIP benefits, and therefore,

the district court should have held an evidentiary hearing.



      We address these arguments in conjunction with our standard of review and

the applicable law. “We review the grant of summary judgment de novo,

applying the same standard as the district court pursuant to Rule 56(c) of the

Federal Rules of Civil Procedure.” 3 Reid, 499 F.3d at 1167 (quotation marks and

      3
         Mrs. May suggests our standard of review is purely de novo when
considering a summary judgment decision, while Travelers contends our standard
of review is an abuse of discretion in cases, like this one, involving equitable
principles on the effective date of reformation. As Travelers suggests, in at least
one case involving the date of reformation of an insurance policy, we have
reviewed the district court’s exercise of its equitable powers in determining the
                                                                        (continued...)

                                          -15-
citation omitted). Summary judgment is proper if there is no genuine issue as to

any material fact and the moving party is entitled to judgment as a matter of law.

See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

When parties file cross motions for summary judgment, we may assume no

evidence needs to be considered other than that filed by the parties, but summary

judgment is inappropriate if material facts are in dispute. See Atlantic Richfield

Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000).



      In diversity cases the laws of the forum state, which in this case is

Colorado, govern our analysis of the underlying claims, while federal law

determines the propriety of the district court’s grant of summary judgment. See

Stickley, 505 F.3d at 1076; Reid, 499 F.3d at 1167; Hill v. Allstate Ins. Co., 479

F.3d 735, 739 (10th Cir. 2007) (Hill II). “This court must determine issues of

state law as we believe the highest state court would decide them.” Clark I, 319

F.3d at 1240. “Although we are not bound by a lower state court decision,

      3
        (...continued)
effective date of reformation for an abuse of discretion, while examining its
underlying factual findings for clear error and its legal determinations de novo.
See Clark v. State Farm Mut. Auto. Ins. Co., 433 F.3d 703, 705, 709 (10th Cir.
2005) (Clark III); see also Clark I, 319 F.3d at 1240 (explaining case involved
dismissal of a complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure rather than, like here, Rule 56). We note the district court in this case
employed the same equitable power in selecting the effective reformation date,
and to that extent we find no abuse of discretion and note that, under either
standard, we continue to consider the district court’s legal determinations de
novo, recognizing no material facts are in dispute in this case.

                                         -16-
decisions of a state’s intermediate appellate courts are some evidence of how the

state supreme court would decide the issue, and we can consider them as such,

even if they are not binding precedent under state law.” Id. (quotation marks and

citation omitted). Similarly, we may rely on federal district court cases

interpreting the law of the state in question, see Wade v. Emcasco Insurance Co.,

483 F.3d 657, 666 (10th Cir. 2007), and this court’s unpublished cases which are

persuasive or otherwise provide guidance based on their reasoned analyses on like

issues. See United States v. Lyons, 510 F.3d 1225, 1233 n.2 (10th Cir. Dec. 18,

2007) (relying on 10th Cir. R. App. P. 32.1(A)); United States v. Samuels, 493

F.3d 1187, 1194 n.9 (10th Cir.) (same), cert. denied, 128 S. Ct. 815 (2007).



      We first turn to Mrs. May’s claim raised for the first time on appeal in

which she argues additional fact finding was necessary, requiring the district

court to hold an evidentiary hearing. Mrs. May maintains a hearing was

necessary because this case called for an intensive factual review of Travelers’

understanding of its obligation to make a reasonable offer, how it assessed what a

reasonable offer was and what information it relied on in developing that

assessment, and its ability and effort to investigate the adequacy of its own offers.



      These arguments are in sharp contrast to her pleadings before the district

court, where Mrs. May argued no dispute in fact or law existed with respect to the

                                         -17-
issue of the date of reformation. In so doing, she stated that “[t]he legal

obligations and facts have been well known to Travelers for quite some time,”

since passage of § 710 in 1992 and clarifying case law in 1992 and 1996, so that

“there is no issue of whether Travelers anticipated the legal obligations it had, or

reasonably relied on some alternate interpretation of the law.” Apt. App. at 515.

At no time during her summary judgment pleadings before the district court did

Mrs. May assert that additional fact finding was necessary, nor did she request a

hearing, file an affidavit ascertaining additional facts existed relevant to a

determination of the issues, or otherwise suggest additional evidence must be

obtained to determine the date of reformation. Instead, she repeatedly stated there

was no issue as to whether Travelers anticipated its legal obligations, and because

no dispute existed as to its known legal obligations, the date of reformation

should be ab initio, thereby leaving only her bad faith and contract claims viable

for jury trial.



       Generally, we will not consider for the first time on appeal issues not raised

in the district court, see Nautilus Insurance Co. v. 8160 South Memorial Drive,

LLC, 436 F.3d 1197, 1200 (10th Cir. 2006), and certainly not where, as here, the

appellant argues before the district court that an issue can be resolved as a matter

of law and then conversely claims on appeal that material facts are in dispute,

presumably because she is unsatisfied with the result. Moreover, even if we

                                          -18-
considered the issues presented concerning the need for an evidentiary hearing,

our review of the record shows no dispute of relevant material facts necessary to

resolve the legal questions in determining the date of reformation. Instead, as

discussed hereafter, the relevant issue is whether an insurer could have

anticipated under the applicable law the sufficiency of its offer. Therefore, the

district court did not err in resolving the issue on summary judgment as a matter

of law and it was unnecessary to hold a hearing to ascertain any further facts.



      Turning to the other issues on appeal, we note neither party disputes the

district court’s actual reformation of the insurance policy, but only the effective

date of such reformation, which affects the viability of Mrs. May’s breach of

contract and bad faith claims. See Clark I, 319 F.3d at 1242. However, in

considering the district court’s determination of the effective date of reformation

on appeal, it is axiomatic that one consider the circumstances leading to the

policy’s reformation together with the relevant case law. This is because when

reformation of an insurance policy occurs, as it did here, “the effective date of

reformation is an equitable decision to be determined by the trial court based on

the particular circumstances of each case.” Id. at 1243 (emphasis added). Thus,

even if the district court determines reformation is appropriate, an insurer’s denial

does not necessarily require reformation back to the date of the policy, as Mrs.




                                         -19-
May contends. 4 This is, in part, because Colorado law recognizes insurers have a

duty to their policy holders and shareholders not to pay claims that are not within

the policy’s coverage, Bailey v. Allstate Insurance Co., 844 P.2d 1336, 1340

(Colo. Ct. App. 1992), so that “an insurer may challenge claims which are fairly

debatable.” Brennan, 961 P.2d at 557.



      In Brennan, where the insurer failed to offer APIP coverage for pedestrians,

the Colorado Court of Appeals affirmed the reformation of the insurance policy to

the date of the trial court’s reformation order, reasoning the insurer should not

necessarily have anticipated it would be obligated to pay such benefits. 961 P.2d

at 556. In making this determination, the Brennan court found it was “fairly

debatable” whether the insurer should have anticipated it would be obligated to

pay such a benefit until the court ruled on the issue, which was one of first

impression. Id. at 557. Following Brennan, in like cases where no APIP

coverage for pedestrians was offered, we instructed courts to consider all

appropriate factors in determining the date of reformation, including: 1) the

degree to which reformation from a particular effective date would upset past

      4
         See Clark I, 319 F.3d at 1244 (holding that “[t]he fact that the insured
may be entitled to obtain a reformation of the policy does not impose any
obligation upon the insurer to conform to such ‘reformed’ policy before a court
has made such reformation”); Brennan, 961 P.2d at 556 (holding the remedy of
reformation is an equitable one within the district court’s discretion so that even
when the insurance policy is reformed, the contractual obligation to pay may be
prospective from the date of the judicial reformation).

                                        -20-
practices on which the parties may have relied and whether the insurer

anticipated the rule in Brennan on mandatory inclusion of insurance for

pedestrians and other uninsured persons; 2) how reformation from a particular

effective date would further or retard the purpose of the rule in Brennan; and 3)

the degree of injustice or hardship reformation on a particular effective date

would cause the parties. See Clark I, 319 F.3d at 1243. Obviously, such an

analysis does not incorporate the ab initio reformation standard promoted by Mrs.

May.



       In this case, the district court performed the required analysis but

concluded factors one and two with respect to Brennan were inapplicable in such

an analysis because, as the parties agreed, this was not a Brennan case involving a

failure to offer APIP coverage to pedestrians. Instead, the district court

determined this case involved an actual offer of APIP coverage and an issue on

the sufficiency of that offer, which was not an issue in Brennan, so that the date

of reformation depended on whether Travelers could have anticipated, under the

more applicable case, Parfrey, whether its offer was “commercially reasonable”

under the “totality of the circumstances.” Thus, the district court essentially

modified the first and second Clark I factors by considering not whether the rule

and purpose of Brennan were anticipated for reformation purposes, which were

inapplicable, but whether Travelers could have anticipated its offer was

                                         -21-
“commercially reasonable” under Parfrey. While it initially questioned whether

Parfrey was the correct standard in evaluating the sufficiency of the offer, it

applied the Parfrey factors, recognizing this court’s and the federal district

court’s prior application of those factors in similar cases. See Johnson v. State

Farm Mut. Auto. Ins. Co., 158 F.App’x 119, 121 (10th Cir. Dec. 9, 2005)

(unpublished op.); Hill v. Allstate Ins. Co., 2006 WL 229202, at *4 (D. Colo. Jan.

24, 2006) (unpublished op.) (Hill I).



      As a preliminary matter, we conclude the district court correctly applied

Parfrey in assessing whether Travelers could have anticipated the sufficiency of

its offer before denying Mrs. May’s claim for APIP coverage. As the district

court pointed out in its decision, § 710(2)(a) requires an insurer to offer APIP

benefits, but neither that provision nor other provisions of the Act define what

constitutes a sufficient offer. See Stickley, 505 F.3d at 1078-79; see also Breaux

v. Am. Family Mut. Ins. Co., 387 F. Supp. 2d 1154, 1163-64 (D. Colo. 2005)

(Breaux I). Because no statutory guidance exists, this court, the Colorado district

court, and the Colorado appellate court have used the Parfrey analysis to

determine what constitutes a sufficient offer of APIP coverage, as evidenced in at

least two decisions issued prior to the district court’s summary judgment order 5

      5
        See Johnson v. State Farm, 158 F.App’x at 121; Hill I, 2006 WL 229202,
at *4. But see Lust v. State Farm Mut. Auto. Ins. Co., 412 F. Supp. 2d 1185,
                                                                     (continued...)

                                         -22-
and several other decisions thereafter. 6



      Under Parfrey, the criteria is whether the insurer performed “its duty of

notification in a manner reasonably calculated to permit the insured to make an

informed decision on whether to purchase coverage higher than the basic statutory

liability limits.” Stickley, 505 F.3d at 1078 (relying on Padhiar, 479 F.3d at 733).

In this case, the district court outlined the Parfrey factors, which include: 1) the

clarity with which the purpose of coverage was explained to the insured; 2)

whether the explanation was made orally or in writing; 3) the specificity of the

options made known to the insured; 4) the price at which the different levels of

coverage would be purchased; and 5) any other circumstances bearing on the

adequacy and clarity of the notification and offer. See Stickley, 505 F.3d at 1078-

79 (relying on Parfrey, 830 P.2d at 913). Under Parfrey, no one factor appears to

be dispositive and they are to be considered together with the totality of the

      5
       (...continued)
1191-92 (D. Colo. 2006) (concluding with limited discussion that Parfrey, which
dealt with UM/UIM coverage, does not apply to offers of APIP coverage).
      6
         See Stickley, 505 F.3d at 1078-79; Reid, 499 F.3d at 1168-69; Hill II, 479
F.3d at 742; Padhiar v. State Farm Mut. Auto. Ins. Co., 479 F.3d 727, 733 (10th
Cir. 2007); Campbell v. Allstate Ins. Co., 2007 WL 3046304, at *2 (10th Cir. Oct.
18, 2007) (unpublished op.); Johnson v. Hartford Underwriters Ins. Co., 238
F.App’x 362 at *2 (10th Cir. June 27, 2007) (unpublished op.); Jewett v. Am.
Standard Ins. Co., ___ P.3d ___, ___, 2007 WL 3025286, at *4 (Colo. Ct. App.
Oct. 18, 2007); Munger v. Farmers Ins. Exch., ___ P.3d ___, ___, 2007 WL
2003001, at **2, 4 (Colo. Ct. App. July 12, 2007), cert. denied, 2008 WL 171060
(Colo. Jan. 22, 2008) (No. 07SC741).

                                            -23-
circumstances. See Stickley, 505 F.3d at 1079; Parfrey, 830 P.2d at 914 & n.5.



      The district court determined reformation of the policy was appropriate

after considering these factors together with the fact Travelers did not provide

Mr. May with a quote for APIP benefits, a PIP selection form or other written

materials describing APIP benefits, or a substantive written or oral description of

APIP benefits prior to issuance of that policy, and the agent’s incorrect statement

that UM/UIM insurance would provide backup coverage for the PIP coverage.

Although it reformed the policy, the district court, like the courts in Brennan and

Clark I, determined the issue was “fairly debatable,” and therefore, Travelers

“should not necessarily have anticipated that it would be obligated to pay [APIP]

benefits ....” Clark I, 319 F.3d at 1243; Brennan, 961 P.2d at 556-57.



      We agree. In considering the Parfrey factors, together with the totality of

the circumstances, it is clear no written document was shown to Mr. May in this

case. Instead, the only “visual” Mr. May was shown on APIP coverages occurred

when the agent showed him a list of all PIP and APIP coverages on a computer

screen. However, while a stronger case may have been made on the sufficiency

of the offer if it had been in writing, the fact the offer here was not in writing

would not have caused Travelers to know that its offer was insufficient, given

§ 710 does not mandate an APIP offer be in writing.

                                          -24-
      Next, as the district court explained, little case law existed providing

guidance on the sufficiency of an APIP offer under § 10-4-710 at the time Mr.

May met with Travelers’ agents in May 2001 or when Travelers denied Mrs.

May’s claim for APIP benefits in December 2004. It was only after those dates

that similar cases were decided providing the district court with guidance on what

constituted a sufficient APIP offer under Parfrey. See Johnson v. State Farm, 158

F.App’x 119; Montez v. Am. Family Mut. Ins. Co., 2005 WL 2893870 (Colo. Dist.

Ct. June 29, 2005) (unpublished op.). In Johnson, we held an offer was sufficient

where the insurer made potential policyholders aware of APIP limits in a brochure

providing a short explanation of PIP benefits along with a chart showing the

varying levels of available PIP coverages. 158 F.App’x at 121-22. In Montez, an

insurer’s offer was held sufficient under Parfrey where the agent, like here, met

the applicant in a face-to-face meeting and showed her the PIP policy

endorsement containing a grid of available PIP and APIP coverages, but did not

discuss the specific price of APIP insurance given the insured clearly and

unequivocally indicated she was not interest in purchasing APIP insurance. 7 See

      7
         We recognize Colorado law provides that when an insurer fails to offer
APIP coverage, one should not speculate on whether the insured would have
purchased the APIP coverage if offered. See Thompson v. Budget Rent-A-Car
Sys., Inc., 940 P.2d 987, 990-91 (Colo. Ct. App. 1996); see also Fincher v.
Prudential Prop. & Cas. Ins. Co., 76 F.App’x 917, 921-22 (10th Cir. Oct. 1,
2003) (unpublished op.). But here, an offer was made for APIP benefits, so
arguably an ambiguity existed as to whether Travelers agents, after making an
offer of APIP coverage, were required to discuss the purpose of that coverage or
                                                                     (continued...)

                                        -25-
2005 WL 2893870, at **3-5. Later, following the district court’s decision in this

case, this court decided Hill II, in which we determined an insurance agent’s act

in showing the insured the available APIP coverages, both on her computer screen

and on a disclosure form, together with periodic renewal packets offering APIP

coverage, provided a sufficient offer, under Parfrey, for the insured to make an

informed decision. See 479 F.3d at 738-39, 742-43; see also Campbell, 2007 WL

3046304, at *5 (following Hill II based on similar facts involving same insurance

company).



      In this case, the circumstances presented differ only in varying degrees

from these cases, with the exception of the agent’s incorrect representation that

UM/UIM coverage could supplement Mr. May’s PIP coverage. While the district

court had the benefit of at least two of these cases in making its decision,

Travelers did not. 8 As a result, it is fairly debatable whether Travelers should

      7
       (...continued)
provide more specificity in light of Mr. May’s comment he did not want to know
about other options because he wanted “to get in as cheap as [he could]” due to
financial difficulties. Apt. App. at 108, 491. However, as the district court
determined, this argument is countered somewhat by the fact that one agent
nevertheless persuaded Mr. May to purchase UM/UIM coverage as backup for
basic PIP coverage, even after Mr. May’s express disinterest in spending more
money.
      8
         As previously stated, the issue of whether Travelers’ offer was sufficient
is not on appeal, so that we determine only whether Travelers should have
anticipated that its offer was insufficient, as determined by the district court, for
                                                                        (continued...)

                                         -26-
have necessarily anticipated whether its offer, in the context and form made, met

the sufficiency requirements under Parfrey.



      In addition, with respect to the Parfrey factor requiring price in terms of

the different levels of coverage available, Parfrey does not state whether the price

must be stated precisely or if it is enough, as here, to merely state APIP coverage

can be obtained for an additional premium at an aggregate cap. In Johnson v.

State Farm we held the lack of discussion of the price of APIP insurance did not

render the offer commercially unreasonable where the insured received the

brochure explaining PIP coverage and chart listing the different levels of PIP

coverage and had the opportunity to obtain a quote and ask additional questions in

a face-to-face meeting. See 158 F.App’x at 121-22; see also Montez, 2005 WL

2893870, at *4. Similarly, during his two visits to the insurance agency, Mr. May

had an opportunity to obtain a quote or additional information on the list of APIP

coverages shown to him on the computer screen or mentioned in his face-to-face

discussions with the agents, so it would not have been clear to Travelers that its

offer was insufficient. Finally, with respect to the fifth factor, as to the adequacy

or clarity of an offer of APIP coverage, as previously stated, little if any case law


      8
        (...continued)
the purpose of determining the date of reformation. As a result, we decline to say
how we would determine the issue of the sufficiency of the offer under the same
or like circumstances.

                                         -27-
specifically addressed what constituted a commercially reasonable offer in

conjunction with the same circumstances presented here at the time Travelers

denied Mrs. May’s claim.



      Based on these circumstances, the issue of whether Travelers should have

necessarily anticipated the sufficiency of its offer is “fairly debatable.”

Therefore, we disagree with Mrs. May’s contention Travelers’ statutory obligation

to make an adequate offer of APIP benefits was known, clear, and established, so

that it should have reasonably anticipated its obligation to make such an offer and

not denied her APIP claim. For these reasons, we also reject Mrs. May’s request

for ab initio reformation based on her argument Colorado requires reformation

back to the date of the insurance policy when an insurer violates a known

statutory duty to offer coverage. Under the circumstances presented, it was

arguably unknown whether such a violation occurred until the district court made

such a determination in its initial summary judgment decision. Our determination

regarding the district court’s decision on the effective date of reformation is

bolstered by Breaux v. Am. Fam. Mut. Ins. Co., 2007 WL 496697 (D. Colo. Feb.

13, 2007) (slip op.) (Breaux III). There, the court determined an insurer could not

have anticipated, under the totality of the circumstances, the compliancy of its

offer of APIP benefits to one of the plaintiffs, Mr. Whitehead, because the issue

was “fairly debatable,” or “one of first impression,” where no court had

                                          -28-
previously analyzed or defined the parameters of whether or when an offer is

reasonably calculated to allow a purchaser an opportunity to make an informed

decision. Id., at **3-4, 7. Consequently, in Breaux III, the district court held the

date of reformation was the date of the district court’s order. Id., at *7. The

same reasoning applies here.



      As to Mrs. May’s claim the district court relied on inapposite cases in

determining the date of reformation, we disagree. While both Brennan and Clark

I involve a different reformation issue based on the insurer’s failure to offer APIP

coverage, rather than the sufficiency of such an offer, they nevertheless provide

guidance on the separate issue of determining the date of reformation. Like here,

in those cases the courts determined the insurer should not have necessarily

anticipated it would be obligated to pay APIP benefits and therefore held the date

of reformation was the date of the court’s decision reforming the policy. See

Clark III, 433 F.3d at 712-13; Clark I, 319 F.3d at 1243; Clark II, 292 F. Supp.

2d at 1269; Brennan, 961 P.2d at 556-57. The same analysis applies here.



      Conversely, the cases cited by Mrs. May in her claim for an earlier

reformation date do not support her contentions. Admittedly, in Breaux I, the

judge reformed Ms. Breaux’s policy back several months before the accident, but

it did so only because that was the date the insurer admitted it first knew its offer

                                         -29-
was noncompliant. See 387 F. Supp. 2d at 1159, 1164. This is in sharp contrast

to Travelers’ situation, where the district court determined Travelers should not

have necessarily anticipated its offer was noncompliant until resolution of the

reformation issue in the district court’s summary judgment decision. In both

Snipes v. American Family Mutual Insurance Co. and Thompson, the Colorado

Court of Appeals generally stated the proposition that when an insurer fails to

offer statutorily mandated APIP coverage, such coverage is deemed incorporated

into the policy. See Snipes, 134 P.3d 556, 558 (Colo. Ct. App. 2006); Thompson,

940 P.2d at 990. However, those cases do not deal with the sufficiency of an

offer or otherwise address the effective date of reformation. See Snipes, 134 P.3d

at 558-59; Thompson, 940 P.2d at 990. Similarly, in DeHerrera v. Sentry Ins.

Co., the Colorado Supreme Court held the No Fault Act required the insurer to

provide UM/UIM and basic PIP coverage to a relative insured while riding an off-

road motorcycle, reasoning that such coverage was mandated by statute and must

be read into the policy as a matter of law. See 30 P.3d 167, 171-76 (Colo. 2001)

(DeHerrera I). However, again, that case did not address either the sufficiency of

the offer or the effective date of reformation, which are at issue here. Id. In

relying on these cases, Mrs. May patently confuses the basic principles of

reformation of an insurance policy with the separate issue of determining the

effective date of such reformation in cases where the sufficiency of an offer of

APIP coverage is fairly debatable. Moreover, in DeHerrera III, after remand and

                                         -30-
further appeal, the Colorado Court of Appeals affirmed the trial court’s

determination that the date of the insurance policy’s reformation was the date of

the Colorado Supreme Court’s decision in DeHerrera I because the insurer should

not have necessarily anticipated that it would be obligated to pay such benefits

until after the court reformed the policy. See DeHerrera v. Sentry Ins. Co., 2007

WL 1705619, slip op. at **7-8 (Colo. Ct. App. June 14, 2007) (unpublished op.)

(DeHerrera III), cert. denied, 2007 WL 4376396 (Colo. Dec. 17, 2007) (No.

07SC656). This lends support to the district court’s conclusion in this case.



      Based on the circumstances presented and applicable law, it is clear the

district court did not err or otherwise abuse its discretion in determining that the

date of reformation began on the date of its initial partial summary judgment

decision when it reformed the insurance policy. Because this determination

affects the viability of Mrs. May’s breach of contract and bad faith claims, see

Clark I, 319 F.3d at 1242-43, the district court similarly did not err in dismissing

those claims as a matter of law given Travelers promptly paid the additional

benefits due to her up to the maximum APIP aggregate benefit amount of

$200,000 following its order.



                                B. Aggregate Cap Issue

      Finally, Mrs. May contends the district court erred in placing a $200,000

                                         -31-
cap on the reformed policy because no applicable cap existed in the policy’s

Declarations portion for her PIP coverage, but instead the cap applied only to

APIP coverage, as shown in the policy’s Endorsement portion. Because Mr. May

did not obtain APIP coverage, Mrs. May claims the aggregate limit cannot apply

to her reformed policy. 9



      The insureds made identical arguments in Breaux I and Snipes, where, like

here, the reformed policy contained an endorsement reflecting a $200,000

aggregate limit on APIP coverage. See Breaux I, 387 F. Supp. 2d at 1159, 1164;

Snipes, 134 P.3d at 557-59. The district court in Breaux noted the insured, like

here, had received the endorsement outlining a $200,000 aggregate limit on APIP

coverage in the original policy issued to her. Id. at 1159, 1164-65. Relying on

our decision in Essex Insurance Co., it explained that general contract principles

and established Colorado law require “‘an insurance policy and an endorsement

attached to it ... be considered as a single instrument, and they should be

construed together in the absence of an internal conflict which cannot be

reconciled.’” Id. at 1165 (quoting Essex Ins. Co. v. Vincent, 52 F.3d 894, 897


      9
        In addition, Mrs. May claims that even if a cap exists, the policy was not
a “complying policy” by statute because it “attempts to restrict and dilute the
required coverages ... by reducing the amount it is actually obligated to pay by the
amount of any deductible or coinsurance.” Apt. Br. at 49, 51. Our review of the
record discloses Mrs. May did not raise this claim before the district court.
Therefore, we decline to address it on appeal.

                                        -32-
(10th Cir. 1995), and Martinez v. Hawkeye-Sec. Ins. Co., 576 P.2d 1017, 1019

(Colo. 1978)). It then recited a rudimentary Colorado rule of construction that

“[w]hen called [on] to construe an insurance contract, a court must read the

contract as a whole and give meaning to all the terms contained within the

policy.” See 387 F. Supp. 2d at 1165 (relying on Dome Corp. v. Kennard, 172

F.3d 1278, 1280 (10th Cir. 1999), and Rogers v. Westerman Farm Co., 29 P.3d

887, 898 (Colo. 2001)). Applying these principles to the circumstances presented,

the Breaux I court determined the policy at the time of issuance was unambiguous

and clearly established a $200,000 aggregate limit on APIP coverage, and because

such a limit was authorized by statute under § 710(2)(b), the reformed policy

entitled the insured to only $200,000 in total benefits. See 387 F. Supp. 2d at

1165-66. Relying on Breaux I, the Colorado Court of Appeals reached the same

conclusion. See Snipes, 134 P.3d at 559. We find this instructive as to how the

Colorado Supreme Court might decide the issue, even if it is not binding

precedent. Accordingly, we hold the district court properly placed a $200,000

cap on the reformed policy, as provided in the original policy’s Endorsement

portion.



                                  III. Conclusion

      For these reasons, we AFFIRM the district court’s grant of summary

judgment in favor of Travelers on the issues of the effective date of reformation

                                        -33-
of the insurance policy, breach of contract and bad faith, and the aggregate

amount of APIP benefits awarded to Mrs. May.



                                       Entered by the Court:

                                       WADE BRORBY
                                       United States Circuit Judge




                                        -34-
