SUMMARY 

May 31, 2018 

2018COA82 

No. 17CA1296, Arline v. American Family Mut. Ins. Co. — 

Insurance — Motor Vehicles — Uninsured/Underinsured — 

Settlement and Release Agreements 

A division of the court of appeals considers whether the 

supreme court’s decision in Calderon v. American Family Mut. Ins. 

Co., 2016 CO 72, renders unenforceable a prior agreement to 

release an insurer and settle a negotiated claim for UIM benefits 

because the insurer reduced its offers of settlement by the amount 

of MedPay benefits paid. The division concludes that Calderon does 

not impact such settlement agreements and affirms the district 

court judgment dismissing the plaintiff’s complaint as barred by the 

valid release. 

 

The summaries of the Colorado Court of Appeals published opinions 

constitute no part of the opinion of the division but have been prepared by 

the division for the convenience of the reader. The summaries may not be 

cited or relied upon as they are not the official language of the division. 

Any discrepancy between the language in the summary and in the opinion 

should be resolved in favor of the language in the opinion. 
COLORADO COURT OF APPEALS 2018COA82 

Court of Appeals No. 17CA1296 

City and County of Denver District Court No. 16CV34390 

Honorable Elizabeth A. Starrs, Judge 

Anitra Arline, 

Plaintiff-Appellant, 

v. 

American Family Mutual Insurance Company, 

Defendant-Appellee. 

JUDGMENT AFFIRMED 

Division III 

Opinion by JUDGE RICHMAN 

Webb and Fox, JJ., concur 

Announced May 31, 2018 

Bradley A. Levin, Susan S. Minamizono, Denver, Colorado; Patricia Meester, 

Keith R. Scranton, Aurora, Colorado, for Plaintiff-Appellant 

Faegre Baker Daniels LLP, Michael S. McCarthy, Todd P. Walker, Matthew D. 

Clark, Denver, Colorado, for Defendant-Appellee 

 
1 

¶ 1 Plaintiff, Anitra Arline, appeals a district court’s judgment 

dismissing her complaint pursuant to C.R.C.P. 12(b)(1). Arline 

sought class action certification and damages resulting from her 

receipt of benefits under her uninsured motorist/underinsured 

motorist (UM/UIM) policy and the allegedly unenforceable release 

and trust agreement (Agreement) she concurrently entered into with 

defendant, American Family Mutual Insurance Company 

(American). We affirm. 

I. Background 

¶ 2 Arline’s complaint alleges that she was injured by an 

underinsured motorist in November 2014. She submitted claims to 

American under insurance policies which provided $5000 in 

MedPay coverage and a total of $50,000 in individual UIM coverage. 

American paid $5000 in MedPay benefits on Arline’s behalf to 

medical providers. American negotiated Arline’s damages under her 

UIM coverage to be $27,000 after subtracting the $5000 in MedPay 

benefits already paid. Arline alleges that American confirmed the 

subtraction of $5000 in a letter to Arline in June 2015. 
2 

¶ 3 In November 2015, Arline, represented by counsel, accepted 

the $27,000 payment and signed the Agreement stating, as relevant 

here, as follows: 

For the sole consideration of Twenty-Seven 

Thousand Dollars . . . paid by [American], . . . 

receipt of which is hereby acknowledged, 

Anitra Arline hereby fully and forever release(s) 

and discharge(s) [American] from all claims, 

demands, actions and rights of action, of 

whatever kind or nature which she now has or 

may hereafter have against [American] under 

[her UIM policy], on account of bodily injury 

sustained [as a result of the November 2014 

accident]. 

Anitra Arline understand(s) and agree(s) that 

the sum paid as consideration for this Release 

and Trust Agreement was agreed to as a 

compromise to avoid expense and to terminate 

all controversy or claims for benefits [under 

the UIM policy for the November 2014 

accident] and that her acceptance of such 

payment shall be a complete bar to any causes 

of action or claims against [American] now 

existing or which may arise in the future . . . . 

(Emphasis added.)

¶ 4 In November 2016, one year after Arline settled, the supreme 

court held for the first time that section 10-4-609(1)(c), C.R.S. 2017, 

prohibits insurers from reducing the UIM benefits paid on a claim 

by the amount of MedPay benefits paid on that claim, which the 
3 

court termed a “setoff.” See Calderon v. Am. Family Mut. Ins. Co., 

2016 CO 72, ¶ 16 (“To the extent that [the plaintiff’s] insurance 

purports to allow the setoff in this case, it is contrary to the setoff 

prohibition of section 10-4-609(1)(c) and is unenforceable.”); see 

also § 10-4-609(1)(c) (“The amount of the coverage available 

pursuant to this section shall not be reduced by a setoff from any 

other coverage, including, but not limited to, . . . medical payments 

coverage.”). Calderon’s counsel now represents Arline.

¶ 5 Shortly after the Calderon decision, Arline sued American on 

her own behalf, asserting breach of contract based on the facts 

described above, and seeking class certification based on the 

assertion that American had unlawfully reduced UIM payments to 

similarly situated class members using a MedPay setoff. American 

responded that the Agreement was a complete bar to the cause of 

action in simultaneous motions to dismiss for (1) lack of standing, 

pursuant to C.R.C.P. 12(b)(1); and (2) failure to state a claim upon 

which relief can be granted, pursuant to C.R.C.P. 12(b)(5). 

¶ 6 Arline argued that the Agreement was unenforceable because 

it was contrary to applicable law and public policy. However, the 

district court found that Arline’s arguments were relevant only to 
4 

the terms of her insurance policy and not to the Agreement. 

Accordingly, the court found that the Agreement was enforceable, 

granted American’s motion to dismiss for lack of standing, and did 

not address the Rule 12(b)(5) motion because it was rendered moot 

by the Rule 12(b)(1) dismissal. 

¶ 7 We agree with the district court that the Agreement is 

enforceable and that Arline’s claims are therefore barred. 

II. The Issue on Appeal 

¶ 8 Arline reiterates the arguments made to the district court, 

contending that the court erred in dismissing her complaint 

because American’s payment of $27,000 pursuant to the Agreement 

caused her to suffer an injury-in-fact to a legally protected interest. 

See Ainscough v. Owens, 90 P.3d 851, 855 (Colo. 2004) (identifying 

two requirements for standing in Colorado: the plaintiff must have 

suffered “(1) an injury-in-fact, (2) to a legally protected interest”). 

¶ 9 American responds that the propriety of the dismissal rests on 

whether the Agreement is enforceable. We agree with American. 

III. Standard of Review and Applicable Law 

¶ 10 We review de novo both (1) a trial court’s grant of a motion to 

dismiss, Allen v. Steele, 252 P.3d 476, 481 (Colo. 2011); and (2) 
5 

whether a contract provision is enforceable or void as against public 

policy, Bailey v. Lincoln Gen. Ins. Co., 255 P.3d 1039, 1045 (Colo. 

2011). Under Rule 12(b)(1), the plaintiff has the burden of proving 

jurisdiction. Medina v. State, 35 P.3d 443, 452 (Colo. 2001). 

¶ 11 “A release is the relinquishment of a vested right or claim to a 

person against whom the claim is enforceable.” Neves v. Potter, 769 

P.2d 1047, 1049 (Colo. 1989). An insured may agree to a term of 

settlement and release as the insured sees fit, “so long as [the term] 

does not violate statutory prohibitions or public policy.” Fox v. I-10, 

Ltd., 957 P.2d 1018, 1022 (Colo. 1998). While a contract provision 

is void if the interest in enforcing it is clearly outweighed by a 

contrary public policy, we must be cognizant that court invalidation 

of a contract provision infringes on the “essential freedoms of . . . 

the right to bargain and contract.” Superior Oil Co. v. W. Slope Gas 

Co., 549 F. Supp. 463, 468 (D. Colo. 1982), aff’d, 758 F.2d 500 

(10th Cir. 1985). 

¶ 12 If a release agreement is valid, dismissal of claims 

encompassed by the agreement is proper. See Ireland v. Wynkoop, 

36 Colo. App. 205, 220-21, 539 P.2d 1349, 1359 (1975); see also 

C.R.C.P. 8(c) (a release is an affirmative defense to a complaint). 
6 

IV. Discussion 

¶ 13 We conclude that the Agreement is valid and enforceable 

because even under Calderon’s construction of section 

10-4-609(1)(c), the interest in enforcing the Agreement — which 

Arline entered into voluntarily while represented by counsel who 

was fully informed that certiorari had been granted in Calderon — 

is neither clearly outweighed by a contrary public policy nor 

contrary to law. 

¶ 14 First, it is not clear to us that the Agreement is contrary to 

public policy. Although a term of an insurance policy “is void and 

unenforceable if it violates public policy by attempting to ‘dilute, 

condition, or limit statutorily mandated coverage,’” we do not agree 

with Arline that the same standard applies to a settlement and 

release agreement entered into upon payment of insurance benefits 

in a negotiated amount. Huizar v. Allstate Ins. Co., 952 P.2d 342, 

345 (Colo. 1998) (citation omitted). Unlike the plaintiff in Calderon, 

Arline is not challenging any provision of her policy. 

¶ 15 We agree with Arline’s assertion that, in Colorado, the purpose 

of UIM insurance is to place “an injured party having uninsured 

motorist coverage in the same position as if the uninsured motorist 
7 

had been insured.” Calderon, ¶ 11 (quoting Barnett v. Am. Family 

Mut. Ins. Co., 843 P.2d 1302, 1308 (Colo. 1993) (collecting cases); 

see State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177, 184 

(Colo. 2004) (“Insured motorists have the right to recover 

compensation for loss caused by an uninsured motorist in the same 

manner that recovery would be permitted for a loss due to an 

insured motorist.”). However, we conclude that the purpose of UIM 

insurance was served here. 

¶ 16 The amount of damages resulting from an injury to an insured 

motorist is an issue of fact, to be negotiated by the parties or 

resolved by a fact finder. In Calderon, the issue was resolved by a 

jury, and the trial court, applying the terms of Calderon’s insurance 

policy, reduced the jury award by $5000 to set off the MedPay 

benefits the plaintiff had already received. The supreme court held 

that policy provisions allowing such setoffs effectively penalize the 

plaintiff for being injured by an uninsured motorist. Calderon, 

¶ 11. Therefore, the policy provision that resulted in the setoff in 

Calderon violated section 10-4-609(1)(c). Id. at ¶ 16. 

¶ 17 Here, however, Arline negotiated her damages benefits and 

agreed that the $27,000 UIM benefit amount paid compensated her 
8 

sufficiently to warrant releasing American from any further claims. 

The present settlement agreement does not concern the amount of 

UM/UIM coverage available on her claim, but rather the amount of 

money she was willing to accept to release her claim. See Archuleta 

v. USAA Cas. Ins. Co., Civ. A. No. 17-cv-00191-RBJ, 2017 WL 

3157947 at *1 (D. Colo. Jul. 25, 2017). 

¶ 18 Arline now argues, for the first time on appeal, that she was 

not compensated in the same manner as if she had been injured by 

a fully insured motorist. But she does not allege facts to support 

this argument. She alleges only that she did not receive “what she 

was entitled to” because of the setoff provision in her UM/UIM 

policy. 

¶ 19 Moreover, Colorado public policy favors the settlement of 

disputes when the settlement is fairly reached. Davis v. Flatiron 

Materials Co., 182 Colo. 65, 71, 511 P.2d 28, 32 (1973). If releases 

and settlements could be “lightly ignored,” insureds and insurers 

would be discouraged from settling claims. Id. at 71-72, 511 P.2d 

at 32. Although Arline argues for the first time in her appeal that 

she was “forced” to sign the release, she alleges no facts to support 

this argument either here or in the district court. The Agreement 
9 

itself states that the sum paid was “agreed to as a compromise.” 

Thus, we cannot conclude that the settlement was unfairly reached. 

¶ 20 Second, we are not persuaded that the Agreement is 

prohibited by statute. Though the supreme court held that section 

10-4-609(1)(c) prohibits policy provisions allowing a setoff from any 

other coverage, it did not hold that the statute extended to 

settlement agreements. See Calderon, ¶ 16. We perceive no 

indication that, in enacting section 10-4-609, the General Assembly 

sought to regulate settlement negotiations between an insured and 

her insurer. 

¶ 21 Accordingly, we conclude that the Agreement is enforceable. 

Our conclusion is consistent with that of three recent federal 

district court cases resolving this issue. See Mischek v. State Farm 

Mut. Auto. Ins. Co., Civ. A. Nos. 16-cv-03208-PAB-MLC, 17-cv00041-PAB-MLC, 2018 WL 1569754, at *6 (D. Colo. Mar. 30, 2018) 

(granting summary judgment based on accord and satisfaction of 

UIM claims; “[b]ecause plaintiffs were aware at the time of 

settlement that [insurer] had reduced its initial settlement offers by 

the amount of MedPay benefits previously remitted, plaintiffs are 

not permitted to reopen their claims merely because there has been 
10 

a favorable development in the law”); Zevallos v. Allstate Prop. & 

Cas. Co., Civ. No. 17-cv-00189-RM-CBS, 2017 WL 3242231, at *6 

(D. Colo. July 28, 2017) (recommending dismissal of the plaintiff’s 

claims seeking additional UM/UIM benefits because the UM/UIM 

settlement agreement between the plaintiff and insurer is 

enforceable and a bar to her claims); Archuleta, 2017 WL 3157947, 

at *1.1

¶ 22 We are not persuaded to the contrary by Arline’s reliance on 

Kral v. American Hardware Mutual Insurance Co., 784 P.2d 759 

(Colo. 1989). In Kral, the supreme court held that a release-trust 

agreement executed pursuant to a subrogation provision in an 

insurance contract was enforceable only to the extent that it did not 

impair the insured’s ability to be made whole. Id. at 763. Kral

analyzed the enforceability of a term from the release agreement 

itself. But Arline does not assert that any term of her Agreement is 

prohibited by statute or public policy; she argues for voiding the 

 

1 At oral argument, Arline’s counsel appeared to suggest that a 

footnote in the Archuleta opinion might mandate a different result 

here. See Archuleta v. USAA Cas. Ins. Co., Civ. A. No. 17-cv-00191-

RBJ, 2017 WL 3157947, at *2 n.2 (D. Colo. Jul. 25, 2017). We 

disagree, because even if the footnote governed settlement 

agreements reached after Calderon was decided, Arline settled her 

claim with American one year before Calderon. 
11 

Agreement based on the calculations underlying American’s net 

settlement payment. And she does not allege that she was not 

made whole or that she would have received more compensation if 

the motorist who caused her injury had been sufficiently insured. 

Kral does not hold that insured parties are required to accept 

nothing less than full compensation for their losses. 

¶ 23 Because Arline signed a valid release agreement which is not 

void as against public policy or prohibited by statute, the district 

court properly dismissed her claim.2 See Ireland, 36 Colo. App. at 

220-21, 539 P.2d at 1359; see also Fort Collins-Loveland Water Dist. 

v. City of Fort Collins, 174 Colo. 79, 84-85, 482 P.2d 986, 989 

(1971) (holding that when a complaint does not state a claim upon 

which relief can be granted, the court has no subject matter 

jurisdiction and could grant a motion to dismiss on either ground). 

V. Conclusion 

The judgment is affirmed. 

JUDGE WEBB and JUDGE FOX concur. 

 

2 We decline to address the retroactivity issue raised for the first 

time at oral argument.