Opinion ID: 871065
Heading Depth: 3
Heading Rank: 2

Heading: Position of Plaintiff Ms. Spiller

Text: Plaintiff, on the other hand, advocates that we should follow Colorado in rejecting California's economic loss requirement for the recovery of emotional distress damages in insurer bad faith actions, citing the Colorado Supreme Court en banc decision of Goodson v. American Standard Insurance Co. of Wisconsin, 89 P.3d 409 (Colo.2004). [16] In Goodson, the insurer disputed the claims of the insured driver and her two minor children for personal injury protection benefits arising out of treatment for injuries received in an automobile accident. Goodson, 89 P.3d at 412. The insurer initially denied Plaintiffs' claims on the basis that they did not receive treatment from an insurer-approved provider organization. Id. Later, the insurer claimed that the automobile insurance policy was ineffective at the time of the accident because of a failure to pay the premium. Id. Finally, the insurer agreed that the policy was in effect at the time of the accident, but a dispute ensued over requested independent medical evaluations to determine whether the plaintiffs' injuries were related to the accident and whether the medial treatment was reasonable and necessary. Id. The insurer ultimately paid the full amount of the outstanding medical bills, which totaled slightly over $8,000. Id. at 412-13. The plaintiffs subsequently filed suit against the insurer, and the case was submitted to the jury solely on the tort claim of bad faith breach of the insurance contract. Id. at 413. The insurer requested an instruction requiring the jury to find substantial property or economic loss as a pre-requisite to an award of emotional distress damages. The trial court refused to give the instruction, reasoning that if such an instruction were required, [i]nsurance companies would understand that they can fiddle around and put the insured through all sorts of hoops and problems and difficulties ... and then at the last minute, the insurer can pay the bills ... and eliminate damages for emotional distress, and the whole idea of bad faith handling of insurance cases goes out the window. Id. The jury returned a verdict against the insurer, awarding plaintiffs $75,000 in non-economic damages, and $75,000 in punitive damages. Id. The insurer appealed, claiming that the trial court erred in refusing to instruct the jury that it could award damages for emotional distress only if the plaintiffs proved substantial property loss or economic damages caused by the insurer's breach. Id. The court of appeals agreed with the insurer's contention, citing a prior Colorado court of appeals case holding that the requirement of substantial property or economic loss for emotional distress damages caused by bad faith was necessary to reduce the threat of fictitious claims. Id. at 413-14. The Colorado Supreme Court granted certiorari, and reversed the court of appeals: We hold that, in a tort claim against an insurer for breach of the duty of good faith and fair dealing, the plaintiff may recover damages for emotional distress without proving substantial property or economic loss. To the extent this holding conflicts with the court of appeals' decision in Farmers Group, Inc. v. Trimble, 768 P.2d 1243 (Colo.App.1988) ( Trimble III ), we overrule that decision. Id. at 412 (emphasis added). The rationale of the Colorado Supreme Court in rejecting California's substantial economic loss requirement is summarized in the following points: 1. following the California rule would encourage insurers to unreasonably refuse to pay, or delay payment of, a valid claim of the insured and then avoid liability for bad faith emotional distress damages by making payment at the last minute and then claiming that the California requirement of substantial economic loss has not been satisfied ( id. at 413 (citing Goodson trial court)); 2. an insured purchases insurance to provide personal security and peace of mind to protect against future risk. The fact that an insurer belatedly pays a claim in full does not erase the emotional distress caused by prior bad faith conduct in refusing to pay, or delaying payment of, a valid claim of the insured ( id. at 417); 3. emotional distress is a likely and foreseeable consequence of a bad faith denial of benefits afforded under a contract of insurance ( id. ); 4. the basis for an insured's bad faith tort liability claim is the insurer's conduct in unreasonably refusing to pay, or delaying payment of, a valid claim and failing to act in good faith, not the insured's ultimate financial liability ( id. at 415); and 5. the Colorado legal system contains numerous safeguards to protect against fictitious claims for emotional distress arising out of the insurer's conduct. These safeguards include, inter alia, (1) the jury system itself, which imposes burdens of proof on the plaintiff insured to prove bad faith conduct by the insurer, and that the plaintiff suffered emotional distress as a result of the insurer's conduct; (2) a statutory cap limit on damages for non-economic injuries, and (3) rules of civil procedure which provide that the trial court can reduce damages awards that are excessive ( id. at 417).