Court Opinion

ID: 4317358
Source: CourtListenerOpinion
Date Created: 2018-10-02 14:22:25.929019+00
Date Added: 2024-06-11T14:45:13.289705
License: Public Domain

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.

                                                                 SUMMARY
                                                          September 6, 2018

                               2018COA133

No.17CA1200, Bailey v. State Farm Automobile Insurance
Company — Insurance — Motor Vehicles —
Uninsured/Underinsured

     A division of the court of appeals considers whether an

underinsured motorist (UIM) policy is triggered under Colorado’s

UIM statute, section 10-4-609, C.R.S. 2017, if the negligent driver’s

insurance company agrees to pay the full extent of a jury’s verdict.

The division concludes that (1) the legislature did not intend to

allow a plaintiff to recover UIM benefits in excess of the damages

awarded by a jury and (2) the language of the statute does not

prevent an insurer from effectively increasing a driver’s liability

coverage by offering to pay any damages awarded at trial.
     Because the trial court properly determined that the UIM

benefits were not triggered, the division affirms the trial court’s

judgment.
COLORADO COURT OF APPEALS                                         2018COA133

Court of Appeals No. 17CA1200
Boulder County District Court No. 15CV31239
Honorable Judith L. Labuda, Judge

Bruce Bailey,

Plaintiff-Appellant,

v.

State Farm Mutual Automobile Insurance Company,

Defendant-Appellee.

                            JUDGMENT AFFIRMED

                                   Division I
                        Opinion by JUSTICE MARTINEZ*
                       Taubman and Welling, JJ., concur

                        Announced September 6, 2018

Fuicelli & Lee P.C., R. Keith Fuicelli, Amanda C. Francis, Denver, Colorado, for
Plaintiff-Appellant

Frank Patterson & Associates, P.C., Franklin D. Patterson, Karl A. Chambers,
Denver, Colorado, for Defendant-Appellee

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2017.
¶1        Plaintiff, Bruce Bailey, appeals the trial court’s order granting

 a motion for entry of judgment in favor of defendant, State Farm

 Mutual Automobile Insurance Company (State Farm).

¶2        In this appeal, we are asked to determine whether an

 underinsured motorist (UIM) policy is triggered under Colorado’s

 UIM statute, section 10-4-609, C.R.S. 2017,1 if the negligent

 driver’s insurance company agrees to pay the full extent of a jury’s

 verdict. We answer that question “no” because (1) the legislature

 did not intend to allow a plaintiff to recover UIM benefits in excess

 of the damages awarded by a jury and (2) the language of the

 statute does not prevent an insurer from effectively increasing a

 driver’s liability coverage by offering to pay any damages awarded at

 trial.

¶3        We therefore affirm the trial court’s judgment.

 1Section 10-4-609, C.R.S. 2017, is titled “Insurance protection
 against uninsured motorists — applicability.” However, the statute
 concerns both uninsured and underinsured motorist coverage. We
 will refer to the statute as the underinsured motorist statute and to
 underinsured motorist benefits because the other driver in this case
 was not an uninsured motorist.

                                       1
                            I.   Background

¶4    This case arises from a car wreck involving the plaintiff and

 another driver. Plaintiff sued the other driver for negligence and

 State Farm for UIM benefits. The other driver is not a party to this

 appeal.

¶5    At the time of the accident, the other driver’s insurance

 company covered him for $100,000 in damages. Plaintiff’s policy

 covered him up to $100,000 for damages caused by underinsured

 motorists. Coincidentally, State Farm issued both policies involved

 in this case.2

¶6    Six days before trial was to commence, the other driver

 disclosed a letter from his insurance company. The letter stated

 that “[s]hould the case actually be tried, provided you comply with

 the conditions indicated above, you are fully protected from any

 compensatory damage award which may be awarded at trial,

 2 When we refer to State Farm throughout the opinion, we are
 referring to plaintiff’s insurer rather than the other driver’s insurer.
 Although State Farm insured both drivers, and attorneys provided
 by State Farm tried the case on behalf of the other driver, the trial
 court treated them as “distinct defendants.”

                                    2
 regardless of amount.” None of the parties requested leave to

 amend or supplement their pleadings based on the new disclosure.

¶7    At trial, State Farm presented evidence that plaintiff had not

 cooperated with claims adjusters and had committed fraud by

 presenting false information to them concerning his income.

 Therefore, State Farm asserted plaintiff’s actions had voided the

 insurance contract, and plaintiff was not entitled to UIM benefits.

¶8    The jury found in favor of plaintiff and awarded him damages

 in the amount of $300,000. The jury also rejected State Farm’s

 affirmative defenses of fraud and failure to cooperate.

¶9    Following trial, State Farm moved for entry of judgment,

 asserting that the insurance company’s letter effectively provided

 unlimited liability insurance coverage for the other driver.

 Therefore, the other driver’s insurance would cover the total

 amount of damages, and according to State Farm, because there

 was no difference between the coverage limit and the amount of

 damages, plaintiff was not entitled to UIM benefits. The other driver

 did not object to State Farm’s motion.

                                   3
¶ 10   The trial court granted the motion in a thorough, well-

  reasoned opinion. The other driver’s insurance company paid the

  entire judgment.

              II.     State Farm’s Motion for Entry of Judgment

¶ 11   Plaintiff contends that the trial court erred in granting State

  Farm’s motion for entry of judgment. We disagree.

         A.         Standard of Review and General Legal Principles

¶ 12   This case requires us to interpret the UIM statute, section

  10-4-609. Our review of a statute is de novo. Goodman v. Heritage

  Builders, Inc., 2017 CO 13, ¶ 5.

¶ 13   When we interpret statutes, we must ascertain and give effect

  to the legislature’s intent. Colo. Dep’t of Revenue v. Creager

  Mercantile Co., 2017 CO 41M, ¶ 16. “We construe the entire

  statutory scheme to give consistent, harmonious, and sensible

  effect to all parts,” and “[w]e give effect to words and phrases

  according to their plain and ordinary meaning.” Denver Post Corp.

  v. Ritter, 255 P.3d 1083, 1089 (Colo. 2011). If a statute’s language

  is clear, we apply it as the legislature wrote it. Id.

                                        4
                          B.    Section 10-4-609

¶ 14   Section 10-4-609(1)(c) states, in pertinent part, that

  underinsured coverage

            shall be in addition to any legal liability
            coverage and shall cover the difference, if any,
            between the amount of the limits of any legal
            liability coverage and the amount of the
            damages sustained, excluding exemplary
            damages, up to the maximum amount of the
            coverage obtained pursuant to this section.

¶ 15   The legislature added the above language to the statute in

  2007, and it took effect January 1, 2008. Ch. 413, secs. 1, 4,

  § 10-4-609, 2007 Colo. Sess. Laws 1921, 1923. Before the 2008

  amendments, the statute included the following language:

            The maximum liability of the insurer under the
            uninsured motorist coverage provided shall be
            the lesser of:

            (a) The difference between the limit of
            uninsured motorist coverage and the amount
            paid to the insured by or for any person or
            organization who may be held legally liable for
            the bodily injury; or

            (b) The amount of damages sustained, but not
            recovered.

  § 10-4-609(5), C.R.S. 2007.

¶ 16   In Jordan v. Safeco Insurance Company of America, Inc., 2013
COA 47, ¶ 30, a division of this court interpreted how these

                                     5
  amendments changed the ways that a plaintiff could recover UIM

  benefits. The negligent driver in Jordan carried a liability policy

  that covered injuries up to $100,000 per person. Id. at ¶ 3. The

  two plaintiffs settled their claims against the defendant for $60,000

  and $38,500, respectively. Id. Then, the plaintiffs sought UIM

  benefits from their own insurer. Id. at ¶ 4. The insurer denied the

  claim. Id. The plaintiffs stipulated that their damages did not

  exceed $100,000. Id. at ¶ 5.

¶ 17   The division concluded that the plain language of section

  10-4-609(1)(c) dictated that “[t]he insurer’s obligation to pay

  benefits is now triggered by exhaustion of the tortfeasor’s ‘limits

  of . . . legal liability coverage,’ not necessarily any payment from or

  judgment against the tortfeasor.” Id. at ¶ 29 (quoting § 10-4-

  609(1)(c)) (citing Vignola v. Gilman, No. 2:10-CV-02099-PMP, 2013
WL 495504, at *13 (D. Nev. 2013)). The division determined that

  because the plaintiffs’ damages did not exceed the $100,000 limit,

  as stipulated by the parties, the UIM policy was not triggered.

  Under the former statute, however, the plaintiffs could have

  recovered “the gap” between the amount that the plaintiffs settled

                                     6
  for and the other driver’s liability coverage limit. See

  § 10-4-609(5)(a), C.R.S. 2007; Jordan, ¶ 33.

¶ 18   The Jordan division determined that the legislature “changed

  Colorado’s UIM statutory scheme from a ‘reduction’ approach . . . to

  an ‘excess’ approach.” Jordan, ¶ 30. Under a reduction approach,

  the UIM coverage is “reduced by any payment received or judgment

  against the tortfeasor.” Id. In contrast, the excess approach allows

  a plaintiff to collect UIM benefits “for damages exceeding the

  tortfeasor’s liability policy limit,” up to the insured’s UIM policy

  limit. Id.

¶ 19   Another division of this court returned to these questions in

  Tubbs v. Farmers Insurance Exchange, 2015 COA 70. In that case,

  the negligent driver’s insurer covered him for $100,000, but he

  settled with the plaintiff for $30,000. Id. at ¶¶ 2-3. The plaintiff

  sought UIM benefits from his insurer, which covered him up to

  $500,000. Id. The division rejected the insurer’s argument that the

  plaintiff was required to exhaust the other driver’s legal liability

  limits before he could pursue UIM benefits. Id. at ¶ 11. The

  division distinguished Jordan, noting that the plaintiff in Tubbs

                                      7
  claimed damages exceeding the negligent driver’s liability coverage.

  Id. at ¶ 15.

                               C.      Analysis

¶ 20   Plaintiff first contends that the trial court abused its discretion

  by allowing State Farm to prevail on an affirmative defense that it

  did not present until after trial.

¶ 21   If this argument is not successful, plaintiff’s next contention is

  that the trial court erred in interpreting the provisions of section

  10-4-609 because (1) the other driver’s offer to pay the entire

  judgment does not constitute “legal liability coverage,”

  § 10-4-609(1)(c); and (2) even if it does, the other driver’s status as

  an “underinsured motorist” is determined “at the time of the

  accident,” § 10-4-609(4).

¶ 22   We disagree with each of plaintiff’s contentions and conclude

  that the trial court did not err in granting State Farm’s motion for

  entry of judgment.

       1.   State Farm Did Not Present a New Affirmative Defense

¶ 23   Plaintiff contends that the trial court should never have

  considered the merits of State Farm’s motion for entry of judgment

  because the motion raised an affirmative defense that State Farm

                                       8
  waived by not presenting it before trial. See Dinosaur Park Invs.,

  L.L.C. v. Tello, 192 P.3d 513, 517 (Colo. App. 2008) (noting that a

  party must assert an affirmative defense in a responsive pleading or

  the defense is waived). We disagree.

¶ 24   Because we conclude that State Farm’s motion did not raise

  an affirmative defense, we reject plaintiff’s argument.

¶ 25   An affirmative defense is “[a] defendant’s assertion of facts and

  arguments that, if true, will defeat the plaintiff’s . . . claim, even if

  all the allegations in the complaint are true.” Black’s Law

  Dictionary 509 (10th ed. 2014); accord Soicher v. State Farm Auto.

  Ins. Co., 2015 COA 46, ¶ 18. C.R.C.P. 8(c) provides a nonexclusive

  list of recognized affirmative defenses in Colorado, including “accord

  and satisfaction, arbitration and award, assumption of risk,

  contributory negligence, discharge in bankruptcy, duress, estoppel,

  failure of consideration, fraud, illegality, injury by fellow servant,

  laches, license, payment, release, res judicata, statute of frauds,

  statute of limitations, [and] waiver.”

¶ 26   Plaintiff does not contend that State Farm raised one or more

  of the listed affirmative defenses in C.R.C.P. 8(c). Moreover, plaintiff

  does not argue that State Farm raised a defense that is

                                       9
  “conceptually or remedially similar to” one of the defenses listed in

  C.R.C.P. 8(c). Dinosaur Park Invs., 192 P.3d at 516.

¶ 27   It is true that C.R.C.P. 8(c) recognizes that some unlisted

  affirmative defenses may also exist. But, an affirmative defense

  must be in the nature of confession and avoidance. See id.; see

  also People v. Low, 732 P.2d 622, 629 (Colo. 1987) (noting that

  “insanity” is an affirmative defense because it “admits the

  commission of the offense but avoids . . . criminal responsibility”);

  Antolovich v. Brown Grp. Retail, Inc., 183 P.3d 582, 600 (Colo. App.

  2007) (explaining that advice of counsel is an affirmative defense to

  malicious prosecution because it “basically admits the doing of the

  act . . . but seeks to justify, excuse, or mitigate it” (quoting People v.

  Huckleberry, 768 P.2d 1235, 1238 (Colo. 1989))). Here, State Farm

  did not contend that it owed UIM benefits but could avoid its

  obligation to pay them for some other reason. Rather, State Farm’s

  motion asserted that it did not owe benefits at all.

¶ 28   Therefore, State Farm’s motion merely asked that the trial

  court enter a judgment under C.R.C.P. 58 that recognized that

  State Farm did not owe plaintiff UIM benefits. To do so, the trial

  court needed to determine whether the UIM benefits were triggered,

                                      10
  see § 10-4-609(1)(c); Jordan, ¶ 29, and what part of the judgment, if

  any, State Farm was required to satisfy. The motion was therefore

  properly made, and the trial court did not err by entertaining it.

¶ 29   Because the trial court properly entertained the motion, we

  next address the trial court’s determination that State Farm had no

  obligation to provide UIM benefits to plaintiff.

        2. Section 10-4-609 Does Not Allow a Party to Recover
        Underinsured Motorist Benefits in Excess of Actual Damages

¶ 30   Plaintiff contends that, under the plain language of section

  10-4-609, State Farm is required to provide him with the full

  amount of UIM benefits. Although plaintiff has already recovered

  the full amount of the jury’s verdict from the other driver’s insurer,

  $300,000, plaintiff nonetheless contends that he should be allowed

  to recover an additional $100,000. We disagree for the following

  reasons.

¶ 31   First, the statute’s plain language suggests that the legislature

  did not intend to allow a plaintiff to recover UIM benefits in excess

  of the total amount of actual damages. See § 10-4-609(1)(c); Roque

  v. Allstate Ins. Co., 2012 COA 10, ¶ 23 (noting that the statute’s

  purpose is to allow a plaintiff to recover from an uninsured driver to

                                     11
  the same extent as a fully insured driver); see also Progressive Ins.

  Co. v. Simmons, 953 P.2d 510, 517 (Alaska 1998) (noting that the

  purpose of the excess approach for UIM coverage is to “maximize

  the potential for full compensation . . . to the extent necessary to

  cover all actual damages”). The statute provides that UIM benefits

  are intended to cover “the difference” between the negligent driver’s

  liability limits and the damages. § 10-4-609(1)(c). And, because

  UIM benefits are not triggered until the damages exceed the

  negligent driver’s liability coverage limits, see Jordan, ¶ 33, the

  most a plaintiff could recover, taking together the other driver’s

  coverage and the plaintiff’s own UIM benefits, is the total amount of

  damages. If we adopted plaintiff’s reading of the statute, it would

  create a windfall for a plaintiff, allowing him or her to recover UIM

  benefits in excess of his or her damages. We conclude that the

  legislature could not have intended that result. See Am. Family

  Mut. Ins. Co. v. Barriga, 2018 CO 42, ¶ 8 (noting that we avoid a

  statutory interpretation that would lead to an illogical or absurd

  result).

¶ 32   Second, nothing in the plain language of section 10-4-609

  prevents an insurer from effectively raising an insured’s “legal

                                     12
  liability coverage” by promising to “fully protect[] [an insured] from

  any compensatory damage award which may be awarded at trial,

  regardless of amount,” as the other driver’s insurer did here. See

  Denver Post Corp., 255 P.3d at 1089.

¶ 33   Third, plaintiff is not entitled to UIM benefits because there is

  no difference between the amount of his damages and the legal

  liability coverage. § 10-4-609(1)(c). Here, we have concluded that

  the insurer’s offer to fully protect the other driver from a judgment,

  “regardless of amount,” effectively raised the other driver’s legal

  liability coverage to the amount of the jury’s verdict, or $300,000.

  Because the amount of damages and the amount of coverage are

  the same, the UIM benefits were not triggered. See Jordan, ¶ 29.

¶ 34   Fourth, we disagree with plaintiff’s contention that the letter

  from the other driver’s insurer did not constitute “legal liability

  coverage.” Plaintiff contends as follows:

           Section 10-4-609(1)(a) cross-references section 42-7-103,

             C.R.S. 2017, which is part of the “Motor Vehicle Financial

             Responsibility Act.”

                                     13
           The latter statute notes that a “complying policy” is an

             insurance policy that complies with the requirements in

             “part 6 of article 4 of title 10, C.R.S.” § 42-7-103(6.5)(b).

           Section 10-4-601(2), C.R.S. 2017, notes that a

             “complying policy” “is subject to the terms and conditions

             required by this part 6, and is certified by the insurer

             and the insurer has filed a certification with the

             commissioner that such policy, contract, or endorsement

             conforms to Colorado law and any rules promulgated by

             the commissioner.”

  Because the letter from the other driver’s insurer does not meet the

  requirements of a “complying policy” as noted above, plaintiff

  contends that the letter is not “legal liability coverage.”

¶ 35   We reject plaintiff’s interpretation of the statute because he

  uses a cross-reference to a specific subsection of section 42-7-103

  in an attempt to import into section 10-4-609 other provisions that

  are not applicable. See Arrington v. Arrington, 618 P.2d 744, 745

  (Colo. App. 1980) (“When a statute adopts precise provisions of

  another statute by specific reference, the adoption is considered to

  refer to the specific provisions contained in that other

                                     14
  statute . . . .”). Section 10-4-609(1)(a) refers specifically to section

  42-7-103(2), which is the definition for an “[a]utomobile liability

  policy” and provides a minimum amount that insurers must offer

  under a policy. The cross-reference to section 42-7-103(2) is

  intended to apply the same monetary limitations to a UIM policy.

  And, section 42-7-103(2) does not mention “complying policy” or

  cross-reference section 42-7-103(6.5)(b), as plaintiff suggests.

  Furthermore, section 42-7-103(6.5)(b) notes that the definition for

  “complying policy” is “[f]or purposes of . . . subsection (6.5)” only.

  We therefore see nothing in section 10-4-609 requiring liability

  coverage extended before trial, in addition to that minimally

  required by section 10-4-609(1)(a), to be offered in a “complying

  policy.”

¶ 36   Fifth, we are also not persuaded by plaintiff’s contention that

  the determination of whether a driver is underinsured is made “at

  the time of the accident.” Plaintiff relies on the language of section

  10-4-609(4), which defines an “underinsured motor vehicle” as “a

  land motor vehicle, the ownership, maintenance, or use of which is

  insured or bonded for bodily injury or death at the time of the

  accident.” Based on this language, plaintiff argues that, even if an

                                      15
  insurer increases an insured’s liability coverage limit after an

  accident, the calculation of the amount of UIM benefits a plaintiff is

  entitled to receive is determined by the amount of legal liability

  coverage the negligent driver had at the time of the accident. We

  see nothing in the statute that would lead to this result, and we

  decline to write words or phrases into a statute that do not appear

  on its face. See Carruthers v. Carrier Access Corp., 251 P.3d 1199,

  1204 (Colo. App. 2010) (“[W]e will not interpret a statute to mean

  that which it does not express.”).

                             III.   Conclusion

¶ 37   The judgment is affirmed.

       JUDGE TAUBMAN and JUDGE WELLING concur.

                                       16