Court Opinion

ID: 9584930
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:54:01.75928+00
Date Added: 2024-06-11T15:07:29.739343
License: Public Domain

Judge ROTHENBERG
concurring in part and dissenting in part.
Insofar as plaintiffs allegations were based on the disclosure of confidential information, I agree with the majority that summary judgment was properly entered in favor of State Farm Insurance Company. However, I would reverse the trial court’s order denying plaintiff leave to file her amended complaint, which asserted a claim of invasion of privacy.
Motions to amend should be freely granted. See C.R.C.P. 15; Passe v. Mitchell, 161 Colo. 501, 423 P.2d 17 (1967). Further, here, the plaintiffs motion to amend to add a new cause of action was based on the supreme court’s then recent holding in Robert C. Ozer, P.C. v. Borquez, 940 P.2d 371 (Colo.1997).
In Borquez, the court joined the majority of jurisdictions that have recognized a tort claim for invasion of privacy in the nature of unreasonable publicity given to one’s private life. The court held that the following elements must be proved in order to prevail on such a claim: (1) the fact or facts disclosed must be private in nature; (2) the disclosure must be made to the public; (3) the disclosure must be one which would be highly offensive to a reasonable person; (4) the fact or facts disclosed cannot be of legitimate concern to the public; and (5) the defendant acted with reckless disregard of the private nature of the fact or facts disclosed.
Importantly, Borquez did not require that the fact or facts disclosed by defendant be *222confidential, only that they be private in nature. The difference is significant.
Generally, confidential communications are those made under such circumstances that the law regards them as privileged, or under circumstances where one party is duty bound to act with the utmost good faith for the benefit of the other party. See § 13-90-107, C.R.S.1998 (describing particular relations “in which it is the policy of the law to encourage confidence and to preserve it inviolate Colorado State Board of Accountancy v. Raisch, 960 P.2d 102 (Colo.1998) (accountant-client privilege prevented Colorado State Board of Accountancy from obtaining confidential accountant-client communications); People v. Agado, 964 P.2d 565 (Colo.App.l998)(rejecting claim of common law privilege based upon confidential nature of specific communications between parent and child).
The requirement that information be “private in nature” is considerably broader and may include, as alleged here, the disclosure of facts relating to an embarrassing mental condition. In fact, the supreme court acknowledged this specific circumstance in Robert C. Ozer, P.C. v. Borquez, supra, 940 P.2d at 377, when it stated that:
[f]acts related to an individual’s sexual relations, or unpleasant or disgraceful illnesses, are considered private in nature and the disclosure of such facts constitutes an invasion of the individual’s right of privacy.
Hence, one’s disclosure of facts relating to sexual matters or unpleasant illnesses may not constitute a breach of confidentiality, but if such disclosure is attended by the above-named circumstances, it may nevertheless constitute an invasion of the plaintiffs privacy. See Robert C. Ozer, P.C. v. Borquez, supra.
In denying plaintiffs motion to amend, the trial court emphasized the fact that the information relating to plaintiffs mental condition was no longer confidential. The court stated that:
I think the amendment would be futile because one, the first element [under Bor-quez ] is the invasion of privacy. Second, cited by Borquez, based on publication of one’s private life, is that the information has to be confidential. And here, since the information was disclosed in an arbitration that was not made private or confidential, [plaintiff] waived, at least as to State Farm’s use, the confidentiality that might otherwise attach to that information. So I think on that basis alone the invasion of privacy claim could not stand....
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I don’t need to reach [the other] issues, since I believe the confidentiality was waived by virtue of the arbitration hearing. (emphasis added)
The trial court erred by treating confidentiality and privacy as synonymous and then concluding that plaintiffs amended complaint would be futile because she had waived her right to or interest in confidentiality. Plaintiffs amended claim for invasion of privacy under Borquez did not require a showing of confidentiality.
Further, State Farm wore two hats in this case. When plaintiff challenged State Farm in the arbitration proceeding over the amount of PIP benefits due, its relationship with plaintiff admittedly became adversarial. Nevertheless, as plaintiffs insurer and PIP carrier, it also owed her a quasi-fiduciary duty. See Farmers Group, Inc. v. Trimble, 691 P.2d 1138, 1141 (Colo.1984) (“[Standard of conduct on the part of the insurer when dealing with claims arising under an insurance policy is shaped by, and must reflect, the quasi-fiduciary relationship that exists between the insurer and the insured by virtue of the insurance contract”); Travelers Insurance Co. v. Savio, 706 P.2d 1258 (Colo.1985)(recognizing special relationship between insurer and its insured). Cf. Peterman v. State Farm Mutual Automobile Insurance Co., 961 P.2d 487, 494 (Colo.1998)(“[T]he insurer becomes almost adversary to its own insured in the context of uninsured motorist coverage, but the conflict does not vitiate the underlying contractual and quasi-fiduciary duty that the insurer owes its insured.”). See also Werner, Bad Faith Claims and the PIP Statute: View of Plaintiffs Counsel, 17 Colo. Law. 2163 *223(1988)(“[I]t is the insurer standing in the position of the fiduciary and attempting to take advantage of the injured insured that forms the basis for the tort of bad faith breach of contract.”).
Once the arbitration proceeding was resolved, State Farm was back in its quasi-fiduciary role. Further, this situation should be distinguished from one in which a third party learns of an embarrassing disclosure by the insured during the course of an arbitration and later uses it adversely to the insured. Such an action would be outside the insurer’s control.
Here, however, State Farm only learned of the information during the PIP proceedings because it was plaintiffs insurer. Then, after those proceedings had been completed, State Farm apparently turned over the information to its own attorney for use against plaintiff during her cross-examination as an expert witness in a totally unrelated court proceeding, a ear accident involving one of plaintiffs chiropractic patients.
Plaintiff has alleged that, in doing so, State Farm humiliated her, harmed her economically by preventing her from testifying in future cases, and harmed her patient. According to the amended complaint, State Farm did this to achieve an economic advantage, and without advance notice to plaintiff that her disclosures during the PIP proceedings and arbitration could be used by State Farm in such a broad manner. If plaintiff had been so informed, she may well have chosen to protect her own privacy by limiting her PIP claim to compensation for physical injuries and by foregoing compensation for psychological injuries.
This case thus presents significant public policy issues about the extent of an insurer’s duty to protect the privacy of its insured with regard to sensitive information such as the insured’s medical and psychological condition, an issue made complex by recent developments of technology that make information about insureds readily accessible and subject to abuse.
For example, suppose an insured is injured in an automobile accident under circumstances that would tend to show the insured’s involvement in an adulterous relationship, and as is required to secure PIP benefits, the insured reports the accident and supplies State Farm with reasonable details about it. Is the insurer then free to use or disclose this information in any manner that would be financially beneficial to it, unless the insured first obtains a confidentiality agreement or court order? Or does the insured have the right to believe that the disclosure to his or her insurer, and any related arbitration proceedings, are for the limited purpose of resolving the PIP claim? Is the insured’s disclosure of that information during an arbitration proceeding no longer private as a matter of law?
By analogy, here, once plaintiffs arbitration with State Farm was complete, did State Farm have the right to turn over her private and highly embarrassing medical information to a lawyer for use in another of State Farm’s cases for State Farm’s financial gain? State Farm contends that it did, but I am not aware of definitive authority so holding.
There is little law on this subject and State Farm’s reliance on Industrotech Constructors, Inc. v. Duke University, 67 N.C.App. 741, 314 S.E.2d 272 (1984) is misplaced. There, one of several prime contractors brought an action against the university for damages arising from the breach of a construction contract. The issue involved the propriety of the trial court’s order directing production of transcripts of an arbitration proceeding involving the university and another contractor.
The North Carolina Court of Appeals upheld the trial court’s discovery order and rejected the university’s claim that the arbitration required confidentiality. There was no claim for invasion of privacy and no special relationship between the parties. Thus, the case is of no assistance in resolving the issue before us.
I express no opinion as to how the plaintiffs allegations against State Farm ultimately should be resolved. I conclude only that her complaint stated a cause of action that did not require a breach of confidentiality by State Farm, and I perceive important issues that remain regarding the extent of her pri*224vacy rights as an insured vis a vis her insurer.
Accordingly, I would affirm the judgment of dismissal, but I would reverse the order denying the motion to amend and allow plaintiff to proceed by filing her amended complaint.