Am. Family Mut. Ins. Co. v. Barriga

• Decision Date: 29 May 2018
• Docket Number: Supreme Court Case No. 15SC934
• Parties: AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Petitioner, v. Guillermo BARRIGA and Evelia Barriga, Respondents.
• Court: Colorado Supreme Court

418 P.3d 1181

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Petitioner,

v.Guillermo BARRIGA and Evelia Barriga, Respondents.

Supreme Court Case No. 15SC934

Supreme Court of Colorado.

May 29, 2018

Attorneys for Petitioner: Campbell Latiolais & Averbach, LLC Colin C. Campbell Denver, Colorado

Attorneys for Respondents: Law Office of Samuel G. Livingston Samuel G. Livingston Golden, Colorado, Roy W. Penny, Jr. Denver, Colorado

Attorneys for Amicus Curiae Colorado Defense Lawyers Association Montgomery Amatuzio Dusbabek Chase, LLP John R. Chase Denver, Colorado

Attorneys for Amicus Curiae Colorado Trial Lawyers Association The Gold Law Firm, LLC Michael J. Rosenberg Greenwood Village, Colorado

En Banc

CHIEF JUSTICE RICE delivered the Opinion of the Court.

¶1 In this case, we consider the operation of a statutory scheme that expressly prohibits the unreasonable delay or denial of insurance benefits. Specifically, we consider whether an award of damages under section 10-3-1116(1), C.R.S. (2017), must be reduced by an insurance benefit unreasonably delayed but ultimately recovered by an insured outside of a lawsuit.¹ We hold that an award under section 10-3-1116(1) must not be reduced by an amount unreasonably delayed but eventually paid by an insurer because the plain text of the statute provides no basis for such a reduction. We also conclude that our general rule against double recovery for a single harm does not prohibit a litigant from recovering under claims for both a violation of section 10-3-1116(1) and breach of contract. We therefore affirm the decision of the court of appeals.

I. Facts and Procedural History

¶2 In 2009, a fire started in an apartment building owned by respondents Guillermo and Evelia Barriga and insured by petitioner American Family Mutual Insurance Company ("American Family"). After the fire, the Barrigas and American Family coordinated for a contractor to begin repairs at the apartment building. American Family made various payments to and on behalf of the Barrigas, totaling $209,816.43. However, after a substantial amount of repair work had been completed, the contractor revised its estimate for the cost of the repairs. The revised estimate was higher than American Family's initial estimate, primarily because of the need for additional repairs and asbestos remediation. In response to the revised estimate, American Family initiated the third-party appraisal process outlined in the insurance policy intended to provide an impartial assessment of the needed repair costs. The third-party appraiser fixed the award at $322,141.79. American Family then paid that award, less the $209,816.43 that had been previously paid to the Barrigas, resulting in a payment of $122,325.36. American Family also made an additional payment of $5435.44 for emergency board-up services.

¶3 Raising a number of concerns with the insurance appraisal process, the Barrigas sued American Family for breach of contract, common law bad-faith breach of insurance contract, and unreasonable delay and denial of insurance benefits under section 10-3-1116(1). The jury found for the Barrigas on all claims, awarding damages, as relevant here, of $9270 for breach of contract and $136,930.80 for benefits unreasonably delayed or denied.

¶4 Section 10-3-1116(1) provides that a plaintiff "whose claim for payment of benefits has been unreasonably delayed or denied may ... [recover] two times the covered benefit" (emphasis added). Applying this statute, the trial court first determined that the total jury verdict on the statutory claim ($136,930.80) comprised two parts: (1) $9270 in benefits unreasonably denied (equivalent to the separate verdict on the breach-of-contract claim); and (2) $127,660.80 in benefits unreasonably delayed.² The trial court then concluded that the statute's "two times the covered benefit" language required it first to double the total jury verdict for benefits unreasonably delayed or denied, but then to reduce that product by the amount of benefits unreasonably delayed. The trial court reasoned that failing to reduce an award by the amount of benefits delayed but eventually paid to the insured would place an insured who suffered only an unreasonably delayed claim in a better position than an insured whose claim was wholly denied without a reasonable basis. The trial court concluded that that result would be "absurd and unintended." Accordingly, the trial court first doubled the total statutory verdict ($136,930.80 x 2 = $273,861.60), then reduced that award by $127,660.80, the amount of benefits unreasonably delayed but eventually paid as found by the jury, resulting in a total award on the statutory claim of $146,200.80.

¶5 The court of appeals disagreed with the trial court's approach. Instead, the court of appeals noted that the text of section 10-3-1116(4) expressly preserves "other actions available by statute or common law" and interpreted the statutory text as permitting recovery of two times the covered benefit delayed or denied in addition to any recovery of that benefit through another source. We granted American Family's cross-petition for certiorari to consider only whether the court of appeals erred in holding that an award under section 10-3-1116(1) should not be reduced by the amount of unreasonably delayed benefits. We now affirm the court of appeals' decision.

II. Standard of Review

¶6 This case presents a question of statutory interpretation, which we review de novo. Goodman v. Heritage Builders, Inc., 2017 CO 13, ¶ 5, 390 P.3d 398, 401.

III. Analysis

¶7 Section 10-3-1116(1) establishes a statutory cause of action whereby an insured can "recover reasonable attorney fees and court costs and two times the covered benefit," after showing that its insurer unreasonably delayed or denied payment of that benefit. This case requires us to decide whether an award of "two times the covered benefit" under section 10-3-1116(1) must be reduced by payments that were unreasonably delayed but that an insured eventually received through an insurance contract. To do so, we first consider the statutory text of sections 10-3-1115, C.R.S. (2017), and 10-3-1116 and conclude that the statutes require no such reduction. We then address the concern, raised by the trial court, that failing to require a reduction will place an insured whose benefits were wholly denied in a worse position than an insured whose benefits were merely delayed, and we reject that concern as misplaced.

A. The Statutory Text of Sections 10-3-1115 and - 1116

¶8 When interpreting a statute, as we do in this instance, our primary goal is to give effect to the intent of the legislature. Goodman, ¶ 7, 390 P.3d at 401. Our starting point is the statutory text and we give that text its plain and ordinary meaning. Id. We must consider the statutory text as a whole, and give "consistent, harmonious, and sensible effect to all of its parts and avoid[ ] constructions that would render any words or phrases superfluous or lead to illogical or absurd results." Pineda-Liberato v. People, 2017 CO 95, ¶ 22, 403 P.3d 160, 164. And if the statutory language is clear and unambiguous, we look no further. Id.

¶9 Sections 10-3-1115 and 10-3-1116 operate concomitantly through cross-reference. Section 10-3-1115(1)(a) prohibits an insurer from unreasonably delaying or denying the payment of a claim for benefits to an insured, while section 10-3-1116(1) creates a cause of action to address insurer behavior that violates the prohibition found in section 10-3-1115(1)(a). As relevant here, an insured can recover "two times the covered benefit" upon proving that the insurer unreasonably delayed or denied a benefit. § 10-3-1116(1). The statute also states that "[t]he action authorized in [ section 10-3-1116(1) ] is in addition to, and does not limit or affect, other actions available by statute or common law, now or in the future. Damages awarded pursuant to [ section 10-3-1116(1) ] shall not be recoverable in any other action or claim." § 10-3-1116(4).

¶10 Beginning with the text of the statute, as we must, two things are readily apparent. The first is that the statutory text makes no explicit command that an award pursuant to section 10-3-1116(1) be reduced by the amount of benefits the jury concluded had been unreasonably delayed by the insurer. The second is that the legislature clearly intended to preserve a plaintiff's ability to pursue any and all related causes of action "in addition to" the statutory cause of action created by section 10-3-1116(1). See § 10-3-1116(4).

¶11 With those observations as a starting point, we conclude that the statute does not require the reduction applied by the trial court for two reasons. First, the absence of any specific textual command to reduce an award under section 10-3-1116(1) certainly weighs against finding that the legislature intended such a drastic revision to the award established by that same section. Rather than read either the absence of a specific textual command requiring the reduction of an award under section 10-3-1116(1) or the absence of any clause differentiating a delayed benefit from a denied benefit as ambiguity, we instead conclude that the statute provides no basis for such a reduction. Had the legislature intended such a reduction, it would have clearly announced such an important element of the statutory scheme. Instead, section 10-3-1116(1) presents no indication that delayed payments are to be treated differently from denied payments and section 10-3-1116(1), by its plain text, applies with equal force in either a case of delayed benefits or a case of denied benefits.³

¶12 Second, the statutory scheme as a whole suggests that the legislature did not intend to limit a plaintiff's recovery under section 10-3-1116(1) based on the delayed payments that the plaintiff eventually received. American Family points to the second sentence of section 10-3-1116(4) —which provides that "[d]amages awarded pursuant to this section shall not...