American Family Mut. Ins. Co. v. Dewitt

• Decision Date: 21 February 2008
• Docket Number: No. 05CA2687.,05CA2687.
• Citation: 216 P.3d 60
• Parties: AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Ed DEWITT and Sarah DeWitt, Defendants-Appellees.
• Court: Colorado Court of Appeals

216 P.3d 60

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Ed DEWITT and Sarah DeWitt, Defendants-Appellees.

No. 05CA2687.

Colorado Court of Appeals, Div. II.

February 21, 2008.

Rehearing Denied March 20, 2008.

Certiorari Granted November 10, 2008.

Law Office of Roger Moore, Roger Moore, Tony K. Alexander, Denver, Colorado, for Plaintiff-Appellant.

Patterson Nuss & Seymour P.C., Craig S. Nuss, William P. Boyle, Greenwood Village, Colorado, for Defendants-Appellees.

Opinion by Judge BERNARD.

In this subrogation case, plaintiff, American Family Mutual Insurance Company, appeals the judgment entered on a jury verdict in which it was awarded only $16,000 on a claim against defendants, Ed and Sarah DeWitt. At trial, American Family sought reimbursement of the $100,000 policy limits it paid its insured, Jeffrey Henderson, following a mandatory arbitration decision awarding Henderson $200,000. We affirm.

I. Background

The following facts are undisputed. This case arises out of an automobile accident on I-70 between Sarah DeWitt and Henderson, in which Sarah DeWitt was driving a vehicle owned by her father, Ed DeWitt. DeWitt struck Henderson's car, causing it to hit the guardrail and roll over. Henderson sustained injuries and was taken to the hospital.

Henderson was insured by American Family under a policy providing a $100,000 limit for underinsured motorist (UIM) coverage. The DeWitt vehicle was insured by Mid-Century Insurance, with a policy including liability limits of $25,000.

Mid-Century offered Henderson $25,000, representing Sarah DeWitt's policy limits. American Family refused to authorize the tender and instead chose to advance Henderson $25,000 (the value of the Mid-Century policy) in order to avoid releasing the DeWitts from liability.

Because Henderson's losses were believed to be greater than $25,000, he made a UIM claim against American Family. The UIM claim was arbitrated and resulted in a finding that Henderson's noneconomic losses were $200,000. American Family consequently paid Henderson $75,000 (the balance of his $100,000 policy limits).

Prior to the arbitration hearing, American Family initiated this subrogation action against the DeWitts in the District Court for Jefferson County seeking to recover the $25,000 it advanced Henderson to avoid releasing the DeWitts. After the arbitration decision, American Family amended its complaint to recover the additional amounts it paid Henderson pursuant to the arbitration award.

The parties subsequently filed their trial management order, in which the DeWitts withdrew their denial of negligence in the accident. American Family then moved to strike the DeWitts' jury demand on the ground that the action to recover funds it paid its insured was purely equitable. American Family requested that the trial court, sitting in equity, determine the issues of restitution, reimbursement, unjust enrichment, and the family car doctrine. The trial court denied the motion.

American Family filed a motion to reconsider the denial of its motion to strike the DeWitts' demand for a jury. The court denied reconsideration and held that the DeWitts were entitled to a jury trial to determine the issue of damages.

At trial, the DeWitts called a certified public accountant (CPA) who testified about Henderson's business and financial interests after the accident. American Family objected to this expert testimony on grounds of relevance, and that any probative value of this testimony was substantially outweighed by the risk of prejudice.

The DeWitts also called the attorney for American Family at the arbitration hearing (former counsel). Former counsel testified that she asked the arbitrator to award Henderson $7,500, which is the amount she thought a jury would award Henderson in a civil trial. American Family objected to this testimony on grounds of relevance.

The jury returned a verdict in favor of American Family. The jury found Henderson incurred injuries in the amount of $16,000, and found that Sarah DeWitt's negligence caused those injuries. The jury further found Ed DeWitt vicariously liable for Sarah DeWitt's negligence under the family car doctrine.

II. Motion to Strike Jury Trial

American Family contends the trial court erred by denying its motion to strike the DeWitts' jury demand. American Family argues that no questions of fact existed at the time of trial and the action was purely equitable, thus rendering a jury trial improper. We disagree.

We review questions of whether a party is entitled to a jury trial in a civil action de novo. Springer v. City & County of Denver, 13 P.3d 794, 798 (Colo.2000).

A. Thrust of the Action

The right to a trial by jury in civil actions exists only in proceedings that are legal in nature. Zick v. Krob, 872 P.2d 1290, 1293 (Colo.App.1993). If the complaint joins or commingles legal and equitable claims, the court must determine whether the basic thrust of the action is equitable or legal. Id. Here, American Family's original complaint combined both equitable (subrogation) and legal (personal injury) claims.

Subrogation implies the restoration of the amount paid by a surety (here, American Family), and restoration of that amount only. United Security Ins. Co. v. Sciarrota, 885 P.2d 273, 277 (Colo.App.1994). Subrogation is a "creature of equity having for its purpose the working out of an equitable adjustment between the parties by securing the ultimate discharge of a debt by the person who in equity and good conscience ought to pay it." Id. In its original and amended complaints American Family claimed its right of subrogation and sought restoration of the $100,000 it paid Henderson in its capacity as subrogee.

Actions to recover money damages for personal injuries are legal in nature. Gleason v. Guzman, 623 P.2d 378, 382 (Colo. 1981). In its original complaint and amended complaint, American Family sought monetary damages from the DeWitts for personal injuries incurred by Henderson.

Because the original complaint commingled equitable and legal claims, we must determine whether the basic thrust of the action is equitable or legal. Zick, 872 P.2d at 1293. The complaint sought damages for injuries to person or property. While American Family sought relief as a subrogee in its complaint, the thrust of the action was not whether American Family should be reimbursed under the doctrine of equitable subrogation. Rather, it demanded the DeWitts reimburse American Family based on Sarah DeWitt's negligence and the family car doctrine. Accordingly, we conclude that the basic thrust of the complaint was legal in nature.

B. Issues of Fact

C.R.C.P. 38(a) provides that "[u]pon ... demand ... all issues of fact shall be tried by a jury." Here, American Family's complaint alleged issues of fact. The complaint set forth two claims for monetary relief, the first based on negligence and the second based on the family car doctrine. The family car doctrine claim involved questions of fact.

The family car doctrine imputes liability to the head of a household when he or she has control over the vehicle and the vehicle is used by a person who is a member of the household. Hasegawa v. Day, 684 P.2d 936, 938 (Colo.App.1983), overruled in part on other grounds by Casebolt v. Cowan, 829 P.2d 352 (Colo.1992). Whether one may be considered the resident of a household is an issue to be determined by the facts and circumstances of each case. United Services Automobile Ass'n v. Mione, 34 Colo.App. 448, 451, 528 P.2d 420, 421 (1974). The depositions of Ed and Sarah DeWitt regarding her residence at the time of the accident show inconsistencies, and therefore, issues of fact related to the family car doctrine existed at the time of trial.

Thus, we conclude that the DeWitts had the right to a jury trial, and the trial court did not commit reversible error by refusing to strike the DeWitts' jury demand.

III. CPA's Testimony

American Family contends the trial court abused its discretion in allowing the CPA to testify regarding the accident's impact on Henderson's business and financial interests. American Family argues that because it was only seeking to recover noneconomic losses for Henderson's injury, this testimony violated CRE 403 because the risk of prejudice associated with its admission substantially outweighed its probative value. Alternatively, American Family argues the testimony was improper impeachment. We disagree.

A reviewing court may not reverse a trial court's decision to admit or exclude evidence absent a showing that the trial court abused its discretion. Wark v. McClellan, 68 P.3d 574, 578 (Colo.App.2003). When reviewing a trial court's admission of evidence in light of the CRE 403 balancing test, an appellate court must assign to the evidence the maximum probative value and the minimum unfair prejudice which a reasonable fact finder might attribute thereto. City of Englewood v. Denver Waste Transfer, L.L.C., 55 P.3d 191, 200 (Colo.App.2002). To overcome this presumption in favor of the trial court's ruling admitting evidence, the appellant must demonstrate that the decision was "manifestly arbitrary, unreasonable, or unfair." Wark, 68 P.3d at 578.

A. CRE 403 Probative Value vs. Prejudicial Effect

Pursuant to CRE 403, relevant evidence may be excluded at trial if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury. Here, the CPA's testimony regarding the finances of Henderson's business was relevant to the impact of Henderson's injuries. The extent of Henderson's injuries was central to the jury's determination of the amount of damages to award.

American Family suggests the testimony improperly influenced the jury's decision by signaling that Henderson was wealthy in contrast to the DeWitts, which compelled the jurors to feel sympathy for the DeWitts. However, the DeWitts' finances were never raised at trial, and American...