Bailey v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 06 September 2018 |
| Docket Number | Court of Appeals No. 17CA1200 |
| Citation | 429 P.3d 109 |
| Parties | Bruce BAILEY, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee. |
| Court | Colorado Court of Appeals |
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
Opinion by JUSTICE MARTINEZ*
¶ 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.
¶ 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, 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.
¶ 10 The trial court granted the motion in a thorough, well-reasoned opinion. The other driver's insurance company paid the entire judgment.
¶ 11 Plaintiff contends that the trial court erred in granting State Farm's motion for entry of judgment. We disagree.
¶ 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, 390 P.3d 398.
¶ 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, 395 P.3d 741. "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.
¶ 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:
¶ 16 In Jordan v. Safeco Insurance Company of America, Inc. , 2013 COA 47, ¶ 30, 348 P.3d 443, a division of this court interpreted how these 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 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, 353 P.3d 924. 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 claimed damages exceeding the negligent driver's liability coverage. Id. at ¶ 15.
¶ 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.
¶ 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 waived by not presenting it before trial. See Dinosaur Park Invs., L.L.C. v. Tello , 192 P.3d 513, 517 (Colo. App. 2008) (). 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, 351 P.3d 559. 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...
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