Brennan v. Farmers Alliance Mut. Ins. Co., 96CA1807

• Decision Date: 08 January 1998
• Docket Number: No. 96CA1807,96CA1807
• Parties: 98 CJ C.A.R. 69 Richard BRENNAN, individually and on behalf of Joshua Brennan, a minor; Brenda Brennan, individually and on behalf of Joshua Brennan, a minor; and Joshua Brennan, a minor, Plaintiffs-Appellants and Cross-Appellees, v. FARMERS ALLIANCE MUTUAL INSURANCE COMPANY, Defendant-Appellee and Cross-Appellant. . II
• Court: Colorado Court of Appeals

Page 550

961 P.2d 550

98 CJ C.A.R. 69

Richard BRENNAN, individually and on behalf of Joshua

Brennan, a minor; Brenda Brennan, individually and on behalf of Joshua Brennan, a minor; and Joshua Brennan, a minor, Plaintiffs-Appellants and Cross-Appellees, v. FARMERS ALLIANCE MUTUAL INSURANCE COMPANY,

Defendant-Appellee and Cross-Appellant.

No. 96CA1807.

Colorado Court of Appeals,

Div. II.

Jan. 8, 1998.

Rehearing Denied Feb. 5, 1998.

Certiorari Denied Aug. 24, 1998.

Montgomery, Kolodny, Amatuzio, Dusbabek & Parker, L.L.P., C. Michael Montgomery, Peter S. Dusbabek, Fort Collins, for Plaintiffs-Appellants and Cross-Appellees.

Anstine, Hill, Richards & Simpson, Ronald C. Hill, Michael S. Simpson, Denver, for Defendant-Appellee and Cross-Appellant.

Kennedy & Christopher, P.C., John R. Mann, Denver, for Amicus Curiae Alliance of American Insurers.

Opinion by Judge DAVIDSON.

This action arose from an auto-pedestrian accident involving plaintiff, Joshua Brennan. Seeking additional personal injury protection (PIP) benefits under the Colorado Auto Accident Reparations Act, § 10-4-701 et seq., C.R.S.1997 (the No-Fault Act), Joshua's parents, plaintiffs Richard and Brenda Brennan, individually and on behalf of their son, filed suit against defendant, Farmers Alliance Mutual Insurance Company (Farmers). On cross-motions for summary judgment, the trial court dismissed several claims and entered judgment on the remaining claims in favor of plaintiffs. Farmers appeals and plaintiffs cross-appeal from these rulings. We affirm in part, vacate in part, and remand.

In October 1991, Joshua Brennan was severely injured when he was struck by a motor vehicle while crossing the street. The vehicle was insured under a policy issued by Farmers to the driver's parents, who are not parties to this appeal. In compliance with the mandatory coverage requirements of the No-Fault Act, the policy provided for coverage of $100,000 for Personal Injury Protection (PIP) benefits which were timely paid to the Brennans.

Section 10-4-710, C.R.S.1997, also provides to an insured the option of purchasing additional PIP coverage, and the policy here included an endorsement which provided for these extended benefits. In July 1995, claiming that these additional benefits (1) applied to Joshua Brennan and (2) provided unlimited coverage, plaintiffs filed suit against Farmers, alleging breach of contract, bad faith breach of contract, fraud, treble damages, and attorney fees. In response, Farmers asserted that the extended PIP provision of the policy did not include pedestrians and, since Joshua Brennan was injured as a pedestrian, it had no obligation to provide any additional payment to the Brennans.

On cross-motions for summary judgment, the trial court agreed with Farmers that the extended PIP provision of the insurance policy did not actually cover pedestrians. However, because, in its view, such coverage was required under § 10-4-710, the court reformed the policy to provide such benefits. The court rejected plaintiffs' argument that the additional PIP coverage was unlimited in amount and entered judgment for $90,900, the difference between the $200,000 maximum aggregate amount provided by the policy, and the $109,100 already paid to the Brennans. The court also dismissed plaintiffs' remaining claims, awarded interest from the date of plaintiffs' complaint, and denied their request for attorney fees. This appeal and cross-appeal followed.

The pivotal question presented here is whether the No-Fault Act requires that extended PIP benefits purchased pursuant to § 10-4-710 be payable to a pedestrian. We conclude that the terms of the No-Fault Act require that the insurer offer such coverage. Hence, because such coverage was not offered nor included in the policy here, the trial court properly reformed the policy to include such coverage. Also, although we disagree somewhat with the trial court's determination of interest and costs, we agree with its resolution of plaintiffs' remaining claims.

I.

A.

The No-Fault Act requires that a complying policy include mandatory PIP benefits. Specifically, § 10-4-706(1), C.R.S.1997, as relevant here, requires a carrier to provide:

(b)(I) Compensation without regard to fault, up to a limit of fifty thousand dollars per person for any one accident, for payment of all reasonable and necessary expenses (c)(I) Compensation without regard to fault up to a limit of fifty thousand dollars per person for any one accident within ten years after such accident for payment of the cost of rehabilitation procedures or treatment and rehabilitative occupational training necessary because of bodily injury arising out of the use or operation of a motor vehicle.

for medical ... and nonmedical remedial care and treatment ... performed within five years after the accident for bodily injury arising out of the use or operation of a motor vehicle....

Section 10-4-706, C.R.S.1997, does not indicate to whom these coverages apply. That information is set forth, however, in § 10-4-707(1), C.R.S.1997, in which the coverages described in § 10-4-706 are applied to four groups of people: 1) the named insured, 2) resident relatives of the named insured, 3) passengers occupying the insured's vehicle with the consent of the insured, and 4) pedestrians who are injured by the covered vehicle. See Hall v. Trinity Universal Insurance Co., 660 P.2d 1298 (Colo.App.1982), aff'd, 690 P.2d 227 (Colo.1984).

In addition to the mandatory minimum PIP coverages required by §§ 10-4-706 and 10-4-707, C.R.S.1997, the No-Fault Act also provides for supplemental PIP coverage. Purchase of this coverage is at the option of the named insured. Specifically, § 10-4-710(2)(a), C.R.S.1997, provides:

Every insurer shall offer for inclusion in a complying policy, in addition to the coverages described in section 10-4-706, at the option of the named insured: (I) Compensation of all expenses of the type described in section 10-4-706(1)(b) without dollar or time limitation; or (II) Compensation of all expenses of the type described in section 10-4-706(1)(b) without dollar or time limitations and payment of benefits equivalent to eighty-five percent of loss of gross income per week from work the injured person would have performed had such injured person not been injured during the period commencing on the date after the date of the accident without dollar or time limitations.

Farmers argues that § 10-4-710(2)(a) does not require extended PIP coverage to be provided to pedestrians. Emphasizing that, unlike the coverages mandated by § 10-4-706, the purchase of extended PIP coverage is entirely optional with the named insured, Farmers points out that § 10-4-710, C.R.S.1997, does not specify to whom these coverages are applicable. It is only in § 10-4-707(1) that the No-Fault Act lists the persons eligible to receive coverage, and § 10-4-707(1) refers only to coverages described in § 10-4-706. Therefore, according to Farmers, only the minimum PIP coverages required by § 10-4-706(1) must be extended to pedestrians. We disagree.

The purpose of the No-Fault Act is to avoid inadequate compensation to all victims of automobile accidents. Coffman v. State Farm Mutual Automobile Insurance Co., 884 P.2d 275 (Colo.1994); see § 10-4-702, C.R.S.1997 (purpose of No-Fault Act is to provide adequate benefits to "victims of automobile accidents" and "to persons injured in accidents"); § 10-4-706 (provides coverage for "bodily injury or death" arising out of the use of a motor vehicle). The No-Fault Act is to be liberally construed to further its remedial and beneficent purposes. See Travelers Indemnity Co. v. Barnes, 191 Colo. 278, 552 P.2d 300 (Colo.1976).

Although Farmers correctly notes that § 10-4-710(2)(a) does not list nor refer to persons who are eligible for coverage, when this section is read in context, it is apparent that the extended coverages offered there must apply to the categories of persons listed in § 10-4-707(1). Specifically, in § 10-4-710, extended coverage is to be made available "in addition to the coverage described in § 10-4-706." The "types" of extended coverage to be provided are the "types" described in § 10-4-706(1)(b). And, the coverages provided in § 10-4-706(1)(b) apply without distinction to all categories of persons listed in § 10-4-707(1). Thus, by the plain terms of these provisions, § 10-4-710 describes an option to purchase coverage, but at higher limits, for the same persons and under the same conditions applicable to mandatory basic PIP coverage.

Moreover, where applicable, the coverage provisions of § 10-4-710 refer not to an "insured," a term which is specifically defined in § 10-4-703, C.R.S.1997, and which excludes pedestrians, but to "an injured person." And, although the term "insured" is defined in the No-Fault Act, the term "injured person" is not.

When the General Assembly defines a term in a statute, such term must be given its statutory meaning. See R.E.N. v. City of Colorado Springs, 823 P.2d 1359 (Colo.1992). Conversely, we find significant the General Assembly's choice, in § 10-4-710, of the more general, non-defined term, "injured person," in lieu of the specific, defined term, "insured." Compare § 10-4-710 (extending coverage to an "injured person") and § 10-4-702 (purpose of No-Fault Act is to protect "persons injured") with § 10-4-706(2)(b), C.R.S.1997 (limiting PIP managed care option to the "named insured, resident spouse, resident relative, and permissive driver"). See also § 10-4-706(1)(b)(I) ("benefits shall be available to the insured or injured person").

Consequently, we read the term "injured person" as used in § 10-4-710(2) to encompass any injured person otherwise covered as set forth in § 10-4-707(1).

B.

Nevertheless, Farmers argues, the legislative purpose of § 10-4-710 is to provide policyholders with a wider range of choices. And, it asserts, most insureds do not want to pay additional premiums for coverage...