Colorado Ins. Guar. Ass'n v. Menor

• Decision Date: 03 May 2007
• Citation: 166 P.3d 205
• Docket Number: 05CA2483
• Parties: COLORADO INSURANCE GUARANTY ASSOCIATION, Plaintiff-Appellant, v. Michael L. MENOR, Defendant-Appellee.
• Court: Colorado Court of Appeals

166 P.3d 205

COLORADO INSURANCE GUARANTY ASSOCIATION, Plaintiff-Appellant, v. Michael L. MENOR, Defendant-Appellee.

No. 05CA2483.

Colorado Court of Appeals. Div. II.

May 3, 2007.

McCrea & Buck, LLC, Bruce B. McCrea, Brett R. Parnes, Denver, Colorado, for Plaintiff-Appellant.

Buescher Goldhammer Kelman & Dodge, P.C., Shelley P. Dodge, Denver, Colorado; Law Office of G. Michael Schuyler, P.C., G. Michael Schuyler, Greenwood Village, Colorado, for Defendant-Appellee.

Opinion by Judge LOEB.

Plaintiff, Colorado Insurance Guaranty Association (CIGA), appeals the judgment of the district court dismissing its complaint against defendant, Michael L. Menor, pursuant to C.R.C.P. 12(b). We reverse and remand for further proceedings on CIGA's complaint.

In 1997, Menor, who was employed by Sunstate Equipment, was driving in a vehicle owned and insured by Sunstate, when a vehicle driven by an uninsured motorist veered out of control and into the path of Menor's vehicle, severely injuring him.

Menor filed for workers' compensation benefits under Sunstate's insurance policy with Industrial Indemnity Company, and Industrial admitted liability for such benefits. In 2002, Fremont Indemnity Company, which had acquired Industrial and had succeeded to its obligations under the workers' compensation policy, filed a final admission for liability (FAL) for permanent total disability benefits and medical benefits.

In 2003, Fremont became insolvent. Pursuant to the Colorado Insurance Guaranty Association Act, § 10-4-501, et seq., C.R.S. 2006 (the Act), CIGA assumed responsibility for the claim and continued to pay workers' compensation benefits to Menor thereafter. See Alexander v. Indus. Claim Appeals Office, 42 P.3d 46, 47 (Colo.App.2001) ("CIGA is a nonprofit, unincorporated legal entity created by the [Act] . . . to create a means for insureds to recover on claims against insolvent insurers. . . . CIGA steps into the shoes of the insolvent insurer to pay claims within the coverage and limits of the insurance policy.").

Sunstate also had an insurance policy providing uninsured and underinsured motorist (UM/UIM) coverage with St. Paul Fire and Marine Insurance Company. In 2000, Menor filed a claim with St. Paul for UM/UIM benefits because the driver whose negligence caused the accident and his injuries was uninsured. Menor and St. Paul apparently agreed to resolve that claim through arbitration. In June 2000, Menor also filed a complaint against St. Paul in the Pueblo County District Court alleging entitlement to UM/UIM benefits under the St. Paul policy.

In February 2001, Menor, Sunstate, and St. Paul entered into a settlement regarding Menor's claim under the St. Paul policy for a lump sum payment of $265,000, and periodic payments of $33,700, to be paid annually beginning in June 2012 and guaranteed to last for 20 years, until June 2031. The settlement agreement was silent as to any allocation or apportionment between economic and noneconomic damages. Also, there is no indication in the record that the settlement was submitted to the district court for approval.

In November 2003, CIGA filed a petition with the Division of Administrative Hearings to modify, terminate, or suspend workers' compensation benefits based on § 10-4-512, C.R.S.2006, the nonduplication of recovery provision of the Act. CIGA asserted entitlement to a statutory offset, pursuant to § 10-4-512(1), C.R.S.2006, that would reduce Menor's workers' compensation benefits based on his UM/UIM insurance settlement with St. Paul to the extent the settlement was for economic damages.

Following a hearing, an administrative law judge (ALJ) found that the nonduplication of recovery provision was applicable and granted CIGA's petition. However, the ALJ found that she did not have jurisdiction to determine the amount of the offset, finding instead that the "amount of offset, if any, must be determined in a Jorgensen hearing by the trial court in the tort case, by apportionment of economic and noneconomic damages." See Colo. Comp. Ins. Auth. v. Jorgensen, 992 P.2d 1156 (Colo.2000).

CIGA then filed this action in the Pueblo County District Court, pursuant to § 10-4-512, requesting a judgment that the amounts of Menor's prior settlement with St. Paul "were for economic damages, thereby eliminating CIGA's obligations to Menor for workers' compensation benefits."

Menor moved to dismiss CIGA's complaint under C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction and C.R.C.P. 12(b)(5) for failure to state a claim upon which relief can be granted.

The district court granted the motion to dismiss based on lack of subject matter jurisdiction. The district court did not rule on Menor's alternative C.R.C.P. 12(b)(5) contention. This appeal followed.

I. Subject Matter Jurisdiction

CIGA contends the district court erred in dismissing its complaint under C.R.C.P. 12(b)(1) on the ground that the court lacked subject matter jurisdiction over the case. We agree.

We review de novo a district court's legal conclusions on a motion to dismiss under C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction. Ashton Props., Ltd. v. Overton, 107 P.3d 1014, 1017 (Colo.App.2004).

A court must have jurisdiction over the parties and the subject matter of the issue to be decided if its judgment is to be valid. In re Marriage of Stroud, 631 P.2d 168, 170 (Colo.1981). "Subject matter jurisdiction concerns the court's authority to deal with the class of cases in which it renders judgment." In re Marriage of Stroud, supra, 631 P.2d at 170.

Subject matter jurisdiction is defined as a court's power to resolve a dispute in which it renders judgment. Ashton Props., Ltd. v. Overton, supra. A court has subject matter jurisdiction if "the case is one of the type[s] of cases that the court has been empowered to entertain by the sovereign from which the court derives its authority." Horton v. Suthers, 43 P.3d 611, 615 (Colo.2002) (quoting Paine, Webber, Jackson & Curtis, Inc. v. Adams, 718 P.2d 508, 513 (Colo.1986)).

"The Colorado Constitution vests district courts with general subject matter jurisdiction in civil cases." Ashton Props., Ltd. v. Overton, supra, 107 P.3d at 1017; see Colo. Const. art. VI, § 9(1) ("The district courts shall be trial courts of record with general jurisdiction, and shall have original jurisdiction in all civil, probate, and criminal cases, except as otherwise provided herein, and shall have such appellate jurisdiction as may be prescribed by law."). As courts of general jurisdiction, the district courts in Colorado have the authority to consider questions of law and of equity and to award legal and equitable remedies. Paine, Webber, Jackson & Curtis, Inc. v. Adams, supra, 718 P.2d at 513; Ashton Props., Ltd. v. Overton, supra, 107 P.3d at 1017.

Both CIGA and Menor agree the ALJ correctly concluded that she did not have jurisdiction to apportion the settlement among Menor, St. Paul, and Sunstate, because the UM/UIM settlement did not involve workers' compensation benefits. Cf. MGM Supply Co. v. Indus. Claim Appeals Office, 62 P.3d 1001, 1004 (Colo.App.2002) (ALJs have jurisdiction to decide workers' compensation cases).

CIGA relies on Jorgensen, a case interpreting subrogation rights under § 8-41-203, C.R.S.2006, of the Workers' Compensation Act, for the proposition that jurisdiction to review and apportion settlement proceeds lies with the court that has jurisdiction over the tort claim. Colo. Comp. Ins. Auth. v. Jorgensen, supra, 992 P.2d at 1160; see § 8-41-203 (providing that a workers' compensation insurer is subrogated to the injured claimant's rights to recover damages against a tortfeasor). Under Jorgensen, when a settlement involves an insurer's subrogation rights with respect to economic damages recovered from a tortfeasor by an injured worker pursuant to § 8-41-203, the insurer may ask the court to scrutinize the settlement, and the court may hold a hearing to apportion economic and noneconomic damages. Colo. Comp. Ins. Auth. v. Jorgensen, supra, 992 P.2d at 1166.

Menor contends that the Pueblo County District Court is not the tribunal that had jurisdiction over the UM/UIM insurance settlement between Menor, St. Paul, and Sunstate, because neither CIGA nor its predecessor, Fremont, participated in the settlement. Menor points out that, when Fremont filed its FAL in 2002, it made no claim of offset against the UM/UIM insurance settlement, and CIGA brought this lawsuit several years after the tort and UM/UIM claims were actually settled. Menor further asserts that the complaint he filed against St. Paul was never served and was dismissed for failure to prosecute, and that because the UM/UIM settlement was never filed with or approved by the court, the district court did not take jurisdiction over it. Menor thus argues that Jorgensen is distinguishable from this case, both because in Jorgensen, the district court that actually approved the settlement later apportioned the settlement proceeds, and because the workers' compensation insurer there had intervened in the personal injury action to protect its subrogation rights. In Menor's view, under Jorgensen, a district court only has the power to review a settlement for apportionment or enforce a subrogation right when the party seeking the right has been involved in the original tort claim or settlement and when proceedings involving the tort claim or settlement have already taken place in the district court.

We reject Menor's view as being too narrow an interpretation of the subject matter jurisdiction of district courts in Colorado, and we thus agree with CIGA that the district court had subject matter jurisdiction over this case.

Here, CIGA's complaint sought to enforce its statutory right under § 10-4-512(1) of the Act to reduce an amount payable on a covered claim to the extent it is duplicative of a recovery under Menor's UM/UIM insurance policy.

As a preliminary matter, we first consider...