Estate of Casper v. Guarantee Trust Life Ins. Co.

• Decision Date: 17 November 2016
• Docket Number: Court of Appeals No. 14CA2423
• Citation: 421 P.3d 1184
• Court: Colorado Court of Appeals
• Parties: Estate of Michael Dean CASPER, by and through Nick Casper, personal representative, Plaintiff–Appellee, v. GUARANTEE TRUST LIFE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellant.

421 P.3d 1184

Estate of Michael Dean CASPER, by and through Nick Casper, personal representative, Plaintiff–Appellee,

v.GUARANTEE TRUST LIFE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellant.

Court of Appeals No. 14CA2423

Colorado Court of Appeals, Division II.

Announced November 17, 2016

Rehearing Denied December 15, 2016

Levin Rosenberg PC, Bradley A. Levin, Nelson A. Waneka, Denver, Colorado; Keating Wagner Polidori Free PC, Zachary C. Warzel, Denver, Colorado, for Plaintiff–Appellee

Hall & Evans, LLC, Kevin E. O'Brien, Alan Epstein, Malcolm S. Mead, Cristin J. Mack, Denver, Colorado, for Defendant–Appellant

Opinion by JUDGE HARRIS

¶ 1 Under Colorado law, the death of a plaintiff in a personal injury action extinguishes his entitlement to recover noneconomic and punitive damages. But what happens when the plaintiff dies after those damages have been awarded by a jury but before the district court has entered a judgment? This question had never been answered in Colorado.

¶ 2 Michael Dean Casper bought a cancer insurance policy from defendant, Guarantee Trust Life Insurance Company (GTL); when he was diagnosed with cancer seven months later, GTL refused to pay his claims. Casper sued GTL for breach of contract, bad faith breach of an insurance contract, and statutory unreasonable denial of benefits. A jury awarded him more than $4,500,000 in punitive and other noneconomic damages.

¶ 3 The trial court immediately entered an oral order making the verdict a judgment. But Casper died nine days later, before the court had reduced its oral order entering judgment to a written judgment as required by C.R.C.P. 58. After resolving attorney fees and interest issues, the court entered a signed and dated written judgment in favor of plaintiff, the Estate of Michael Dean Casper (the Estate), in the amount of $1,997,996.40, nunc pro tunc to the date of verdict.

¶ 4 GTL says that as a matter of law the delay in entering the written judgment means that under the Colorado survival statute, § 13–20–101, C.R.S. 2016, the Estate is entitled only to the $50,000 awarded as economic damages for the breach of contract claim. We disagree. Because the verdict resolved the merits of the case, and judgment would necessarily follow, the survival statute did not extinguish Casper's right to damages. We therefore affirm the judgment.

I. Background

¶ 5 Casper bought a "First Diagnosis" cancer insurance policy in August 2010. According to his testimony, he was sold the policy by Joanna Gaylord, a door-to-door insurance salesperson who worked for Platinum Supplemental Insurance, Inc. (Platinum), an agency with exclusive rights to sell GTL's policy. Casper listened to Gaylord's presentation but expressed concern about his ability to qualify for benefits, based on prior arterial blockages in his legs. Gaylord assured him that, as long as he had not been diagnosed with, or been advised to seek treatment for, AIDS, cancer, a heart attack, or a stroke, he would be covered by the policy. Casper answered truthfully that he had not been diagnosed with or advised to seek treatment for any of those conditions. He filled out the application, authorized GTL to obtain ten years' of medical records, and agreed to monthly electronic premium payments. A month later, GTL approved his application.

¶ 6 In March 2011, Casper was diagnosed with prostate cancer. He submitted claims to GTL, which denied them. According to page twelve of the policy, cancer was not a covered condition "when advice or treatment is received ... prior to the Effective Date, and such advice or treatment results in the First Diagnosis of Cancer." GTL maintained that Casper had received such advice, in connection with his treatment for a non-cancerous condition involving an enlarged prostate, which had ultimately resulted in the detection of Casper's prostate cancer.

¶ 7 In 2012, Casper sued GTL for breach of contract, bad faith breach of insurance contract, and unreasonable denial of benefits in violation of sections 10–3–1115 and – 1116, C.R.S. 2016. He also sued, but then settled with, Gaylord and Platinum on claims for negligent misrepresentation and fraud based on their role in marketing the policy on behalf of GTL.

¶ 8 Trial was originally scheduled to begin in February 2014. But in October 2013, the court, on its own motion, reset the trial to July 2014.

¶ 9 During trial, the court directed a verdict for Casper on his breach of contract claim, finding that the exclusion provision was ambiguous and, therefore, as a matter of law, the policy had to be construed as covering Casper's cancer. On July 15, 2014, the jury returned a verdict in favor of Casper on all claims. It awarded Casper $50,000 for breach of contract, $50,000 for unreasonable denial of benefits, $150,000 in economic damages for bad faith breach of the contract, $550,000 in noneconomic damages for bad faith breach of the contract, and $4,000,000 in punitive damages.¹

¶ 10 Because Casper was in hospice care by then, his lawyer requested that the court immediately enter judgment on the verdict to avoid any limitation on recovery under Colorado's survival statute. The court attempted to oblige, announcing that it was entering judgment. It directed the clerk to receive and enter the verdict in the court registry. Then it entered an unsigned minute order reflecting that it had ordered judgment to be entered.

¶ 11 When Casper died nine days later, GTL moved to set aside the verdict in part and to limit the recoverable damages. It argued that because attorney fees and prejudgment interest had not been determined and statutory caps had not been applied, Casper had died before final judgment had been entered. Thus, according to GTL, the statutory bad faith denial of benefits claim was extinguished, as was Casper's entitlement to recover noneconomic and punitive damages. GTL requested that the court enter final judgment on the breach of contract claim in the amount of $50,000. In the alternative, GTL requested that the court impose statutory caps on the noneconomic and punitive damages.

¶ 12 Casper's attorneys, in the meantime, moved to substitute the Estate as plaintiff, and then they requested an award of attorney fees under section 10–3–1116 and prejudgment interest to July 15, 2014, the date the court had orally entered judgment.

¶ 13 The district court denied GTL's motion to set aside the verdict, ruling that the survival statute was not implicated because Casper had died after entry of judgment on the verdict. It did, however, grant GTL's motion to enforce the statutory caps on damages.

¶ 14 On October 30, 2014, after reducing the noneconomic and punitive damages pursuant to statutory caps and awarding approximately one-third of the fees requested by Casper's attorneys, the district court entered an amended final judgment, nunc pro tunc to July 15, 2014, in favor of the Estate in the amount of $1,997,996.40.

¶ 15 On appeal, GTL contends that the district court erred by failing to vacate all of the damages (with the exception of the $50,000 breach of contract damages), by characterizing the attorney fees awarded under section 10–3–1116 as compensatory damages for purposes of calculating punitive damages, by failing to further reduce the attorney fees award, and by instructing the jury on an insurance regulation related to the standard of care for the sale and marketing of insurance policies. We take up each of these contentions, reject them, and therefore affirm.

II. Colorado's Survival Statute

¶ 16 At common law, claims based on personal torts abated upon the death of either party. To ameliorate the harsh effects of this rule, Colorado, like most other states, enacted a survival statute in the late 1800s. Its current iteration— section 13–20–101 —provides:

All causes of action, except actions for slander or libel, shall survive and may be brought or continued notwithstanding the death of the person in favor of or against whom such action has accrued, but punitive damages shall not be awarded nor penalties adjudged after the death of the person against whom such punitive damages or penalties are claimed; and, in tort actions based upon personal injury, the damages recoverable after the death of the person in whose favor such action has accrued shall be limited to loss of earnings and expenses sustained or incurred prior to death and shall not include damages for pain, suffering, or disfigurement, nor prospective profits or earnings after date of death. An action under this section shall not preclude an action for wrongful death under part 2 of article 21 of this title.

¶ 17 GTL contends that because Casper died before a final, appealable judgment was entered, the Estate may recover only the $50,000 awarded as economic damages.

A. Standard of Review and Principles of Interpretation

¶ 18 Resolution of this case turns on the interpretation of a statute, an issue of law subject to de novo review. Kyle W. Larson Enters., Inc. v. Allstate Ins. Co. , 2012 COA 160M, ¶ 9, 305 P.3d 409.

¶ 19 Our primary task when construing a statute is to ascertain and give effect to the legislature's intent based on its chosen language. Young v. Brighton Sch. Dist. 27J , 2014 CO 32, ¶ 11, 325 P.3d 571 ; see also State v. Nieto , 993 P.2d 493, 502 (Colo. 2000) ("Legislative intent is the polestar of statutory construction." (quoting Schubert v. People , 698 P.2d 788, 793 (Colo. 1985) )). We give words and phrases their plain and ordinary meanings, and we read the statute as a whole, giving consistent, harmonious, and sensible effect to all of its parts. Young , ¶ 11. We must choose a construction that serves the purpose of the legislative scheme and avoids absurd results. Town of Erie v. Eason , 18 P.3d 1271, 1276 (Colo. 2001).

¶ 20 If the statutory language is unambiguous, we apply it as written. Reno v. Marks , 2015 CO 33, ¶ 20, 349 P.3d 248. If a statute is ambiguous, however, we may consider indicia of legislative intent such as the object to be...