Giampapa v. American Family Mut. Ins. Co.

Decision Date24 February 2003
Docket NumberNo. 00SC468.,00SC468.
Citation64 P.3d 230
PartiesGioacchino (Jack) GIAMPAPA, Petitioner, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Respondent.
CourtColorado Supreme Court

Walter H. Sargent, P.C. Walter H. Sargent, Colorado Springs, Colorado, Attorney for Petitioner.

Harris, Karstaedt, Jamison & Powers, P.C., A. Peter Gregory, Englewood, Colorado, Attorney for Respondent.

William Imig, Denver, Colorado, Amicus Curiae for National Association of Independent Insurers.

Patterson, Nuss & Seymour, P.C., Franklin D. Patterson, Brian C. Proffitt, Englewood, Colorado, Amicus Curiae for Colorado Defense Lawyers Association.

Collison & Bechtold, LLC, Joan M. Bechtold, Denver, Colorado, Amicus Curiae Plaintiffs Employment Lawyers Association.

Bradley A. Levin, Christine K. Biretta, Denver, Colorado, Amicus Curiae by The Colorado Trial Lawyers Association.

Chief Justice MULLARKEY delivered the Opinion of the Court.


This case clarifies the availability of non-economic damages when an insurer has willfully and wantonly breached its insurance contract.

When an insurer has wrongfully refused to pay benefits to an insured, the insured may, under certain circumstances, seek remedies under contract law, tort law, and the Colorado Auto Accident Reparations Act ("No Fault Act" or "Act"). §§ 10-4-701 et seq., 3 C.R.S. (2002). In this case, Gioacchino (Jack) Giampapa filed all three types of actions against the American Family Mutual Insurance Company and a jury awarded Giampapa damages under all claims. Under the contract claim specifically, the jury awarded Giampapa $900,000 in economic and non-economic "special damages" for American Family's willful-and-wanton breach of contract. This award did not duplicate any of Giampapa's tort or statutory damages. On appeal today is the issue of whether Giampapa may recover complete non-economic damages under his common law contract claim.

We hold that a complete range of non-economic damages is available when an insurer has willfully and wantonly breached its contract with an insured, so long as the damages are foreseeable at the time of contracting and the damages are a natural and probable result of the breach. We begin our discussion with a summary of the underlying facts of this case and an explanation of its complex procedural history. Next, we address the threshold issue of whether a common law contract claim can coexist with a statutory claim under the No Fault Act, and conclude that the No Fault Act does not preempt a contract claim. We then address contract claims specifically, explaining (1) the background of Colorado's existing "willful-and-wanton" rule; (2) why we retain the rule today; and (3) why the scope of the rule allows an insured to recover complete non-economic damages not limited to "mental anguish." Finally, we apply Colorado's willful-and-wanton rule to Giampapa and find that (1) the "law of the case doctrine" is inapplicable here; (2) his case satisfies the elements of the willful-and-wanton rule; and (3) the full $900,000 award stands because American Family has waived its section 13-21-102.5(3)(a), 5 C.R.S. (2001), statutory cap argument. Accordingly, we reverse the judgment of the court of appeals and reinstate Giampapa's original special damages award in its entirety.


In 1992, a vehicle traveling at 35-45 miles per hour rear-ended Giampapa while he was stopped at a stop sign. After the initial impact, a second vehicle crashed into the first vehicle, causing another collision. Giampapa suffered numerous serious injuries, including spinal fractures, head and neck injuries, torn knee cartilage, and severe numbness in his arms and legs.

At the time of the accident, the defendant American Family Mutual Insurance Company ("American Family") was Giampapa's automobile insurance carrier. Giampapa was covered under a "deluxe" insurance plan, for which he paid a higher premium and which provided additional benefits beyond the basic personal injury protection ("PIP") coverage required by the No Fault Act. Namely, American Family agreed to pay for medical care provider bills and for reasonable and necessary durable medical equipment.

Following the accident, Giampapa began a physical therapy regimen that included hydrotherapy, treadmill walking, and strengthening exercises. Giampapa's physicians believe that he probably will need to continue this physical therapy for the rest of his life. On his physicians' advice, Giampapa attended these physical therapy sessions three to five times a week and had to drive approximately sixty miles, round trip, to attend each of these sessions.

Soon, the strain of this frequent and time-consuming drive began to substantially aggravate his condition and to negate the positive effects of the therapy. In light of these circumstances, Giampapa's physicians concluded that he would be better off with a treadmill and weight machine for home use. Such home equipment would allow Giampapa to continue physical therapy without having to make the strenuous drive, thus his therapy would be more effective. His physicians also prescribed a special therapeutic chair that would allow him to sit without great pain, and a hot tub that had been effective in both improving his condition and alleviating his constant pain.

American Family was advised of the medical opinion that this home medical equipment was necessary to help Giampapa recover from his injuries, but American Family repeatedly refused to pay for such items. Furthermore, in addition to refusing to pay for the medical equipment, American Family failed to pay some of Giampapa's medical care provider bills and paid other bills months late. As a result, Giampapa received numerous collection notices from his medical providers about his failure to pay for their services.

All of these events had a devastating impact on Giampapa's life. Because of American Family's failure to pay the above benefits, Giampapa was required to continue his sixty-mile drives to his physical therapy sessions, three to five times a week. He consumed large amounts of pain medications to offset the diminished effectiveness of his physical therapy, and he endured substantial side effects from these medications. His personal relationships with his family degenerated as he became increasingly irritable and withdrawn, and his condition eventually forced him to shut down his business.

Giampapa ultimately filed suit against American Family for failing to make timely medical provider payments and for failing to pay for reasonable and necessary medical equipment. Giampapa argued that American Family's actions constituted a common law breach of contract, a statutory violation of the No Fault Act, and a tortious bad faith breach of contract. A jury trial found for Giampapa on all claims.

Under the contract action, the jury found that American Family had willfully and wantonly breached its contract with Giampapa by failing to pay for $10,574.59 worth of reasonable and necessary durable medical equipment, causing him to suffer an additional $900,000 in special damages. Furthermore, the jury found that American Family had willfully and wantonly failed to pay $9,336.74 in medical care provider bills in a timely fashion.

Because the jury found that American Family's conduct was willful and wanton, the trial court, pursuant to section 10-4-708(1.8) of the No Fault Act, 3 C.R.S. (2001), trebled "the amount of unpaid benefits recovered in the proceeding." Specifically, the trial court awarded Giampapa three times the amount of the actual value of the medical equipment and three times the amount of the actual value of unpaid medical care provider bills.

Finally, under the tort action, the jury found that American Family had breached the insurance contract in tortious bad faith, entitling Giampapa to $100,000 in economic damages and $200,000 in non-economic damages. Neither amount duplicated the special damages under the contract claim. The jury also determined that American Family's breach was willful and wanton beyond a reasonable doubt, thus warranting punitive damages in the amount of $300,000.

After the trial court issued its order, this case began a long and convoluted journey through an appeal, a limited retrial, and a second appeal. We now summarize this complex procedural history.

First, American Family appealed the $900,000 special damages award on the basis that the No Fault Act is the exclusive remedy for an insurer's willful-and-wanton breach of an automobile insurance contract. The court of appeals rejected this argument, allowing Giampapa to recover special damages under common law contract principles. Giampapa v. American Family Mut. Ins. Co., 919 P.2d 838, 840-41 (Colo.App.1995) ["Giampapa I"]. However, the court of appeals also held, sua sponte, that its holding in Decker v. Browning-Ferris Indus. of Colo., Inc., 903 P.2d 1150 (Colo.App.1995) ["Thomas Decker I"], limited the recovery of non-economic special damages to "mental anguish" caused by the willful-and-wanton breach of contract. Giampapa I, 919 P.2d at 841. Giampapa's $900,000 special damages award had included not only lost earnings and mental anguish, but also physical pain, impairment of earning capacity, and impairment of quality of life. Therefore, based on Thomas Decker I, the court vacated the $900,000 award and remanded the case for a limited new trial to determine damages on the segregated issue of lost earnings and mental anguish.1

This court denied cross-petitions for certiorari review of Giampapa I. American Family Mut. Ins. Co. v. Giampapa, No. 96SC43, 1996 Colo. LEXIS 203 (Colo. June 17, 1996).

At retrial, the jury awarded Giampapa $125,000 on the sole issue of mental anguish. The trial court reduced this award to $50,000 pursuant to section 13-21-102.5(3)(a), 5 C.R.S. (2001), which generally limits total non-economic damages in civil suits to $250,000.2 Under this...

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