Hughes v. Essentia Ins. Co.
| Decision Date | 05 May 2022 |
| Docket Number | Court of Appeals No. 20CA1356 |
| Citation | 516 P.3d 31,2022 COA 49 |
| Parties | Beverly HUGHES, Plaintiff-Appellant, v. ESSENTIA INSURANCE COMPANY, Defendant-Appellee. |
| Court | Colorado Court of Appeals |
Bachus & Schanker, LLC, Corey A. Holton, Scot Kreider, Denver, Colorado, for Plaintiff-Appellant
Sutton | Booker P.C., Jacquelyn S. Booker, Rachel T. Jennings, Denver, Colorado, for Defendant-Appellee
Opinion by JUDGE WELLING
¶ 1 This is an appeal from a trial court's grant of summary judgment in an automobile insurance coverage dispute. The plaintiff, Beverly Hughes, was injured in a car accident and sought to recover uninsured/underinsured motorist (UM/UIM) benefits under her auto insurance policy from defendant, Essentia Insurance Company (Essentia), which insured her two classic cars. At the time of her injury, Hughes wasn't driving either of the classic cars and was, instead, driving her "regular use vehicle"—a vehicle she was required to have and separately insure in order to maintain her classic car insurance policy.
¶ 2 The classic car insurance policy explicitly excepted "regular use vehicles" from UM/UIM coverage, and therefore Essentia refused to provide Hughes with UM/UIM benefits for her injuries because she wasn't using one of the classic cars at the time of the accident. Hughes filed suit, alleging that she was entitled to the UM/UIM benefits under the Essentia classic car insurance policy regardless of what vehicle she was driving at the time of the accident.
¶ 3 Relying on Cruz v. Farmers Insurance Exchange , 12 P.3d 307 (Colo. App. 2000), the trial court concluded that a "regular use vehicle" exclusion in a classic car insurance policy adheres to both section 10-4-609, C.R.S. 2021, and the supreme court's interpretation of section 10-4-609, because Hughes was still protected through her "regular use vehicle" insurance policy.
¶ 4 This case raises an issue of first impression: whether an automobile insurance policy restriction that insureds can only access their UM/UIM benefits when they are injured in the covered vehicle is valid under section 10-4-609. We conclude that it isn't.
¶ 5 We reject the proposition that a vehicle-based restriction is consistent with section 10-4-609. Instead, we conclude that the trial court erred by failing to apply our supreme court's holding in DeHerrera v. Sentry Insurance Co. , 30 P.3d 167 (Colo. 2001), which provides that UM/UIM benefits cover persons injured by uninsured or underinsured motorists and can't be tied to the occupancy or use of a particular vehicle or type of vehicle.
¶ 6 Therefore, we reverse the summary judgment and remand the case to the trial court for further proceedings consistent with this opinion.
¶ 7 Hughes alleged that she was seriously injured in an automobile accident caused by another driver. At the time of the accident, Hughes was driving a Ford Edge owned by her employer but provided to her for her regular use. The driver who caused the accident was insured by an auto policy with bodily injury limits of $25,000. Hughes alleged that her injuries and losses substantially exceeded the negligent driver's insurance coverage limit.
¶ 8 At the time of the accident, Hughes was insured by two automobile insurance policies: one issued by Travelers Insurance (Travelers) and another issued by Essentia. Both policies provided for UM/UIM coverage. Hughes filed suit against both Travelers and Essentia for UM/UIM benefits. Hughes settled her claim against Travelers.
¶ 9 The Essentia policy insures two classic cars—a 1967 Ford Mustang and a 1930 Ford Model A. Under the Essentia policy, Hughes’ husband is the named insured and Hughes is a named driver. The Essentia policy requires that the policy holder own a "regular use vehicle," which must be "insured by a separate insurance policy which must be in effect for the entire time [the Essentia classic car] policy is in effect."
¶ 10 Essentia moved for summary judgment on Hughes’ claims, arguing that Hughes wasn't entitled to UM/UIM benefits under the Essentia policy because, at the time of the accident, she wasn't driving one of the covered cars (the 1967 Ford Mustang or the 1930 Ford Model A) but was driving her "regular use vehicle."
¶ 11 The trial court granted summary judgment in favor of Essentia, concluding that enforcing the Essentia policy as written is consistent with section 10-4-609 and Colorado public policy, and protects Hughes’ interest in two ways.
¶ 12 First, the trial court found that the Essentia policy is specifically for classic cars, and the Essentia policy states that the insured cars are not considered "regularly used vehicles." Thus, the clear language of the policy states that the insured classic cars wouldn't be regularly used, lowering the likelihood and risk of an accident and, in turn, lowering the insurance rates and premiums for cars in this category.
¶ 13 Second, the trial court reasoned, Hughes’ interest was protected through the Essentia policy's requirement that she maintain a separate and more substantial insurance policy for her regularly used vehicle.
¶ 14 Hughes contends that the trial court erred by granting Essentia's motion for summary judgment based on an erroneous application of Colorado law. Specifically, Hughes contends that the policy's exclusion of coverage when the insured is using a "regular use vehicle" (1) directly contradicts the plain language of section 10-4-609 and (2) violates Colorado public policy. We agree that the trial court erred.
¶ 15 Because we are reviewing the trial court's grant of summary judgment, we review each contention de novo, applying the same standard as the trial court. Poudre Sch. Dist. R-1 v. Stanczyk , 2021 CO 57, ¶ 12, 489 P.3d 743. A court may grant a motion for summary judgment when the pleadings and supporting documents establish that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See C.R.C.P. 56(c) ; Gibbons v. Ludlow , 2013 CO 49, ¶ 11, 304 P.3d 239.
¶ 16 An insurer must offer UM/UIM coverage in an automobile liability or motor vehicle liability policy. § 10-4-609(1)(a) ; DeHerrera , 30 P.3d at 173–74. If the insured purchases UM/UIM coverage, then an insurer must provide those UM/UIM benefits when an insured person is "legally entitled to recover damages from owners or operators of uninsured [or underinsured] motor vehicles." § 10-4-609(1)(a), (4). In other words, an insured is entitled to recover UM/UIM benefits when the at-fault driver either doesn't have any liability insurance or is underinsured. § 10-4-609(4) ; DeHerrera , 30 P.3d at 173–74.
¶ 17 UM/UIM coverage is "in addition to any legal liability coverage and shall cover the difference, if any, between the amount of the limits of any legal liability coverage and the amount of the damages sustained ... up to the maximum amount of the [UM/UIM] coverage obtained pursuant to this section." § 10-4-609(1)(c) ; see Mullen v. Metro. Cas. Ins. Co. , 2021 COA 149, ¶ 30, 507 P.3d 73. Put differently, UM/UIM coverage fills the gap between a tortfeasor's insurance liability limit and the amount of damages sustained by the insured, up to the amount of the UM/UIM coverage purchased. Mullen , ¶ 31 ; see also Jordan v. Safeco Ins. Co. of Am., Inc. , 2013 COA 47, ¶ 30, 348 P.3d 443.
¶ 18 By enacting section 10-4-609, the General Assembly's purpose was to guarantee the widespread availability to the insuring public of insurance protection against financial loss caused by motorists who are financially irresponsible by failing to carry adequate liability insurance. Bernal v. Lumbermens Mut. Cas. Co. , 97 P.3d 197, 201 (Colo. App. 2003). Put differently, the purpose of the UM/UIM statute is to ensure that individuals injured in an automobile accident will be compensated for their losses even if the other motorist is underinsured or uninsured. Peterman v. State Farm Mut. Auto. Ins. Co. , 961 P.2d 487, 492 (Colo. 1998).
¶ 19 Our supreme court interpreted the breadth of section 10-4-609 in DeHerrera . In that case, the named insured—DeHerrera—had a Sentry insurance policy that provided UM/UIM coverage to DeHerrera, her spouse, and her son who lived with her. 30 P.3d at 169. DeHerrera's son, while riding his off-road motorcycle, was injured in an accident involving a pickup truck driven by a third party. Id. The motorcycle wasn't a vehicle covered by the Sentry policy. Id. The third-party driver paid the limit of his automobile liability policy, and DeHerrera made a claim for underinsured motorist benefits under the Sentry policy. Id. at 168. Sentry denied coverage, asserting that its policy excluded from coverage persons occupying a vehicle other than a car. The trial court granted summary judgment in favor of Sentry, and DeHerrera appealed. Id. at 169. A division of this court affirmed the trial court's decision, concluding that the Sentry policy unambiguously denied UM/UIM coverage to an insured who is neither a pedestrian nor an occupant of a car.
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