Jaimes v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 31 January 2002
• Docket Number: No. 00CA0042.,00CA0042.
• Citation: 53 P.3d 743
• Parties: Ignacio JAIMES, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellee.
• Court: Colorado Court of Appeals

53 P.3d 743

Ignacio JAIMES, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellee.

No. 00CA0042.

Colorado Court of Appeals, Div. V.

January 31, 2002.

Certiorari Denied August 19, 2002.

Thomas D. McFarland, Golden, CO, for Plaintiff-Appellant.

Bayer, Carey & McGee, P.C., Gary L. Palumbo, Peter M. Spiessbach, Terry L. Lutts, Denver, CO, for Defendant-Appellee.

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

Richard W. Laugesen, Denver, CO, for Amicus Curiae Richard W. Laugesen.

Opinion by Judge ROY.

Plaintiff, Ignacio Jaimes (insured), appeals the trial court's judgment in favor of defendant, State Farm Mutual Automobile Insurance Company (insurer). We reverse and remand.

In Jaimes v. State Farm Mutual Automobile Insurance Co., (Colo.App. No. 00CA0042, Mar. 29, 2001)(not selected for official publication), we addressed the validity of the exclusion in a motor vehicle insurance policy limiting coverages, including uninsured/underinsured (UM/UIM) coverage, to insured's injuries while occupying a vehicle insured under that policy. We concluded that the exclusion was valid, enforceable, and applied to the circumstances presented.

Thereafter, the supreme court granted the insured's petition for a writ of certiorari, vacated our judgment, and remanded with directions that the matter be reconsidered in light of DeHerrera v. Sentry Insurance Co., 30 P.3d 167 (Colo.2001). Upon reconsideration we now conclude that the exclusion is void.

Insured owned a Nissan and his wife owned a Subaru, both of which were insured under separate policies by insurer. The Nissan policy had a UM/UIM limit of $25,000 per person, and the Subaru policy had a UM/UIM limit of $100,000 per person.

While he was driving the Nissan, insured was involved in an accident with an underinsured motorist. Insured settled with the underinsured motorist for $25,000, that motorist's liability policy limit, with the consent of insurer. Because the settlement amount equaled the UM/UIM policy limit for the policy insuring the Nissan and was subject to setoff, no UM/UIM benefits were payable under the Nissan policy.

Insured then sought UM/UIM benefits under the policy insuring the Subaru. Insurer admitted that the insured was "an insured" under the Subaru policy, because he is married to and resides with the named insured at the same residence. However, insurer denied coverage on the grounds that the "owned but not insured under this policy" exclusion in the Subaru policy excluded coverage because insured was injured while driving a vehicle owned by a person who was an insured under the Subaru policy but the vehicle was not insured under the Subaru policy.

Insured then commenced this declaratory judgment proceeding, asserting that the exclusion in the Subaru policy violates § 10-4-609, C.R.S.2001. Alternatively, insured asserted that the exclusion is inconsistent with the "other coverage" clause contained in the Subaru policy and, therefore, must be interpreted in his favor.

The exclusion of the UM/UIM coverage in the Subaru policy states:

THERE IS NO COVERAGE

....

2. FOR BODILY INJURY TO AN INSURED:

a. WHILE OCCUPYING, OR

b. THROUGH BEING STRUCK BY A MOTOR VEHICLE OWNED BY YOU, YOUR SPOUSE OR ANY RELATIVE IF IT IS NOT INSURED FOR THIS COVERAGE UNDER THIS POLICY. (emphasis in original)

Section 10-4-609(1)(a), C.R.S.2001, requires for UM/UIM coverage as follows:

No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle licensed for highway use in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in section 42-7-103(2), C.R.S., under provisions approved by the commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom; except that the named insured may reject such coverage in writing.

The insurer filed a motion for summary judgment. The trial court, relying on Arguello v. State Farm Mutual Automobile Insurance Co., 42 Colo.App. 372, 599 P.2d 266 (1979), and Williams-Diehl v. State Farm Fire & Casualty Co., 793 P.2d 587 (Colo.App.1989), granted the motion. The court concluded that there was no ambiguity or conflict in the Subaru policy and that the exclusion does not violate § 10-4-609 or public policy. This appeal followed.

I.

We first address the "owned but not insured under this policy" exclusion as applied to UM/UIM coverage and conclude that the exclusion is contrary to the public policy of Colorado and thus void.

The ability of an insurer to exclude UM/UIM benefits under certain circumstances historically has been recognized as valid and enforceable in Colorado and not repugnant to public policy. See § 10-4-609; Terranova v. State Farm Mutual Automobile Insurance Co., 800 P.2d 58 (Colo.1990)(exclusion of UM/UIM coverage for the owner-occupant injured in a one-vehicle accident is enforceable); Cruz v. Farmers Insurance Exchange, 12 P.3d 307 (Colo.App.2000)("regular use" exclusion applicable to UM/UIM coverage is not contrary to public policy); Williams-Diehl v. State Farm Fire & Casualty Co., supra ("owned but not insured" exclusion is not contrary to public policy); Arguello v. State Farm Mutual Automobile Insurance Co., supra (same).

However, in DeHerrera, the supreme court indicated its disapproval of Williams-Diehl and implicitly disapproved of Arguello, to the extent they conflicted with DeHerrera. DeHerrera v. Sentry Insurance Co., supra, 30 P.3d at 176 n. 8. Thus, the supreme court, in obiter dictum, has announced its limited disapproval of the exclusion in the UM/UIM context.

In DeHerrera, the insured's child was injured while riding an unlicensed, off-the-road motor bike owned by the child, upon being struck by an uninsured or underinsured motor vehicle. The insured then sought Personal Injury Protection and UM/UIM benefits provided by a policy insuring her automobile. The applicable policy provided UM/UIM coverage only if an insured person was occupying a car or was a pedestrian, and coverage was denied on the basis that the child was not occupying a car and was not a pedestrian.

As pertinent here, in DeHerrera, the supreme court held that UM/UIM coverage extended to the child, an insured party, even when operating the motor bike, because UM/UIM coverage is personal, rather than vehicle specific, under § 10-4-609. The coverage thus travels with the insured, there a resident family member driving an uninsured vehicle. The court, therefore, voided the limitation on the UM/UIM coverage to insureds who are in a car or are pedestrians as being contrary to § 10-4-609 and the public policy of Colorado:

[W]e hold that the language and purpose of the UM/UIM statute require an insurer to provide UM/UIM benefits to a person insured under the policy when injured in an accident caused by an uninsured or underinsured motorist without regard to the vehicle occupied by the insured at the time of injury.

DeHerrera v. Sentry Insurance Co., supra, 30 P.3d at 169 (emphasis added). The court also noted the policy and purpose of UM/UIM coverage:

Because of the important policy behind UM/UIM insurance to

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