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

• Decision Date: 03 April 1997
• Docket Number: No. 95CA1544,95CA1544
• Parties: 21 Colorado Journal 467 Ronald KLEIN, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee. . II
• Court: Colorado Court of Appeals

Page 43

948 P.2d 43

21 Colorado Journal 467

Ronald KLEIN, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.

No. 95CA1544.

Colorado Court of Appeals Div. II.

April 3, 1997.

As Modified on Denial of Rehearing May 29, 1997.

Certiorari Denied Dec. 15, 1997.

Thomas M. Haskins, P.C., Gordon J. Williams, Colorado Springs, for Plaintiff-Appellant.

Retherford, Mullen, Johnson & Bruce, LLC, Neil C. Bruce, Colorado Springs, for Defendant-Appellee.

Opinion by Judge MARQUEZ.

In this action premised on alleged violations of the Colorado Auto Accident Reparations Act (No Fault Act) as in effect at the pertinent times, plaintiff, Ronald Klein, appeals a judgment entered on a jury verdict in favor of defendant, State Farm Mutual Automobile Insurance Company. We affirm.

On December 17, 1989, plaintiff was injured in an automobile accident and, approximately twelve days thereafter, sought treatment for those injuries. At that time, plaintiff was insured under a liability policy issued by defendant that provided personal injury protection/no-fault insurance coverage. For the treatments provided, plaintiff's health care providers submitted statements to defendant for payment. Defendant paid over $21,000 under the medical portion of the policy and over $8,000 for lost wages, but denied payment of certain other bills.

Thereafter, plaintiff commenced this action alleging breach of contract by failure to pay insurance policy proceeds, bad faith breach of an insurance contract, and the willful and wanton failure to make prompt payment of benefits. A central allegation of plaintiff's complaint was that defendant had violated the No Fault Act by not paying or denying the claims within the thirty-day period required by § 10-4-708(1), C.R.S. (1994 Repl.Vol. 4A). Prior to trial, defendant paid additional benefits to plaintiff.

The jury returned a verdict for defendant, and this appeal followed.

I.

Plaintiff first contends that, because the No Fault Act mandated binding arbitration, the trial court lacked jurisdiction to hear claims arising under that statute. We disagree.

Plaintiff raises this issue for the first time on appeal. However, because he questions jurisdiction, we address it at this time. See In re Marriage of Finer, 893 P.2d 1381 (Colo.App.1995). We conclude that, even under the version of the No Fault Act requiring arbitration, the court does have jurisdiction if the right to arbitration is not invoked.

In 1989, the No Fault Act was amended to provide in pertinent part that any "action for breach of contract brought pursuant to subsection (1) of this section shall proceed to binding arbitration...." Colo. Sess. Laws 1989, ch. 82, § 10-4-708(1.5) at 458-459 (emphasis added). That statutory section was amended in 1991, Colo. Sess. Laws 1991, ch. 203, § 1, at 1185, and now provides:

If a dispute arises under subsection (1) of this section, the insured ... and the insurer may agree to resolve the dispute through binding arbitration.... If there is no agreement concerning binding arbitration, the insured ... may bring an action in contract in the appropriate court to resolve the dispute.

Section 10-4-708(1.5), C.R.S. (1994 Repl.Vol. 4A) (emphasis added).

The effective date of the 1989 amendment was July 1, 1989. Colo. Sess. Laws 1989, ch. 82, § 6, at 461. See McClendon v. Regional Transportation District, 878 P.2d 123 (Colo.App.1994). Thus, because plaintiff's accident occurred on December 17, 1989, our consideration is limited to the 1989 version of § 10-4-708(1.5).

A valid and enforceable arbitration provision divests the courts of jurisdiction over all disputes that are to be arbitrated. Mountain Plains Constructors, Inc. v. Torrez, 785 P.2d 928 (Colo.1990); Eychner v. Van Vleet, 870 P.2d 486 (Colo.App.1993). The general rule is that the party asserting a claim has the burden to initiate arbitration. Mountain Plains Constructors, Inc. v. Torrez, supra.

The provisions of the No Fault Act are incorporated into insurance policies written in Colorado. The No Fault Act provision that is controlling here dictates that disputes under the No Fault Act shall proceed to binding arbitration pursuant to the Uniform Arbitration Act. State Farm Mutual Automobile Insurance Co. v. Broadnax, 827 P.2d 531 (Colo.1992) (rejecting insurance company's contention that the 1989 version of § 10-4-708(1.5) impermissibly limits district court jurisdiction).

However, a party may waive its right to arbitration by taking actions that are inconsistent with an arbitration provision. Mountain Plains Constructors, Inc. v. Torrez, supra. A defendant's right to arbitrate will be deemed waived if he or she has acted inconsistently with that right and prejudice will accrue to the other parties. Norden v. E.F. Hutton & Co., 739 P.2d 914 (Colo.App.1987).

In Warwick v. State Farm Mutual Automobile Insurance Co., 886 P.2d 323 (Colo.App.1994), a motorist injured in an accident which occurred prior to the 1991 amendments brought an action against her insurer. A division of this court held that the provisions of the statute, then in effect, required plaintiff to submit disputes to binding arbitration and affirmed a ruling of the trial court dismissing these claims because plaintiff failed to arbitrate them.

Defendant contends that, because plaintiff did not raise the issue in the trial court, his right to arbitration was waived. We agree that, under the circumstances here, the right to arbitration has been waived.

Defendant asserts that plaintiff did not seek arbitration at any time after Warwick was announced or prior to the filing of this appeal. Defendant also notes that State Farm and its counsel were also defendant and counsel in Warwick, and plaintiff's trial counsel was counsel for the plaintiff in Warwick. Plaintiff does not dispute these assertions.

Because statutory rights may also be waived, we conclude that any rights plaintiff had to arbitration under the 1989 version of § 10-4-708(1.5) could also be waived. See First Interstate Bank of Denver, N.A. v. Central Bank & Trust Co., 937 P.2d 855 (Colo.App.1996); People v. Bergen, 883 P.2d 532 (Colo.App.1994) (statutory rights may be waived so long as waiver is voluntary).

Here, plaintiff filed his complaint in April 1992. In November 1994, Warwick v. State Farm Mutual Automobile Insurance Co., supra, was announced. Trial in the present case commenced in May 1995.

Thus, plaintiff acted inconsistently with his right to arbitrate by pursuing discovery and proceeding all the way through trial after the decision in Warwick put him on notice that he was to submit to binding arbitration. See Bashor v. Bache Halsey Stuart Shields, Inc., 773 P.2d 578 (Colo.App.1988) (advantage defendants gained by judicial discovery not available to them in arbitration proceedings constitutes sufficient prejudice to plaintiff to infer waiver of defendants' right to require arbitration); Norden v. E.F. Hutton & Co., supra (defendants acted inconsistently with their right to arbitrate by pursuing discovery and confirming in open court their intention to go to trial after they knew they had a legally enforceable arbitration right).

We conclude, as a matter of law, that the actions of the plaintiff were inconsistent with the right to arbitrate and constituted a waiver of the mandatory arbitration requirement. See Cordillera Corp. v. Heard, 200 Colo. 72, 612 P.2d 92 (1980); Red Sky Homeowners Ass'n v. Heritage Co., 701 P.2d 603 (Colo.App.1984). Further, because plaintiff failed to invoke his statutory right to arbitration, the court had jurisdiction to hear his claims.

II.

Plaintiff next contends that the trial court erred in denying his motion for judgment notwithstanding the verdict. Plaintiff specifically contends that the defendant clearly failed to pay, deny, or request further proof as to his claims within thirty days of the receipt of reasonable proof of expenses and that, thus, the jury's verdict is unsupported by the record. We disagree.

A motion for judgment notwithstanding the verdict:

may be entered only if a reasonable person could not reach the same conclusion as the jury, when viewing the evidence in the light most favorable to the party against whom the motion is directed.... Every reasonable inference that may be drawn from the evidence must be drawn in favor of the non-moving party.

Boulder Valley School District R-2 v. Price, 805 P.2d 1085, 1088 (Colo.1991).

A verdict will not be reversed if a reading of the record reveals any basis to support it. Combined Communications Corp., Inc. v. Public Service Co., 865 P.2d 893 (Colo.App.1993). Viewing the evidence in the light most favorable to defendant, we conclude that the jury's verdict was supported by the evidence presented at trial.

At the time pertinent here, Colo. Sess. Laws 1989, ch. 82, § 10-4-708(1), provided, in relevant part:

Benefits for any period are overdue if not paid within thirty days after the insurer receives reasonable proof of the fact and amount of expenses incurred during that period; except that an insurer may accumulate claims for periods not exceeding one month, and benefits are not overdue if paid within fifteen days after the period of accumulation. If reasonable proof is not supplied as to the entire claim, the amount supported by reasonable proof is overdue if not paid within thirty days after such proof is received by the insurer. Any part or all of the remainder of the claim that is later supported by reasonable proof is overdue if not paid within thirty days after such proof is received by the insurer. In the event that the insurer fails to pay such benefits when due, the person entitled to such benefits may bring an action in contract to recover the same.

During the relevant period, insurers were required under the act to pay all reasonable and necessary expenses for a variety of treatments for bodily injury arising out of the use or operation of a motor vehicle. See ...