Lincoln General Ins. Co. v. Bailey, No. 08CA0371.
| Court | Court of Appeals of Colorado |
| Citation | 224 P.3d 336 |
| Docket Number | No. 08CA0371. |
| Parties | LINCOLN GENERAL INSURANCE COMPANY, a Pennsylvania insurance company, Plaintiff-Appellee, v. Julie BAILEY, individually, and as personal representative for the Estate of Brandon Magnuson, Defendant-Appellant. |
| Decision Date | 14 May 2009 |
v.
Julie BAILEY, individually, and as personal representative for the Estate of Brandon Magnuson, Defendant-Appellant.
[224 P.3d 338]
Hall & Evans, LLC, Peter F. Jones, George Koons, III, Malcolm S. Mead, Denver, Colorado, for Plaintiff-Appellee.
King & Greisen, LLP, Paula Greisen, Laura E. Schwartz, Denver, Colorado; The Overton Law Firm, Richard J. Gleason, Thomas J. Overton, Denver, Colorado, for Defendant-Appellant.
Opinion by Judge ROY.
Julie Bailey, individually and as personal representative for the Estate of Brandon Magnuson (the claimants), appeal from the entry of summary judgment and dismissal of their claims against Lincoln General Insurance Company (the insurer). We affirm.
Raymond Juhl (the insured) rented a car from a rental car agency at Denver International Airport. Primary liability insurance coverage ($25,000 limit) was provided by the rental car agency. The insured purchased supplemental liability insurance coverage (SLI) through the agency but from the insurer with a policy limit of $1,000,000. It is the availability of the SLI coverage that is at issue here.
While operating the rental vehicle, the insured led police officers from multiple jurisdictions on a 20-mile high-speed chase with speeds exceeding 100 miles-per-hour, ending when the insured collided head-on with the claimants' vehicle. The collision severely injured Julie Bailey and killed her son, Brandon Magnuson.
The insured later pleaded guilty to five felonies: second degree murder, first degree assault-extreme indifference, possession of a controlled substance with intent to distribute, vehicular homicide, and vehicular assault-reckless. The insured assigned all of his claims, if any, against the insurer to the claimants.
With respect to insurance coverages, the rental agreement stated:
H. Renter's Third Party Liability Responsibility: ....
2. ... SLI provides You with protection against third-party auto liability claims as outlined below:
A. [The rental car agency] will protect You against third party liability claims arising out of the use or operation of the Vehicle for: (i) Bodily injury or death of another ... and (ii) Property damage other than to the Vehicle. This protection is limited to an amount equal to the minimum limits specified by the compulsory insurance or financial responsibility laws relating to automobile liability insurance in the state in which the Vehicle is rented and shall be referred to as Primary Protection; and
B. SLI provides You with a separate policy providing excess coverage against such claims for the difference between the Primary Protection and a maximum combined single limit of $1,000,000.00 (US) per occurrence for bodily injury, including death and property damage, for other than the Vehicle while the Vehicle is on rent to You.
....
3. You understand SLI is void if You violate the terms of the Agreement. You understand SLI is subject to other specific exclusions which are summarized on the separate SLI brochure which is available at the rental counter.
The prohibitions that affected the availability of insurance listed in the rental agreement included:
E. WHAT ARE PROHIBITED USES OF THE VEHICLE?
THE VEHICLE MAY NOT BE USED: ... (3) IN A RACE OR SIMILAR CONTEST ...; (4) FOR ANY ILLEGAL PURPOSES, OR IN THE COMMISSION OF A CRIME THAT COULD BE CHARGED AS A FELONY; (5) WHILE THE DRIVER IS UNDER THE INFLUENCE OF ALCOHOL OR DRUGS; ... (7) TO INTENTIONALLY CAUSE DAMAGE, OR DAMAGE THE VEHICLE BY WILLFUL, RECKLESS OR WANTON MISCONDUCT....
ANY PROHIBITED USE OF THE VEHICLE VIOLATES THE AGREEMENT AND VOIDS OR DEPRIVES YOU OF BENEFITS, PROTECTION AND OPTIONAL COVERAGES, IF ANY, TO
WHICH YOU WOULD HAVE OTHERWISE BEEN ENTITLED UNDER THIS AGREEMENT.
(Emphasis in original.)
The insurer filed a declaratory judgment action naming the insured and the claimants as defendants, seeking a declaration that there was no liability coverage for the collision under the SLI. The claimants then filed an action against the insurer seeking damages and asserting claims for breach of contract, bad faith, and violations of the Colorado Consumer Protection Act (CCPA). The two actions were consolidated by the trial court.
The claimants also filed a personal injury and wrongful death action against both the insured and the rental car agency. The trial court entered judgment against the insured in the amount of $2,034,133. The rental car agency settled with the claimants for the base policy liability insurance limits of $25,000.
The insurer filed a motion for partial summary judgment in this action, arguing that the following exclusions precluded coverage: "the commission of a crime that could be charged as a felony" (the crime exclusion); "to intentionally cause damage"; "while the driver is under the influence of alcohol or drugs"; and "in a race or similar type contest." The insurer also filed a separate motion directed at the CCPA claim. The claimants filed a cross-motion for partial summary judgment on their claims for breach of contract and bad faith, arguing that the prohibitions and exclusions were ambiguous and violated public policy doctrines of reasonable expectations and unconscionability.
The trial court granted the insurer's motion for partial summary judgment based on the crime exclusion and denied the claimants' cross-motion. This appeal followed.
We review an order granting summary judgment de novo. Brodeur v. Am. Home Assurance Co., 169 P.3d 139, 146 (Colo.2007). Summary judgment is appropriate only when the pleadings, affidavits, depositions, or admissions establish that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Id.; C.R.C.P. 56. We also review the interpretation of insurance contracts de novo. Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo.2002).
Because the trial court limited its conclusions to the crime exclusion, we likewise limit our analysis and discussion to that exclusion.
The claimants' first contention is that the crime exclusion violates the insured's "reasonable expectations" and is therefore void. We disagree.
A term is ambiguous when it is reasonably susceptible of more than one meaning. Carlisle v. Farmers Ins. Exch., 946 P.2d 555, 556 (Colo.App.1997). However, if insurance policies are clear and unambiguous, they require no construction or interpretation and are to be enforced as written. Cary v. United of Omaha Life Ins. Co., 91 P.3d 425, 427 (Colo. App.2003), rev'd on other grounds, 108 P.3d 288 (Colo.2005).
In our view, the crime exclusion is clear, unambiguous, and expressly excludes SLI coverage in this instance. Therefore, we need not construe or interpret it.
The claimants base their argument on the doctrine of reasonable expectations. However, that doctrine is an interpretative tool used to resolve an ambiguity and preserve the intention of the parties. Dupre v. Allstate Ins. Co., 62 P.3d 1024, 1028 (Colo. App.2002). The claimants argue that the doctrine of reasonable expectations applies to unambiguous insurance contracts, citing State Farm Mutual Automobile Insurance Co. v. Nissen, 851 P.2d 165, 166 (Colo.1993); Simon v. Shelter General Insurance Co., 842 P.2d 236, 239 (Colo.1992); and Davis v. M.L.G. Corp., 712 P.2d 985, 991 (Colo.1986). Of the three, only the last mentions or discusses reasonable expectations. That case involved an intoxication exclusion to collision coverages. In Davis, the supreme court set forth the trial court's findings, including that the location, color, and print size of the exclusion amounted to a "concerted effort" to discourage persons from reading it. The customer
was involved in a one-vehicle accident while intoxicated, and the rental car company sued for damages to the vehicle. The case turned not on interpretation of an ambiguous contract but on unconscionability based on the remote placement of the exclusions to the...
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Coll. Park Pentecostal Holiness Church v. Gen. Steel Corp., Civil No. PJM 09–2070.
...agreement appeared to contain “relatively standard terms,” suggesting that they were substantively fair); Lincoln Gen. Ins. Co. v. Bailey, 224 P.3d 336, 341–42 (Colo.App.2009) (finding that insurance exclusion provision in rental car contract was not unconscionable in part because such excl......
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...Introduction In this insurance coverage dispute, we review the court of appeals' decision in Lincoln General Insurance Co. v. Bailey, 224 P.3d 336 (Colo.App.2009), which upheld enforcement of a criminal-acts exclusion in an excess-insurance policy that absolved the insurer, Lincoln General ......
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Coll. Park Pentecostal Holiness Church v. Gen. Steel Corp., Civil No.: PJM 09-2070
...appeared to contain "relatively standard terms," suggesting that they were substantively fair); Lincoln Gen. Ins. Co., v. Bailey, 224 P.3d 336, 341-42 (Colo. App. 2009) (finding that insurance exclusion provision in rental car contract was not unconscionable in part because such exclusions ......
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...Colorado law similarly discourages courts from enforcing unconscionable contract provisions. See Lincoln Gen. Ins. Co. v. Bailey, 224 P.3d 336, 341 (Colo.App.2009)aff'd, 255 P.3d 1039 (Colo.2011) ("Courts will not enforce an unconscionable contract.").4 This finding of unconscionability wou......