Marez v. Dairyland Ins. Co.
| Decision Date | 21 December 1981 |
| Docket Number | No. 79SC267,79SC267 |
| Parties | Emiliano MAREZ, Valentine Marez as Special Administrator of the Estate of James Marez, Deceased, Bernadette Valdez, and Julia Valdez, a/k/a Julia Valdez Montoya, Petitioners, v. DAIRYLAND INSURANCE COMPANY, a Wisconsin corporation, Respondent. |
| Court | Colorado Supreme Court |
Frye & Sawaya, Richard B. Rose, Michael G. Sawaya, Denver, for petitioners Emiliano Marez and Valentine Marez as Special Administrator of the Estate of James Marez, Deceased.
Marilyn T. Meadoff, Denver, for petitioners Bernadette Valdez and Julia Valdez, a/k/a Julia Valdez Montoya.
Pryor, Carney & Johnson, Irving G. Johnson, Thomas L. Roberts, Englewood, for respondent.
Irvin M. Kent, Denver, for amicus curiae Colo. Trial Lawyers Ass'n.
We granted certiorari to review the opinion of the court of appeals in Dairyland Insurance Co. v. Marez, 42 Colo.App. 536, 601 P.2d 353 (1979). We affirm the judgment of the court of appeals.
On September 18, 1973, James Marez was seriously injured when his bicycle collided with an automobile driven by Bernadette Valdez. The automobile was owned by Valdez' mother, Julia Valdez Montoya, and was insured by Dairyland Insurance Company (Dairyland), the respondent here. Both Valdez and Montoya were aware that Marez had been injured and that he was taken to a hospital.
The Dairyland Insurance policy contained the following conditions:
"1. Notice of Accident ...
When an accident occurs written notice shall be given by or on behalf of the Insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the Insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses.
2. Notice of Claim or Suit ...
If claim is made or suit is brought against the Insured, the Insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.
12. No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all the terms and conditions of the policy, nor until thirty days after the required proofs of claim have been filed with the company."
It was stipulated that neither Bernadette Valdez nor Julia Montoya ever provided written notice of the accident to Dairyland. However, Julia Montoya claimed that she telephoned the insurance agency and gave verbal notification of the accident. This was denied by the insurance agent and his employee. The trial court specifically resolved the conflict in this evidence in favor of the insurance company agent, finding as a fact that no verbal notice of the accident was ever given. The trial court found that both Valdez and Montoya were persons of ordinary and reasonable intelligence and were capable of understanding the notice requirements of the insurance policy for reporting the accident, and that they were in fact aware that James Marez sustained significant injuries in the accident; yet they failed to give notice as required by the insurance policy.
On April 30, 1976, Bernadette Valdez and Julia Montoya were served with a summons and complaint in an action filed on behalf of James Marez, who died from causes unrelated to the accident. It was undisputed that neither of the parties contacted Dairyland nor did they forward the suit papers to the insurance company as required by the insurance policy. It was also undisputed that Dairyland first learned of the accident by happenstance more than two and one-half years after the accident. On June 29, 1976, the information concerning the accident came to the attention of a Dairyland field adjustor, who, while working on an unrelated matter, was advised by one of the attorneys for Marez that the accident had occurred and involved serious injuries to Marez. Once Dairyland learned of the claim, it searched its records and finding no record of notification of the accident or claim, it forwarded a reservation of rights document to the insured by registered mail. Dairyland then commenced this declaratory judgment action, seeking a declaration as to its obligations and liabilities under the policy of automobile insurance.
At trial, attorneys for Montoya attempted to elicit testimony as to whether Dairyland was prejudiced by the failure to give Dairyland written notice of the accident and lawsuit. The trial court determined as a matter of law that prejudice to Dairyland, if any, was not to be considered under the facts of this case in determining the obligations and liabilities of Dairyland under the policy. The court concluded that there had been a total lack of compliance with the conditions of the policy; that the notice conditions of the policy were express conditions precedent; that Valdez and Montoya offered no legal excuses for their failure to comply with the policy conditions; and, that since those conditions had not been complied with, the insured had committed a material breach of the insurance contract. The court held that Dairyland was relieved of any liability under the policy to either defend the insureds or to indemnify them with respect to any judgment subsequently obtained arising out of the accident of September 18, 1973.
Marez, Valdez, and Montoya appealed to the court of appeals which affirmed the trial court's holding that the failure of Valdez and Montoya to notify Dairyland of the accident or to forward suit papers to it was not excused. Furthermore, the court of appeals held that prejudice is not a factor in determining the insurer's liability when conditions precedent requiring the insured to give notice of an accident and to forward suit papers to the insurance company are breached and the breach of conditions is unexcused.
We affirm the court of appeals.
We adhere to the fundamental concept enunciated in the landmark case of Barclay v. London Co., 46 Colo. 558, 105 P. 865 (1909), that the rights and duties flowing from an accident insurance policy are contractual in nature and are measured by the terms and conditions of the insurance contract to which the parties thereto have agreed. Insurance contracts are to be construed according to the general rules for construction of contracts. As stated in Olinger v. Christy, 139 Colo. 425, 342 P.2d 1000 (1959), a policy of insurance is not sui generis, but is treated in the law in the same way as contracts are treated generally, and is to be interpreted according to the intent of the parties. Accord, Waggoner v. Wilson, 31 Colo.App. 518, 507 P.2d 482 (1973); Jennings v. Brotherhood Accident Co., 44 Colo. 68, 96 P. 982 (1908). 1
Barclay, supra, dealt with provisions for notice of accident and claim similar to those in the present case, and although the policy there required the giving of immediate written notice of an accident or claim, the insured delayed in notifying the insurance company for over three months, and a denial of liability followed. This court characterized the insurance policy as an executory contract and notice provisions as conditions precedent, compliance with which was mandatory, absent a legal excuse for failure to comply. The principles of Barclay have been substantially followed by our courts throughout the years without fundamental change.
In Certified Indemnity Co. v. Thun, 165 Colo. 354, 439 P.2d 28 (1968), this court expressed the rule as follows:
Illustrative of the firm adherence to the foregoing rule are the following cases: Cochran v. Massachusetts Bonding and Insurance Co., 76 Colo. 198, 230 P. 788 (1924); Thomas v. Guaranty Nat'l. Ins. Co., 43 Colo.App. 34, 597 P.2d 1053 (1979); Matthews v. Arko, 534 P.2d 658 (Colo.App.1975); Celina Mutual Ins. Co. v. Berg, 486 P.2d 472 (Colo.App.1971), cert. denied; Interstate v. Burns, 29 Colo.App. 276, 484 P.2d 1257, cert. denied (1971); Overturf v. National Union Fire Ins. Co., 470 P.2d 600 (Colo.App.1970); Wetzbarger v. Eisen, 475 P.2d 637 (Colo.App.1970); compare, Barnes v. Waco Scaffolding & Equip. Co., 41 Colo.App. 423, 589 P.2d 505 (1979), cert. denied. 2
The foregoing cases involved factual situations where the notice of accident or suit had been delayed but eventually was given to the insurer, though not in a timely manner as required by the policy conditions. We emphasize that in the present case Valdez and Montoya, without justifiable excuse or extenuating circumstances, totally failed to give notice of any kind whatsoever to Dairyland, and that it was only by chance that Dairyland learned of the accident and lawsuit two and one-half years after the accident. A review of the evidence presented at trial fully supports the trial court's findings on these factual issues. We are not at liberty to otherwise interpret the record were we inclined to do so.
In accordance with the rule of law consistently followed over the years by our courts, under the circumstances of the present case the failure of Valdez and Montoya to comply with the notice of accident and suit conditions, as a matter of law, constituted a material breach of the contract of insurance, relieving Dairyland of its duty to defend the insureds and to indemnify them with respect to any judgment holding them liable for the injuries to Marez.
Petitioners contended in the trial court and assert here that they should have been allowed to present evidence showing that Dairyland was not prejudiced by reason of their failure to comply with the notice...
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