Marquez v. Prudential Property and Cas. Ins. Co.

• Citation: 620 P.2d 29
• Decision Date: 26 November 1980
• Docket Number: No. C-1792,C-1792
• Parties: Johnnie E. MARQUEZ, Petitioner, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Respondent, and American Standard Insurance Company of Wisconsin, Defendant.
• Court: Supreme Court of Colorado

Page 29

620 P.2d 29

Johnnie E. MARQUEZ, Petitioner, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Respondent and American Standard Insurance Company of Wisconsin, Defendant.

No. C-1792.

Supreme Court of Colorado.

Nov. 26, 1980.

Norton Frickey & Associates, Dan W. Corson, Denver, for petitioner.

Burnett, Horan & Hilgers, Mike Hilgers, Denver, for respondent.

Joel H. Greenstein, Boulder, Branney & Hillyard, Neil A. Hillyard, Englewood, for amicus curiae, Colorado Trial Lawyers Association.

J. D. MacFarlane, Atty. Gen., Richard F. Hennessey, Deputy Atty. Gen., Mary J. Mullarkey, Sol. Gen., Sandra B. McCray, Asst. Atty. Gen., Denver, for amicus curiae, J. Richard Barnes, Ins. Com'r.

ERICKSON, Justice.

We granted certiorari to review Marquez v. Prudential Property & Casualty Insurance Company, 41 Colo.App. 478, 590 P.2d 75 (1978). We reverse the court of appeals and return this case with directions that the cause be remanded to the district court for the entry of a declaratory judgment in favor of the plaintiff, Johnnie E. Marquez.

The parties stipulated to the facts which provide the foundation for our decision. Marquez filed a civil action to recover damages for personal injuries which he suffered in an automobile collision. The reasonable value of the Marquez personal injury claim for injuries, disability, pain and suffering, medical bills, and loss of income was agreed to be $30,000. The negligence of Donna Marie Wright was the direct and proximate cause of his injuries.

Wright carried liability insurance with the American Standard Insurance Company of Wisconsin (American Standard). Marquez was insured by the defendant, Prudential Property & Casualty Insurance Company (Prudential). American Standard discharged its obligation to Wright by paying her $15,000 liability policy limits into the registry of the district court. Prudential paid Marquez $12,366.40 under policy provisions which provide no fault personal injury protection (PIP Benefits). Thereafter, a declaratory judgment proceeding was instituted by Marquez when Prudential indicated that it was entitled to recover the $12,366.40 paid to Marquez for PIP Benefits from the $15,000 deposited in the registry of the court by American Standard as Wright's policy limits for liability. Prudential based its claim for full reimbursement on section 10-4-713(1), C.R.S.1973 of the Colorado Auto Accident Reparations Act (No Fault Act), and the subrogation provision of Marquez's policy which states:

"In the event of any payment to any person under this coverage: The company shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury because of which such payment is made; and the company shall have a lien to the extent of such payment, notice of which may be given to the person or organization causing such bodily injury, his agent, his insurer or a court having jurisdiction in the matter...."

The district court entered a declaratory judgment granting Prudential the right to recover the PIP Benefits paid to Marquez from American Standard's $15,000 liability insurance deposit. The court of appeals, in interpreting section 10-4-713(1), C.R.S.1973, affirmed the district court, except that the statutory section was declared to only permit recovery in excess of $500 of the PIP Benefits paid to Marquez. Thus, instead of receiving $27,366.40, Marquez recovered approximately one-half of the $30,000 in damages which he suffered. ¹

The error made by both the district court and the court of appeals centers on their isolated reading of section 10-4-713(1), C.R.S.1973. The court of appeals' decision gives priority to the provider of PIP Benefits over the right of the injured insured and circumvents the purpose of the No Fault Act.

To resolve the issues which are before us, we must interpret various provisions of the No Fault Act which are in apparent conflict. The principles of statutory construction set forth in sections 2-4-201 and 2-4-203, C.R.S.1973, provide assistance. The No Fault Act must be read in its entirety to carry out the intention of the General Assembly. Section 2-4-201(1)(b). See Travelers Indemnity v. Barnes, 191 Colo. 278, 552 P.2d 300 (1976); Humana v. Bd. of Adjustment, 189 Colo. 79, 537 P.2d 741 (1975). Additionally, if a statute is ambiguous, the court, in determining the intention of the General Assembly, may consider legislative history. Section 2-4-203(1)(b).

The legislative history of the No Fault Act clarifies and reconciles the relationship between sections 10-4-713(1) (which prohibits tort recovery of direct benefits yet grants an insurer a direct cause of action against the alleged tortfeasor); 10-4-714 (which permits tort recovery of general damages by an insured); and 10-4-717 (which grants recovery rights by arbitration to an insurer). ² From 1971 through 1973, a series of bills were introduced in the General Assembly relating to no fault insurance. An analysis of six of these bills, which focused on the recovery rights of the insurer and insured, indicates a legislative intent to allow an insured full tort recovery undiminished by the subrogation and arbitration right of his insurer, except in those cases where such a policy would result in double recovery to the insured. Likewise, there is nothing in the legislative history which indicates an intention to grant insurers concurrent, alternative recovery rights through subrogation and arbitration. ³

Section 10-4-713(1), C.R.S.1973, under which this case was tried, provided:

"Neither any person eligible for direct benefits described in section 10-4-706(1)(b) to (1)(e) nor any insurer providing benefits described in section 10-4-706(1)(b) to (1)(e) shall have any right to recover against an owner, user, or operator of a motor vehicle or against any person or organization legally responsible for the acts or omissions of such person in any action for damages for benefits required to be paid under section 10-4-706(1)(b) to (1)(e), ... except that an insurer paying benefits under section 10-4-706(1)(b) to (1)(e) to or for any one person in excess of five hundred dollars shall have a direct cause of action against an alleged tortfeasor to the extent of benefits paid in excess of five hundred dollars and limited to the liability insurance coverage of the alleged tortfeasor...."

The court of appeals read the foregoing statute as giving the insurer an unqualified right to recover PIP Benefits already paid from the tortfeasor's insurance carrier at the expense of the insured who had not been paid damages for the injuries he suffered. We disagree. Section 10-4-717(1), C.R.S.1973, states:

"Every insurer licensed to write motor vehicle insurance in this state shall be deemed to have agreed, as a condition to maintaining such license after January 1, 1974:

(a) That, where its insured is or would be held legally liable for damages for bodily injury sustained by any persons to whom the benefits described in section 10-4-706(1)(b) to (1)(e) have been paid by another insurer, it will reimburse such other insurer to the extent of such benefits, subject to the limitations contained in section 10-4-713, but not in excess of the amount of damages so recoverable for the type of loss covered by such benefits or in excess of the limits of its liability under the policy; and

(b) That the issue of liability for such reimbursement and the amount thereof shall be decided by mandatory, binding intercompany arbitration procedures approved by the commissioner...."

Reading sections 10-4-713(1) and 10-4-717 together, it is clear that they were not intended to provide concurrent, alternative recovery rights to an insurer through subrogation or arbitration. An isolated reading would permit an insurer to recover an amount no greater than the liability insurance of the alleged tortfeasor under section 10-4-713, while section 10-4-717 limits the insurer's recovery to the lesser of the following amounts in excess of $500 paid by the insurer under section 10-4-713(1): (a) the benefits paid by the insurer to its insured; (b) the limits of the alleged tortfeasor's PIP Benefits coverage; or (c) the limits of the alleged tortfeasor's liability coverage.

We conclude that the better interpretation of sections 10-4-713 and 10-4-717, is that arbitration is the sole means of recovery for an insurer unless the accident involves out-of-state insurers and vehicles, and the injured insured has a direct cause of action against the alleged tortfeasor under section 10-4-714, C.R.S.1973. ⁴

In Cirelli v. Ohio Casualty Insurance Company, 72 N.J. 380, 371 A.2d 17 (1977), the New Jersey Supreme Court considered the validity of reimbursement and subrogation provisions in an automobile liability insurance policy with respect to personal injury benefits paid to the insured as required by the New Jersey No Fault Law. The court held that the reimbursement agreement was invalid insofar as New Jersey vehicles are concerned. Their determination was based upon the finding that the rationale...