Metro Wastewater v. National Union Fire Ins. Co.

• Decision Date: 31 January 2005
• Docket Number: No. 03SC846.,03SC846.
• Citation: 105 P.3d 653
• Parties: BOARD OF DIRECTORS, METRO WASTEWATER RECLAMATION DISTRICT, Petitioner, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA (a member company of American International Group, Inc., a Delaware corporation), Respondent-Intervenor.
• Court: Colorado Supreme Court

105 P.3d 653

BOARD OF DIRECTORS, METRO WASTEWATER RECLAMATION DISTRICT, Petitioner, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA (a member company of American International Group, Inc., a Delaware corporation), Respondent-Intervenor.

No. 03SC846.

Supreme Court of Colorado, En Banc.

January 31, 2005.

Inman Flynn Biesterfeld Brentlinger & Moritz, P.C., Richard P. Brentlinger, Joel A. Moritz, Robert J. Thomas, Denver, for Petitioner.

Gibson, Dunn & Crutcher, LLP, Gregory J. Kerwin, Amanda J. Tessar, Denver, for Respondent-Intervenor.

White & Steele, P.C., Sandra L. Spencer, Denver, for Amicus Curiae Complex Insurance Claims Litigation Association. Robert W. Smith, Denver, for Amici Curiae London Market Insurers.

Perkins Coie LLP, L. Norton Cutler, Stephanie E. Dunn, Brownstein Hyatt & Farber, P.C., Timothy R. Beyer, Benjamin A. Kahn, Denver, for Amicus Curiae United Policyholders.

Justice HOBBS delivered the Opinion of the Court.

Pursuant to C.A.R. 50, we granted certiorari in this case as a companion to Friedland v. The Travelers Indem. Co., No. 03SC681, 105 P.3d 639, 2005 WL 196482 (Colo. Jan. 31, 2005) on the issue of the applicability of the notice-prejudice rule to a liability insurance policy.¹

Today we issue our decision in Friedland, in which we apply the notice-prejudice rule enunciated in Clementi v. Nationwide Mut. Fire Ins. Co., 16 P.3d 223 (Colo.2001), to a late-notice liability case.

In the case before us, relying on Marez v. Dairyland Ins. Co., 638 P.2d 286 (Colo.1981), the district court ruled the notice-prejudice rule inapplicable to a liability policy. The Metro Wastewater Reclamation District (Metro) appealed the district court's ruling to the court of appeals, and the case was pending there when we granted certiorari.

Because Metro presented a non-justiciable issue to the district court, the court should have dismissed the petition. Accordingly, we vacate the trial court's judgment and dismiss this case.

I.

The undisputed facts are that Metro instituted this suit to test whether the Colorado appellate courts would apply Clementi to liability policies or continue to apply Marez. Invoking section 32-4-540 C.R.S. (2003), Metro's Board of Directors passed a resolution authorizing its attorneys to institute an action calculated to result in an appellate opinion on the notice-prejudice question we have resolved today in Friedland.

Metro solicited an offer by National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union) to provide an officers' and directors' liability policy containing the customary timely notice of claim and notice of suit language. Metro then petitioned the trial court under section 32-4-540 for a legal determination regarding the applicability of the notice-prejudice rule to the proposed liability policy's notice of claim and notice of suit provisions. It did not name National Union as a defendant or serve the petition on the insurance company; instead, it published notice of the petition in a local paper, as set forth in section 32-4-540. National Union did not see the notice and, accordingly, did not appear at the district court hearing.

At the time of the district court hearing, there was no policy in effect, no claim against Metro, no late notice by Metro to National Union, and no denial of coverage by National Union. Thus, there was no actual controversy. Any future dispute posited as the basis for the district court's ruling was purely conjectural.

When Metro appealed the district court's ruling that Marez continued to apply to liability policies, we subsequently granted certiorari under C.A.R. 50, and National Union intervened to argue that the district court lacked jurisdiction to enter its ruling.

We conclude that the General Assembly did not intend section 32-4-540 to override the constitutional authority of Colorado courts to decline the exercise of jurisdiction in a non-justiciable case.

II.

Because Metro presented a non-justiciable issue to the trial court, it should have dismissed Metro's petition.

A. Justiciable Questions

Power vested in the judicial branch of Colorado government flows primarily from Article VI, section 1, of the Colorado Constitution. In its exercise, courts limit their inquiry to the resolution of actual controversies based on real facts. Davidson v. Comm. for Gail Schoettler, Inc., 24 P.3d 621, 623 (Colo.2001). The mere possibility of a future claim is not an appropriate predicate for the exercise of judicial power. Bd. of County Comm'rs of County of Park v. Park County Sportsmen's Ranch, LLP, 45 P.3d 693, 698 (Colo.2002).

In the separation of powers design of Colorado government, courts limit their exercise of judicial power through jurisprudential doctrines that include standing, mootness, and ripeness, establishing establish parameters for the principled exercise of judicial authority. See Stell v. Boulder County Dep't of Soc. Servs., 92 P.3d 910, 914 (Colo.2004)

. Standing has constitutional and prudential prongs that function to limit who may bring causes of action to the courts. City of Greenwood Vill. v. Petitioners for the Proposed City of Centennial, 3 P.3d 427, 436-37 (Colo.2000). Mootness instructs courts not to grant relief that would have no practical effect upon an actual and existing controversy. Stell, 92 P.3d at 914. Ripeness tests whether the issue is real, immediate, and fit for adjudication. Beauprez v. Avalos, 42 P.3d 642, 648 (Colo.2002). Courts should refuse to consider uncertain or contingent future matters that suppose speculative injury that may never occur. Stell, 92 P.3d at 914.

In some instances, the Colorado Constitution or the General Assembly affords a means for determining legal disputes that a court might not otherwise consider. One example is the interrogatory provision of the Colorado Constitution, Article VI, section 3, which authorizes our Court alone to "give its opinion upon important questions upon solemn occasions when required by the governor, the senate, or the house of representatives." See Submission of Interrogatories on Senate Bill 93-74, 852 P.2d 1 (Colo.1993). Another example is the declaratory judgment statute, which authorizes district courts "to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations." § 13-51-102, C.R.S. (2004).

We underscore that these grants of authority do not require us to take cases that are not justiciable. Rather, they empower us to take additional types of justiciable cases. However, when a court exercises its interrogatory or declaratory judgment authority in a case, it must focus on a real set of facts involving an immediate controversy fit for judicial resolution.

For instance, in exercising our authority to decline non-justiciable cases, we do not answer questions propounded by the Governor regarding the constitutionality of a proposed legislative bill that has not been introduced and may never be passed. In re Interrogatories by Governor, 71 Colo. 331, 332, 206 P. 383, 383 (1922) (answering the question "would establish a precedent which would require us to pass upon the constitutionality of all important legislation before presented to the lawmaking body"). Likewise, a declaratory judgment "calls, not for an advisory opinion upon a hypothetical basis, but for an adjudication of present rights upon established facts." Cacioppo v. Eagle County Sch. Dist. Re-50J, 92 P.3d 453, 467 (Colo.2004) (citation omitted). A court should exercise jurisdiction in such actions "only if the case contains a currently justiciable issue or an existing legal controversy, rather than the mere possibility of a future claim." Id.

B. District Court Jurisdiction under Section 32-4-540

We now turn to the General Assembly's intent in enacting section 32-4-540 of the water and sanitation district statutes. In doing so, we are guided by the rubric that the legislature intends a statute to be constitutional and we should construe it in a manner avoiding constitutional infirmity, if possible. See People v. M.B., 90 P.3d 880, 881 (Colo.2004)

(if statute can be construed in a manner that adheres to constitutional requirements, we must adopt that construction). An act requiring us to render an advisory opinion on a non-justiciable issue of law would impermissibly intrude on the judiciary's role in the separation of powers.

In determining the legislature's intent, we look first to the language of the statute and apply its plain and ordinary meaning, if possible. Davison v. Indus. Claim Appeals Office, 84 P.3d 1023, 1029 (Colo.2004). We read the statutory provision as a whole and construe its terms harmoniously when we can, reconciling conflicts if necessary. Colorado Dep't of Labor & Employment v. Esser, 30 P.3d 189, 195 (Colo.2001). Section 32-4-540 provides a mechanism for water and sanitation districts to bring questions important to the exercise of their authority and statutory purposes to a district court for review:

(1)(a) In its discretion, the board may file a petition at any time in the district court in and for any county in which the district is located wholly or in part, praying for a judicial examination and determination of

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