Nibert v. GEICO Cas. Co.

• Decision Date: 23 February 2017
• Docket Number: Court of Appeals No. 16CA0322
• Citation: 488 P.3d 142
• Court: Colorado Court of Appeals
• Parties: Denise G. NIBERT, Plaintiff-Appellee, v. GEICO CASUALTY COMPANY, Defendant-Appellant.

488 P.3d 142

Denise G. NIBERT, Plaintiff-Appellee,

v.GEICO CASUALTY COMPANY, Defendant-Appellant.

Court of Appeals No. 16CA0322

Colorado Court of Appeals, Division V.

Announced February 23, 2017

Franklin D. Azar & Associates, P.C., Michael Born, Aurora, Colorado, for Plaintiff-Appellee

Deisch, Marion & Klaus, P.C., Gregory K. Falls, Denver, Colorado, for Defendant-Appellant

Burg Simpson Eldredge Hersh & Jardine, P.C., Thomas W. Henderson, Brian K. Matise, Nelson Boyle, Englewood, Colorado, for Amicus Curiae The Colorado Trial Lawyers Association

Opinion by JUDGE FOX

¶ 1 Geico Casualty Company (Geico Casualty) appeals the trial court's judgment entered against it on jury verdicts returned in favor of Denise G. Nibert on her claims of common law bad faith and violations of section 10-3-1116, C.R.S. 2016. Geico Casualty also appeals the trial court's order awarding Nibert her attorney fees. We affirm.

I. Background

¶ 2 Nibert and her husband were injured when a car collided with their motorcycle in October 2012, along Interstate Highway 25.¹ Nibert fractured her tibia and fibula and required surgery. The at-fault driver of the car was insured by Allstate Insurance Company (Allstate), and Allstate paid Nibert its insurance limits of $50,000, settling Nibert's claims against the at-fault driver. Nibert had underinsured motorist (UIM) coverage on the motorcycle through Geico Indemnity Company (Geico Indemnity), and Geico Indemnity paid Nibert her UIM coverage limit of $50,000 before trial. Nibert had a separate UIM policy on the automobiles in her household through Geico Casualty, with a $25,000 coverage limit, which was secondary to the motorcycle policy. On July 3, 2014, Geico Casualty offered Nibert $1500 to settle her claim under her secondary automobile UIM coverage.

¶ 3 On January 8, 2015, Nibert sued Geico Casualty for breach of contract, common law bad faith, and statutory delay under section 10-3-1116. After discovery and before trial, Geico Casualty paid Nibert the $25,000 UIM coverage limit to settle Nibert's claims for breach of contract.

¶ 4 Following trial on Nibert's remaining claims of bad faith and statutory delay, a jury returned verdicts awarding Nibert $33,250 in noneconomic damages on her bad faith claim and $25,000 for her statutory delay claim. The trial court entered judgment on the jury's verdict for Nibert's bad faith claim and entered judgment of $50,000 as damages for Nibert's statutory delay claim.

¶ 5 The trial court also granted Nibert's motion for attorney fees, awarding $118,875.30 in fees. The court rejected Geico Casualty's arguments regarding the reasonableness of Nibert's attorney's hourly rates and scope of work performed and found that the lodestar amount of $118,875.30 did not warrant any upward or downward adjustment based on the facts and subject matter of the case.

II. Defense Theory Jury Instruction

¶ 6 Geico Casualty argues that the trial court erred in failing to adequately instruct the jury on its theory of defense—specifically that challenges to debatable claims are reasonable. We disagree.

A. Preservation and Standard of Review

¶ 7 The parties agree that Geico Casualty preserved its argument for appeal.

¶ 8 We review jury instructions de novo to determine whether the instructions as a whole accurately informed the jury of the governing law. Clyncke v. Waneka , 157 P.3d 1072, 1078-79 (Colo. 2007). If a jury instruction correctly states the law, we review the trial court's decision to give the instruction for an abuse of discretion. Day v. Johnson , 255 P.3d 1064, 1067 (Colo. 2011). A court abuses its discretion when its ruling is manifestly arbitrary, unreasonable, unfair, or when it misapplies the law. Landmark Towers Ass'n, Inc. v. UMB Bank, N.A. , 2016 COA 61, ¶ 31, 436 P.3d 1126.

B. Law and Analysis

¶ 9 Rejecting a tendered instruction that properly instructs the jury on the applicable law in the case and the evidence at issue, which are not adequately covered elsewhere, is error. Schuessler v. Wolter , 2012 COA 86, ¶ 26, 310 P.3d 151. However, it is not error for a trial court to reject a party's instruction when that instruction misstates the law, is argumentative, improperly emphasizes specific evidence, or when the court allows the party to otherwise argue its theory of the case. Id. ; Vista Resorts, Inc. v. Goodyear Tire & Rubber Co. , 117 P.3d 60, 73-74 (Colo. App. 2004) ; see also People v. Merklin , 80 P.3d 921, 927 (Colo. App. 2003) (concluding that the trial court properly rejected the defendant's instruction where the defendant was not precluded from presenting his theory of the case during closing argument); People v. Renaud , 942 P.2d 1253, 1255-57 (Colo. App. 1996) (affirming the trial court's refusal to give the defendant's requested instructions where the defendant was not deprived of his opportunity to present his theory of the case).

¶ 10 Geico Casualty tendered the following instruction, which the trial court refused to give to the jury: "It is reasonable for an insurance company to challenge claims that are fairly debatable. A claim is fairly debatable if reasonable minds could disagree on the outcome." Instead, the trial court relied on the Colorado pattern jury instructions governing common law bad faith and first-party statutory claims. In relevant part, the court instructed the jury as follows:

• Instruction 6 stated the elements of common law insurance bad faith, including that Geico Casualty knew or recklessly disregarded the fact that its conduct or position was unreasonable.

• Instruction 7 provided the standards for unreasonable conduct and unreasonable position, including the necessary comparison to what "a reasonably careful insurance company" would do under similar circumstances.

• Instruction 8 gave the elements of statutorily unreasonable delay, including the requirement that the delay was "without a reasonable basis."

• Instruction 9 listed prohibited insurer practices found in section 10-3-1104(1)(h), C.R.S. 2016.

The instructions did not state that it is reasonable for an insurance company to challenge claims that are fairly debatable. See Vaccaro v. Am. Family Ins. Grp. , 2012 COA 9M, ¶ 41, 275 P.3d 750 (stating that, under Colorado law, it is reasonable for an insurer to challenge claims that are fairly debatable).

¶ 11 However, the trial court allowed Geico Casualty to present expert testimony regarding the "fairly debatable" issue and argue its theory of defense to the jury. Geico Casualty's expert, Jon Sands, testified that, in his opinion, Geico Casualty acted reasonably in handling Nibert's UIM claim. Sands also testified about what it means to have a claim that is fairly debatable and opined that disagreements over the value of an insured's claim are neither uncommon nor unreasonable. In closing argument, Geico Casualty reiterated Sands' testimony, emphasizing to the jury that "he also told you that it's reasonable for insurers to challenge claims that are fairly debatable."

¶ 12 Geico Casualty argues that the ability to present its theory of defense and argument related to the "fairly debatable" issue did not adequately remedy the court's rejection of their instruction. We disagree. Contrary to Geico Casualty's argument, the tendered instruction went beyond the reasonableness of a challenge to a claim that is fairly debatable. Instead, the instruction, as tendered, misstated the law by effectively conflating the reasonableness elements of the common law bad faith claim and the statutory delay claim by inquiring only into whether Nibert's claim was fairly debatable. Colorado law is clear that whether a claim is fairly debatable is not the sole inquiry in a reasonableness analysis. See Fisher v. State Farm Mut. Auto. Ins. Co. , 2015 COA 57, ¶¶ 22-24, 419 P.3d 985 (cert. granted on other grounds, 2016 WL 3207869 [Colo. June 6, 2016] ).

¶ 13 In Fisher , another division of this court concluded that "fair debatability is not a threshold inquiry that is outcome determinative as a matter of law," but instead is a factor to be considered in a broader evaluation of whether an insurer acted reasonably. Id. at ¶ 24 (quoting Vaccaro , ¶ 42 ). The instruction in this case, as tendered, overly emphasized the "fairly debatable" issue, and, if allowed, could have directed the jury to find Geico Casualty's actions reasonable based purely on whether the claim was fairly debatable—rather than upon application of a balancing inquiry to more broadly determine reasonableness.

¶ 14 Geico Casualty further argues that the language in Fisher and Vaccaro , concluding that fair debatability is merely a factor to be considered in the ultimate reasonableness determination, is distinguishable where, as here, the issue arises in the context of a trial, rather than during resolution of a dispositive motion. However, the procedural posture is not relevant because the ultimate determination that a trial court must make when ruling on proffered jury instructions is whether the instruction adequately instructs the jury on the relevant law. See Schuessler , ¶ 26. Therefore, the conclusions in Fisher and Vaccaro that fair debatability is not outcome determinative and is but a factor in the broader reasonableness inquiry are instructive here.

¶ 15 Moreover, the "fairly debatable" issue is not relevant to a statutory delay claim pursuant to section 10-3-1116. See Etherton v. Owners Ins. Co. , 829 F.3d 1209, 1226-27 (10th Cir. 2016) (summarizing Colorado's unreasonable delay law, agreeing with cases limiting the "fairly debatable" issue to common law bad faith claims, and opining that "under Colorado law, fair debatability can be a relevant but not necessarily a determinative factor as to whether the insurer acted reasonably"). Including Geico Casualty's proposed instruction—without further explanation of its purpose and proper interpretation—in the jury instructions could have prompted the jury to improperly weigh the defense theory. See id. The trial court avoided this...