Radil v. National Union Fire Ins. Co.

Decision Date16 October 2008
Docket NumberNo. 07CA1534.,07CA1534.
Citation207 P.3d 849
PartiesJennifer RADIL, Cross-Claim Plaintiff-Appellant, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Cross-Claim Defendant-Appellee.
CourtColorado Court of Appeals

Roberts Levin Rosenberg, P.C., Thomas L. Roberts, Michael J. Rosenberg, Zachary C. Warzel, Denver, Colorado, for Cross-Claim Plaintiff-Appellant.

Treece, Alfrey, Musat & Bosworth, P.C., Carol L. Thomson, Denver, Colorado, for Cross-Claim Defendant-Appellee.

Opinion by Judge ROY.

Jennifer Radil (the plaintiff) appeals the trial court's summary judgment in favor of National Union Fire Insurance Company of Pittsburgh, Pennsylvania (the insurer) regarding her claim for underinsured motorist (UIM) benefits for injuries she suffered as a passenger in a car accident. We vacate the judgment and remand for further proceedings.

In the summer of 2000, the plaintiff worked as an assistant counselor at a summer camp owned and operated by Sanborn Western Camps, Inc. (the employer). In mid-summer, the camp supervisors scheduled an "Assistant Counselor Appreciation Day," which included a whitewater rafting trip partially paid for by the employer.

Ordinarily, the employer provided transportation in its vans; however, its vans were not available, and it requested that the counselors use their own vehicles. A supervisor provided a sports utility vehicle driven by her daughter, who was also a counselor. Due to the number of passengers, the plaintiff rode in the space behind the seats, which lacked seatbelts or other passenger restraints. En route, the driver lost control, the vehicle rolled, the plaintiff was ejected, and she suffered a broken neck, leaving her a quadriplegic.

The driver was insured under an automobile liability policy issued to her mother with a $500,000 policy limit (vehicle insurance). The employer was insured under a commercial automobile and general liability policy with a $1 million policy limit (employer's primary insurance policy). In addition, the employer carried a commercial "follow on" umbrella insurance policy issued by the insurer with a $25 million policy limit. This latter policy is at issue here.

After being denied workers' compensation benefits, the plaintiff brought a diversity negligence action against the employer in federal court. The trial court dismissed the action, concluding that her action was barred by state law and her remedies were limited to workers' compensation. The appellate court reversed and remanded the matter to the trial court. See Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220 (10th Cir.2004).

While the plaintiff's personal injury action was pending in federal court, the employer's primary insurer brought this declaratory judgment action against the plaintiff and the employer, seeking a declaration that it was not obligated to defend or indemnify the employer in the federal proceeding. The insurer was joined at the request of the employer, which alleged that the insurer was obligated to provide liability coverage should the employer's primary insurer prevail or should its coverage be exhausted. In addition, the plaintiff filed a cross-claim seeking a declaration that she was entitled to UIM coverage from the insurer. The insurer denied both claims.

Following the reinstatement of her action in federal court, and with the insurer's permission but without the insurer's waiving its position that its policy did not provide UIM benefits to the plaintiff, she settled her claims against the driver for $500,000, the driver's mother's policy limit, and against the employer for the $1 million policy limit under the employer's primary insurance policy. However, she reserved the right to seek UIM benefits from the insurer. Following the settlement, the employer and the insurer stipulated to dismiss this action as between them.

The plaintiff objected to the stipulated dismissal. In response to that objection, the insurer, for the first time, conceded that its policy provided liability coverage to the driver. Further, it argued that the vehicle was not underinsured because aggregating the vehicle liability coverage, the employer's primary insurer's liability coverage (which the primary insurer denied and which was not resolved or conceded), and the insurer's liability coverage, the driver had $26.5 million in liability coverage, which is in excess of the UIM coverage under the insurer's UM/UIM $25 million policy limit.

Both the plaintiff and the insurer filed motions for summary judgment. The trial court granted the insurer's motion and this appeal followed.

I. Standard of Review

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.

We also review the interpretation of insurance contracts de novo. Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo.2002). Terms contrary to statutory provisions or in violation of public policy are void. Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92, 100 (Colo.1995). Otherwise, we give contract terms their plain and ordinary meanings and construe ambiguous terms in favor of the insured. Id.; Hoang v. Assurance Co., 149 P.3d 798, 802 (Colo.2007). 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).

Exclusionary language that conflicts with the insured's objectively reasonable expectations is not enforceable. State Farm Mut. Auto. Ins. Co. v. Nissen, 851 P.2d 165, 167-68 (Colo.1993). A commonsense analysis of automobile insurance contracts is particularly appropriate because such insurance policies are sold to consumers who are not expected to be highly sophisticated in the art of reading them. Id. at 167.

II. Statutory Requirements

Section 10-4-609, as applicable at the time of the accident and as pertinent here, governed the offering of uninsured and underinsured motorist (UM/UIM) insurance and provided as follows:

(1) (a) No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be delivered or issued for delivery in this state ... unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in section 42-7-103(2), C.R.S., ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom; except that the named insured may reject such coverage in writing.

. . . .

(4) Uninsured motorist coverage shall include coverage for damage for bodily injury or death that an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle. An underinsured motor vehicle is a land motor vehicle, the ownership, maintenance, or use of which is insured or bonded for bodily injury or death at the time of the accident, but the limits of liability for bodily injury or death under such insurance or bonds are:

(a) Less than the limits for uninsured motorist coverage under the insured's policy; or

(b) Reduced by payments to persons other than an insured in the accident to less than the limits of uninsured motorist coverage under the insured's policy.

(5) The maximum liability of the insurer under the uninsured motorist coverage provided shall be the lesser of:

(a) The difference between the limit of uninsured motorist coverage and the amount paid to the insured by or for any person or organization who may be held legally liable for the bodily injury; or

(b) The amount of damages sustained, but not recovered.

Ch. 92, sec. 1, 1983 Colo. Sess. Laws 455, as amended by Ch. 51, sec. 4, 1995 Colo. Sess. Laws 143; cf. § 10-4-609, C.R.S.2008 (reflecting amendments to subsection (4) and deletion of subsection (5) by Ch. 413, secs. 1 & 2, 2007 Colo. Sess. Laws 1921-22). The statute required insurers to offer their customers the ability to protect themselves from loss caused by negligent and financially irresponsible motorists. Kral v. Am. Hardware Mut. Ins. Co., 784 P.2d 759, 762-63 (Colo. 1989). The statute further permitted an injured insured to recover from an underinsured motorist to the same extent as would occur if the underinsured motorist had no insurance and set the maximum limits of the insurer's liability relative to the insured's loss. Id. Together, the subsections reflected a clear legislative intent to place an injured party with UM/UIM coverage in the same position as if the negligent motorist had been insured to the limits of the UM/UIM coverage.

To determine whether a liable party is underinsured, the statute requires a comparison between the liability limits on policies insuring the tortfeasor's vehicle and the sum of the UM/UIM limits on policies available to the injured party. § 10-4-609(4)(a) (before 2007 amendments); State Farm Mut. Auto. Ins. Co. v. Progressive Mut. Ins. Co., 148 P.3d 117, 121 (Colo.2006).

An insurer may offset against its UM/UIM coverage all liability payments received from tortfeasors, their insurers, and other UM/ UIM carriers. Carlisle, 946 P.2d at 556. However, an insurer's UIM coverage obligation is not contingent upon the injured party's full recovery under the tortfeasor's policy. § 10-4-609(4), (5) (before 2007 amendments); State Farm Mut. Auto. Ins. Co. v. Bencomo, 873 P.2d 47, 50 (Colo.App. 1994). In such cases, an insurer may only offset its UIM coverage obligation by the actual amount the injured party recovers. State Farm Mut. Auto. Ins. Co. v. Tye, 931 P.2d 540, 543...

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