State Farm Mut. Auto. Ins. Co. v. McMillan

• Citation: 900 P.2d 1243
• Decision Date: 08 September 1994
• Docket Number: No. 93CA1721,93CA1721
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Petitioner-Appellant, v. Stephanie R. McMILLAN and Tracy D. McMillan, Respondents-Appellees. . I
• Court: Court of Appeals of Colorado

Page 1243

900 P.2d 1243

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois

corporation, Petitioner-Appellant, v. Stephanie R. McMILLAN and Tracy D. McMillan, Respondents-Appellees.

No. 93CA1721.

Colorado Court of Appeals,

Div. I.

Sept. 8, 1994.

As Modified on Denial of Rehearing Nov. 10, 1994.

Certiorari Granted July 31, 1995.

Rodman & Ross-Shannon, John R. Rodman, David L. Murphy, Denver, for petitioner-appellant.

Martin E. Long & Associates, P.C., Martin E. Long, Denver, for respondents-appellees.

Opinion by Judge ROY.

This is a declaratory judgment action to determine the availability of uninsured motorist benefits. Petitioner, State Farm Mutual Automobile Insurance Company, appeals from the trial court's order vacating a summary judgment entered in its favor pursuant to C.R.C.P. 60(b) and the subsequent summary judgment entered in favor of respondents, Stephanie and Tracy D. McMillan. We affirm.

On September 30, 1989, Stephanie McMillan (McMillan) was struck by a bullet while she was driving her car. The bullet was fired by an occupant of another vehicle who had been "tailgating" the McMillans and with whom the McMillans had engaged in verbal exchanges.

The insurer for the assailant's vehicle denied liability coverage. The McMillans' vehicle was insured by State Farm, and McMillan made a claim for benefits for her injuries. State Farm denied both Personal Injury Protection (PIP) benefits and benefits under the uninsured motorist coverage and then filed this declaratory judgment action to determine its liability for McMillan's injuries. The parties subsequently stipulated to the dismissal of any claims relating to PIP coverage and then State Farm filed a motion for summary judgment.

The trial court, on March 28, 1991, reserved ruling on State Farm's motion stating:

It has come to the Court's attention that a case with very similar issues was argued before the Court of Appeals on 2-25-91. Therefore, the Court will wait to rule on this issue to see if the appellate court provides any guidance on how to handle this matter.

The case to which the trial court referred, State Farm Automobile Insurance Co. v. Cung La, 819 P.2d 537 (Colo.App.1991) (Cung La I ), was announced March 28, 1991. In Cung La I, a panel of this court held that the victim of a shooting under very similar facts was not entitled to uninsured motorist benefits from his insurance carrier, State Farm.

Subsequently, on May 15, 1991, the trial court, expressly relying on Cung La I, granted summary judgment in favor of State Farm, stating:

As anticipated, the case of State Farm v. Cung La, 90CA0105, announced March 28, 1991, by the Colorado Court of Appeals, is dispositive. Under Cung La Defendant's injuries did not 'arise out of the use or operation of a motor vehicle.'

On December 2, 1991, the McMillans submitted to the trial court a "Notice to Court" advising that certiorari had been granted by our supreme court in Cung La I. Subsequently, on May 26, 1992, the court announced its decision reversing this court. Cung La v. State Farm Automobile Insurance Co., 830 P.2d 1007 (Colo.1992) (Cung La II ).

On June 29, 1992, relying on Cung La II, the McMillans filed a motion pursuant to C.R.C.P. 60(b)(4) and (5) seeking relief from the summary judgment previously entered.

In granting this motion for relief, the trial court stated:

This Court, relying on State Farm v. Cung La, 90 CA 0105, announced March 28, 1991, by the Colorado Court of Appeals, granted Plaintiff's Motion for Summary Judgment. The Court of Appeals decision was reversed by the Colorado Supreme Court on May 26, 1992. At all times, Respondent had kept this Court informed and advised as to the status of Cung La, which this Court determined was dispositive of the Motion for Summary Judgment.

After the trial court's ruling reopening the case, and based on its reading of Cung La II, State Farm moved to amend its petition for declaratory relief alleging that the injuries incurred by McMillan were not "caused by accident" that arose out of the operation or use of a motor vehicle. The trial court granted the motion to amend.

Both parties then filed cross-motions for summary judgment. In ruling upon these motions, the trial court concluded that McMillan's injuries were "caused by accident" within the meaning of the policy and she was, therefore, entitled to uninsured motorist benefits from her insurer, State Farm.

I.

State Farm first contends that the trial court erred in vacating the initial summary judgment order pursuant to C.R.C.P. 60(b)(4) and C.R.C.P. 60(b)(5). We conclude that, under these unique circumstances, the trial court did not abuse its discretion in setting aside the initial summary judgment pursuant to C.R.C.P. 60(b)(5). We do not, therefore, address the applicability of C.R.C.P. 60(b)(4).

The standard of review with regard to post-judgment relief is whether the trial court abused its discretion in granting or denying the C.R.C.P. 60(b) motion. See Johnson v. Johnson, 132 Colo. 236, 287 P.2d 49 (1955); In re Marriage of Seely, 689 P.2d 1154 (Colo.App.1984).

C.R.C.P. 60(b) specifies a number of circumstances in which a trial court may relieve a party from the effects of a final judgment, order, or proceeding. It, and the corresponding federal rule, have been described as attempting "to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice should be done." Canton Oil Corp. v. District Court, 731 P.2d 687, 694 (Colo.1987), quoting, 11 C.Wright & A. Miller, Federal Practice & Procedure § 2851 at 140 (1973).

C.R.C.P. 60(b)(5) permits a trial court to set aside a final order for "any other reason justifying relief from the operation of the judgment." Fed.R.Civ.P. 60(b)(6) permits a federal court to grant relief from a final judgment or order on the same "other reason" grounds as C.R.C.P. 60(b)(5).

C.R.C.P. 60(b)(5) has been interpreted by our supreme court to apply to "extreme situations not covered by the preceding clauses in the rule," Atlas Construction Co. v. District Court, 197 Colo. 66, 69, 589 P.2d 953, 956 (1979), and its federal counterpart has been referred to as the "grand reservoir of equitable power to do justice in a particular case." Radack v. Norwegian America Line Agency, Inc., 318 F.2d 538, 542 (2d Cir.1963).

Accordingly, the rule must be applied in light of its equitable purposes. It should not be interpreted so broadly that it creates uncertainty surrounding the validity of judgments or so narrowly that it will not accomplish justice in the situation in which it is warranted. See Canton Oil Corp. v. District Court, supra.

In interpreting the federal rule, the United States Court of Appeals for the Tenth Circuit has held that when a state supreme court overrules a decision upon which the relief was based, relief under Fed.R.Civ.P. 60(b)(6) is justified. Pierce v. Cook & Co., 518 F.2d 720 (10th Cir.1975); see also Adams v. Merrill Lynch Pierce Fenner & Smith, 888 F.2d 696, 702 (10th Cir.1989) ("[A] change in relevant case law by the United States Supreme Court warrants relief under Fed.R.Civ.P 60(b)(6)."); Koch v. Billings School District No. 2, 253 Mont. 261, 833 P.2d 181 (1992) (change in "immunity law" created circumstances permitting relief under state's "other reason clause").

In our view, an analogous principle applies here in light of the change in case law effected by our supreme court's ruling in Cung La II. Indeed, the situation here is as compelling as that presented in Pierce in that our supreme court in Cung La II also reversed the very case upon which the trial court relied in entering the initial summary judgment.

State Farm urges us to follow E.B. Jones Construction v. Denver, 717 P.2d 1009 (Colo.App.1986). We find Jones distinguishable and decline. In Jones, Denver moved to have a judgment set aside under C.R.C.P. 60(b)(5) based on a recently issued supreme court opinion which was characterized as reiterating a long established rule of law in Colorado. Here, Cung La I and Cung La II, though they obviously reached different conclusions, both announced a new rule of law in a case of first impression in Colorado.

For the reasons set forth above, we also reject State Farm's contention that the McMillans are not entitled to relief from the initial summary judgment order because they failed to pursue a timely appeal of that determination. C.R.C.P. 60(b)(5) is not "a substitute for an appeal, but instead is meant to provide relief in the interests of justice in extraordinary circumstances." Cavanaugh v. State, 644 P.2d 1, 5 (Colo.1982), appeal dismissed, 459 U.S. 1011, 103 S.Ct. 367, 74 L.Ed.2d 504 (1982).

Under the unique circumstances of this case, the McMillans, in our view, have not deliberately chosen not to appeal as contended by State Farm. See Canton Oil v. District Court, supra. Rather, the conduct of the parties and the trial court's reliance on a single precedent that was subsequently reversed creates the equitable circumstances that justify relief under C.R.C.P. 60(b)(5).

We conclude that the trial court, and for that matter the parties, intended to rely on a correct statement of the applicable law. Timing alone dictated an incorrect result. Thus, it was appropriate that the trial court review its initial summary judgment order and take appropriate action.

Therefore, we conclude that the trial court did not abuse its discretion in granting the C.R.C.P. 60(b) motion. See Johnson v. Johnson, supra; In re Marriage of Seely, supra.

II.

State Farm next contends that the trial court erred in determining that McMillan's injuries were "caused by accident." Again, we disagree.

A.

The McMillans' policy with State Farm provides uninsured motorist coverage as follows:

We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident...