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

• Decision Date: 14 October 2003
• Docket Number: No. 02SC258.,02SC258.
• Citation: 77 P.3d 1256
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, v. Christina E. KASTNER, Respondent.
• Court: Colorado Supreme Court

77 P.3d 1256

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner, v. Christina E. KASTNER, Respondent.

No. 02SC258.

Supreme Court of Colorado, En Banc.

October 14, 2003.

Rehearing Denied October 27, 2003.¹

Hall & Evans, L.L.C., Alan Epstein, Denver, Colorado, Cain & Hayter, L.L.P., Craig W. Cain, Colorado Springs, Colorado, Attorneys for Petitioner.

Tracy Pride Stoneman, P.C., Tracy Pride Stoneman, Westcliffe, Colorado, Attorneys for Respondent.

Johnson & Ayd, P.C., James D. Johnson, Denver, Colorado, Attorneys for Amicus Curiae National Association of Independent Insurers.

Gerald C. Sloat, P.C., Gerald C. Sloat, P. Randolph Nicholson, Boulder, Colorado, Attorneys for Amicus Curiae Colorado Trial Lawyers Association.

Joel N. Varnell & Associates, Joel N. Varnell, Michael J. Decker, Denver, Colorado, Attorneys for Amicus Curiae Colorado Defense Lawyers Association.

Justice KOURLIS delivered the Opinion of the Court.

In this case, an assailant kidnapped Plaintiff, Christina E. Kastner, took her in her own car to a remote location and sexually assaulted her in the vehicle. Kastner sought coverage from her automobile insurer, State Farm Mutual Automobile Insurance Company (State Farm), for her injuries. State Farm denied coverage and brought a declaratory judgment action against Kastner, seeking a declaration that its automobile insurance policy did not cover the injuries Kastner had suffered from the assault. The trial court determined that there was coverage, and the court of appeals agreed. State Farm Mut. Auto. Ins. v. Kastner, 56 P.3d 1144 (Colo.App.2002). We granted certiorari on the question of whether injuries caused by a sexual assault in an automobile arise out of the operation, maintenance, or use of a motor vehicle for purposes of personal injury protection or uninsured/underinsured automobile insurance coverage.

Resolution of this case requires us to determine whether the injuries associated with the sexual assault are causally related to a "use" of the claimant's motor vehicle. We now hold that (1) where the motor vehicle is being used in a manner reasonably foreseeable at the time the parties contracted for the insurance and (2) the "use" of the vehicle is inextricably linked to the plaintiff's injury, the plaintiff is entitled to recover. Both because we conclude that the use was not reasonably foreseeable and because we conclude that the sexual assault had an insufficient causal nexus with use of the vehicle, we now hold that Kastner's State Farm policy did not cover her injuries. Accordingly, we reverse the court of appeals, and return this case to the trial court with directions to enter summary judgment on State Farm's motion.

I. Facts

This case was submitted on stipulated facts. Those facts disclose that on December 8, 1998, Christina Kastner was shopping at the Citadel Mall in Colorado Springs. When she left the store sometime after 7:30 p.m., it was dark. Her car was parked about ten cars down from the closest parking spot on the east side of the shopping center. The lot was relatively full and there were cars parked on both sides of Kastner's car. Kastner was standing at her car and had unlocked the car door when she saw a male just to the south of her and directly behind her car. She then opened the door to the car and was standing between the car seat and the open door when the male began asking for directions. Kastner believed that the male had been hiding either behind and to the side of her vehicle or behind the vehicle next to hers because she did not notice him until she reached her car.

Kastner had no reason to believe that the male used her vehicle in some way to identify her as a potential victim. As Kastner was responding to the request for directions, the man quickly moved beside her and ordered her to get into the car. She saw something in his hand that she believed to be a knife or gun. Kastner tried to get away from the man by pushing him in the face, but he moved the object toward her and she noticed that the object was a knife. He ordered her to the passenger side of the car, and he grabbed the keys to the car from her hand. She obeyed the man's instructions to get into the front passenger seat of the car, put the seat back and get down as far as possible. The man then entered the driver's side of the car and drove her car from the lot.

He took Kastner to Palmer Park, a wooded park in Colorado Springs. Along the way, he pointed a knife with a 6" to 8" blade at her, yelled at her to stay in the car and threatened to kill her. At Palmer Park, he pulled off the road in an isolated area. He robbed her of $150, and demanded that she disrobe. She opened the passenger door to attempt escape, but was held in by her automatic seatbelts. The man immediately grabbed her by the hair and placed the knife blade on her throat. He then sexually assaulted her in the car with the knife at her back. After the assault, he drove out of Palmer Park and pulled into a liquor store parking lot. He threatened her and her children with bodily harm if she reported the assault, got out of the car and walked away. Kastner immediately drove to the police station to report the incident.

At the time of the incident, Kastner was insured by State Farm Insurance Company under a Personal Injury Protection (PIP) policy that was consistent with the Colorado Auto Accident Reparations Act (the "No Fault Act"), section 10-4-701 et. seq., 3 C.R.S. (2002). The policy also included uninsured/underinsured (UM) motorist coverage pursuant to the Colorado Uninsured Motorist Act, section 10-4-609, 3 C.R.S. (2002). Kastner submitted claims to State Farm for both PIP and UM benefits to compensate her for injuries arising out of the subject incident. State Farm denied the claims.

In pertinent part, the personal injury protection portion of that policy provided that:

We will pay in accordance with the No Fault Act for bodily injury to an insured, caused by an accident resulting from the use or operation of a motor vehicle. (emphasis added)

The uninsured motor vehicle portion of that policy provided that:

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 an accident arising out of the operation, maintenance or use of an uninsured motor vehicle. (emphasis added)

State Farm brought this action, seeking a declaratory judgment that it had no obligation under the policy. The parties submitted the matter to the trial court on stipulated facts and cross motions for summary judgment. The trial court granted summary judgment for Kastner, concluding that "the victim selection of Kastner after the vehicle door was opened, the use of the reclining passenger seat to prevent Kastner from signaling for help, the use of the vehicle to get to an isolated area and the use of the automatic seatbelts as restraints collectively constitute a causal connection between this vehicle and the assault." State Farm appealed to the court of appeals, which affirmed the trial court, holding that under the facts of this case, there was a sufficient causal connection between the car and the injuries to warrant a finding of coverage under the PIP and UM provisions of the policy. Kastner, 56 P.3d at 1146.

II. Insurance Policies in General

An insurance policy is a contract between the insured and the insurer, and as such, it is to be interpreted according to settled principles of contract law. Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo. 2002). This general rule, however, has two provisos. First, the contract raises quasi-fiduciary obligations owed by the insurer to the insured. Farmers Group, Inc. v. Trimble, 691 P.2d 1138, 1141 (Colo.1984). Unlike the ordinary commercial contract where the parties seek to ensure a commercial advantage for themselves, the insurance contract "seeks to obtain some measure of financial security and protection against calamity" for the insured. Id. As a result, the insurer has a common-law duty "not to unreasonably withhold payment of benefits it is obligated to make under the insurance contract." Farmers Group, Inc. v. Williams, 805 P.2d 419, 423 (Colo.1991).

Second, the contract must comply with applicable statutory requirements. Should the contract fail to conform to any statute, it is unenforceable to that extent. Peterman v. State Farm Mut. Ins. Co., 961 P.2d 487, 492 (Colo.1998). While the No Fault Act requires the insurer to provide certain coverage within its policy, this requirement co-exists with its quasi-fiduciary duty not to deny this coverage unreasonably. Williams, 805 P.2d at 423.

Here, we deal with the simple language of a contract, and with the legal implications of that language. Since both the UM and PIP policy provisions are express attempts to conform to statutory requirements, our interpretation of their terms should reflect the overall legislative purpose of the UM and No Fault statutes. See Allstate Ins. Co. v. Parfrey, 830 P.2d 905, 911 (Colo.1992)

; 7 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 109:17 (3d ed.1995, updated 2003). Consistent with both the legislative declaration and the general purpose of automobile insurance, our previous cases have interpreted the No Fault Act as providing a floor of recovery for the injuries of policy-carriers for the type of risks one would expect an insurance contract to cover. See, e.g., Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92, 103 (Colo.1995). Thus, the legislative intent of the statutes controls our interpretation of the policies. See State Farm Mut. Auto. Ins. Co. v. McMillan, 925 P.2d 785, 792 (Colo.1996) ("[S]ection 10-4-609 regulates coverage for injuries caused by uninsured motorists and therefore governs the terms of the insurance contract.") (internal citation omitted).

III. The Use Test

The General Assembly has declared that the purpose of the No Fault Act is to avoid inadequate...