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

• Decision Date: 23 March 1992
• Docket Number: Nos. 91SA175,91SA129,s. 91SA175
• Citation: 827 P.2d 531
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner-Appellant, v. Earle BROADNAX, Respondent-Appellee. Philipp GAAL, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.
• Court: Colorado Supreme Court

Page 531

827 P.2d 531

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner-Appellant, v.Earle BROADNAX, Respondent-Appellee.

Philipp GAAL, Plaintiff-Appellee, v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

Nos. 91SA175, 91SA129.

Supreme Court of Colorado En Banc.

March 23, 1992.

Marc Levy & Associates, P.C., Marc R. Levy, Stuart D. Morse, Englewood, Creamer & Seaman, P.C., Thomas J. Seaman, Thomas J. Jirak, Denver, for petitioner-appellant in No. 91SA175.

No appearance on behalf of respondent-appellee in No. 91SA175.

Creamer & Seaman, P.C., Thomas J. Seaman, David P. Reiter, Denver, for defendant-appellant in No. 91SA129.

Kidneigh & Kaufman, P.C., Larry L. McCray, Denver, for plaintiff-appellee in No. 91SA129.

Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol.Gen., Eugene C. Cavaliere, Merrill Shields, Deputy Attys.Gen., Richard Djokic, First Asst. Atty. Gen., Robert M. Howard, Asst. Atty. Gen., Denver, for amicus curiaeAtty. General's Office, in Nos. 91SA175and91SA129.

Justice VOLLACKdelivered the Opinion of the Court.

State Farm Mutual Automobile Insurance Company(State Farm) appeals from two district court orders in two unrelated actions.In each action, State Farm challenged the constitutionality of section 10-4-708(1.5), 4A C.R.S. (1990 Supp.), which requires binding arbitration of disputes arising under no fault insurance contracts.We simultaneously address both appeals, since the constitutional challenges to section 10-4-708(1.5) in each are substantially the same.¹We affirm the district court's finding that section 10-4-708(1.5) is constitutional.

State Farm Mutual Automobile Insurance Co. v. Broadnax

No. 90CV11678

State Farm issued a car insurance policy to Earle Broadnax(Broadnax) prior to December 18, 1988.On December 18, 1988, and on September 7, 1989, Broadnax was involved in car accidents.Broadnax submitted claims to State Farm for personal injury protection benefits under his policy.A dispute regarding payment of benefits ensued, and Broadnax served State Farm with a Demand for Arbitration on April 3, 1990.

On November 6, 1990, State Farm filed a Petition to Stay Arbitration and sought a declaration that section 10-4-708(1.5) was unconstitutional.The district court denied the stay and found the statute to be constitutional.

Gaal v. State Farm Mutual Automobile Insurance Co.

No. 90CV9218

State Farm issued a car insurance policy to Rashel Engholm prior to October 14, 1988.On that date, Philipp Gaal(Gaal) was involved in an accident with Rashel Engholm and qualified for personal injury protection benefits under the policy.State Farm paid benefits to or on behalf of Gaal, but a dispute arose and Gaal served a Demand for Arbitration on State Farm. ²

An arbitration hearing was held in July 1990, at which State Farm argued that section 10-4-708(1.5) was unconstitutional.State Farm later filed an Application to Vacate the Arbitration Award in district court.

On March 25, 1991, the district court relied on its finding in State Farm Mutual Automobile Insurance Company v. Broadnax that section 10-4-708(1.5) was constitutional, and denied State Farm's application.State Farm now seeks review of the district court's determination in each case.

Section 10-4-708(1.5) provides, in pertinent part, that in "[a]ny action for breach of contract brought pursuant to subsection (1) of this section shall proceed to binding arbitration."Section 10-4-708(1.5) is part of the Motor Vehicle ("No Fault") Insurance Act (No Fault Act). §§ 10-4-701 to -724, 4A C.R.S. (1991 Supp.).

The No Fault Act requires automobile owners to have insurance policies which provide coverage to insureds for personal injuries sustained in automobile accidents.§ 10-4-706, 4A C.R.S. (1987 & 1991 Supp.).Insurers are obligated under the No Fault Act to provide direct benefits to insureds.Id.When the benefits sought exceed $2,500, insureds may bring an action in tort against another automobile owner or operator.§ 10-4-714(1)(e), 4A C.R.S.(1987).When an insured is liable for benefits paid by another insurer, the No Fault Act requires insurers to resolve reimbursement issues through mandatory, binding arbitration.§ 10-4-717, 4A C.R.S.(1987).³

The disputes thus governed by section 10-4-708(1.5) arise from the statutory right of insureds to recover benefits directly from insurers.§ 10-4-708(1), 4A C.R.S.(1987).As an insurer, State Farm is in essence contesting its statutory obligation to disburse benefits.Section 10-4-708(1.5) was enacted on June 1, 1989, and took effect on January 1, 1990.⁴Approximately one year later, section 10-4-708(1.5) was amended to provide parties with the option of resolving disputes through either binding arbitration or actions in contract.§ 10-4-708(1.5), 4A C.R.S. (1991 Supp.).State Farm challenges section 10-4-708(1.5) as it applied to Broadnax's and Gaal's disputes, which arose between January 1, 1990, and July 1, 1991.Our consideration of State Farm's challenges is thus limited to the version of section 10-4-708(1.5) which existed prior to the 1991amendment.

I.

State Farm contends that section 10-4-708(1.5), 4A C.R.S. (1990 Supp.), extinguishes its right of access to courts because the section removes State Farm's statutory cause of action for disputes arising under the No Fault Act from a trial to jury before a district court, without providing a right of de novo review by a district court following an adverse arbitration award.⁵After careful consideration of the constitutional guarantee, we find no violation of State Farm's right of access to courts.

A.The Right of Access to Courts

State Farm's contention posits that the right of access to courts guarantees Colorado litigants a trial to jury before a district court for disputes arising under the No Fault Act, and that the scope of appellate review be de novo.While we have previously evaluated the scope of the right of access to courts, we have not passed on the contentions raised by State Farm in the context of mandatory binding arbitration of disputes arising under the No Fault Act.⁶In resolving this inquiry, we thus look to the law of other jurisdictions for guidance.

The United States Constitution does not expressly provide for a right of access to courts.Berry v. Beech Aircraft Corp., 717 P.2d 670, 674(Utah1985);see alsoNordgren v. Milliken, 762 F.2d 851, 853(10th Cir.1985).Rather, the federal right of access to courts has been located in the Due Process Clause of the Fourteenth Amendment, ⁷ in the First Amendment's provision securing the right to petition the government for redress of grievances, ⁸ and in the Privileges and Immunities Clause of the Fourteenth Amendment.⁹

The United States Supreme Court has noted that the right of access to courts and the guarantees of due process have developed in response to challenges by defendants involuntarily haled into the formal judicial process.Boddie v. Connecticut, 401 U.S. 371, 375, 91 S.Ct. 780, 784, 28 L.Ed.2d 113(1970).¹⁰Thus, whether litigants are afforded adequate constitutional access to courts often sounds in due process under federal analysis.See, e.g., id.;Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 n. 5, 102 S.Ct. 1148, 1154 n. 5, 71 L.Ed.2d 265(1982).¹¹The Tenth Circuit Court of Appeals, in construing prison inmates' right of access, has stated that "[a]ccess to the courts'encompasses all the means a defendant or petitioner might require to get a fair hearing from the judiciary on all charges brought against him or grievances alleged by him.' "Nordgren, 762 F.2d at 853(quotingGilmore v. Lynch, 319 F.Supp. 105, 110(N.D.Cal.1970), aff'd sub nom.Younger v. Gilmore, 404 U.S. 15, 92 S.Ct. 250, 30 L.Ed.2d 142(1971)(per curiam)).Accordingly, the Court of Appeals for the Fifth Circuit has held that "[b]efore a 'compelling interest' standard of strict scrutiny is applied, the right that plaintiffs seek to vindicate by access to the courts must be a fundamental right."Wayne v. Tennessee Valley Authority, 730 F.2d 392, 403 n. 9(5th Cir.1984)(citingBoddie, 401 U.S. at 381, 91 S.Ct. at 788)(holding that statute of limitations in products liability action did not deprive homeowners of access to courts through due process).

Colorado, however, is one of thirty-seven states which diverged from the federal constitutional model by creating an express right of access to courts independent of constitutional due process guarantees.Beech Aircraft Corp., 717 P.2d at 674(citingFrancis E. McGovern, The Variety, Policy and Constitutionality of Product Liability Statutes of Repose, 30 Am.U.L.Rev. 579, 615 n. 218(1981));Lankford v. Sullivan, Long & Hagerty, 416 So.2d 996, 999(Ala.1982).

In evaluating the right of access under the Alabama Constitution, Justice Shores has noted that the origins of the right

can be traced back to the Magna Charta.Although its language is broad enough to be subject to varying interpretations, it can generally be said to incorporate into our constitution a fundamental principle of fairness, a perhaps vaguely conceived but important notion of limitation on the power of government to infringe upon individual rights, and to act arbitrarily.What those rights are, what degree of infringement is permitted, and with how much justification, are inquiries which have been the subject of long-standing debate....

Id. at 999(citation omitted).

While the thirty-seven constitutional provisions are "essentially similar,"¹² their application has varied.Under the Louisiana constitutional guarantee, for example, the legislature is free to allocate access to the formal judicial system using any system or classification which is not totally arbitrary so long as access to the system is not essential to the exercise of a fundamental constitutional right.Bazley v. Tortorich, 397 So.2d 475, 485(La.1981)(finding no violation where...