Travelers Indem. Co. of Illinois v. Mid-Century Ins. Co.

• Decision Date: 30 October 1997
• Docket Number: MID-CENTURY,No. 96CA1225,96CA1225
• Citation: 961 P.2d 509
• Parties: 97 CJ C.A.R. 2545 The TRAVELERS INDEMNITY COMPANY OF ILLINOIS, Plaintiff-Appellee, v.INSURANCE COMPANY, Defendant-Appellant. . III
• Court: Colorado Court of Appeals

Page 509

961 P.2d 509

97 CJ C.A.R. 2545

The TRAVELERS INDEMNITY COMPANY OF ILLINOIS, Plaintiff-Appellee, v. MID-CENTURY INSURANCE COMPANY, Defendant-Appellant.

No. 96CA1225.

Colorado Court of Appeals Div. III.

Oct. 30, 1997.

Rehearing Denied Dec. 11, 1997.

Certiorari Granted July 27, 1998.

Clifton, Hook & Bovarnick, P.C., James R. Clifton, Harvey D. Flewelling, Denver, for Plaintiff-Appellee.

Levy & Lambdin, P.C., Suzanne Lambdin, Stephanie A. Montague, Englewood, for Defendant-Appellant.

Opinion by Judge HUME.

Defendant, Mid-Century Insurance Company, appeals the award of damages to plaintiff, Travelers Indemnity Company of Illinois. We affirm.

Plaintiff's insured was injured in an automobile accident while riding as a passenger in a car covered by an insurance policy issued by defendant. Defendant denied her claim for personal injury protection (PIP) benefits, asserting that her one-time request of her roommate for a ride to work when her truck was being repaired constituted a ridesharing arrangement under 10-4-707.5, C.R.S. 1997.

The insured then contacted plaintiff, her insurer. Plaintiff's claims representative called defendant to dispute its refusal to pay the insured's PIP benefits. Defendant told the representative that it was standing by its decision to deny such benefits on the ground that the one-time ride was a ridesharing agreement. Defendant subsequently closed its file on the incident and took no other action on the insured's claim.

Plaintiff, as the insured's insurance carrier, paid PIP benefits to her and sought reimbursement from defendant for the amounts paid. Defendant continued to deny its liability for such payments relying on its interpretation of the ridesharing statute.

Plaintiff then filed suit seeking reimbursement and a declaratory judgment that defendant was the primary provider for PIP benefits arising from the accident. The trial court granted plaintiff's motion for summary judgment, determining that defendant was liable as the primary provider and was required to reimburse plaintiff for the amounts paid to its insured. Defendant does not challenge this judgment on appeal.

Plaintiff then amended its complaint to add a claim for treble damages, prejudgment interest, and attorney fees incurred as a result of defendant's alleged willful and wanton failure to pay PIP benefits. Plaintiff also filed another motion for summary judgment, which the court granted, determining that defendant had waived its right to dispute the reasonableness and necessity of the amounts paid by plaintiff. This judgment also is not challenged on appeal.

Following a trial, a jury determined that defendant's refusal to pay PIP benefits was willful and wanton. The trial court entered judgment for plaintiff and awarded treble damages pursuant to 10-4-708(1.8), C.R.S. 1997.

Defendant's sole contention on appeal is that the trial court erred in awarding treble damages to plaintiff. The primary argument advanced by defendant in seeking reversal is based upon a narrow reading of the language of 10-4-708(1.8) which states that: "[T]he insurer shall pay to the insured ... an amount which is three times the amount of unpaid benefits recovered ..." (emphasis added). We perceive no error.

In enacting legislation establishing requirements for property and casualty insurance, the General Assembly declared that the "health, welfare, and safety of the people ... would be enhanced by the expeditious handling of liability claims." Section 10-4-101, C.R.S. 1997. Similarly, the Colorado Auto Accident Reparations Act, 10-4-701, et seq., C.R.S. 1997 (the No-fault Act), was enacted to avoid inadequate compensation to automobile accident victims and provide benefits to persons injured in such accidents. Section 10-4-702, C.R.S. 1997; Farmers Group, Inc. v. Williams, 805 P.2d 419 (Colo.1991).

Section 10-4-708(1), C.R.S. 1997, grants persons entitled to collect PIP benefits the statutory right to maintain an action in contract against an insurer who fails to pay such benefits, and 10-4-108(1.8) provides a civil penalty for an insurer's willful and wanton failure to pay such benefits.

The Colorado Supreme Court has determined that treble damages under 10-4-708(1.8) are not punitive in nature. Rather, this section establishes a statutory claim to a civil penalty upon proof by a preponderance of evidence of an insurer's willful and wanton failure to pay benefits. Once such conduct on the part of the insurer has been proven, the award of treble damages is automatic....