Travelers Indem. Co. v. Howard Elec. Co., 92CA1155
| Decision Date | 10 February 1994 |
| Docket Number | No. 92CA1155,92CA1155 |
| Citation | 879 P.2d 431 |
| Parties | TRAVELERS INDEMNITY COMPANY, Plaintiff-Appellee, v. HOWARD ELECTRIC COMPANY; Howard Mechanical Company; Cross-Tec Co.; TJK Co.; Howard Companies; Howard Electrical and Mechanical Company; C.I.C., Inc.; C.I.C., Inc. & Brown-Olds Corporation, a Joint Venture; TJ & K Electric; H.E.M.C.O. Electrical & Mechanical Co.; Howard-Chamblee-McAfee, a Joint Venture; Howard-Chamblee-McAfee; Howard-Belco, a Joint Venture; Howard-Diversified, a Joint Venture; Howard Electric Company & Howard Mechanical Company, a Joint Venture; Howard Electric Company Employees Profit Sharing Plan; Jack Howard; Robert Kohnen; Howard Electric and Mechanical Co., Inc.; Howard Systems, Inc.; Howard-Wholt, a Joint Venture; Herdman-Howard, a Joint Venture; Friedlander-Howard, a Joint Venture; Howard Electrical & Mechanical of Arizona, Inc.; EMCM, Inc.; REK, Inc., a/k/a REK Enterprises, Inc.; Howard Electrical & Mechanical, Inc.; H.E.M.C.O.-W.R. Roberts, a Joint Venture; and Howard Builders and Designers, Inc., Defendants-Appellants and Cross-Appellees, and Shaffer/Edson Electric Supply Co., a/k/a Shaffer Electric Supply Co. and Edson Lighting Co., a/k/a Edson Distributing Co., Inc., Defendant-Appellee and Cross-Appellant. . II |
| Court | Colorado Court of Appeals |
Weller Friedrich, LLC, Jerome M. Joseph, Gregory E. Sopkin, Denver, for plaintiff-appellee.
Wolf & Slatkin, P.C., Albert B. Wolf, Jean C. Arnold, Jonathan L. Madison, Denver, for defendants-appellants and cross-appellees.
Grimshaw & Harring, Richard L. Harring, Denver, for defendant-appellee and cross-appellant.
Opinion by Judge NEY.
Defendants, Howard Electric Company, and various of its officers, related companies, and joint ventures (Howard), appeal the judgment of the trial court entered in favor of plaintiff, Travelers Indemnity Company (Travelers), and in favor of defendant, Shaffer/Edson Electric Supply Co. (Shaffer), on its cross-claim for indemnity against Howard. We reverse and remand for a new trial.
This action arose from a dispute concerning retrospective insurance premiums assessed by Travelers for coverage provided to Howard and Shaffer under their automobile liability, general liability, and workers' compensation policies.
Under a retrospective insurance plan, premiums are based upon an insured's loss experience under the policies to which the plan applies. Thus, the actual annual premium is calculated after covered losses occurring during the completed year are known. Furthermore, because an insured under the plan is required to pay an estimated premium during the course of the coverage year, an adjustment is made at year's end based upon actual loss experience. Consequently, an insured may then be assessed an additional premium amount or, in case of overpayment, issued a refund.
Here, the major portion of the retrospective premium assessments sought by Travelers relates to one occurrence, a traffic accident in which a child was injured in a fall from a vehicle owned by Shaffer. At the time of this accident, Shaffer was one of the companies which comprised the Howard organization and was a named insured on the policies issued by Travelers to Howard.
In the subsequent personal injury action on behalf of the child, Travelers defended its insureds, settling the claim in an amount equal to the primary policy coverage limit of $300,000. Thereafter, Howard and Shaffer refused to pay retrospective premiums that were in excess of a $50,000 loss limitation included in their coverage. At issue, principally, are the inclusion by Travelers in the premium calculation of expenses incurred in defending the personal injury claim and the extent to which the loss limitation applies.
As a threshold matter, we reject plaintiff's contention that the stipulated confession of personal liability by named insureds Jack Howard and Robert Kohnen precludes their right to appeal the judgment of the trial court.
The named insured companies and individuals that comprise the Howard organization, among them Jack Howard and Robert Kohnen, have not denied liability for payment of retrospective insurance premiums. Rather, it is the calculation of the premiums that is at issue here, and the stipulation relied upon by Travelers does not support a conclusion that these individuals have waived their right to appeal what they contend is a calculation, and resultant award, based upon error.
Howard first asserts that the trial court misapplied the parol evidence rule in refusing to allow the admission of certain evidence to support the contention of Howard that the contract was ambiguous and did not comprise an integrated agreement between the parties. We agree.
The trial court's order does not reflect an explicit determination that the insurance agreement between the parties is unambiguous or is integrated as the final and complete expression of the agreement. See Restatement (Second) of Contracts § 209 (1979). However, implicit in its refusal to admit parol evidence during trial and in its analysis of the contract as interpreted by Travelers is a finding by the trial court that the terms of the contract were not ambiguous. Nevertheless, the interpretation of insurance documents, as any other written contract, is a matter of law, and we are not bound by the interpretative findings of the trial court. Eisenhower Hospital Osteopathic v. Taylor, 43 Colo.App. 498, 609 P.2d 1114 (1980).
Central to the issue here is the meaning of the contract term "allocated loss adjustment expenses." This term is undefined in the insurance contract and, thus, on its face represents a potentially unlimited adjustment. Even so, a term is not ambiguous merely because it is undefined within the policy if its meaning can be ascertained by looking at the definitions generally accepted by the courts, the industry, and authoritative secondary sources. See Heller v. Fire Insurance Exchange, 800 P.2d 1006 (Colo.1990).
Travelers maintains that "allocated loss adjustment expenses" is a term well-defined within the construction and insurance industry to include attorney fees and costs incurred in defending claims against insureds. Travelers further points out that Howard is a multi-million dollar construction enterprise that has purchased complex insurance coverage for many years.
There is no indication in the record that Howard possesses any expertise in the field of insurance. Rather, it relied upon the Talbert Corporation, an established insurance broker, to provide the necessary information and to negotiate and secure its coverage. However, any imputation of Talbert's role on behalf of Howard is weakened by the contractual relationship which existed between Talbert and Travelers, and such contract precludes characterization of Talbert exclusively as the agent of Howard. The trial court found, and we agree, that Talbert owed duties to both Howard and Travelers. Thus, its expertise cannot summarily be assumed to accrue to the sole benefit of Howard.
Additionally, the record does not support a conclusion that Howard's position in the construction industry provided it with adequate knowledge of the scope and meaning of this term. Hence, the question of ambiguity should be considered in view of the insured's knowledge and understanding as a reasonable lay person and from such a person's normal expectation of the extent of coverage of the policy. Steven v. Fidelity & Casualty Co., 58 Cal.2d 862, 27 Cal.Rptr. 172, 377 P.2d 284 (1964).
Moreover, "[p]ublic policy favors protecting consumers by requiring those who sell insurance to disclose fully and fairly to the purchasing public what insurance protection is actually being provided for the premium charged." Newton v. Nationwide Mutual Fire...
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APPENDIX 22
...of America, 38 P.3d 47 (Colo. 2001). Simon v. Shelter Gen. Ins. Co., 842 P.2d 236 (Colo. 1992) Travelers Indem. Co. v. Howard Elec. Co., 879 P.2d 431 (Colo. App. 1994) Tynan's Nissan, Inc. v. American Hardware Mut. Ins. Co., 917 P.2d 321 (Colo. App. 1995) Union Ins. Co. v. Kjeldgaard, 820 P......
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Chapter 12 - § 12.2 • LIABILITY INSURANCE POLICIES
...App. 2001) (using extrinsic evidence to determine who was intended to be "named insured"); Travelers Indem. Co. v. Howard Elec. Co., 879 P.2d 431 (Colo. App. 1994) (interpretation of phrases "allocated loss adjustment expense" and retrospective premiums).[122] Travelers, 879 P.2d at 434-35.......
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APPENDIX 23
...that a reasonable lay person can, by reading the policy, understand the coverage provided." Travelers Indem. Co. v. Howard Elec. Co., 879 P.2d 431, 434 (Colo. App. 1994). "[T]he rights and duties that each party acquired under the contract [depend] on the reasonable meaning of the policy la......