Usaa v. Parker

• Citation: 200 P.3d 350
• Decision Date: 20 January 2009
• Docket Number: No. 07SC524.,07SC524.
• Parties: USAA, Petitioner v. Richard Ernest PARKER, Respondent.
• Court: Colorado Supreme Court

200 P.3d 350

USAA, Petitioner v. Richard Ernest PARKER, Respondent.

No. 07SC524.

Supreme Court of Colorado, En Banc.

January 20, 2009.

Neil C. Bruce, Bruce & Salt, LLC, Colorado Springs, Colorado, Attorneys for Petitioner.

Lloyd C. Kordick, III, Lloyd C. Kordick & Associates, Colorado Springs, Colorado Attorneys for Respondent.

Justice BENDER delivered the Opinion of the Court.

Introduction

In this appeal, we determine which of Colorado's two prejudgment interest statutes controls the calculation of prejudgment interest awarded to an insured in an underinsured motorist ("UIM") case brought against his insurer to recover benefits arising out of an underlying tort: the "personal injury statute,"¹ which governs prejudgment interest in cases where damages for personal injuries are sought, or the "wrongful withholding statute,"² which governs prejudgment interest in cases where damages for wrongful withholding³ are sought.⁴⁵

In Parker v. USAA, ___ P.3d ___, No. 05CA2361, 05CA2569, 2007 WL 1289614, slip op. (Colo.App. May 3, 2007), the court of appeals held that the "personal injury statute" controls the calculation of prejudgment interest in such cases and thus Petitioner USAA, Respondent Richard Parker's uninsured/underinsured motorist (UM/UIM) insurer, was liable to Parker for prejudgment interest on his UIM claim at rate of nine percent per annum from the date of Parker's accident as mandated by that statute.

We affirm. As a threshold matter, we hold that USAA's payment of the disputed interest after it filed a notice of appeal did not moot the case under either the acceptance-of-benefits doctrine or the satisfaction-of-judgment doctrine.

The plain language of Colorado's UM/UIM statute, section 10-4-609, C.R.S. (2002), provides that UIM insurance must include coverage for all "damages" an insured is legally entitled to recover against the tortfeasor, up to the insured's UIM policy limits. Because prejudgment interest is an element of "damages," the language of section 10-4-609 mandates that the insured recover the same measure of prejudgment interest he would be entitled to recover in a direct action against the tortfeasor, that is, prejudgment interest at a rate of nine percent per annum from the date of the accident under the personal injury statute.

Likewise, we have consistently held that the legislative intent behind section 10-4-609 is to give Coloradans the opportunity to recover compensation for losses from their UIM insurer "in the same manner" and "to the same extent" as they would recover for such losses from a tortfeasor who was insured in amounts equal to the insured's UIM coverage. If the wrongful withholding statute applied to claims such as Parker's, an insured would recover less in such an action than he would in a direct action against a tortfeasor who is insured to the same extent that he is, thus contravening our well-established understanding of the legislature's intent.

The plain language of the "personal injury statute" provides that the nature of the damages sought by the plaintiff, rather than the source of the defendant's obligation to pay the plaintiff, triggers its application.⁶ Although USAA's obligation as a UIM insurer is contractual, its contract requires the payment of personal injury damages to the insured.

Thus, we hold that when an insured succeeds in a claim against an insurer for UIM benefits arising from personal injuries, the insured's prejudgment interest award is calculated under the "personal injury statute," and not under the "wrongful withholding statute." Prejudgment interest for underinsured motorist benefits therefore accrues at a rate of nine percent per annum from the date of the accident as mandated by the "personal injury statute."

We remand this case to the court of appeals to be returned to the trial court with directions to enter judgment consistent with this opinion.

Facts and Proceedings Below

Respondent Richard Parker and four other motorists were injured in a motor vehicle chain reaction accident caused by Stephen Maxwell. Maxwell's liability insurance was limited to $50,000. Twelve days later, Parker filed a claim for UIM benefits with USAA, his insurer, and twenty days after the accident, filed suit against Maxwell, alleging that Maxwell negligently caused his injuries. Parker also filed a third party complaint against USAA for UIM benefits, alleging that the litigation determining Maxwell's liability for Parker's injuries "should determine the liability of USAA for payment of underinsured benefits as required by Colorado statute C.R.S. 10-4-609," the UM/UIM statute, and that "USAA is a necessary and essential party to determination of that issue as to the amount of any offset they would be entitled to against their coverage for underinsured benefits purchased by Richard Parker."

Maxwell's insurer paid the $50,000 liability limit into the court's registry fund and, pursuant to a settlement agreement, the injured parties agreed that Parker would receive $12,500 of this amount. Parker thereafter released Maxwell from further liability, leaving USAA as the sole remaining defendant in the case.

Approximately twenty-one months after filing suit, the case was tried to a jury; however, the jury could not agree on a verdict and a mistrial was declared. Six months later, the parties stipulated to a court decision based on the first trial record.

The trial court ruled in Parker's favor and awarded him $201,000 in damages, not including interest. The trial court then awarded Parker prejudgment interest at nine percent per annum from the date of the accident, as mandated by the "personal injury statute," section 13-21-101(1), and certain costs not pertinent to this appeal. The trial court reasoned that, by its plain language, the "personal injury statute" applies to this case because "Defendant's obligation arose from contract, but Plaintiff's injury was in tort." The trial court further stated that the legislative history of the UM/UIM statute indicates that the General Assembly intended that when an innocent insured is injured by an uninsured or underinsured motorist, then the insured should recover against the insurer to the same extent as he would against the tortfeasor, up to the insured's UIM limits. The court reasoned that because Parker would be entitled to prejudgment interest as calculated under section 13-21-101(1) in a direct action against Maxwell, the UM/UIM statute requires that he receive the same treatment when recovering against his UM/UIM insurer, USAA.

USAA filed a supersedeas bond⁷ in the amount of $93,000 to stay the execution of judgment pending appeal. Several months later, after filing its notice of appeal, USAA paid Parker the entire judgment, including prejudgment interest at nine percent. Parker acknowledged receipt of the judgment in three separate partial satisfactions of judgment. In the third partial satisfaction of judgment, Parker acknowledged receipt of the amount of interest currently in dispute. That third partial satisfaction of judgment states: "The proper calculations of the judgment and interest are pending on appeal. This Partial Satisfaction of Judgment does not include these calculations that are currently on appeal." At oral argument, counsel for USAA stated that USAA paid the disputed interest, even though it already filed a notice of appeal, because it wished to avoid both a suit for insurer bad faith and the expense of maintaining a supersedeas bond.

After USAA paid the disputed interest and Parker filed the partial satisfactions of judgment, USAA requested release of their supersedeas bond; the request was granted and the bond was released. Parker then filed a motion in the court of appeals requesting an order to show cause why USAA's appeal was not moot because USAA had already paid the entire judgment, including the disputed interest. A motions division of the court of appeals denied Parker's motion.

The court of appeals reviewed the motions division's ruling that the appeal was not moot, USAA's appeal of the trial court's ruling on prejudgment interest, and two issues raised by Parker on cross-appeal.⁸ Parker, ___ P.3d at ___, No. 05CA2361, 05CA2569, 2007 WL 1289614, slip op. at 1-2. That court held that the case was not moot because, under the acceptance-of-benefits doctrine, only a "`mutual manifestation of an intention to bring the litigation to a definite conclusion'" is sufficient to bar the subsequent appeal of a particular issue, "`and not the fact, standing alone, that benefits under the judgment were accepted.'" Id. at 2, 2007 WL 1289614 (quoting Main Elec., Ltd. v. Printz Servs. Corp., 980 P.2d 522, 528 (Colo. 1999)). Because the third partial satisfaction judgment Parker filed acknowledged that the proper calculation of interest was still in dispute, the required mutual manifestation of intention to conclude litigation on the issue of prejudgment interest did not exist. Parker, ___ P.3d at ___, No. 05CA2361, 05CA2569, 2007 WL 1289614, slip op. at 2.

As to the merits of the case, the court of appeals affirmed the trial court's determination that prejudgment interest accrues under the "personal injury statute" when an insured seeks to recover UIM benefits from his insurer arising out of the underlying claim for personal injuries in an auto accident. Id. The court reasoned that the plain language of the "wrongful withholding statute" indicated that it was a statute of general applicability, which carves out an exception for cases where the application of the "personal injury statute" is appropriate. Id. at 3, 2007 WL 1289614. The "personal injury statute", in turn, states that it applies where damages for personal injury are sought. Id. at 4, 2007 WL 1289614. In this case, the court concluded, Parker's complaint set forth claims for damages based upon Maxwell's negligence in causing his injuries. Id. The court of appeals also relied on the legislative history of section...