Empire Casualty Co. v. St. Paul Fire & Marine Insurance Co.

ERICKSON, Justice,

concurring in part and dissenting in part:

I respectfully concur in part and dissent in part. In my view the trial court properly analyzed Gary Peter Peek’s (Pete) claims along traditional negligence concepts, rather than as “wrongful life” claims. I dissent because the court of appeals properly concluded that the $500,000 threshold necessary to activate Continental’s excess insurance policy and trigger its obligation to pay was not met.

In this malpractice action Lockwood admitted liability and the sole issue at trial was the measure of damages. An advisory jury entered a $575,000 judgment against Lockwood in favor of Pete based upon four separate negligent acts. Pete recovered on the total judgment from four insurance companies that provided Lockwood with coverage, and this dispute centers around the allocation of liability among the insurance companies.

The claim for “wrongful life” addressed by the appellate court and the majority was never recognized as a “wrongful life” claim by the trial court. In fact, as raised at this late stage of the proceedings, the issues of “wrongful life” and “continuing negligence” have relevance only insofar as they directly relate to determining the proper allocation of damages among the insurance carriers. It is asserted that if we uphold the trial court’s findings that each of Lockwood’s four negligent acts was a proximate cause of the injuries sustained by Pete, and allow damages to be apportioned accordingly, then we are impliedly recognizing a claim for “wrongful life.” I disagree. Whether Pete has stated a cognizable claim should be analyzed along traditional negligence guidelines. See Lininger v. Eisenbaum, 764 P.2d 1202 (Colo.1988) (Erickson, J., concurring). The advisory jury determined the case on the issue of negligence, and its findings should not be disturbed here.

The advisory jury found that Lockwood had committed four independent acts of negligence: (1) mistyping or misrecording the results of Shelly Peek’s (Shelly) blood test in July or August of 1972; (2) failing to retype Shelly Peek’s blood for the RH factor during her second pregnancy and before she was confined for delivery; (3) failing to investigate adequately the cause of Shelly’s second son’s (Justin) stillbirth; and (4) affirmatively advising Shelly Peek to have additional children, without determining the cause of Justin Peek’s stillbirth. *1201The trial court found that “[s]ince the defendants presented no evidence of apportionment with regard to the degree of aggravation caused by the subsequent acts of professional negligence, [Peter] Peek was entitled to recover in full for damages caused by them.” (citing Newbury v. Vogel, 151 Colo. 520, 379 P.2d 811 (1963)).1 I interpret the trial court’s findings to mean that each insurance policy in effect at the time the negligent acts occurred is liable for the judgment, subject to the limitations on liability as set out in each policy. Even though the trial court stated that each insurance carrier is potentially liable for the entire $575,000 judgment, any liability is necessarily conditioned upon the express terms of the liability limitations found in each policy. See Mid-Century Ins. Co. v. Liljestrand, 620 P.2d 1064 (Colo.1980); Gulf Ins. Co. v. State, 43 Colo.App. 360, 607 P.2d 1016 (1979).

Three insurance companies are involved in this dispute: Empire Casualty Company (Empire), who underwrote Lockwood’s primary malpractice coverage; and Continental Casualty Company (Continental) and Chicago Insurance Company (Chicago), who underwrote Lockwood’s excess insurance coverage.2 The trial court found that Empire had two primary insurance policies in effect when the negligent acts occurred. Policy No. 18168 was in force when the initial mistyping or misrecording of the blood occurred in July or August 1972, and Policy No. 20598 was in effect when the three subsequent negligent acts occurred. Each policy provided $100,000 worth of coverage for Lockwood and $100,000 for his professional corporation, establishing $400,000 worth of primary insurance coverage. At trial, the court entered judgment against Empire for $200,000 on each policy, or for $400,000 in total.

Chicago provided $1,000,000 worth of excess insurance coverage to Lockwood from April 21, 1974 to April 21, 1977. Under the Chicago policy, Lockwood was required to maintain 100/300 of underlying primary coverage.3 The policy also stated that Chicago would be liable for any amount that Lockwood became liable for during the policy’s term which exceeded:

[t]he insured’s retained limit defined as an amount equal to the limit(s) of liability indicated beside the underlying professional policy(ies) listed in Schedule A hereof plus the applicable limits of any other underlying insurance collectable by the insured.

(Emphasis added.) By the express terms of the Chicago policy, it is liable for any judgment entered against Lockwood that exceeds the $200,000 underlying limit of Empire’s Policy No. 20598, because No. 20598 is the “underlying professional liability policy,” plus the $200,000 provided by Empire’s Policy No. 18168, because that policy falls within “any other underlying insurance collectable by the insured.” Thus, in this case, if Continental is not obligated to provide coverage under its policy, Chicago is solely liable for that amount of the $575,000 judgment in excess of $400,000, or $175,000.

Continental’s insurance policy with Lockwood was in effect between April 21, 1970 and April 21, 1973, and provided $1,000,000 worth of excess coverage conditioned upon Lockwood obtaining and maintaining 500/500 worth of primary coverage. Lockwood obtained the requisite primary coverage from Empire. However, when Empire informed Lockwood that it was no longer financially able to underwrite the 500/500 coverage, and could only provide 100/300 coverage, Lockwood agreed to the reduction in coverage and then failed to acquire supplemental primary coverage from another source to meet the 500/500 level required by Continental. The Continental *1202policy provides that Continental is not obligated to provide coverage until the primary policy limit of $500,000 has been paid. Specifically, the Continental policy provides for $1,000,000 worth of coverage “in excess of ... the amount recoverable under the underlying insurance as set out in the schedule of underlying insurance....” That amount as set out in the schedule was $500,000.

The majority concludes that because the judgment was for $575,000, the $500,000 threshold was met and Continental is therefore liable, along with Chicago, for its portion of the judgment in excess of the $500,-000. While this conclusion may appear to be reasonable, it ignores the fact that only Empire Policy No. 18168 was in force during the time the Continental policy was in effect. The only negligent act that occurred while Continental provided coverage took place in July or August of 1972, for which Empire had to provide $200,000 worth of coverage pursuant to its policy no. 18168. The $200,000 paid out by Empire pursuant to its policy no. 20598 was attributed by the trial court to negligent acts that occurred after Continental’s coverage ended, and as such should not be applied against Continental’s $500,000 threshold.

Because the trial court did not apportion liability among the three insurance companies, it cannot be determined with certainty whether the $175,000 of the judgment not covered by Empire’s primary insurance coverage was attributable to the first negligent act, which occurred while the Continental policy was in effect, or to the second, third, or fourth negligent acts, which occurred while the Continental policy was not in effect, or to any combination thereof. If the $175,000 were attributable to the first act, then Empire would have been obligated to pay out $375,000 under its primary coverage, if Lockwood had maintained the 500/500 primary coverage required by Continental. Because I agree with the majority’s statement that Lockwood’s failure to carry the requisite primary coverage does not lower Continental’s threshold from 500/500 to 100/300, the $375,000 of primary coverage paid out during the term the Continental policy was in effect falls $125,000 short of the $500,-000 threshold necessary to activate the Continental policy. Since Lockwood’s failure to maintain the requisite primary insurance coverage does not lower Continental’s threshold, and since this $500,000 threshold was never met, the Continental policy was never activated. Accordingly, Continental is not liable to pay any portion of the $575,000 judgment, and that liability falls solely on Chicago.

I am authorized to say that Justice VOL-LACK joins in this concurrence and dissent.

. "Subsequent acts of negligence” refers to those three acts that occurred after the results of Shelly Peek’s blood test were either misrecorded or mistyped in July or August of 1972.

. Only three insurance companies are now involved in the dispute, the fourth company, St. Paul Fire and Marine Insurance Company having been dismissed from the case by the trial court on a motion for summary judgment.

.100/300 refers to f 100,000 in coverage per claim and $300,000 in aggregate coverage. 500/500 refers to $500,000 in coverage per claim and $500,000 in aggregate coverage.