Bowen v. Farmers Insurance Exchange

Judge BRIGGS

dissenting.

In my view, the trial court’s ruling should be affirmed. I therefore respectfully dissent.

As an initial matter, the record on appeal is insufficient to warrant reversal of the trial court’s ruling.

An insurance policy is a contract and should be construed in accordance with general principles of contractual interpretation. Wota v. Blue Cross & Blue Shield, 831 P.2d 1307 (Colo.1992). Thus, like any other contract, the provisions of an insurance contract should not be read in isolation but rather as a whole. See Worsham Construction Co. v. Reliance Insurance Co., 687 P.2d 988 (Colo.App.1984).

Plaintiff, however, has not included the complete policy in the record on appeal, making it impossible to construe the contract as a whole. Accordingly, the trial court’s ruling should be presumed correct. See Schuster v. Zwicker, 659 P.2d 687 (Colo.1983).

If the merits of plaintiffs claim are to be addressed based on the record before us, I would reach the same result as the trial court. Although not addressed by the parties, I reach this result because of what I believe to be the proper interplay between § 13-21-101, C.R.S. (1987 Repl.Vol. 6A), which provides for an award of interest as a part of damages from the date a personal injury action accrues, and § 5-12-102(1), C.R.S. (1992 RepLVol. 2), which provides for a judgment creditor to receive an award of interest from the date funds are “wrongfully withheld.”

The point at which any sums may be considered to be “wrongfully withheld” by the insurer, resulting in interest accruing under § 5-12-102(1), depends in the first instance on the language of the agreement. See Allstate Insurance Co. v. Starke, 797 P.2d 14 (Colo.1990). The record before us includes a policy provision that states as follows:

We will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injuries sustained by an injured person. ... Determination as to whether an insured person is legally entitled to recover damages or the amount of the damages shall be made by agreement between the insured person and us. If no agreement is reached, the decision will be made by arbitration.

Thus, under the express terms of the insurance contract, the insured is not “legally entitled” to any amounts unless and until an agreement has been reached or an arbitration award rendered. No amount can be “wrongfully withheld” under this provision until the insured is so legally entitled.

This policy provision is similar to an indemnity provision in that any amount due from the insurer remains inchoate until it is determined whether and to what extent the insured is legally entitled to recovery from the insurer. Only then can the insured be said to have a claim for relief. See Duncan v. Schuster-Graham Homes, Inc., 194 Colo. 441, 578 P.2d 637 (1978).

This is not to say that the insurer may thereby avoid any liability for interest before *18the date of agreement or arbitration award. The policy here expressly provides that the insured may recover “all sums which an insured person is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle.” Those damages include prejudgment interest as provided under § 13-21-101. See Allstate Insurance Co. v. Starke, supra; Guin v. Ha, 591 P.2d 1281 (Alaska 1979).

The difficulty in recovering interest arises when the damage award, with accrued prejudgment interest, exceeds the policy limitations. In that case, depending on the language in the policy, the only interest that can be recovered in excess of the policy limitation may be that accruing after the amounts payable under the policy become due. See Allstate Insurance Co. v. Starke, supra; see generally G. Couch, Cyclopedia of Insurance Law § 56:15 (2d ed.1983). Although the entire policy is not before us, the parties appear to have assumed that prejudgment interest under § 13-21-101 is part of the damages subject to the UIM policy limitation.

In my view, an insured in these circumstances should be entitled to recover from the UIM insurer interest accruing under § 13-21-101 from the date of the accident, but only to the extent the insured has purchased sufficient UIM benefits. The insured should not be able to recover any greater amount by circumventing express policy limitations on the total recovery available for damages.

The only exception would be for interest accruing after the insured is legally entitled to a recovery. For example, if the insurer refused to agree on the amount of recovery or to arbitrate after a request by the insured, the insurer would be in breach of the contract. Interest on the amount of any recovery to which the insured was entitled would then accrue under § 5-12-102(1) from the date of the breach, as the majority properly recognizes. Likewise, if the insurer delayed payment after the agreement or arbitration award, interest would accrue under § 5-12-102(1) from the date payment was due. Hence, at no time is the insurer encouraged to delay resolution in violation of the insurance contract.

Under this analysis the trial court reached the right result. It first concluded that the policy language clearly requires an agreement or arbitration award before UIM benefits are due, with interest accruing under § 5-12-102(1) from that point. This was a proper reading of the unambiguous- policy provision.

The trial court further correctly reasoned that such a construction balances the respective rights of the parties. It is the insured who decides when to submit a UIM claim after an accident. If no agreement can be reached, the insured can require arbitration. All the while interest continues to accrue, but under § 13-21-101, not § 5-12-102(1). Earlier events,-like the insured’s demand or the insurer’s refusal to pay the demand, create no breach of contract by the insurer or reasonable expectation of payment by the insured at that point. They are just steps leading to the determination expressly required in the absence of agreement: the arbitration award.

I would therefore affirm the trial court’s award of interest on the judgment.