As we look back on 2024, here are some key personal injury and insurance bad faith cases to consider (bolded sections are the comments of the author):
Fear v. GEICO Casualty Co., 2024 CO 77
Plaintiff filed a statutory bad faith claim against its UIM insurer pursuant to C.R.S. section 10-3-1115. At a bench trial the court considered GEICO’s claim file, which included a claim evaluation summary outlining its reserve amount and the amount of its negotiation range for settlement purposes. The court concluded that the holding in State Farm Mutual Automobile Insurance Co. v. Fisher, 2018 CO 39 (requiring insurers pay undisputed portions of a UIM claim, even though other portions of the claim remain disputed), applied to undisputed non-economic damages.
The insurer appealed. The Court of Appeals reversed and concluded that the district court erred in relying on the GEICO’s claim evaluation as evidence of the amount of undisputed benefits owed. It reasoned that non-economic damages are “inherently subjective” and that insurers estimate these ranges in its internal evaluations for the limited purposes of setting reserves and settlement authority, not to confine the case to a certain damage range. It also noted that admitting the claim evaluation as evidence of the amount of undisputed damages would violate CRE 408 because it was “inextricably intertwined” with settlement offers.
The Colorado Supreme Court affirmed the judgment of the appellate division, but on different grounds. Notably, it concluded that the court of appeals erred when it determined it was reasonable as a matter of law for an insurer to refuse to pay non-economic damages, or any portion thereof, before resoling an insured’s claim because such damages are “inherently subjective” and always subject to a reasonable dispute. Rather, non-economic damages, or some portion thereof, may be undisputed in a particular case and under Fisher an insurer would be required to pay those damages without obtaining a release of the entire claim. The case at bar was not such a case. Further, the court found that while CRE 408 bars the admission of the kind of claim evaluation at issue in the subject case to show the amount of undisputed benefits owed, such an evaluation may be admissible for other purposes, such as to establish an insurer’s good or bad faith.
Klabon v. Travelers Property Casualty Co. of America, 2024 CO 66
The Court addressed certified questions of law from the U.S.D.C. of Colorado regarding whether an employee injured in the course and scope of his or her employment by an uninsured third-party tortfeasor, and who receives workers’ compensation benefits, can bring suit against their employer’s UIM insurer. The Court held that an employee can bring suit to recover benefits from their employer’s separate UIM carrier because the Workers’ Compensation Act of Colorado (“WCA”) immunizes only employers and their workers’ compensation carriers from liability. Furthermore, when an employee is injured by the negligence of a third-party, rather than by an employer or co-employee, a suit to recover UIM benefits does not constitute a suit against the employer or co-employee; therefore, it is not barred by the exclusivity clause of the WCA.
County of Jefferson v. Stickle, 2024 CO 7
Pedestrian brought a premises liability claim against Jefferson County after falling in a public parking structure maintained by the County. The County moved to dismiss the claim alleging immunity under the Colorado Governmental Immunity Act (“CGIA”). Immunity may be waived when injuries arise from a “dangerous condition of a public building.” The CGIA waives immunity for a “dangerous condition” of a building caused by negligent maintenance or construction, but not when due to inadequate design. The Supreme Court held that the County’s public parking structure met the definition of “building” under the CGIA. The court considered the definition of a “building” from Merriam-Webster, which defined it as a “usually roofed and walled structure built for permanent use (as for a dwelling).” It also looked to Sanchez vs. People, 349 P.2d 561, 562, (Colo. 1960), which defined a “building” when interpreting the burglary statute and held that “all stationary structures within Colorado, no matter of what substance they may be constructed, are within the term building, so long as they are designed for use in the position in which they are fixed”; “a structure which has a capacity to contain, and is designed for the habitation of man or animals, or the sheltering of property.” Since the County’s parking structure was designed for “permanent use” and “for use in the position in which [it is] fixed and had electricity, a sprinkler system, a covered and enclosed lower level, and was designed to store vehicles, the Supreme Court deemed it met the ordinary definition of a “building.”
The court then addressed the optical illusion created by the parking structure’s surface coloring and held that it was created, in part, from maintenance of the facility, thus immunity was waived. “Maintenance” is the act or omission of keeping a facility in the same general state or repair as initially constructed or preserving it from decline or failure. The County argued the color of the walkway and parking surface was a design decision; yet, the County adopted a five year “Major Maintenance Repair and Replacement” plan which included a resurfacing project to add new topping material to the walkways and parking surface to prevent water, and other materials from infiltrating and degrading the concrete. The court held that the new topping material was supposed to help preserve the facility from decline, which falls within the definition of maintenance. It also restated that the CGIA and case law is clear that “it is only when the dangerous condition is solely attributable to design that the [government] is immune.” (quoting Medina v. State, 35 P.3d 443, 459 (Colo. 2001)).
Essentia Insurance Co. v. Hughes, 2024 CO 17
The Supreme Court analyzed the applicability of UIM coverage in a classic car policy and held as follows:
We hold that a specialty antique/classic-car policy that requires an insured to have a regular-use vehicle and to insure it through a standard policy that provides UM/UIM coverage may properly limit its own UM/UIM coverage to the use of any antique/classic car covered under the specialty policy. In our view, an adjunctive antique/classic-car policy, which excludes UM/UIM benefits with respect to situations involving a regular-use vehicle but works in tandem with a standard regular-use-vehicle policy that provides UM/UIM coverage, satisfies both the language of section 10-4-609 and the public policy goals underpinning the statute.
Gregory v. Safeco Insurance Co. of America, 2024 CO 13
The Colorado Supreme Court held that the notice-prejudice rule applies to occurrence-based, first party homeowners’ property insurance policies. It did so for two reasons:
First, our recent cases have consistently applied the notice-prejudice rule to occurrence policies like those at issue, in which the purpose of notice is to allow an insurer to investigate and defend against the claim and is not a fundamental term defining the temporal boundaries of coverage (unlike in a claims-made policy). Second, the policy considerations that we identified in Clementi v. Nationwide Mutual Fire Insurance Company, 16 P.3d 223, 229–30 (Colo. 2001), for determining whether the notice-prejudice rule applies, namely, the adhesive nature of insurance contracts, the public policy objective of compensating tort victims, and the inequity of granting the insurer a windfall due to a technicality, all support the application of the notice-prejudice rule here.
As a result, we further conclude that courts in cases involving such policies must follow the two-step approach that we described in Clementi,16 P.3d at 231. Thus, a court must first determine whether an insured’s notice was timely or whether any delay was reasonable. If the court determines that the notice was timely or that any delay was reasonable, then the analysis ends there, and the court should conclude that coverage exists. If, however, a court determines that an insured’s notice was untimely and that the delay was unreasonable, then the court moves to step two, which requires the court to determine whether the insurer was prejudiced by such untimely notice. Because it is more difficult for the insured to prove a lack of prejudice, the insurer bears the burden of proving such prejudice by a preponderance of the evidence.
Hice v. Giron, 2024 CO 9
A police officer pursuing a speeding vehicle did not initially turn on his lights or siren as he sped up. The Giron brothers were waiting to turn left. After letting the speeding driver pass, they initiated their turn. The officer, traveling close to 103 mph, then approached and was unable to avoid striking the Giron van, killing the brothers. The officer engaged his emergency lights, but not his siren, for the final five to ten seconds. The trial court held that CGIA barred suit because the officer had his lights on in enough time to warn the Girons and he did not create an unreasonable risk of injury during his pursuit. The Cout of Appeals reversed holding immunity was waived because the officer did not use his emergency lights or siren for the entire time he was in pursuit of the speeder.
The Colorado Supreme Court analyzed the framework for determining when emergency drivers waive CGIA immunity pursuant to C.R.S. section 24-10-106(1)(a), by failing to use alerts while speeding in pursuit of suspected lawbreakers. The court found that an interpretation of the statute that waiver of immunity applies if an officer fails to use his alerts as a bright line rule, would be illogical, should it be that the officer failed to use alerts the first 5-10 seconds and the collision happened in the 5th minute. Rather, it held that under section 24-10-106(1)(a) an emergency driver waives immunity only if the plaintiff’s injuries could have resulted from the emergency driver’s failure to use alerts. It reversed the judgment of the Court of Appeals and remanded the case for the trial court to determine if the officer’s failure to use his lights or siren until the final 5-10 seconds of his pursuit could have contributed to the collision and whether he waived immunity by failing to satisfy the condition that emergency drivers refrain from endangering life or property while speeding.
Miller v. Crested Butte, LLC, 2024 CO 30
Father sued owner of ski resort after daughter fell from chair lift for negligence per se for violations of the SSA, the PTSA, and a number of regulations promulgated thereunder, gross negligence, and negligence-highest duty of care of a ski lift operator.
The ski area argued it could absolve itself of liability through a private release agreement for negligence per se based on violations of Crested Butte’s statutory and regulatory duties.
The Colorado Supreme Court determined that the statutory and regulatory provisions of the SSA and PTSA, and the General Assembly’s authorization of the PTSA’s use of the standards adopted by ANSI regarding lift attendants, defines per se negligence for a violation of those statutory and regulatory requirements.
Further, the violations asserted by the father were provisions adopted for the public safety with the purpose of protecting against the type of injuries suffered by his daughter, and that the violation of these lift operator standards proximately caused injury to his daughter.
The court then looked to whether the release barred the negligence per se claims and concluded it did not. The court noted:
[S]ettled precedent from this court has established that a party cannot discharge its obligation to perform a statutory duty by way of an exculpatory agreement. See, e.g., Peterman v. State Farm Mut. Auto.Ins. Co., 961 P.2d 487, 492 (Colo. 1998) (“Parties may not privately contract to abrogate statutory requirements or contravene the public policy of this state.”); Gonzales v. Indus. Comm’n, 740 P.2d 999, 1002 (Colo. 1987) (“Private parties may not by agreement or rule render ineffectual the rules and standards provided by statute.”).
The Court then turned to the “highest duty of care” claim and held that the district court properly applied the Jones factors for determining the validity of an exculpatory release and that the four factors were satisfied, therefore the release was enforceable and barred his cause of action for Negligence – Highest Duty of Care.
Scholle v. Ehrichs, 2024 CO 22
This medical malpractice case considered the interrelationship between the collateral source statute and the Health Care Availability Act (“HCAA”). The plaintiff’s medical bills were paid by Tricare, a self-funded ERISA plan, and Medicare. As required under the HCAA, the plaintiff notified his insurers of the matter and none of them filed notices of subrogation into the case thereby waiving their interests.
The jury awarded the plaintiff over $9,000,000 in economic losses and he moved to exceed the $1,000,000 damage cap under the HCAA. The trial court found good cause to lift the cap, citing in part, his past medical costs (Scholle and his family “lack the means to earn sufficient income to repay his already-incurred medical costs.”).
The Court of Appeals reversed, holding that because any subrogation interests were waived it was improper for the trial court to consider the plaintiff’s repayment obligation as a significant factor in determining whether to allow a judgment in excess of the HCAA cap.
The Colorado Supreme Court addressed “whether the contract exception to the collateral source statute, C.R.S. section 13-21-111.6, is applicable in post-verdict proceedings seeking to reduce damages in medical malpractice cases under the HCAA.” It applied the relevant statutes and case law and found the answer is Yes. Therefore, the trial court properly disregarded evidence about the plaintiff’s health insurance liabilities in determining whether to exceed the HCAA cap.
University of Denver v. Doe, 2024 CO 27
Former student brought action against university and others responsible for investigation and adjudication that resulted in student’s expulsion for non-consensual sexual contact, asserting claims for breach of contract, breach of covenant of good faith and fair dealing, promissory estoppel, and negligence. The trial court granted summary judgment for the defendants. The court of appeals affirmed in part and reversed in part.
The Colorado Supreme Court held that (1) Doe’s breach of contract claim survived because the university’s sexual misconduct policy was sufficiently definite and certain to be enforced under contract law; (2) Doe’s breach of contract claim based on a violation of the covenant of good faith and fair dealing was applicable because some the policy procedures vested the investigators with discretion; (3) genuine issues of material fact existed as to whether the university violated specific investigation requirements under the policy; and (4) the university did not owe a student a tort-based duty to use reasonable care in adopting and implementing fair procedures related to the adjudication of sexual misconduct claims.
Maldonado v. GeneDx, 2024 COA 121
Parents brought claims individually and on behalf of their twins, who also asserted their own claims on behalf of themselves, against various medical professionals for negligently misrepresenting to the parents that the mother was not a carrier of Duchenne Muscular Dystrophy (“DMD”), which the parents relied upon and gave birth to their twins, one of whom developed DMD, and the other of whom is a carrier. Defendants moved to dismiss arguing plaintiffs failed to state a claim under section 13-64-502(1), related to genetic counseling. The trial court dismissed their action.
The Court of Appeals analyzed C.R.S. section 13-64-502, which bars damage or injury claims arising from genetic counseling where such damage was the result of a genetic disorder, but also has an exception that allows for claims to proceed where a claimant can establish that the damage of injury “could have been prevented or avoided by the ordinary standard of care” of the health care professional. The court held that the case fell within the exception and the parents’ claims could proceed, because if, as the parents claimed, the testing had been within the ordinary standard of care in providing genetic counseling, they would have prevented the pregnancy and the resulting injury/damages and expenses associated with the care of the children.
As to the children’s claims for loss of enjoyment of life, the court held that is barred by Lininger v. Eisenbaum, 764 P.2d 1202 (Colo. 1988), which held that a claim for “wrongful life” is barred.
Harrington v. Neutron Holdings, 2024 COA 120
Plaintiff brought a negligence claim against an electric scooter rental company, Neutron Holdings, Inc., d/b/a Lime for injuries sustained after colliding with someone riding a scooter in the wrong direction. The Court of Appeals held that the scooter company’s “rental of electric scooters to third parties does not, in and of itself, given rise to a duty to members of the general public to protect them from users’ unsafe operation of the scooters.” The division did not address circumstances under which such a duty may arise based on other specific acts or omissions.
Babayev v. Hertz Corp., 2024 COA 15, cert granted, Hertz Corp. v. Babayev, 2024 Colo. LEXIS 1176[1]
Passengers in rental car were injured in hit and run collision. They brought claims under the underinsured motorist policy in the company’s rental agreement with the driver for breach of contract, common law bad faith and statutory bad faith. In response to a C.R.C.P. 56(h) motion, the trial court held Hertz Corporation was not an insurer and owed plaintiffs no duty.
The Court of Appeals reversed noting that a motor vehicle rental company is an insurer within the meaning of C.R.S. section 10-1-102 (13), if it offers to sell the renter “various insurance coverages for specified prices.” (citing Passamano v. Travelers Indemnity Co., 882 P.2d 1312 (Colo. 1994)). Although not required to offer UM coverage, once it did, Hertz could qualify as an insurer. In this case, Hertz was an insurer because it offered and sold the driver two separate insurance coverages for separate prices.
The court went on to analyze whether Hertz was a “de facto” insurer owing the plaintiffs a duty of good faith and fair dealing. A non-insurer becomes a de-facto insurer when it performs the functions of an insurer and has a financial incentive to limit an insured’s claims. In looking at whether Hertz performed the functions of an insurer, the court considered the deposition testimony of the claims adjuster from the third-party claims management service Hertz hired, who stated Hertz maintained “high involvement” in the claims process and “hold[s] the ultimate authority, when it comes to their files; It is their money.”
Ultimately, the court reinstated the plaintiffs’ claims and held that Hertz was plaintiffs’ insurer and therefore, the proper party to name for all their claims. It also held that there were material facts in dispute about whether Hertz performed the functions of an insurer, so it was error to resolve the “de facto” insurer dispute under Rule 56(h).
Bullington v. Barela, 2024 COA 56, cert. denied, Barela v. Bullington, 2024 Colo. LEXIS 1111
Plaintiff who became pregnant twice in the years following a rear-end collision and was therefore unable to complete recommended medical treatment while she was pregnant and nursing is not “competent evidence” that plaintiff failed to take reasonable efforts to mitigate her damages. A plaintiff’s duty to mitigate damages cannot require them to terminate a pregnancy or forgo breastfeeding. The appellate court also noted that it appeared the trial court assumed that the plaintiff was unable to receive treatment for her injuries because she had “voluntarily” gotten pregnant, but the record showed the plaintiff was trying to prevent pregnancy during that time period.
AUTHOR’S CORNER
The court’s decision left an unanswered question: If a personal injury plaintiff voluntarily becomes pregnant post-incident and as a result it limits or eliminates her medical treatment options, is a failure to mitigate defense applicable?
Should a woman have to delay starting or adding to her family because she was injured by the negligence of another? Personal injury claims have a three-year statute of limitations, so conceivably a woman’s desire to have a child would need to be put on hold for three years or more? As biology dictates, child-bearing years are limited. If the standard for failure to mitigate is that a plaintiff has a duty to take such steps as are reasonable under the circumstances to minimize her damages, is it unreasonable for a woman to become pregnant when she is a personal injury plaintiff? What about consideration for the disruption on the injured party’s plan for when to have children? Is that a damage category? If the woman elects to move forward with becoming pregnant “voluntarily” and has a more difficult time, e.g. increased neck pain at the injury site because she cannot avail herself of common treatments, who should bear the cost of that harm?
Jacobs Investments, LLC v. Fort Collins-Loveland Water District, 2024 COA 83
Before excavating an area, Colorado Boring gave notice to the Utility Notification Center, which notified the Fort-Collins-Loveland Water District. As required by the Excavation Requirements Statute (“ERS”), the District then located and marked its underground water line. The District mismarked the line. Colorado Boring then excavated the area and its equipment ruptured an underground water line causing flooding.
Colorado Boring brought claims against the District for negligently marking the water line and violating the ERS statute. The District argued the claims were barred by the CGIA and it did not waive its immunity because locating water lines is not a function of operating or maintaining a public water facility pursuant to C.R.S. section 24-10-106(1)(f).
The Court of Appeals found that the District did not waive its immunity by mismarking the line because its duties under the ERS are ancillary to its primary purposes of collecting, treating and distributing water and are not part of its operational duties; even assuming it did violate a duty of care imposed by the ERS, its violation of that duty alone is not sufficient to waive immunity under the CGIA; and, the marking of water lines was not part of the District’s maintenance obligations.
AUTHOR’S CORNER
Although this is not a personal injury case, it is included because if someone were injured due to the mismarking of a water line, the holding of this case suggests that the Water District would maintain its immunity.
Ortiz v. Progressive Direct Insurance Co., 2024 COA 54
Insured brought action against the uninsured motorist for negligence in causing a collision and against the UIM carrier for breach of contract, bad faith and unreasonable delay and denial of benefits.
The trial court entered default against the motorist; declined to permit the UIM carrier to contest motorist’s liability; permitted UIM carrier to participate in damages hearing; entered judgment on jury verdict in favor of insured on claims of bad faith and unreasonable delay and denial; and, denied carrier’s motion for a new trial. The carrier appealed.
In determining the appropriate amount of participation of the insurer in tort litigation, the Court of Appeals cited extensively from State Farm Mutual Automobile Insurance Co. v. Brekke, 105 P.3d 177 (Colo. 2004). It noted that an insurer bears the burden to show its interest in a fair hearing on its legitimate defenses will be unprotected without participation in the proceedings and as such, must plead “specific and particular allegations” that set forth legitimate defenses. (citing Brekke at 192-93). An insurer will usually be allowed to participate fully in the damages phase of a default judgment hearing, but its participation in the liability phase will be more limited and will be permitted only when it clearly appears that legitimate defenses of the insurance provider will not be presented without an additional hearing. (citing Brekke at 193).
Progressive argued (1) that the uninsured driver’s default did not establish the uninsured driver was at fault for the collision and (2) that because it did not participate in the liability phase, the uninsured driver’s default could not be used to establish the plaintiff’s entitlement to recover damages form the uninsured motorist. The Court of Appeals held that the UIM statute, C.R.S. 10-4-609, “requires an insured be “legally entitled to recover damages from owners or operators of uninsured motor vehicles’ in order to invoke UM coverage.” (citing Brekke at 185). Since a default judgment has the same effect as a final judgment after a formal trial, it entitles a plaintiff to collect money from an uninsured motorist. Id. Accordingly, there was no error in the district court’s determination that the uninsured motorist’s default involved the plaintiff’s UIM coverage, binding Progressive.
Progressive further argued that it should have been permitted to contest the uninsured motorist’s liability via its affirmative defense of comparative fault against the plaintiff. The Court of Appeals upheld the district court’s finding that Progressive waived its comparative fault defense and ability to participate in the liability phase, reciting the district court’s explanation that, consistent with Brekke, if Progressive intended to contest liability it has to do so “as soon as practicable” and with greater specificity than the boilerplate defenses it provided in answer to the complaint. Specifically, Progressive failed to respond to the plaintiff’s allegations against the uninsured driver by stating those allegations were directed to the uninsured driver.
Wenzell v. United Services Automobile Assoc., 2024 COA 40
Insured brought claims against primary and excess UIM carriers to recover UIM benefits. The trial court entered summary judgment in favor of the insurance companies and the plaintiff appealed.
The Court of Appeals held that (1) the plaintiff’s failure to comply with statutory requirements pursuant to C.R.S. section 10-3-1118 for seeking information from its insureds precluded the insurance companies from raising a non-cooperation defense; (2) strict compliance with the statutory requirements of 10-3-1118 is necessary; (3) the excess insurer had an independent duty to evaluate the claim without regard to exhaustion of the primary UIM coverage; and (4) factual issues precluded summary judgment on the plaintiff’s claim of unreasonable delay or denial of benefits.
[1] Cert granted, en banc, to address: Whether, after the legislative abrogation of Passamano v. Travelers Indemnity Co., 882 P.2d 1312 (Colo. 1994), a “motor vehicle rental company” may be considered a statutory or de facto “insurer,” where its rental agreement incidentally offers customers the option of purchasing insurance coverage provided by a licensed, third-party insurer under the rental company’s own pre-existing policy with that insurer.
