City and County of Denver District Court No. 11CV4818 Honorable Ruthanne Polidori, Judge
Announced May 7, 2015 Bachus & Schanker, LLC, J. Kyle Bachus, Denver, Colorado, for Plaintiff-Appellee
Hall & Evans, L.L.C., Alan Epstein, Denver, Colorado; Sweetbaum Sands Anderson PC, Jon F. Sands, William B. Stanton, Denver, Colorado, for Defendant-Appellant
¶ 1 This is a dispute over underinsured motorist (UIM) benefits. Defendant, State Farm Mutual Automobile Insurance Company, appeals the judgment entered on a jury verdict in favor of plaintiff, Dale Fisher, for unreasonable delay or denial of payment of benefits under sections 10-3-1115 and 10-3-1116, C.R.S. 2014. These statutes establish a civil cause of action for an insurer's unreasonable delay or denial of "payment of a claim for benefits owed to . . . any first-party claimant." § 10-3-1115(1).
¶ 2 State Farm contends that (1) as a matter of law, it did not unreasonably delay or deny payment of Fisher's UIM claim; (2) the district court erred in excluding testimony of State Farm's insurance expert; and (3) the district court erred in excluding evidence of Fisher's prior felony convictions. We address and reject each of these contentions and therefore affirm.
I. Relevant Facts and Procedural History
¶ 3 In February 2010, Fisher was injured in a collision between the vehicle he was driving and another vehicle. The other vehicle's driver carried $25, 000 in automobile liability insurance. Fisher was insured under several automobile insurance policies with State Farm that had a combined UIM coverage limit of $400, 000.
¶ 4 In September 2010, Fisher presented State Farm with a claim for UIM benefits totaling $1.35 million, the amount of damages he contended he had incurred from the accident. In December 2010, State Farm gave consent for Fisher to settle with the other driver's insurer for the driver's policy limits of $25, 000.
¶ 5 In February 2011, State Farm offered to settle Fisher's UIM claim against it for $59, 572.10. Fisher rejected the offer. On July 7, 2011, Fisher filed a complaint against State Farm alleging, among other things, that, because State Farm had not paid him any UIM benefits by that date, it had unreasonably delayed or denied payment of benefits in violation of section 10-3-1115.
¶ 6 At trial, the parties stipulated that the other driver was solely at fault for the accident; that Fisher had settled his liability claim against the other driver for the driver's liability limits of $25, 000; and that State Farm had not paid any UIM benefits to Fisher.
¶ 7 At the close of Fisher's case-in-chief, State Farm moved for a directed verdict on Fisher's statutory claim. The trial court denied the motion.
¶ 8 The jury returned a verdict for Fisher in the amount of $780, 572. The jury also found that State Farm had unreasonably delayed payment to Fisher for medical expenses totaling $61, 125.16.
¶ 9 The trial court entered judgment for Fisher against State Farm for $400, 000 (the UIM policy limits), plus $122, 250.32 (Fisher's medical expenses multiplied by two) as a statutory penalty under section 10-3-1116 for the unreasonable delay of payment. Also under section 10-3-1116, the court awarded Fisher $51, 100 in attorney fees and $54, 175.21 in costs.
¶ 10 State Farm appeals only the portion of the judgment reflecting the jury's finding that State Farm had unreasonably delayed payment of medical benefits.
II. Fisher's Unreasonable Delay of Benefits Claim Does Not Fail as a Matter of Law
¶ 11 Section 10-3-1115(1) provides that "[a] person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant." If a claim for payment of benefits has been unreasonably delayed or denied, the claimant "may bring an action . . . to recover reasonable attorney fees and court costs and two times the covered benefit." § 10-3-1116(1).
¶ 12 State Farm argues that the trial court erred in denying its motion for a directed verdict on Fisher's statutory claim because Fisher's medical expenses were not, as a matter of law, benefits owed to Fisher at the time he initiated the lawsuit. Therefore, according to State Farm, it could not have unreasonably delayed payment of owed UIM benefits. State Farm's argument raises a number of related issues, which we discuss in turn.
A. An Insurer's Obligation to Tender the Amount of a Rejected Settlement Offer
¶ 13 The arguments in the parties' briefs are like ships passing in the night. State Farm contends that the theory of Fisher's statutory claim was that State Farm should have paid Fisher the amount of its initial settlement offer after Fisher rejected the offer. State Farm argues, persuasively, that no such obligation existed under either the terms of the insurance policy or the statute.
¶ 14 Fisher argues, on the other hand, that this was not the theory upon which the case was tried and he never argued to the jury that State Farm breached its duty under section 10-3-1115 by failing to pay the settlement offer. Instead, Fisher contends that the claim that was tried to the jury was that State Farm failed to pay medical expenses incurred by Fisher that State Farm internally had determined were reasonable, covered by the UIM policy, and causally related to the accident.
¶ 15 State Farm is correct that an assertion that it breached its duty under section 10-3-1115 by failing to pay Fisher the initial settlement offer is inconsistent with Colorado law. As the trial court explained in a pretrial order, CRE 408 expressly prohibits the admission into evidence of the amount of a settlement offer to prove the "amount of a claim that was disputed." Colorado law thus prohibits the conclusion that State Farm's initial settlement offer represents an admission that the amount of the offer was the amount of benefits owed to Fisher for his medical expenses. Cf. Spendrup v. Am. Family Mut. Ins. Co., No. 13-CV-00513-KLM, 2014 WL 321155, at *2 (D. Colo. Jan. 29, 2014) (unpublished opinion) (relying on Fed.R.Evid. 408 in refusing to consider a settlement offer to determine whether the defendant insurer failed to pay an "undisputed amount of benefits" under the applicable insurance policy) (emphasis added)); Sunahara v. State Farm Mut. Auto. Ins. Co., 2012 CO 30M, ¶ 23 (An insurance agent's "settlement authority does not constitute a final, objective assessment of a claims [sic] worth to which an insurer may be held." (internal quotation marks omitted)).
¶ 16 However, although there was confusion during the proceedings as to the theory advanced by Fisher, the record, especially the jury instructions and special verdict form, establishes that Fisher is correct regarding the claim advanced at trial and adjudicated by the jury. That claim was that State Farm unreasonably delayed paying benefits to Fisher to cover his medical expenses, which were owed regardless of State Farm's settlement offer. Therefore, to the extent that State Farm's argument is based on the lack of an obligation to pay Fisher the amount of the initial settlement offer, we do not further address it.
B. Determination of the Amount of Compensatory Damages an Insured is Legally Entitled to Collect from the Underinsured Motorist
¶ 17 In its opening brief, State Farm asserts:
Under [the relevant] policy language, in order for an insured to have a viable statutory claim that an insurer unreasonably delayed paying UIM benefits owed to the insured, the insurer and insured must either agree to the amount of the compensatory damages to which the insured is legally entitled to collect from the underinsured driver, or the amount of compensatory damages must be resolved in a lawsuit that the insured initiates against the insurer. Because neither of those conditions had been met at the time [Fisher] brought his statutory claim against State Farm in this case, State Farm was entitled to directed verdict at the close of [Fisher's] case-in-chief, and is entitled to judgment as a matter of law now.
¶ 18 This is the extent of State Farm's argument on this issue. State Farm devotes the remainder of its opening brief, as well as its reply brief, to arguing that the amount of Fisher's UIM claim against State Farm was undetermined at the time the lawsuit was initiated; it does not further discuss its assertion that the amount of Fisher's claim against the underinsured motorist was undetermined. We generally decline to address arguments presented to us in a conclusory manner that are lacking citations to any supporting authority. See, e.g., S. Colo. Orthopaedic Clinic Sports Med. & Arthritis Surgeons, P.C. v. Weinstein, 2014 COA 171, ¶ 35.
¶ 19 But even considering this argument on its merits, we reject it. Under the UIM statute, § 10-4-609, C.R.S. 2014, as amended in 2007, an "insurer's obligation to pay [UIM] benefits is . . . triggered by exhaustion of the tortfeasor's limits of . . . legal liability coverage, not necessarily any payment from or judgment against the tortfeasor." Jordan v. Safeco Ins. Co. of Am., Inc., 2013 COA 47, ¶ 29 (internal quotation marks omitted). Accordingly, it is no longer the case that UIM benefits are not owed until third-party liability has been determined. Baker v. Allied Prop. & Cas. Ins. Co., 939 F.Supp.2d 1091, 1109-10 (D. Colo. 2013). Rather, a UIM "insurer is . . . responsible for damages exceeding the tortfeasor's liability policy limit, subject only to the UIM coverage limit in the insured's policy." Id. at 1110 (internal quotation marks omitted).
¶ 20 The amended UIM statute thus precludes State Farm from relying on any policy language that purports to prevent Fisher from establishing a claim under section 10-3-1115 until the amount of compensatory damages to which he is legally entitled to collect from the underinsured motorist has been determined. Therefore, to the extent that State Farm argues that its conduct could not have been unreasonable because the amount the underinsured motorist owed to Fisher had not been determined at the time he initiated the lawsuit, this argument is inconsistent with Colorado law. See id. C. Insurer's Obligation to Pay a UIM Claim on a Piecemeal Basis
¶ 21 State Farm's principal argument on appeal is that it had no legal obligation to pay Fisher's UIM claim on a "piecemeal" basis. According to State Farm, because a genuine disagreement as to the total amount of benefits owed on Fisher's entire UIM claim existed when the lawsuit was filed, State Farm had no obligation to pay any part of Fisher's claim, including his medical expenses. It thus could not have owed Fisher any benefits while the value of the entire claim remained "fairly debatable, " and accordingly, as a matter ...