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American Family Mutual Insurance Co. v. Barriga

Supreme Court of Colorado, En Banc

May 29, 2018

American Family Mutual Insurance Company, Petitioner
v.
Guillermo Barriga and Evelia Barriga. Respondents

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 13CA1944

          Attorneys for Petitioner: Campbell Latiolais & Averbach, LLC Colin C. Campbell Denver, Colorado

          Attorneys for Respondents: Law Office of Samuel G. Livingston Samuel G. Livingston Golden, Colorado, Roy W. Penny, Jr. Denver Colorado

          Attorneys for Amicus Curiae Colorado Defense Lawyers Association Montgomery Amatuzio Dusbabek Chase, LLP John R. Chase Denver, Colorado

          Attorneys for Amicus Curiae Colorado Trial Lawyers Association The Gold Law Firm, LLC Michael J. Rosenberg Greenwood Village, Colorado

          OPINION

          RICE CHIEF JUSTICE

          ¶1 In this case, we consider the operation of a statutory scheme that expressly prohibits the unreasonable delay or denial of insurance benefits. Specifically, we consider whether an award of damages under section 10-3-1116(1), C.R.S. (2017), must be reduced by an insurance benefit unreasonably delayed but ultimately recovered by an insured outside of a lawsuit.[1] We hold that an award under section 10-3-1116(1) must not be reduced by an amount unreasonably delayed but eventually paid by an insurer because the plain text of the statute provides no basis for such a reduction. We also conclude that our general rule against double recovery for a single harm does not prohibit a litigant from recovering under claims for both a violation of section 10-3-1116(1) and breach of contract. We therefore affirm the decision of the court of appeals.

         I. Facts and Procedural History

         ¶2 In 2009, a fire started in an apartment building owned by respondents Guillermo and Evelia Barriga and insured by petitioner American Family Mutual Insurance Company ("American Family"). After the fire, the Barrigas and American Family coordinated for a contractor to begin repairs at the apartment building. American Family made various payments to and on behalf of the Barrigas, totaling $209, 816.43. However, after a substantial amount of repair work had been completed, the contractor revised its estimate for the cost of the repairs. The revised estimate was higher than American Family's initial estimate, primarily because of the need for additional repairs and asbestos remediation. In response to the revised estimate, American Family initiated the third-party appraisal process outlined in the insurance policy intended to provide an impartial assessment of the needed repair costs. The third-party appraiser fixed the award at $322, 141.79. American Family then paid that award, less the $209, 816.43 that had been previously paid to the Barrigas, resulting in a payment of $122, 325.36. American Family also made an additional payment of $5435.44 for emergency board-up services.

         ¶3 Raising a number of concerns with the insurance appraisal process, the Barrigas sued American Family for breach of contract, common law bad-faith breach of insurance contract, and unreasonable delay and denial of insurance benefits under section 10-3-1116(1). The jury found for the Barrigas on all claims, awarding damages, as relevant here, of $9270 for breach of contract and $136, 930.80 for benefits unreasonably delayed or denied.

         ¶4 Section 10-3-1116(1) provides that a plaintiff "whose claim for payment of benefits has been unreasonably delayed or denied may . . . [recover] two times the covered benefit" (emphasis added). Applying this statute, the trial court first determined that the total jury verdict on the statutory claim ($136, 930.80) comprised two parts: (1) $9270 in benefits unreasonably denied (equivalent to the separate verdict on the breach-of-contract claim); and (2) $127, 660.80 in benefits unreasonably delayed.[2] The trial court then concluded that the statute's "two times the covered benefit" language required it first to double the total jury verdict for benefits unreasonably delayed or denied, but then to reduce that product by the amount of benefits unreasonably delayed. The trial court reasoned that failing to reduce an award by the amount of benefits delayed but eventually paid to the insured would place an insured who suffered only an unreasonably delayed claim in a better position than an insured whose claim was wholly denied without a reasonable basis. The trial court concluded that that result would be "absurd and unintended." Accordingly, the trial court first doubled the total statutory verdict ($136, 930.80 x 2 = $273, 861.60), then reduced that award by $127, 660.80, the amount of benefits unreasonably delayed but eventually paid as found by the jury, resulting in a total award on the statutory claim of $146, 200.80.

         ¶5 The court of appeals disagreed with the trial court's approach. Instead, the court of appeals noted that the text of section 10-3-1116(4) expressly preserves "other actions available by statute or common law" and interpreted the statutory text as permitting recovery of two times the covered benefit delayed or denied in addition to any recovery of that benefit through another source. We granted American Family's cross-petition for certiorari to consider only whether the court of appeals erred in holding that an award under section 10-3-1116(1) should not be reduced by the amount of unreasonably delayed benefits. We now affirm the court of appeals' decision.

         II. Standard of Review

         ¶6 This case presents a question of statutory interpretation, which we review de novo. Goodman v. Heritage Builders, ...


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