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Munoz v. American Family Mutual Insurance Co.

Supreme Court of Colorado, En Banc

September 10, 2018

Joel Munoz, Petitioner
v.
American Family Mutual Insurance Company, Respondent

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 16CA416

          Attorneys for Petitioner: Franklin D. Azar & Associates, PC Patricia A. Meester Keith R. Scranton Aurora, Colorado Levy Law, P.C. Marc R. Levy Englewood, Colorado

          Attorneys for Respondent: Campbell Latiolais & Averbach, LLC Clifton J. Latiolais, Jr. Denver, Colorado

          Attorneys for Amici Curiae Colorado Civil Justice League and Colorado Defense Lawyers Association: Taylor Anderson, LLP Lee A. Mickus Denver, Colorado

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

          OPINION

          BOATRIGHT, JUSTICE

         ¶1 In this matter, we consider whether an insured is entitled to collect prejudgment interest when he settles an uninsured motorist claim ("UM claim") with his insurer in lieu of filing a lawsuit and proceeding to judgment.[1] We hold that, under the plain language of the prejudgment interest statute, § 13-21-101, C.R.S (2017), an insured is entitled to prejudgment interest only after (1) an action is brought, (2) the plaintiff claims damages and interest in the complaint, (3) there is a finding of damages by a jury or court, and (4) judgment is entered. Because Munoz did not meet all of these conditions, he is not entitled to prejudgment interest. We therefore affirm the court of appeals.

         I. Facts and Procedural History

         ¶2 After Joel Munoz was injured in a car crash with an uninsured motorist, he filed a UM claim with his insurer, American Family Insurance Company ("American Family"). During settlement negotiations, Munoz asked American Family to include prejudgment interest in its offer, but it declined to do so, stating that because prejudgment interest is required only after a judgment, it would not consider interest in settlement negotiations.

         ¶3 American Family ultimately offered Munoz $10, 008 to settle his claim, not including prejudgment interest. Munoz stated that he would accept the offer, but again asked American Family to add prejudgment interest, suggesting that he would otherwise sue. American Family did not consider that a true acceptance, and the parties were unable to resolve their dispute.

         ¶4 Munoz then sued. In his complaint, he alleged that American Family had breached its contract by refusing to pay all that he was entitled to under the uninsured motorist policy, which he viewed as including prejudgment interest. Munoz also alleged that American Family did not have a reasonable basis to deny him this benefit and that it had acted in bad faith by compelling him to litigate his claims to recover his full benefits.

         ¶5 Munoz then filed a motion for determination of law, asking the court to decide whether an insurance company must pay prejudgment interest on money received from a settlement. Munoz argued that according to this court's opinion in USAA v. Parker, 200 P.3d 350 (Colo. 2009), American Family was required to pay prejudgment interest on its settlement offer. Parker stated that the uninsured motorist statute, § 10-4-609(4), C.R.S. (2017), requires that an insured be able to recover the same amount of damages from an insurance company as he would from a direct action against the tortfeasor. 200 P.3d at 353. Because prejudgment interest is an element of damages, Munoz reasoned that he should be able to recover interest from the insurance company.

         ¶6 The trial court disagreed. It concluded that American Family was not required to include prejudgment interest in any settlement offer because the claim did not result in a judgment through litigation. In so doing, the trial court distinguished Parker, finding that it did not address whether an insurer must pay prejudgment interest on a settlement, and ruling that requiring an insurer to do so would be contrary to the uninsured motorist statute and lead to "an inconsistent and bizarre result."[2]

         ¶7 Munoz then appealed the trial court's determination of law. The court of appeals agreed with the trial court, holding that insurance companies are not required to pay prejudgment interest on a settlement. Munoz v. Am. Family Ins. Co., 2017 COA 25, ¶ 1, ___ P.3d ___. The division looked to the plain language of section 13-21-101 and concluded that a court's authority to award prejudgment interest exists only "if a plaintiff has lawfully requested prejudgment interest, there is a jury verdict or court finding that the plaintiff has damages, and a judgment is entered." Id. at ¶ 10. Because those prerequisites were not met here, the court of appeals concluded that Munoz was not entitled to prejudgment interest. See id. at ¶¶ 10-13. The division also agreed with the trial court's interpretation of Parker, stating that while some language from that opinion ...


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