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 ...