Munoz v. American Family Mutual Insurance Co , 2017 Colo. App. LEXIS 204 ( 2017 )

COLORADO COURT OF APPEALS 2017COA25
Court of Appeals No. 16CA0416
City and County of Denver District Court No. 15CV30685
Honorable John W. Madden, IV, Judge
Joel Munoz,
Plaintiff-Appellant,
v.
American Family Mutual Insurance Company,
Defendant-Appellee.
JUDGMENT AFFIRMED
Division IV
Opinion by JUDGE ASHBY
Hawthorne and Freyre, JJ., concur
Announced February 23, 2017
Franklin D. Azar & Associates, PC, Patricia A. Meester, Keith R. Scranton,
Aurora, Colorado, for Plaintiff-Appellant
Campbell Latiolais & Averbach, LLC, Clifton J. Latiolais, Jr., Denver, Colorado,
for Defendant-Appellee
¶1 Plaintiff, Joel Munoz, appeals from the trial court’s judgment
entered in favor of defendant, American Family Mutual Insurance
Company (American Family). We are asked to decide a question not
yet resolved in Colorado: Must an insured file a lawsuit and proceed
to judgment to be legally entitled to prejudgment interest, as
provided by section 13-21-101(1), C.R.S. 2016, when the insured
settles a claim under his or her uninsured motorist/underinsured
motorist policy? We conclude that the answer is “yes” and affirm
the judgment of the trial court.
I. Background
¶2 Munoz was injured in a collision with David L. McCormack, an
uninsured motorist (UM). Munoz opened a UM claim with his
insurer, American Family. Throughout the settlement process,
American Family made settlement offers to Munoz but took the
position that it was not required to pay prejudgment interest.
Munoz asked American Family to consider including prejudgment
interest when settling the UM claim because it was an element of
damages he could have pursued against McCormack. American
Family maintained that it was only required to pay prejudgment
interest as determined by a court after a judgment had been
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entered. Munoz accepted American Family’s final offer,
understanding that it did not include interest, though he continued
to try to persuade American Family to include payment of
prejudgment interest. American Family declined and sought a
release of all claims in exchange for its payment of the amount of
the offer accepted by Munoz.
¶3 Munoz then filed a lawsuit against American Family and
McCormack. Seeking prejudgment interest on damages payable
from American Family, Munoz moved for the trial court, under
C.R.C.P. 56(h), to determine whether American Family was required
to include prejudgment interest as part of its settlement of the UM
claim. American Family filed a cross-motion asking the court to
determine the same legal question.
¶4 The trial court ruled that although an insured under a UM
policy may recover prejudgment interest pursuant to section 13-21-
101, as a matter of law, the insured is entitled to such interest only
when a judgment has entered and interest is awarded as an
component of damages assessed by the jury’s verdict or the court.
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II. Prejudgment Interest Need Not Be Considered When Evaluating
or Settling a Claim for UM Benefits
¶5 Munoz contends that the trial court erred by determining that
he, an insured motorist, is not legally entitled to collect
prejudgment interest unless he has secured a judgment following
an assessment of an amount of damages resulting from a jury
verdict or court finding. He contends that prejudgment interest is a
necessary element of compensatory damages that makes an injured
party whole.
¶6 The purpose of prejudgment interest is to compensate the
injured party for the time value of the money owed for his or her
injuries. Morris v. Goodwin, 185 P.3d 777, 780 (Colo. 2008). And
Munoz therefore asserts that he was legally entitled to collect
prejudgment interest as an element of his compensatory damages
even if no judgment has been entered. He contends that section
13-21-101 merely “instructs” trial courts as to when, and at what
rate, a prejudgment interest award is authorized and that the
statute was not intended to limit the circumstances under which
prejudgment interest may be awarded to those where a trial has
occurred and a judgment has been entered. American Family
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counters that under the plain language of section 13-21-101,
prejudgment interest can only be awarded after a judgment, based
upon a damages award determined by a trier of fact, has been
entered. To resolve this dispute, we must construe section 13-21-
101. We agree with American Family.
¶7 We review the trial court’s determination of a question of law
under C.R.C.P. 56(h) de novo. Henisse v. First Transit, Inc., 247
P.3d 577, 579 (Colo. 2011). We also review decisions related to
statutory construction de novo. Bostelman v. People, 162 P.3d 686,
689 (Colo. 2007). An entitlement to interest is created by statute
and is in derogation of the common law. Clark v. Hicks, 127 Colo.
25, 32, 252 P.2d 1067, 1070 (1953). When a statute is in
derogation of the common law, we construe the statute strictly,
Bertrand v. Bd. of Cty. Comm’rs, 872 P.2d 223, 229 (Colo. 1994),
giving consistent, harmonious, and sensible effect to all its parts.
People v. Adams, 2016 CO 74, ¶ 12.
¶8 In interpreting statutes, our primary task is to give effect to
the intent of the General Assembly. Sperry v. Field, 186 P.3d 133,
137 (Colo. App. 2008), aff’d, 205 P.3d 365 (Colo. 2009). We first
look to the statute’s plain language. Id. If it is clear and
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unambiguous, we interpret the statute as written. Id. Only if the
terms used are susceptible of more than one interpretation may we
employ extrinsic sources, such as legislative history, prior law,
consequences of one interpretation over another, and the goal of the
statutory scheme, to aid our interpretation. Id.¶9 As relevant here, section 13-21-101(1) states as follows:
In all actions brought to recover damages for
personal injuries sustained by any person
resulting from or occasioned by the tort of any
other person, corporation, association, or
partnership, whether by negligence or by
willful intent of such other person,
corporation, association, or partnership and
whether such injury has resulted fatally or
otherwise, it is lawful for the plaintiff in the
complaint to claim interest on the damages
alleged from the date said suit is filed; and . . .
[w]hen such interest is so claimed, it is the
duty of the court in entering judgment for the
plaintiff in such action to add to the amount of
damages assessed by the verdict of the jury, or
found by the court, interest on such
amount . . . .
¶ 10 Section 13-21-101(1) therefore sets forth specific conditions
that must be met before prejudgment interest can be awarded: (1)
an action must be brought; (2) the plaintiff must claim damages in
the complaint; (3) there must be a finding of damages by a jury or
the court; and (4) judgment is entered. In our view, the plain
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meaning of the statute’s language is clear — a court’s authority to
award prejudgment interest only exists 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.
And because we conclude that the language of the statute is clear
and unambiguous, we need look no further.
¶ 11 Munoz contends that USAA v. Parker, 200 P.3d 350 (Colo.
2009), compels a different result. We disagree. The issue decided
in USAA was the proper rate of prejudgment interest to be applied
to a judgment against an underinsured motorist (UIM) carrier. See
id. at 357. The supreme court did not resolve the issue of whether
an insurance company is required to pay prejudgment interest
when evaluating and settling a claim with its insured under a UM
or UIM policy. We recognize that certain language in USAA could be
construed to support Munoz’s contention that because prejudgment
interest is a type of compensatory damages, he would be entitled to
recover prejudgment interest from McCormack in a direct action
against him and Munoz is, therefore, entitled to recover the same
from American Family. However, we conclude, as did the trial court
in its well-reasoned order, that USAA does not stand for the
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proposition that if the insured does not file a claim, a UM/UIM
insurer is required to pay to the insured the same amount that
could have been recovered from the UM or UIM as if the insured
had filed an action. See Witt v. State Farm Mut. Auto. Ins. Co., 942
P.2d 1326, 1327 (Colo. App. 1997) (holding the plaintiff was not
entitled to prejudgment interest from UIM carrier on settlement
amount negotiated with tortfeasor, and the plaintiff’s decision to
settle waived right to seek prejudgment interest). Instead, the
statute establishes the conditions upon which the insured’s right to
interest exists, and it uses specific language to do so, including the
following: “[i]n all actions brought”; “it is lawful for the plaintiff in
the complaint to claim interest on the damages alleged from the date
said suit is filed”; “[w]hen such interest is so claimed, it is the duty
of the court in entering judgment for the plaintiff in such action to
add to the amount of damages assessed by the verdict of the jury, or
found by the court, interest on such amount.” § 13-21-101(1)
(emphasis added).
¶ 12 Significantly, USAA also did not address an issue applicable
here that had been previously resolved by the court of appeals in
Parker v. USAA, 216 P.3d 7, 13-14 (Colo. App. 2007), aff’d, 200
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P.3d 350 (Colo. 2009), holding that an insured was not entitled to
recover prejudgment interest on the settlement amount from his
UM/UIM carrier.
¶ 13 We therefore conclude that the trial court correctly determined
that Munoz was not entitled to prejudgment interest in the
settlement reached with American Family prior to litigation.
III. Conclusion
¶ 14 The judgment is affirmed.
JUDGE HAWTHORNE and JUDGE FREYRE concur.
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