v. LM General Insurance Company , 2020 COA 147 ( 2020 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
October 15, 2020
2020COA147
No. 20CA0965, Trudgian v. LM General Insurance Company —
Insurance — Motor Vehicles — Claims Practices for Property
Damage; Regulation of Vehicles and Traffic — Registration
Upon Transfer
In this C.A.R. 4.2 interlocutory appeal, the division analyzes
the intersection of section 10-4-639(1), C.R.S. 2019, which states
that insurers must pay an insured registration fees “associated with
the total loss of a motor vehicle,” with section 42-3-115(1), C.R.S.
2018, which states that a vehicle’s owner may receive credit for
registration fees from the Division of Motor Vehicles for a cancelled
registration. The insurer asserts that, when read together, the two
statutes authorize it to wait to see if the owner will receive a credit
before it is required to pay the insured the registration fees. The
division disagrees and concludes that the insurer is required to pay
the registration fees.
COLORADO COURT OF APPEALS 2020COA147
Court of Appeals No. 20CA965
City and County of Denver District Court No. 19CV30732
Honorable Martin F. Egelhoff, Judge
Barbara Trudgian,
Plaintiff-Appellee,
v.
LM General Insurance Company,
Defendant-Appellant.
ORDER AFFIRMED AND CASE
REMANDED WITH DIRECTIONS
Division A
Opinion by CHIEF JUDGE BERNARD
Tow and Hawthorne*, JJ., concur
Announced October 15, 2020
Franklin D. Azar & Associates, P.C., Michael D. Murphy, Alexander Beale,
Aurora, Colorado, for Plaintiff-Appellee
Lewis Roca Rothgerber Christie LLP, Holly C. White, Lindsey C. Herzog, Denver,
Colorado, for Defendant-Appellant
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1 As is pertinent to this C.A.R. 4.2 interlocutory appeal, section
10-4-639(1), C.R.S. 2019, states that an insurer “shall” pay
registration fees when they are “associated with the total loss of a
motor vehicle.” To resolve this appeal, we must decide whether an
insurer is required to pay an insured such registration fees even
though the insured might get a credit from the Department of Motor
Vehicles, which we shall call “the department,” for the same fees
when the insured registers a replacement vehicle. We conclude that
the insurer is required to pay the registration fees.
I. Background
¶2 The named plaintiff in this putative class action, Barbara
Trudgian, whom we shall call “the insured,” bought auto insurance
from defendant, LM General Insurance Company, which we will call
“the insurer.” She paid registration fees for the vehicle, which was
later damaged in an accident.
¶3 The insurer decided that the vehicle was a total loss, so it gave
the insured an itemized settlement statement. But the insured
thinks that the insurer violated section 10-4-639(1) because (1) the
settlement statement did not include reimbursement for any
registration fees that she had paid for the vehicle for the period
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following the accident; and (2) the insurer has never reimbursed her
for those fees.
¶4 So the insured filed this lawsuit, which includes claims for
statutory bad faith, common law bad faith, breach of contract, and
a request for a declaratory judgment. Relying on C.R.C.P. 56(h), the
insurer filed a motion asking the trial court to decide, as a matter of
law, that section 10-4-639(1) does not require it to reimburse the
insured for any credit that the department gave or would give the
insured for registration fees that the insured had paid on the
vehicle during the period after the time of the accident.
¶5 The court disagreed with the insurer, concluding that section
10-4-639(1) “[u]nambiguously states that an insurer ‘shall’ pay
registration fees” associated with the total loss of a vehicle and that
this statute does not contain any “exception [to] or limitation on the
insurer’s statutory duty.” The court explained that the insured’s
contention that its duty to pay is “conditioned upon whether or not
a discretionary credit is applied or ‘will be applied’ at some point in
the future” is both “inconsistent with the mandatory duty”
established by section 10-4-639(1) and “in conflict with” the
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insurer’s “overarching obligation to pay claims in a reasonable
time.”
¶6 The court later certified its order for interlocutory appeal
under C.A.R. 4.2. We granted the petition because we concluded
that it meets the requirements for an interlocutory appeal. We now
affirm the court’s order.
II. Standard of Review and Principles of Statutory Interpretation
¶7 This appeal requires us to interpret statutes. We review such
issues de novo. People v. Ortiz, 2016 COA 58, ¶ 15.
¶8 When we interpret a statute, we must ascertain and give effect
to the legislature’s intent. Colo. Dep’t of Revenue v. Creager
Mercantile Co., 2017 CO 41M, ¶ 16. In doing so, “[w]e give effect to
words and phrases according to their plain and ordinary
meaning[s].” Denver Post Corp. v. Ritter, 255 P.3d 1083, 1089 (Colo.
2011).
¶9 If a statute’s language is clear, we apply it as the legislature
wrote it. Id. “[W]e will not interpret a statute to mean that which it
does not express.” Carruthers v. Carrier Access Corp., 251 P.3d
1199, 1204 (Colo. App. 2010).
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III. Analysis
¶ 10 There are two statutes at the core of this case. The first is
section 10-4-639(1), which states that “[a]n insurer shall pay . . .
any . . . registration fee associated with the total loss of a motor
vehicle.” The second is section 42-3-115(1), C.R.S. 2018, which, at
the time of the accident, specified that
• a vehicle’s owner, when “applying for registration in such
owner’s name during the same registration period of
another motor vehicle”;
• “may receive credit upon fees due for such new
registration for such portion of the fees paid for the
cancelled registration” (emphasis added);
• “as the department may determine to be proper and
proportionate to the unexpired part of the original term of
registration.”
¶ 11 According to the insurer, section 10-4-639(1) does not require
it to reimburse the insured for registration fees that the department
has or will credit to her under section 42-3-115(1), C.R.S. 2018. As
a result, the insurer continues, it cannot “calculate what amount of
money, if any, it owes to an insured for the loss . . . of . . . [the]
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registration fees” until the insured tells the insurer one of two
things: (1) she will not be registering a replacement vehicle,
meaning that she will not receive a credit from the department; or
(2) she has received a credit from the department and tells the
insurer how much it was. But, whether we read these two statutes
separately or together, we conclude that they do not say what the
insurer contends that they say.
¶ 12 Beginning with the plain language of section 10-4-639(1), the
use of the word “shall” requires the insurer to reimburse the
insured for the registration fee associated with the total loss of a
vehicle. See People v. Dist. Court, 713 P.2d 918, 921 (Colo.
1986)(“[T]he use of the word ‘shall’ in a statute is usually deemed to
involve a mandatory connotation.”). “[A]ssociated” means “related,
connected, or combined together.” Merriam-Webster Dictionary,
https://perma.cc/99DL-X4LB. Giving these terms their ordinary
meanings, section 10-4-639(1) requires an insurer to reimburse an
insured for the registration fee if it is connected to the total loss of a
vehicle. In other words, just like a totaled vehicle is a loss to the
insured, the associated registration fee is likewise a loss.
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¶ 13 Contrary to the insurer’s contention, nothing in section
10-4-639(1) creates an exception to this obligation. The statute
does not contain an exception, and we eschew creating one out of
thin air because “an exception not expressly made by the legislature
should not be read into a statute by the courts.” Dikeou v. Dikeou,
928 P.2d 1286, 1293 n.4 (Colo. 1996); see In re Marriage of Chalat,
112 P.3d 47, 57 (Colo. 2005)(“Straining the statute to read
otherwise would ignore its plain language . . . and read in a
judicially created exception that the General Assembly did not
include.”). And section 42-3-115(1), C.R.S. 2018, does not refer to
any such exception for insurers, either.
¶ 14 Even so, the insurer submits that, by not creating an
exception to its obligation to pay the insured’s registration fee under
section 10-4-639(1), the insured, and any other similarly situated
insureds, might receive a windfall allowing them to collect twice:
once from the insurer under section 10-4-639(1), and once in the
form of a credit from the department under section 42-3-115(1),
C.R.S. 2018. We disagree for five reasons.
¶ 15 First, unlike an insurer’s obligation to pay registration fees in
section 10-4-639(1), the credit provided in section 42-3-115(1),
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C.R.S. 2018, is not mandatory. “The owner . . . may receive credit
upon the fees due for such new registration for such portion of the
fees paid for the cancelled registration as the department may
determine to be proper and proportionate to the unexpired part of
the original term of registration.” § 42-3-115(1), C.R.S. 2018
(emphasis added). See Larry H. Miller Corp. Denver v. Urban
Drainage & Flood Control Dist., 64 P.3d 941, 946 (Colo. App.
2003)(“[T]he General Assembly’s use of the term ‘may’ is indicative
of a discretionary power to choose among alternatives.”); see also
People v. Kilgore, 992 P.2d 661, 663 (Colo. App. 1999)(“While [the
term ‘may’] can, in some instances, bear a mandatory meaning . . .
it is generally deemed to carry a permissive connotation, absent
evidence of a contrary legislative intent.”). Providing an exception to
an insurer’s mandatory obligation based on a discretionary credit
would be contrary to the ordinary meaning of these statutes.
¶ 16 Second, in construing a statute’s ordinary meaning, we read
the statutory scheme as a whole to “give consistent, harmonious,
and sensible effect to all parts of [the] statute.” Jefferson Cty. Bd. of
Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo. 2010). Title 10
applies to all types of insurance. Section 10-4-639(1) is part of
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Article 4, which deals with “Property and Casualty Insurance.” By
enacting Article 4, the General Assembly declared “that the health,
welfare, and safety of the people of the state of Colorado would be
enhanced by the expeditious handling of liability claims.”
§ 10-4-101, C.R.S. 2019; see § 10-3-1115(1)(a), C.R.S. 2019 (An
insurer “shall not unreasonably delay or deny payment of a claim
for benefits owed to or on behalf of any first-party claimant.”).
Interpreting section 10-4-639(1) as the insurer suggests we should
interpret it is contrary to this statutory scheme because it puts the
burden on the insured to provide information based on an
uncertain event — buying and registering a new vehicle — before
she can be compensated for the total loss of her covered vehicle.
¶ 17 Third, and relatedly, forcing the insured to wait to receive the
reimbursement for the registration fees until she has either decided
against registering a replacement vehicle or decided to register one
and the department has given her a credit would unnecessarily
delay the payment of her claim, undercutting the legislature’s
direction that such claims be resolved expeditiously. See § 10-3-
1115(1)(a); § 10-4-101.
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¶ 18 Fourth, the insured is only seeking registration fees for the
period when she was unable to use her vehicle after the accident
because of the total loss. She would not be in the position of
needing a replacement vehicle — and paying additional registration
fees — if her insured vehicle had not been a total loss. See State,
Dep’t of Health v. The Mill, 887 P.2d 993, 1005 (Colo. 1994)(“A
‘windfall’ is commonly understood to mean ‘an unexpected or
sudden gain or advantage.’” (quoting Webster’s Third New
International Dictionary 2619-20 (1986))).
¶ 19 Fifth, “[i]t is not within the purview of this court to question
the legislature’s choice of policy,” even if that policy results in a
windfall to insureds. City of Montrose v. Pub. Utils. Comm’n, 732
P.2d 1181, 1193 (Colo. 1987); see Volunteers of Am. Colo. Branch v.
Gardenswartz, 242 P.3d 1080, 1088 (Colo. 2010)(The legislature
“chose to allow a plaintiff to obtain the benefit of his contract, even
if the award resulted in a double recovery.”); see also Colo. Ins.
Guar. Ass’n v. Menor, 166 P.3d 205, 217 (Colo. App. 2007)(“[T]he
General Assembly has not amended § 8-41-203 to preclude such
windfalls.”).
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¶ 20 The insurer points to the legislature’s recent repeal of section
42-3-115(1), C.R.S. 2018, and to its related enactment of section
42-3-107(25), C.R.S. 2019 (effective January 1, 2020), to buttress
its contention. See Ch. 231, sec. 2, § 42-3-115, 2019 Colo. Sess.
Laws 2319. Section 42-3-107(25) now provides that the
“department shall allow a credit for . . . registration fees . . . if the
owner disposes of the vehicle during the registration period . . . .”
(Emphasis added.) The insurer asserts that, because the legislature
did not modify section 10-4-639(1) when enacting section
42-3-107(25), section 10-4-639(1) cannot be interpreted to require
insurers to pay registration fees that the department now must
credit to insureds.
¶ 21 But that is not what the 2019 statutory changes say. They did
not expressly create an exception to the insurer’s duty to reimburse
the insured for registration fees under section 10-4-639(1), and we
cannot create one out of whole cloth. See Dikeou, 928 P.2d at 1293
n.4. And, as our supreme court has explained, the legislature “that
amended the statute is not the same [legislature] that enacted the
statute that we construe here.” State v. Nieto, 993 P.2d 493, 504
n.6 (Colo. 2000). We cannot infer the intent of the predecessor
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legislature that enacted section 10-4-639(1) from the act of the
successor legislature that enacted section 42-3-107(25). Id.¶ 22 Finally, the insurer submits that the United States District
Court’s decision in Monson v. Country Preferred Insurance Company,
No. 17-CV-02130-RBJ, 2018 WL 11016704 (D. Colo. Sept. 28,
2018), supports its interpretation. In Monson, as in this case, the
plaintiff claimed that an insurance company did not reimburse its
insured for registration fees under section 10-4-639(1). Id. at *2.
The insurer relies on the district court’s statement that a credit
from the department “may be relevant in determining the amount of
fees owed” by the insurer. Id. at *4. But this statement was made
in the context of discussing all the fees that the plaintiff sought
from the insurance company: “the total amount of fees related to
the replacement vehicle, minus a . . . credit” from the department.
Id. at *3. The insured in this case did not seek such additional fees.
¶ 23 More to the point, Monson held that section 10-4-639(1)
“mandates the insurance provider to pay . . . registration fee[s]
associated with a total loss.” Id. at *4. It decided, like we do, that
“a discretionary credit from the [department] does not relieve
insurance providers of their statutory duties as a matter of law.” Id.
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¶ 24 In the end, we conclude that section 10-4-639(1) means
exactly what it says: the insurer must pay registration fees
associated with the total loss of the insured’s vehicle.
¶ 25 The trial court’s order is affirmed, and we remand the case for
further proceedings.
JUDGE TOW and JUDGE HAWTHORNE concur.
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