Estate of Casper v. Guarantee Trust Life Insurance Co , 421 P.3d 1184 ( 2016 )

COLORADO COURT OF APPEALS 2016COA167
Court of Appeals No. 14CA2423
Pueblo County District Court No. 12CV740
Honorable David W. Crockenberg, Judge
Estate of Michael Dean Casper, by and through Nick Casper, personal
representative,
Plaintiff-Appellee,
v.
Guarantee Trust Life Insurance Company, an Illinois corporation,
Defendant-Appellant.
JUDGMENT AFFIRMED AND CASE
REMANDED WITH DIRECTIONS
Division II
Opinion by JUDGE HARRIS
Webb and Ashby, JJ., concur
Announced November 17, 2016
Levin Rosenberg PC, Bradley A. Levin, Nelson A. Waneka, Denver, Colorado;
Keating Wagner Polidori Free PC, Zachary C. Warzel, Denver, Colorado, for
Plaintiff-Appellee
Hall & Evans, LLC, Kevin E. O’Brien, Alan Epstein, Malcolm S. Mead, Cristin J.
Mack, Denver, Colorado, for Defendant-Appellant
¶1 Under Colorado law, the death of a plaintiff in a personal
injury action extinguishes his entitlement to recover noneconomic
and punitive damages. But what happens when the plaintiff dies
after those damages have been awarded by a jury but before the
district court has entered a judgment? This question had never
been answered in Colorado.
¶2 Michael Dean Casper bought a cancer insurance policy from
defendant, Guarantee Trust Life Insurance Company (GTL); when
he was diagnosed with cancer seven months later, GTL refused to
pay his claims. Casper sued GTL for breach of contract, bad faith
breach of an insurance contract, and statutory unreasonable denial
of benefits. A jury awarded him more than $4,500,000 in punitive
and other noneconomic damages.
¶3 The trial court immediately entered an oral order making the
verdict a judgment. But Casper died nine days later, before the
court had reduced its oral order entering judgment to a written
judgment as required by C.R.C.P. 58. After resolving attorney fees
and interest issues, the court entered a signed and dated written
judgment in favor of plaintiff, the Estate of Michael Dean Casper
1
(the Estate), in the amount of $1,997,996.40, nunc pro tunc to the
date of verdict.
¶4 GTL says that as a matter of law the delay in entering the
written judgment means that under the Colorado survival statute,
§ 13-20-101, C.R.S. 2016, the Estate is entitled only to the $50,000
awarded as economic damages for the breach of contract claim. We
disagree. Because the verdict resolved the merits of the case, and
judgment would necessarily follow, the survival statute did not
extinguish Casper’s right to damages. We therefore affirm the
judgment.
I. Background
¶5 Casper bought a “First Diagnosis” cancer insurance policy in
August 2010. According to his testimony, he was sold the policy by
Joanna Gaylord, a door-to-door insurance salesperson who worked
for Platinum Supplemental Insurance, Inc. (Platinum), an agency
with exclusive rights to sell GTL’s policy. Casper listened to
Gaylord’s presentation but expressed concern about his ability to
qualify for benefits, based on prior arterial blockages in his legs.
Gaylord assured him that, as long as he had not been diagnosed
with, or been advised to seek treatment for, AIDS, cancer, a heart
2
attack, or a stroke, he would be covered by the policy. Casper
answered truthfully that he had not been diagnosed with or advised
to seek treatment for any of those conditions. He filled out the
application, authorized GTL to obtain ten years’ of medical records,
and agreed to monthly electronic premium payments. A month
later, GTL approved his application.
¶6 In March 2011, Casper was diagnosed with prostate cancer.
He submitted claims to GTL, which denied them. According to page
twelve of the policy, cancer was not a covered condition “when
advice or treatment is received . . . prior to the Effective Date, and
such advice or treatment results in the First Diagnosis of Cancer.”
GTL maintained that Casper had received such advice, in
connection with his treatment for a non-cancerous condition
involving an enlarged prostate, which had ultimately resulted in the
detection of Casper’s prostate cancer.
¶7 In 2012, Casper sued GTL for breach of contract, bad faith
breach of insurance contract, and unreasonable denial of benefits
in violation of sections 10-3-1115 and -1116, C.R.S. 2016. He also
sued, but then settled with, Gaylord and Platinum on claims for
3
negligent misrepresentation and fraud based on their role in
marketing the policy on behalf of GTL.
¶8 Trial was originally scheduled to begin in February 2014. But
in October 2013, the court, on its own motion, reset the trial to July
2014.
¶9 During trial, the court directed a verdict for Casper on his
breach of contract claim, finding that the exclusion provision was
ambiguous and, therefore, as a matter of law, the policy had to be
construed as covering Casper’s cancer. On July 15, 2014, the jury
returned a verdict in favor of Casper on all claims. It awarded
Casper $50,000 for breach of contract, $50,000 for unreasonable
denial of benefits, $150,000 in economic damages for bad faith
breach of the contract, $550,000 in noneconomic damages for bad
faith breach of the contract, and $4,000,000 in punitive damages.1
¶ 10 Because Casper was in hospice care by then, his lawyer
requested that the court immediately enter judgment on the verdict
to avoid any limitation on recovery under Colorado’s survival
1 The parties later agreed that the economic damages awards for the
breach of contract, bad faith breach of an insurance contract, and
statutory unreasonable denial of benefits claims were duplicative
and that economic damages totaled $50,000.
4
statute. The court attempted to oblige, announcing that it was
entering judgment. It directed the clerk to receive and enter the
verdict in the court registry. Then it entered an unsigned minute
order reflecting that it had ordered judgment to be entered.
¶ 11 When Casper died nine days later, GTL moved to set aside the
verdict in part and to limit the recoverable damages. It argued that
because attorney fees and prejudgment interest had not been
determined and statutory caps had not been applied, Casper had
died before final judgment had been entered. Thus, according to
GTL, the statutory bad faith denial of benefits claim was
extinguished, as was Casper’s entitlement to recover noneconomic
and punitive damages. GTL requested that the court enter final
judgment on the breach of contract claim in the amount of $50,000.
In the alternative, GTL requested that the court impose statutory
caps on the noneconomic and punitive damages.
¶ 12 Casper’s attorneys, in the meantime, moved to substitute the
Estate as plaintiff, and then they requested an award of attorney
fees under section 10-3-1116 and prejudgment interest to July 15,
2014, the date the court had orally entered judgment.
5
¶ 13 The district court denied GTL’s motion to set aside the verdict,
ruling that the survival statute was not implicated because Casper
had died after entry of judgment on the verdict. It did, however,
grant GTL’s motion to enforce the statutory caps on damages.
¶ 14 On October 30, 2014, after reducing the noneconomic and
punitive damages pursuant to statutory caps and awarding
approximately one-third of the fees requested by Casper’s attorneys,
the district court entered an amended final judgment, nunc pro
tunc to July 15, 2014, in favor of the Estate in the amount of
$1,997,996.40.
¶ 15 On appeal, GTL contends that the district court erred by
failing to vacate all of the damages (with the exception of the
$50,000 breach of contract damages), by characterizing the
attorney fees awarded under section 10-3-1116 as compensatory
damages for purposes of calculating punitive damages, by failing to
further reduce the attorney fees award, and by instructing the jury
on an insurance regulation related to the standard of care for the
sale and marketing of insurance policies. We take up each of these
contentions, reject them, and therefore affirm.
6
II. Colorado’s Survival Statute
¶ 16 At common law, claims based on personal torts abated upon
the death of either party. To ameliorate the harsh effects of this
rule, Colorado, like most other states, enacted a survival statute in
the late 1800s. Its current iteration — section 13-20-101 —
provides:
All causes of action, except actions for slander
or libel, shall survive and may be brought or
continued notwithstanding the death of the
person in favor of or against whom such action
has accrued, but punitive damages shall not
be awarded nor penalties adjudged after the
death of the person against whom such
punitive damages or penalties are claimed;
and, in tort actions based upon personal
injury, the damages recoverable after the death
of the person in whose favor such action has
accrued shall be limited to loss of earnings and
expenses sustained or incurred prior to death
and shall not include damages for pain,
suffering, or disfigurement, nor prospective
profits or earnings after date of death. An
action under this section shall not preclude an
action for wrongful death under part 2 of
article 21 of this title.
¶ 17 GTL contends that because Casper died before a final,
appealable judgment was entered, the Estate may recover only the
$50,000 awarded as economic damages.
7
A. Standard of Review and Principles of Interpretation
¶ 18 Resolution of this case turns on the interpretation of a statute,
an issue of law subject to de novo review. Kyle W. Larson Enters.,
Inc. v. Allstate Ins. Co., 2012 COA 160M, ¶ 9.
¶ 19 Our primary task when construing a statute is to ascertain
and give effect to the legislature’s intent based on its chosen
language. Young v. Brighton Sch. Dist. 27J, 2014 CO 32, ¶ 11; see
also State v. Nieto, 993 P.2d 493, 502 (Colo. 2000) (“Legislative
intent is the polestar of statutory construction.” (quoting Schubert v.
People, 698 P.2d 788, 793 (Colo. 1985))). We give words and
phrases their plain and ordinary meanings, and we read the statute
as a whole, giving consistent, harmonious, and sensible effect to all
of its parts. Young, ¶ 11. We must choose a construction that
serves the purpose of the legislative scheme and avoids absurd
results. Town of Erie v. Eason, 18 P.3d 1271, 1276 (Colo. 2001).
¶ 20 If the statutory language is unambiguous, we apply it as
written. Reno v. Marks, 2015 CO 33, ¶ 20. If a statute is
ambiguous, however, we may consider indicia of legislative intent
such as the object to be attained, the circumstances under which
the statute was enacted, the common law, and the consequences of
8
a particular construction. § 2-4-203, C.R.S. 2016; see also State
Eng’r v. Castle Meadows, Inc., 856 P.2d 496, 504 (Colo. 1993)
(listing indicators of legislative intent). “Because we also presume
that legislation is intended to have just and reasonable effects, we
must construe statutes accordingly and apply them so as to ensure
such results.” Castle Meadows, Inc., 856 P.2d at 504; see also § 2-
4-201(1)(c), C.R.S. 2016.
B. Discussion
¶ 21 The survival statute sets forth a broad rule, with two
exceptions. As relevant here, all causes of action survive the death
of a party. But, neither punitive damages nor penalties shall be
“awarded” or “adjudged” after the death of a party,2 and in personal
injury cases, the damages “recoverable” after the death of the
2 The statute prohibits the award of punitive damages or penalties
“after the death of the person against whom such punitive damages
or penalties are claimed,” § 13-20-101, C.R.S. 2016 (emphasis
added), but the supreme court has interpreted this limitation on
damages to apply not just when the tortfeasor dies, but also when
the plaintiff dies. See Kruse v. McKenna, 178 P.3d 1198, 1200
(Colo. 2008); see also Warren v. Liberty Mut. Fire Ins. Co., Civ. A. No.
05-cv-01891-PAB-MEH, 2011 WL 1103160, at *9 (D. Colo. 2013
A.K. Marsh. 24, 2011) (Although the statutory language appears to bar
recovery of punitive damages or penalties only after the death of the
tortfeasor, “[t]his interpretation of the statute . . . has been
foreclosed by the Colorado Supreme Court.”).
9
plaintiff are limited to economic damages suffered before death and
shall not include noneconomic damages or future earnings. § 13-
20-101.
¶ 22 GTL maintains that the survival statute precludes recovery of
punitive or noneconomic damages if the plaintiff dies before his
claims merge into a final judgment, an event that prevents
abatement. And, it argues, the judgment that was entered in July
2015, days before Casper’s death, was not final because it did not
include an award of attorney fees or prejudgment interest.
Therefore, the jury’s award of damages became a nullity when
extinguished by Casper’s death nine days later.
¶ 23 We agree with GTL that, as a general matter, claims merge
into a judgment and a judgment does not abate, even if the cause of
action would not have survived the party’s death. Ahearn v. Goble,
90 Colo. 173, 176, 7 P.2d 409, 410 (1932). And, neither the court’s
oral pronouncement nor the minute order constituted a “judgment”
within the meaning of C.R.C.P. 58(a) because the rule requires
entry of a written, dated, and signed judgment. But we do not
believe that these propositions lead inexorably to a conclusion that
the survival statute precludes recovery of punitive and other
10
noneconomic damages if the plaintiff dies after the verdict is
returned but before judgment is entered. We conclude that, based
on the language, history, and purpose of the statute, the legislature
did not intend to draw such a bright line between verdict and
judgment. Rather, in our view, one naturally leads to the other, so
that a party who survives to verdict and obtains an entitlement to a
judgment may recover punitive and other noneconomic damages,
regardless of whether the party is alive when the resulting judgment
is entered.
¶ 24 To begin, the statute does not set the date of judgment as the
time when a claim for noneconomic damages is no longer subject to
abatement. Nor does it mention the date of verdict. Some other
states’ survival statutes do explain more explicitly when the party’s
death extinguishes a right to recover damages. See, e.g., Cal. Prob.
Code § 573 (West 1991) (“Where a person having a cause of action
dies before judgment, the damages recoverable . . . are limited to
the loss or damage the decedent sustained or incurred prior to
death, including any penalties or punitive or exemplary damages
. . . but not including any damages for pain, suffering, or
disfigurement.”) (repealed 1992); Nev. Rev. Stat. § 41.100 (2016)
11
(“[W]hen a person who has a cause of action dies before judgment,
the damages recoverable by the decedent’s executor . . . include all
losses or damages which the decedent incurred or sustained before
the decedent’s death, including any penalties or punitive and
exemplary damages . . . and damages for pain, suffering or
disfigurement . . . .”); Or. Rev. Stat. § 121.010 (1964) (“An action for
a wrong shall not abate by the death of any party, after a verdict
has been given therein, but the action shall proceed thereafter in
the same manner as in cases where the cause of action survives.”)
(repealed 1965).
¶ 25 The General Assembly’s decision to forego an explicit selection
of either the date of verdict or the date of judgment as the
controlling date for survival purposes shows that it did not consider
the distinction relevant. The General Assembly has distinguished
between the verdict and the judgment in a number of other
statutes. See, e.g., § 8-2-203, C.R.S. 2016 (“[T]he verdict of the jury
and the judgment of the court shall specify the amount of damages
awarded to each person . . . .”); § 13-64-205, C.R.S. 2016 (setting
forth the procedure to determine “what judgment is to be entered on
a verdict requiring findings of special damages”); § 38-1-113, C.R.S.
12
2016 (“The court shall cause the verdict of the jury and the
judgment of said court to be entered upon the records of said
court.”). Thus, had the General Assembly intended to bar a party’s
recovery of noneconomic damages in the event of death after the
verdict but before judgment, it could have said so. See Specialty
Rests. Corp. v. Nelson, 231 P.3d 393, 397 (Colo. 2010) (“[T]he
General Assembly’s failure to include particular language is a
statement of legislative intent.”).
¶ 26 Turning to the language that does appear in the survival
statute, we conclude that it supports an interpretation that survival
to verdict suffices for a party to recover noneconomic damages.
With respect to punitive damages, the statute instructs that a
plaintiff cannot be “awarded” punitive damages after his death or
the death of the tortfeasor. Because punitive damages are awarded
by the jury, an “award” of punitive damages necessarily occurs at
the time of the verdict. See § 13-21-102, C.R.S. 2016 (jury may
award exemplary damages in addition to actual damages).
Accordingly, the legislature’s choice of the word “awarded” indicates
that a punitive damages award is not extinguished if the plaintiff
dies after a verdict is returned. See People v. Guenther, 740 P.2d
13
 971, 976 (Colo. 1987) (In construing a statute, the court assumes
that the legislative choice of language is a “deliberate one calculated
to obtain the result dictated by the plain meaning of the words.”).
¶ 27 Though the General Assembly used another term —
“recoverable” — when referring to other types of noneconomic
damages, we do not read the statute as imposing different rules
depending on the type of noneconomic damages at issue. In other
words, we do not believe that the legislature intended to allow a
party to recover punitive damages if he survived to verdict, but to
allow recovery of other noneconomic damages only if he survived to
entry of judgment. The creation of separate standards within the
same provision of a statute would be unusual enough that we
would expect the legislature to delineate that distinction more
explicitly. And, if the statute creates a single standard, we believe
that the word “awarded” is a more clear description of the relevant
event than the word “recoverable.”
¶ 28 Even so, because the language could reasonably be interpreted
to support both Casper and GTL, we conclude that the statute is
ambiguous. Thus, we must look to other tools of statutory
construction to ascertain legislative intent.
14
¶ 29 Under the common law of England, causes of action did not
abate upon the death of a party once a verdict was returned as long
as the judgment followed within a prescribed period of time. See,
e.g., Isley’s Case (1589) 74 Eng. Rep. 172 (K.B.) (where the plaintiff
died after verdict but before judgment was entered, cause of action
was not abated but instead judgment related back to date of
verdict); see also 17 Car. 2 c. 8 (1665) (“[I]n all Actions Personall (’)
Reall or mixt the death of either partie betweene the Verdict and the
Judgement shall not hereafter be alleadged for Error soe as such
Judgement be entred within Two Termes after such Verdict.”);
Skidaway Shell-Road Co. v. Brooks, 77 Ga. 136, 138 (1886) (under
English common law, return of a verdict before the death of a party
prevented abatement). In other words, because the judgment
followed from the verdict, the verdict was ordinarily sufficient to
prevent abatement.
¶ 30 GTL points out that while Colorado adopted the common law
of England, it did not adopt statutes enacted after 1607. See § 2-4-
211, C.R.S. 2016. But under the common law, as well as the pre-
1607 statutes that codified it, the death of a party after verdict did
not result in an abatement of the claims.
15
¶ 31 C.R.C.P. 58(a) also codifies this concept. Under the rule,
“upon a general or special verdict of a jury, or upon a decision by
the court, the court shall promptly prepare, date, and sign a written
judgment.” Rule 58(a), then, contemplates that the verdict and
judgment go hand in hand. And C.R.C.P. 54(f) instructs that “[i]f a
party dies after a verdict or decision upon any issue of fact, and
before judgment, the court may, nevertheless, render judgment
thereon.” This rule confirms that, once a verdict is returned, the
judgment shall follow, even if the party dies before judgment is
entered. See Bates v. Burns, 274 P.2d 569, 570 (Utah 1954)
(interpreting equivalent rule and concluding that the plaintiff’s
action did not abate where the plaintiff died after verdict but before
judgment because purpose of rule is to “preserve the verdict until a
judgment can be entered thereon”).
¶ 32 A number of courts share our view that once the merits of the
case have been decided by a verdict and the plaintiff is entitled to a
judgment, the action or claim for damages will not abate, even if
judgment has not been entered at the time of the party’s death.
¶ 33 In Tunnell v. Edwardsville Intelligencer, Inc., 252 N.E.2d 538
(Ill. 1969), for example, the jury returned a verdict for the plaintiff
16
on his defamation action. The court entered judgment
notwithstanding the verdict for defendant and plaintiff appealed,
but while the appeal was pending, the plaintiff died. After reversal
by the court of appeals, the defendant objected to reinstatement of
the verdict, arguing that the defamation claim did not survive the
plaintiff’s death. The Illinois Supreme Court disagreed, holding that
an action does not abate when the plaintiff dies after obtaining a
verdict in his favor:
What is significant in such cases, in our
opinion, is not any metaphysical notion of
merger of the cause of action into the verdict,
but rather the circumstance that all factual
questions had been resolved before the plaintiff
died. . . . The present case was ripe for
judgment when the plaintiff died, and the
appellate court properly held that his death
did not abate the action.
Id. at 541.
¶ 34 An analogous situation arose in Reed v. United States, 891
F.2d 878 (11th Cir. 1990). In that case, the parents of a child who
was born with birth defects asserted negligence claims against the
government under the Federal Tort Claims Act. The parties reached
a settlement; shortly thereafter, the lawyer for the government
notified the plaintiffs that the settlement had been approved. The
17
following day, the government’s lawyer prepared a stipulation and
sent it to the plaintiffs’ lawyer for signature. The child had died,
however, the day before, just after the parties had confirmed
approval of the settlement. The government attempted to withdraw
from the settlement, contending that, under Florida’s survival
statute in effect at the time, the negligence action abated upon the
child’s death.
¶ 35 The Eleventh Circuit affirmed the district court’s enforcement
of the agreement. It reasoned that the period between settlement
and final judgment was similar to the period between verdict and
judgment because, in both situations, the dispute had been
“conclusively resolved.” Id. at 881-82; Variety Children’s Hosp., Inc.
v. Perkins, 382 So. 2d 331 (Fla. Dist. Ct. App. 1980) (cause of action
does not abate during period between verdict and judgment). The
settlement entitled the plaintiffs to a judgment and, thus, the cause
of action did not abate between settlement and final judgment. Id.
at 882; see also Parker v. Parker, 319 A.2d 750, 751 (N.J. Super. Ct.
App. Div. 1974) (husband’s death after resolution of parties’ dispute
but before judgment did not abate divorce action because trial court
had “made a definitive adjudication of the controversy, reflecting its
18
conclusive determination that each party be granted a divorce”);
Garrett v. Byerly, 284 P. 343, 358 (Wash. 1930) (concluding that
cause of action does not abate when party dies after the verdict
because party is “entitled to a judgment” at the time of his death
(quoting Fitzgerald v. Stewart, 53 Pa. 343, 346 (1866))); Wilson v.
Coop. Transit Co., 30 S.E.2d 749, 753 (W. Va. 1944) (negligence
claim did not abate where the plaintiff died after verdict but before
entry of judgment).
¶ 36 Undaunted, GTL contends that Casper was not entitled to a
“final judgment” at the time of his death because the court had not
yet computed attorney fees and prejudgment interest. To be sure,
when attorney fees and prejudgment interest constitute
compensatory damages — as they do in this case — a final,
appealable judgment cannot be entered until the calculations are
complete. See Grand Cty. Custom Homebuilding, LLC v. Bell, 148
P.3d 398, 400-01 (Colo. App. 2006). But that does not mean that
the court could not enter a judgment pursuant to C.R.C.P. 58(a)
before it performed the calculations necessary to enter an amended
judgment that would be final and appealable under C.R.C.P. 54(a).
A “final judgment” is simply a type of judgment from which an
19
appeal may lie. See C.R.C.P. 54(a) (“‘Judgment’ as used in these
rules includes a decree and order to or from which an appeal lies.”);
C.R.C.P. 58 (“The term ‘judgment’ includes an appealable decree or
order as set forth in C.R.C.P. 54(a).”); see also Musick v. Woznicki,
136 P.3d 244, 251 (Colo. 2006) (distinguishing judgments from
final, appealable judgments under C.R.C.P. 54); cf. In re Estate of
Becker, 32 P.3d 557, 559-60 (Colo. App. 2000) (judgment in
dissolution of marriage case could have been entered after initial
hearing, even though court had not yet ruled on child custody
issues). We therefore reject GTL’s argument that Casper’s claim
abated merely because he was not entitled to a final, appealable
judgment.
¶ 37 Here, entry of judgment under C.R.C.P. 58(a) was surely
proper, as the jury had returned a general verdict. Indeed, the
dispute had been fully and finally resolved, all issues of liability had
been determined, and the jury had awarded all damages based on
the evidence presented at trial. See, e.g., Kaufman v. Herrman, 748
So. 2d 310, 312 (Fla. Dist. Ct. App. 1999) (The personal injury
action did not abate upon death of the plaintiff before entry of
judgment because the “dispute in this case had been conclusively
20
decided in favor of [plaintiff] by the rendition of the verdict prior to
[plaintiff’s] death.”).3
¶ 38 In any event, we are not persuaded that the General Assembly
intended the extinguishment of a jury verdict to turn on whether
attorney fees are characterized as costs or compensatory damages,
particularly where the legislature itself created the special remedy
that allows for reimbursement of attorney fees. Under GTL’s
reasoning, its own egregious conduct in unreasonably denying
benefits (which turns attorney fees otherwise treated as costs into
compensatory damages) would cause the delay that then renders
the jury’s award of noneconomic damages unrecoverable. We
3 The Estate contends that, not only was it entitled to a judgment
after the jury verdict under C.R.C.P. 58, but that judgment was
actually entered at this time because, when the court entered its
later written judgment, it did so nunc pro tunc to the date of the
verdict. “Nunc pro tunc judgments operate retrospectively and are
given the same force and effect as if entered at the time the court’s
decision was originally rendered.” Dill v. County Court, 37 Colo.
App. 75, 76 541 P.2d 1272, 1273 (1975). However, a court may
only enter a judgment nunc pro tunc to a date on which the
judgment legally could have entered. Robbins v. A.B. Goldberg, 185
P.3d 794, 797 (Colo. 2008). Because we conclude that the
judgment legally could have entered on the date of the verdict, we
agree with the Estate that judgment was validly entered nunc pro
tunc to that date. But this conclusion is not necessary to the
resolution of the Estate’s claim: even if the court had not entered
the judgment nunc pro tunc, Casper’s claim would not have abated
because he was entitled to a judgment.
21
decline to read the survival statute to require that result. Castle
Meadows, Inc., 856 P.2d at 504 (court should construe a statute in
a way that promotes the just and reasonable result the legislature
surely intended).
¶ 39 Finally, our interpretation of the statute advances its overall
goal of preserving claims and remedies. GTL says that we should
construe the statute in favor of abatement. But the supreme court
has explained that the statute indicates “an intention to create
remedies rather than to kill or suppress them.” Publix Cab Co. v.
Colo. Nat’l Bank of Denver, 139 Colo. 205, 220, 338 P.2d 702, 710
(1959).
¶ 40 For these reasons, we conclude that the claims for
noneconomic damages, including punitive damages, did not abate
upon Casper’s death.
III. Attorney Fees and Costs Under Section 10-3-1116
¶ 41 Under section 13-21-102(1)(a), the amount of “actual
damages” awarded to a plaintiff determines the amount of punitive
damages the plaintiff may recover. GTL asserts that attorney fees
and costs awarded by the trial court under section 10-3-1116 do
not constitute actual damages. Thus, GTL contends that the
22
district court erred when calculating both actual and punitive
damages. We disagree.
A. Standard of Review
¶ 42 Although we typically review a district court’s decision to
award attorney fees for an abuse of discretion, we review the legal
conclusions that provided the basis for that decision de novo.
Jorgensen v. Colo. Rural Props., LLC, 226 P.3d 1255, 1259 (Colo.
App. 2010); see also Sch. Dist. No. 12 v. Sec. Life of Denver Ins. Co.,
185 P.3d 781, 787 (Colo. 2008). And because the district court
awarded attorney fees pursuant to section 10-3-1116(1), we also
review its interpretation of this statute de novo. Kisselman v. Am.
Family Mut. Ins. Co., 292 P.3d 964, 969 (Colo. App. 2011).
¶ 43 Our ultimate task when examining statutes is to give effect to
the intent of the legislature, as expressed through the plain
language of the statute. Kyle W. Larson Enters., Inc., ¶ 10. Even
so, we may still examine legislative history when there is
substantial legislative discussion that bolsters our plain language
interpretation. Kisselman, 292 P.3d at 972; see Welby Gardens v.
Adams Cty. Bd. of Equalization, 71 P.3d 992, 995 (Colo. 2003)
23
(discussing legislative history despite concluding that “the plain
language of the statute is clear”).
B. Discussion
¶ 44 Pursuant to section 10-3-1116, the district court awarded
attorney fees and costs as part of the Estate’s actual damages.
Relying on Hall v. American Standard Insurance Co. of Wisconsin,
2012 COA 201, which determined that attorney fees are damages
(but did not specify whether they were actual, i.e., compensatory,
damages), the district court concluded that attorney fees and costs
were a component of actual damages and not a penalty, as GTL
asserted.
¶ 45 We agree with the district court and conclude that under the
plain meaning of section 10-3-1116, reasonable attorney fees and
court costs in this context are actual damages and do not constitute
penalties or other types of damages. Hall, ¶ 20. Although Hall does
not explicitly say that such damages constitute “actual damages,”
we find Hall’s analysis and reasoning lead to that conclusion.
¶ 46 Section 10-3-1116, which became effective August 5, 2008,
concerns “[r]emedies for unreasonable delay or denial of [insurance]
benefits.” The language provides, in pertinent part, that “[a] first-
24
party claimant . . . whose claim for payment of benefits has been
unreasonably delayed or denied may bring an action . . . to recover
reasonable attorney fees and court costs and two times the covered
benefit.” § 10-3-1116(1); Kisselman, 292 P.3d at 967. Additionally,
subsection (4) provides that the “action authorized in this section is
in addition to, and does not limit or affect, other actions available
by statute or common law, now or in the future.” § 10-3-1116(4).
¶ 47 The plain language of the statute lists two components of
recovery: “reasonable attorney fees and court costs” and “two times
the covered benefit.” § 10-3-1116(1); see also Hall, ¶ 20. Unlike
other statutes permitting the recovery of attorney fees, such as
sections 13-40-123, 24-34-402.5(2)(b)(I), and 38-33.3-123(1)(c),
C.R.S. 2016, section 10-3-1116 does not separate or place in a
distinct subsection the provision providing for the recovery of
attorney fees and costs. Hall, ¶¶ 13, 20. This structure evinces the
legislature’s intent to make the award of attorney fees and costs a
primary remedy, and not an additional or ancillary remedy. See id.;
compare § 13-40-123 (separating and distinguishing attorney fees
and costs from other “recover[able] damages”), with § 10-3-1116(1)
25
(listing nothing to recover other than “reasonable attorney fees and
court costs and two times the covered benefit”).
¶ 48 Further, “[c]lassification of attorney fees as either costs or
damages depends on context, and turns on the nature of the
requested attorney fees in a particular case.” Hall, ¶ 15. When
attorney fees and costs are part of the substance of the lawsuit,
that is, when they are the “legitimate consequences” of the tort or
breach of contract sued upon, attorney fees are clearly damages.
Id. at ¶¶ 15, 20 (quoting Ferrell v. Glenwood Brokers, Ltd., 848 P.2d
936, 941 (Colo. 1993)). Accordingly, we agree with Hall’s conclusion
that attorney fees and costs are “a ‘legitimate consequence’ of
bringing. . . an action to remedy an insurer’s unreasonable
conduct” and that this interpretation “is consistent with the
statutory authorization” in section 10-3-1116. Id. at ¶ 20; see also
Stresscon Corp. v. Travelers Prop. Cas. Co. of Am., 2013 COA 131,
¶¶ 119-20 (relying on Hall to conclude attorney fees are damages
under section 10-3-1116), rev’d on other grounds, 2016 CO 22M.
Thus, under section 10-3-1116, attorney fees and costs are actual
damages. Cf. Bunnett v. Smallwood, 793 P.2d 157, 160 (Colo. 1990)
(Attorney fees are not considered “actual damages” when “they are
26
not the legitimate consequences of the tort or breach of contract
sued upon.” (quoting Taxpayers for the Animas-LaPlata Referendum
v. Animas-LaPlata Water Conservancy Dist., 739 F.2d 1472, 1480
(10th Cir. 1984))); see Ferrell, 848 P.2d at 941-42 (attorney fees
should be considered actual damages when they are part of the
substance of the lawsuit); Double Oak Constr., L.L.C. v. Cornerstone
Dev. Int’l, L.L.C., 97 P.3d 140, 150 (Colo. App. 2003) (Attorney fees
are actual damages when “but for defendants’ obdurate conduct,
plaintiff would not have incurred attorney fees in pursuing its
judgment.”).
¶ 49 True enough, this interpretation of section 10-3-1116 is a
departure from the common law rule that attorney fees are not
recoverable as damages for a first-party insurance bad faith claim.
See Bernhard v. Farmers Ins. Exch., 915 P.2d 1285 (Colo. 1996).
But when the General Assembly enacted this statute it created “a
new private right of action for insureds in addition to and different
from a common law bad faith claim.” Kisselman, 292 P.3d at 975.
In stating that the “action authorized in this section is in addition to
. . . other actions available by statute or common law,” § 10-3-
1116(4), the statute makes clear that it imposes upon insurers
27
additional liabilities and provides for additional means of recovery
for plaintiffs. See Kisselman, 292 P.3d at 972-73.
¶ 50 Despite this language, GTL contends that Bernhard should
control, and to hold otherwise would create a conflict between
Bernhard and the statute. We perceive no conflict.
¶ 51 While, under Bernhard, attorney fees in this case would not be
considered actual damages, it is axiomatic that the legislature can,
and frequently has, abrogated various common law tort doctrines.
Union Pac. R.R. Co. v. Martin, 209 P.3d 185, 187 (Colo. 2009); see,
e.g., Fibreboard Corp. v. Fenton, 845 P.2d 1168, 1176 (Colo. 1993)
(recognizing the legislature’s abrogation of the common law rule
that the release of one tortfeasor operated to release all tortfeasors
from liability for the same tort).
¶ 52 Section 10-3-1116 was enacted nearly twelve years after
Bernhard was announced; Bernhard simply has no bearing on how
attorney fees should be treated under a later-enacted statute that
explicitly departs from the common law. And the court in Bernhard
expressly recognized that deviations from the common law rule
preventing the recovery of attorney fees as damages could be
properly established by the legislature; it merely concluded that at
28
that time — before the enactment of section 10-3-1116 — the
legislature had not yet created such an exception. 915 P.2d at
1288 (“Permitting Bernhard to recover attorney fees would
represent the creation of a new exception to the American rule: a
function better addressed by the legislative than the judicial branch
of government.”).
¶ 53 Thus, because section 10-3-1116 created a new statutory right
of action separate and apart from common law bad faith claims,
Bernhard, which discusses common law bad faith claims, is not
dispositive. Kisselman, 292 P.3d at 975; see also Vaccaro v. Am.
Family Ins. Grp., 2012 COA 9M, ¶ 35 (“As the Kisselman division
observed, common law bad faith precedent is helpful, but not
dispositive, when interpreting a statutory right of action expressly
intended to apply ‘in addition to . . . other actions available by
statute or common law.’” (quoting § 10-3-1116(4))).
¶ 54 Moreover, following Bernhard would be contrary to the clear
intent of the legislature. Section 10-3-1116 expanded the causes of
action against insurance companies and provided for additional
remedies. Kisselman, 292 P.3d at 972-73. It is clear from both the
plain meaning of the statute and the legislative history behind it
29
that the legislature intended to carve out exceptions to the common
law, including an exception to the common law rule that attorney
fees were not recoverable as actual damages. Id.; see § 10-3-
1116(1). The legislature made clear that insureds should not be
forced to sue their insurers to obtain the benefit of their bargain.
Thus, the General Assembly departed from the common law to
enact new protections for individuals that would permit the
recovery of reasonable attorney fees and court costs as actual
damages. See Kisselman, 292 P.3d at 972-73.
¶ 55 GTL further contends that, even if Bernhard does not control,
attorney fees and costs are a penalty, and not damages, because
section 10-3-1116 is penal in nature. Thus, GTL argues, attorney
fees and costs cannot be included in the calculation of actual
damages.
¶ 56 But we disagree that the statute is penal and instead conclude
that section 10-3-1116 is remedial in nature. See Stresscon Corp.,
¶ 121. In Stresscon, a division of this court determined that the
attorney fees under section 10-3-1116 were damages, not costs,
and “this request for damages is part of a remedial statutory
scheme.” Id. at ¶ 121. After examining the legislative history and
30
comparing the statute to other similar statutory schemes, the
division concluded that “section 10-3-1116 was enacted as a
remedial measure, intended ‘to curb perceived abuses in the
insurance industry.’” Id. at ¶ 124 (quoting Kisselman, 292 P.3d at
976). Thus, the fee-shifting component of the statute has a
“compensatory purpose” and is not a penalty. Id. at ¶ 122.
¶ 57 Even assuming some aspect of the statute is penal, GTL’s
argument is too broad: statutes may be both remedial and penal in
nature. See Moeller v. Colo. Real Estate Comm’n, 759 P.2d 697, 701
(Colo. 1988). Although section 10-3-1116 may be penal in the
sense that the General Assembly intended for it to punish
insurance companies and deter them from unreasonably denying
the claims of their insureds, see Kisselman, 292 P.3d at 972, the
penal nature of the statute only manifests itself in the ability to
recover two times the amount of the covered benefit. See Gerald H.
Phipps, Inc. v. Travelers Prop. Cas. Co. of Am., Civ. A. No. 14-CV-
01642-PAB-KLM, 2015 WL 5047640, at *2 (D. Colo. Aug. 27, 2015)
(noting that the ability to recover “two times the covered benefit . . .
reflects the imposition of a penalty”). But this double recovery has
no bearing on whether the attorney fees and costs are a penalty and
31
therefore not actual damages. Cf. Moeller, 759 P.2d at 701 (“When
a statute is both remedial and penal in nature, the remedial and
penal elements are separated and the appropriate standard is
applied to each.”).
¶ 58 Although section 10-3-1116 does not explicitly label attorney
fees and costs as “actual damages,” we conclude that the statute
intended to classify them as actual or compensatory damages.
Thus, the district court did not err in its calculation of both actual
and punitive damages.
IV. Supplemental Award of Attorney Fees and Costs
¶ 59 GTL next asserts that the district court erred by not reducing
by two-thirds the supplemental request for attorney fees. We
disagree.
A. Additional Background
¶ 60 Casper’s attorneys filed two requests for fees. In their first
motion, they sought $396,180 in fees, plus a lodestar enhancement
of fifty percent, for a total of $594,270, as well as costs in the
amount of $57,840.55. They later filed a supplemental fee request,
seeking an additional $123,925 in post-trial fees and $15,105.24 in
costs.
32
¶ 61 GTL opposed both fee requests. Regarding the initial fee
request, GTL asserted that no fees were recoverable, but, at most,
Casper’s lawyers could recover only those fees attributable to the
statutory unreasonable denial of benefits claim, without any
lodestar enhancement. GTL attached an affidavit from an expert,
who recommended that the court award no more than $75,000 in
fees.
¶ 62 GTL made the same apportionment argument with respect to
the supplemental fee request and attached an exhibit that set forth
its objections to specific time entries. It identified numerous entries
that it claimed were attributable to work on a related probate
matter, but it only identified two entries as being otherwise
unrelated to the statutory claim, and those entries amounted to
approximately $800 in fees. It did not provide an expert affidavit
related to apportionment or reasonableness of the supplemental fee
request.
¶ 63 The hearing on attorney fees was conducted by telephone and
neither party called any witnesses or introduced any evidence
beyond the expert affidavits that had previously been submitted by
both parties. Casper’s lawyers reiterated their request for fees plus
33
a fifty percent lodestar enhancement, and GTL reiterated its request
that the court award only those fees attributable to the statutory
claim, though it did not suggest any particular percentage or
amount. At the hearing, GTL did not reassert its specific objections
to the time entries or protest that the vagueness of the entries
prevented additional specific objections.
¶ 64 The court determined that, as a rough estimate, only one-third
of the fees in the initial request were attributable to the statutory
bad faith claim. It denied Casper’s lawyers a fifty percent lodestar
enhancement and instead applied a twenty percent enhancement to
the reduced fee amount. As for the supplemental fees, the court
examined the time entries, concluded that — with the exception of
work on the probate case — the entries related to the statutory bad
faith claim, and approved the remaining fees. After those
reductions, the attorney fee award totaled $281,197, a sixty percent
overall decrease from the request of approximately $718,000
($594,270 in the initial motion for fees plus the $123,925 requested
in the supplemental motion).
¶ 65 On appeal, GTL contends that the district court erred in
awarding all of the fees requested in the supplemental fee request,
34
insisting that the court should have reduced the overall request of
$123,925 by two-thirds. It specifically objects to the award of fees
related to the motion to amend the judgment and research on
abatement, which GTL says were matters unrelated to the statutory
claim.
B. Standard of Review
¶ 66 The determination of what constitutes reasonable attorney fees
is a question of fact for the trial court and will not be disturbed on
review unless it is patently erroneous and unsupported by the
evidence. Melssen v. Auto-Owners Ins. Co., 2012 COA 102, ¶ 67;
see also Planning Partners Int’l, LLC v. QED, Inc., 2013 CO 43, ¶ 12.
We therefore review the reasonableness of the amount of attorney
fees awarded for an abuse of discretion. Melssen, ¶ 67.
C. Discussion
¶ 67 The parties disagree as to whether apportionment of fees is
necessary in this case. GTL maintains that the court could award
fees only for work directly related to the statutory unreasonable
denial of benefits claim. The Estate, however, argues that
apportionment is not required under section 10-3-1116 and that, in
any event, Casper’s statutory claim was intertwined with the
35
common law claim, rendering apportionment unnecessary. We
need not resolve this dispute because we determine that, even if
apportionment was required, the district court did not clearly err in
its award of supplemental fees.
¶ 68 GTL did not request a two-thirds reduction in the
supplemental fees until after the court had reduced the initial
request for fees by two-thirds. Indeed, it never suggested any
percentage reduction based on an apportionment theory. Its
argument, then, is simply that the court was required to apportion
the supplemental fees in precisely the same manner as the initial
fees. We discern no such requirement.
¶ 69 Rather than applying a rough, across-the-board reduction in
fees, as it had with the primary motion for attorney fees, the district
court examined the entries included in the supplemental fee
petition and the parties’ related exhibits to determine whether those
entries were sufficiently related to the statutory claim. We perceive
no abuse of discretion in the use of this more precise methodology
for apportionment. See Planning Partners, ¶ 23 (“‘[T]here is no
precise rule or formula’ for determining attorney’s fees.” (quoting
Evans v. Jeff D., 475 U.S. 717, 736 (1986))); cf. Haystack Ranch,
36
LLC v. Fazzio, 997 P.2d 548, 557 (Colo. 2000) (observing that
because the trial court made no attempt to parse the billing
statements and timesheets, the allocation was unsupported by the
evidence).
¶ 70 That leaves GTL’s specific objections to two time entries: work
related to (a portion of) the motion to amend the judgment and
research concerning abatement. GTL did not object to Casper’s
lawyers’ recovery of their fees for research on abatement until after
the court had issued its order on attorney fees. But even if it had
made an earlier objection, the district court did not clearly err in
determining that research on abatement of claims was related to
Casper’s statutory bad faith claim. GTL’s motion to set aside the
verdict argued that Casper’s statutory claim had abated upon his
death. Research conducted in response to that argument would
relate to the statutory claim. As for the motion to amend the
judgment, GTL concedes that at least some portion of the motion
was attributable to that claim. Even where apportionment is
warranted, we do not require the kind of surgical precision
demanded by GTL. The trial court’s goal when awarding attorney
fees and costs “is to do rough justice, not to achieve auditing
37
perfection.” Payan v. Nash Finch Co., 2012 COA 135M, ¶ 35
(quoting Fox v. Vice, 563 U.S. 826, 838 (2011)).
¶ 71 Furthermore, the district court’s apportionment of fees
resulted in an overall reduction of more than sixty percent from the
amount requested. Given that GTL did not suggest any particular
apportionment method or percentage reduction, we discern no
abuse of discretion in the district court’s apportionment of the
supplemental fees. See Am. Water Dev., Inc. v. City of Alamosa, 874
P.2d 352, 384 (Colo. 1994) (reviewing court will uphold allocations
of fees if the record affords sufficient support).
V. Jury Instruction 27
¶ 72 Finally, GTL asserts that the trial court erred by instructing
the jury on Regulation 4-2-3, which regulates advertising by the
insurance industry. Div. of Ins. Reg. 4-2-3, 3 Code Colo. Regs. 702-
4. We are not persuaded.
A. Standard of Review
¶ 73 A trial court has substantial discretion in formulating and
tendering jury instructions, so long as they include correct
statements of the law and fairly and adequately cover the issues
presented. Tricon Kent Co. v. Lafarge N. Am., Inc., 186 P.3d 155,
38
162 (Colo. App. 2008); Taylor v. Regents of Univ. of Colo., 179 P.3d
246, 248 (Colo. App. 2007). Therefore, we review de novo the jury
instruction at issue to assess whether the instruction correctly
states the law, Bedor v. Johnson, 2013 CO 4, ¶ 8, and review for an
abuse of discretion the trial court’s decision to give a particular jury
instruction. Id.
B. Discussion
¶ 74 The duty of good faith and fair dealing implied in every
insurance contract in Colorado extends to the advertisement and
purchase of the policy. Ballow v. PHICO Ins. Co., 875 P.2d 1354,
1362-63 (Colo. 1993). To determine whether an insurer has
breached this duty, its conduct is measured objectively and is
tested based on industry standards. Am. Family Mut. Ins. Co. v.
Allen, 102 P.3d 333, 343 (Colo. 2004). Administrative rules and
agency regulations may help establish the applicable standard of
care. Id.; see also Giampapa v. Am. Family Mut. Ins. Co., 919 P.2d
838, 842 (Colo. App. 1995). However, even if they do not, they “may
nonetheless ‘be relevant evidence bearing on the issue of negligent
conduct.’” Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913, 931
(Colo. 1997) (quoting Restatement (Second) of Torts § 288B (Am.
39
Law Inst. 1965)). Thus, regulations may be “valid, but not
conclusive, evidence” of an insurer’s breach of the duty of good faith
and fair dealing. Id.
¶ 75 Regulation 4-2-3 was set forth in Instruction 27. The
instruction first explained that “[a]t the time of the sale of the policy
at issue in this case, the following regulations of the Division of
Insurance . . . were in effect, and applied to the advertisement of
policies like the one purchased by Mr. Casper.” The instruction
then presented excerpts of Regulation 4-2-3, including
requirements that all policy limitations and restrictions be “set out
conspicuously,” and that advertisements not contain misleading
representations.
¶ 76 The instruction concluded by stating that “[t]hese regulations
are valid, but not conclusive evidence of insurance industry
standards, and you may consider such regulations in determining
whether the defendant acted unreasonably toward the Plaintiff.”
¶ 77 GTL objected to the instruction at trial, contending that it was
irrelevant to Casper’s remaining claims, given the settlement with
Platinum and Gaylord. The district court disagreed, concluding
that the instruction related to Casper’s theory that GTL’s marketing
40
and sale of the insurance policy, through Platinum, was evidence of
its bad faith. We perceive no abuse of the district court’s discretion.
¶ 78 One of Casper’s theories at trial was that GTL, through
Platinum, intentionally misrepresented the nature of the insurance
coverage by misleadingly calling the policy a “First Diagnosis” policy
when, in fact, hidden and ambiguous language enabled the
insurance company to deny benefits if the diagnosis was traceable
in any way to advice given prior to the effective date of the policy.
¶ 79 Casper’s lawyers discussed advertising and marketing tactics
in their opening statement. Many of Casper’s witnesses addressed
GTL’s allegedly deceptive sales practices; one of his expert witnesses
testified extensively about Regulation 4-2-3 and the connection
between GTL’s sales practices and the denial of Casper’s claim.
Additionally, two of GTL’s own witnesses discussed Regulation 4-2-
3. They acknowledged that GTL’s duty to act in good faith extended
to the advertising, marketing, and sale of the insurance policy, but
they opined that GTL’s conduct had not violated the regulation.
¶ 80 We agree with the district court that the standard of care
related to the sale and marketing of the policy was relevant to
Casper’s claims, and it is undisputed that the instruction was a
41
correct statement of the law. Accordingly, we conclude that the
district court did not abuse its discretion in giving the instruction.
VI. Appellate Attorney Fees
¶ 81 Finally, the Estate asserts that it should be awarded its
attorney fees and costs on appeal. We agree that under section
10-3-1116, Casper’s estate is entitled to an award of its reasonable
appellate attorney fees and costs. Stresscon, ¶ 136 (“When a party
is awarded attorney fees for a prior stage of the proceedings, it may
recover reasonable attorney fees and costs for successfully
defending the appeal.” (quoting Melssen, ¶ 75)).
¶ 82 We exercise our discretion under C.A.R. 39.1 to remand this
issue to the district court to determine the total amount of the
Estate’s reasonable fees and costs incurred on appeal, and to award
those fees. Payan, ¶ 63 (citing Martin v. Essrig, 277 P.3d 857, 862-
63 (Colo. App. 2011)).
VII. Conclusion
¶ 83 The judgment is affirmed, and the case is remanded to the
district court to determine and award the total amount of the
Estate’s reasonable appellate fees and costs allocable to the
statutory claim.
42
JUDGE WEBB and JUDGE ASHBY concur.
43