White v. Estate of Soto-Lerma

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
March 8, 2018
2018COA35
No. 17CA0292, White v. Estate of Soto-Lerma — Probate —
Limitations on Presentation of Claims — Nonclaim Statute —
Damages — Prejudgment Interest — Attorney Fees — Offer of
Settlement — Costs
In this proceeding, a division of the court of appeals considers
whether Colorado’s nonclaim statute, section 15-12-803(3)(b),
C.R.S. 2017, prevents a plaintiff from recovering prejudgment
interest and costs above the limit of a liability insurance policy,
when the action was filed after expiration of the statutory period for
presentation of claims. The division also evaluates whether the
policy limit caps the plaintiff’s recovery even where a jury awards
damages in excess of a statutory offer of settlement.
Because prejudgment interest is a form of compensatory
damages, the division concludes that an award of such damages
beyond the insurance policy limit is barred. And because section
15-12-803 bars “all [untimely] claims” against an estate, with the
exception of claims “[t]o the limits of the insurance protection only,”
§ 15-12-803(3)(b), the division concludes that any untimely filed
claim and resulting judgment in excess of policy limits is also
barred.
The division finally concludes that the nonclaim statute
precludes an award of costs to be entered based on a jury award in
excess of a statutory settlement offer for policy limits under section
13-17-202(1)(a)(I), C.R.S. 2017.
COLORADO COURT OF APPEALS 2018COA35
Court of Appeals No. 17CA0292
Arapahoe County District Court No. 15CV32971
Honorable Phillip L. Douglass, Judge
Fannie S. White,
Plaintiff-Appellee and Cross-Appellant,
v.
Estate of Julian Soto-Lerma, deceased,
Defendant-Appellant and Cross-Appellee.
JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division III
Opinion by JUDGE TERRY
Loeb, C.J., and Webb, J., concur
Announced March 8, 2018
Bosen Law, LLC, Stephen A. Justino, Denver, Colorado; Ronald R. Way, P.C.,
Ronald R. Way, Englewood, Colorado; Wilcox Law Firm, LLC, Ronald L. Wilcox,
Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant
Senter Goldfarb & Rice, LLC, Arthur J. Kutzer, Denver, Colorado, for
Defendant-Appellant and Cross-Appellee
Ogborn Mihm, LLP, Thomas D. Neville, Denver, Colorado; The Gold Law Firm,
LLC, Michael J. Rosenberg, Greenwood Village, Colorado, for Amicus Curiae
Colorado Trial Lawyers Association
¶1 In a suit against a decedent’s estate, does the nonclaim
statute, section 15-12-803(3)(b), C.R.S. 2017, allow a plaintiff to
recover a judgment for prejudgment interest and costs above the
limit of a liability insurance policy, even though the action was filed
after expiration of the statutory period for presentation of claims?
Under the circumstances of this case, we conclude that the answer
to this question is “no.” And under these facts, we also conclude
that the policy limit caps the plaintiff’s recovery even where a jury
awards damages in excess of a statutory offer of settlement.
¶2 Defendant, the Estate of Julian Soto-Lerma, appeals and
plaintiff, Fannie S. White, cross-appeals the trial court’s judgment
awarding plaintiff damages in a negligence action. We reverse the
judgment and remand for the trial court to reduce the amount of
damages awarded to conform to the applicable policy limits, and to
eliminate the award of costs.
I. Background
¶3 Plaintiff’s claim arose from a car accident that occurred about
a year before decedent died from unrelated causes. More than two
years after decedent’s death, plaintiff filed suit, asserting that
decedent had been negligent. Decedent’s estate consisted solely of
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his automobile insurance policy, which had a policy limit of
$50,000 per person injured in an automobile accident.
¶4 Defendant rejected plaintiff’s pretrial statutory offer of
settlement for the insurance policy limit of $50,000. The case
proceeded to trial, and the jury returned a verdict in plaintiff’s
favor, awarding $100,000 in damages. The court reduced the jury’s
award of damages to $50,000, consistent with plaintiff’s
representation at trial that she was only seeking damages in the
amount of the insurance policy limit. Nevertheless, the court
ultimately entered judgment for $79,218, which included $50,000
in damages, $11,600 in costs, and $17,618 in prejudgment interest.
¶5 Defendant appeals the award of prejudgment interest and
costs under section 15-12-803(3). Plaintiff cross-appeals, arguing
that the trial court should have entered judgment in the entire
amount of the jury’s verdict.
II. Standard of Review
¶6 We review statutory provisions de novo. Shelby Res., LLC v.
Wells Fargo Bank, 160 P.3d 387, 389 (Colo. App. 2007). In
interpreting a statute, our primary goals are to discern and give
effect to the General Assembly’s intent. Krol v. CF & I Steel, 2013
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COA 32, ¶ 15. We look first to the statutory language, giving the
words and phrases used therein their plain and ordinary meanings.
Id. We read the language in the dual contexts of the statute as a
whole and the comprehensive statutory scheme, giving consistent,
harmonious, and sensible effect to all of the statute’s language. Id.After doing this, if we determine that the statute is not ambiguous,
we enforce it as written and do not resort to other rules of statutory
construction. Id.III. Award of Prejudgment Interest
¶7 Defendant first contends that the trial court erred in awarding
plaintiff prejudgment interest on the $50,000 damages award. We
agree.
¶8 Defendant relies on section 15-12-803(1)(a), which bars “[a]ll
claims against a decedent’s estate that arose before the death of the
decedent” and were not presented within a specified timeframe. It
is undisputed that plaintiff’s claim was not presented within the
statutory timeframe. Subsection (3)(b) provides that nothing in
section 15-12-803 “affects or prevents[,] . . . [t]o the limits of the
insurance protection only, any proceeding to establish liability of
the decedent or the personal representative for which he is
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protected by liability insurance.” Therefore, the statute bars
untimely liability claims against a decedent’s estate that exceed the
limits of a relevant insurance policy.
¶9 That statute conflicts with section 13-21-101(1), C.R.S. 2017,
which provides that when a plaintiff requests prejudgment interest,
“it is the duty of the court in entering judgment for the plaintiff” to
add a properly calculated amount of prejudgment interest to the
amount of damages. To resolve this conflict, we must consider
whether prejudgment interest is part of the underlying liability
claim against a decedent’s estate, and is therefore subject to
insurance policy limits and section 15-12-803(3)(b)’s bar on claims
above policy limits.
¶ 10 We conclude that section 15-12-803 acts as a bar against an
award of prejudgment interest above defendant’s $50,000 insurance
policy limit. The supreme court has held that because such
interest is “awarded to compensate the plaintiff for the time value of
the award eventually obtained against the tortfeasor,” Allstate Ins.
Co. v. Starke, 797 P.2d 14, 19 (Colo. 1990), “[p]rejudgment interest
in a personal injury case is an element of compensatory
damages . . . subject to relevant coverage limits in the defendant’s
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insurance policy.” Old Republic Ins. Co. v. Ross, 180 P.3d 427, 437
(Colo. 2008); cf. Marso v. Homeowners Realty, Inc., 2018 COA 15,
¶ 43 (“A statutory cap reflects a legislative policy that, despite the
fact that a claimant suffers a particular amount of damages, other
public policies justify the existence of a cap such that the injured
party will not recover the full amount of the suffered damages.”).
¶ 11 In Starke, 797 P.2d at 17, the insurance policy’s “additional
payments” clause provided that the insurer would pay “all interest
on any judgment entered in such suit until [insurer] has paid,
tendered or deposited in court that part of the judgment which does
not exceed the limit of [insurer’s] liability thereon.” The supreme
court concluded that the additional payments clause did not require
the insurer to pay prejudgment interest beyond the policy limit.
The court explained that for the insurer to pay “all interest on any
judgment entered,” there had to first be a judgment, and “[i]nterest
accruing before entry of judgment is not interest on a judgment.”
Id. at 16, 18.
¶ 12 The “additional payments” section of defendant’s policy
provides that the insurer will pay “interest accruing on a judgment
entered against you,” indicating that the insurer will only pay —
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beyond the policy limit — postjudgment interest accruing on a
judgment that has already been entered. See id.
¶ 13 Accordingly, we conclude that the award of prejudgment
interest sought by plaintiff was a form of compensatory damages
subject to the $50,000 insurance policy limit. See Old Republic,
180 P.3d at 437. Because plaintiff could not recover prejudgment
interest beyond the policy limit, the trial court’s award of
$17,617.81 in prejudgment interest was prohibited by section
15-12-803(3)(b).
IV. Entry of Judgment Exceeding Policy Limits
¶ 14 Plaintiff cross-appeals the trial court’s judgment, arguing that
the court should have entered judgment for the entire $100,000 in
damages awarded by the jury, plus corresponding costs and
prejudgment interest. Plaintiff argues that, regardless of whether
she could collect the judgment from defendant’s insurance company
under section 15-12-803, judgment in excess of policy limits was
still proper in order to leave open the possibility that plaintiff could
be assigned the right to bring a bad faith claim against defendant’s
insurer. We disagree.
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¶ 15 Section 15-12-803(1)(a) bars “[a]ll claims” against a decedent’s
estate that arose before the decedent’s death and were not
presented within a specified timeframe. Section 15-12-803(3)(b)
exempts from the statutory time bar liability claims covered by
insurance “[t]o the limits of the insurance protection only.” We
conclude that the application of section 15-12-803 to the issue of
an excess judgment is straightforward. Any liability claim, and
therefore any resulting judgment, in excess of policy limits is
barred.
¶ 16 We acknowledge that in Nunn v. Mid-Century Insurance Co.,
244 P.3d 116, 121-22 (Colo. 2010), the supreme court adopted “the
judgment rule,” recognizing a judgment exceeding policy limits as
sufficient proof of damages in an insurer bad faith suit, even when
an insured has no assets. The court reasoned that “an insured’s
ability to pay a judgment should not determine whether the insurer
can be held liable for its bad faith conduct toward its insured.”
Thus, by holding that section 15-12-803 is a statutory bar against
excess judgments above policy limits, we may be precluding bad
faith claims against insurers when an insurance policy is the only
asset of a decedent’s estate. But because the statutory language in
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section 15-12-803 barring untimely liability claims in excess of
insurance policy limits is clear and unambiguous, we must enforce
the statute as written. See Krol, ¶ 15.
¶ 17 Accordingly, we conclude that the trial court did not err when
it entered judgment for compensatory damages equal to the
$50,000 policy limit, despite the jury’s award of $100,000.
V. Statutory Award of Plaintiff’s Costs
¶ 18 Defendant also contends that the trial court erred when it
included plaintiff’s costs of $11,600.41 in the final judgment.
Defendant argues that such an award of costs ignores the bar on
claims in excess of insurance policy limits established by section
15-12-803(3)(b). We agree.
¶ 19 In support of including costs in the final judgment, plaintiff
cites section 13-17-202(1)(a)(I), C.R.S. 2017, which was enacted
with the “intent of encouraging settlement of cases in order to both
reduce the costs of litigation and expedite relief to victims.” Centric-
Jones Co. v. Hufnagel, 848 P.2d 942, 956 (Colo. 1993). Section
13-17-202(1)(a)(I) provides that a “plaintiff shall be awarded actual
costs accruing after the offer of settlement,” if the plaintiff “serves
an offer of settlement in writing at any time more than fourteen
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days before the commencement of the trial that is rejected by the
defendant, and the plaintiff recovers a final judgment in excess of
the amount offered.” (Emphasis added.)
¶ 20 Plaintiff made a statutory settlement offer of $50,000 in
accordance with section 13-17-202(1)(a)(I), and the offer was not
accepted by defendant. The jury then awarded plaintiff $100,000 in
damages, which was in excess of the settlement offer.
¶ 21 But section 13-17-202(1)(a)(I) specifies that a plaintiff shall be
awarded costs only if the “final judgment” exceeds the settlement
offer. Section 13-17-202 does not define “final judgment.” Novak v.
Craven, 195 P.3d 1115, 1121 (Colo. App. 2008). The term “final
judgment” “has acquired a particular meaning under our case law
and court rules. Under our case law, a ‘final judgment’ is one
which ‘disposes of the entire litigation on the merits.’” Id. (quoting
Hierath-Prout v. Bradley, 982 P.2d 329, 330 (Colo. App. 1999)).
¶ 22 The jury’s $100,000 award was not a final judgment ending
the litigation on its merits because, as we discussed in Parts III and
IV above, section 15-12-803(3)(b)’s limit on claims in excess of the
insurance policy barred the court from entering a final judgment
greater than the $50,000 policy limit, even including prejudgment
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interest. Therefore, given that the final judgment did not and could
not exceed the $50,000 policy limit — which was also the amount of
the settlement offer — plaintiff was not entitled to costs under
section 13-17-202, and the trial court erred when it entered a
judgment for costs above the $50,000 policy limit. Because on
appeal plaintiff argued for costs only under section 13-17-202, we
express no opinion on how the limitation in section 15-12-803(3)(b)
would affect costs recoverable under any other statute or court rule.
VI. Conclusion
¶ 23 We reverse the judgment and remand to the trial court to enter
judgment for plaintiff in the amount of $50,000.
CHIEF JUDGE LOEB and JUDGE WEBB concur.
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