2018 CO 68
Colo.2018Background
- Joel Munoz was injured by an uninsured motorist and pursued an uninsured motorist (UM) claim against his insurer, American Family.
- During settlement negotiations American Family offered $10,008 without prejudgment interest; Munoz requested interest and threatened suit when insurer refused.
- Munoz filed suit alleging breach of the UM policy, denial without reasonable basis, and bad faith; he requested prejudgment interest on the settlement amount.
- The trial court ruled insurer was not required to include prejudgment interest on a pre-claim settlement; the court of appeals affirmed.
- The Colorado Supreme Court granted certiorari to decide whether an insured who settles a UM claim (instead of obtaining a judgment) is entitled to prejudgment interest under § 13-21-101.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insured who settles a UM claim (instead of obtaining a judgment) is entitled to prejudgment interest under § 13-21-101 | Munoz: Parker and the UM statute require insurers to provide prejudgment interest so insureds recover same damages as against tortfeasor; prejudgment interest should apply to settlements | American Family: Statute’s plain text requires an action, pleaded claim for interest, a factfinder’s finding of damages, and entry of judgment; settlements do not trigger those prerequisites | Held: Prejudgment interest is available only when (1) an action is brought, (2) interest is claimed in the complaint, (3) damages are found by court or jury, and (4) judgment is entered; settlements do not satisfy these conditions, so Munoz is not entitled to prejudgment interest |
Key Cases Cited
- USAA v. Parker, 200 P.3d 350 (Colo. 2009) (held insured may recover prejudgment interest from insurer after judgment because UM statute entitles insured to same damages as against tortfeasor)
- Morris v. Goodwin, 185 P.3d 777 (Colo. 2008) (addressed ambiguity in § 13-21-101 regarding calculation method for prejudgment interest)
- Seaward Constr. Co. v. Bradley, 817 P.2d 971 (Colo. 1991) (analyzed whether prejudgment interest applies to punitive damages and found ambiguity in statute’s scope)