Munoz v. American Family Mutual Insurance Co
2017 COA 25
Colo. Ct. App.2017Background
- Joel Munoz was injured by an uninsured motorist and filed a UM claim with his insurer, American Family.
- American Family made settlement offers but refused to include prejudgment interest, asserting interest is payable only after a judgment.
- Munoz accepted American Family’s last offer (without interest), then sued American Family and the tortfeasor and moved the court under C.R.C.P. 56(h) to decide whether prejudgment interest must be included when settling a UM claim.
- The trial court ruled that prejudgment interest under § 13-21-101(1) is available only when a judgment is entered based on damages found by a jury or the court.
- Munoz appealed, arguing prejudgment interest is an element of compensatory damages and should be collectible even on a pre-judgment settlement; American Family argued the statute limits awards to post-judgment situations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insured is entitled to prejudgment interest as part of a UM settlement absent a judgment | Munoz: prejudgment interest is compensatory and an element of damages and thus collectible even without a judgment | American Family: § 13-21-101(1) permits prejudgment interest only when an action has been brought, interest claimed, damages found by jury/court, and judgment entered | Court: Insured is entitled to prejudgment interest only when the statutory conditions are met (i.e., post-judgment award); settlement without judgment does not obligate insurer to pay prejudgment interest |
Key Cases Cited
- Morris v. Goodwin, 185 P.3d 777 (Colo. 2008) (describing purpose of prejudgment interest: compensation for time value of money)
- USAA v. Parker, 200 P.3d 350 (Colo. 2009) (addressed rate of prejudgment interest for UIM judgments; did not hold insurers must pay interest on prelitigation settlements)
- Parker v. USAA, 216 P.3d 7 (Colo. App. 2007) (insured not entitled to prejudgment interest on UIM settlement amount)
- Witt v. State Farm Mut. Auto. Ins. Co., 942 P.2d 1326 (Colo. App. 1997) (settling with tortfeasor can waive right to seek prejudgment interest from UIM carrier)
- Clark v. Hicks, 252 P.2d 1067 (Colo. 1953) (entitlement to interest is statutory and in derogation of common law)
- Bertrand v. Bd. of Cty. Comm’rs, 872 P.2d 223 (Colo. 1994) (statutes in derogation of common law must be strictly construed)
- Bostelman v. People, 162 P.3d 686 (Colo. App. 2007) (statutory construction reviewed de novo)
- Sperry v. Field, 186 P.3d 133 (Colo. App. 2008) (court consults plain language first when construing statutes)