2015 COA 46
Colo. Ct. App.2015Background
- Plaintiff DeeAnna Soicher was insured by State Farm with $250,000 UM coverage; she was injured in a 2009 collision caused by uninsured driver Anthony Manueke. Soicher sued Manueke and State Farm; judgment against Manueke for $125,000 is not appealed.
- After the accident State Farm repeatedly requested medical authorizations and questionnaires; Soicher did not respond for ~6 months, State Farm reserved rights and later closed the file; counsel later provided the requested materials and Soicher made a $250,000 demand.
- State Farm responded months later with a $40,997.60 offer, paid that amount (and later advanced that sum during litigation), and continued investigating; Soicher sued alleging breach of contract, bad faith, and statutory unreasonable delay/denial under Colo. Rev. Stat. §§ 10-3-1115 & 10-3-1116.
- In its answer State Farm generally denied Soicher’s performance of policy duties and pleaded an affirmative defense that Soicher failed in her duty of good faith and fair dealing; it did not expressly plead a noncooperation defense or specific failure of a condition precedent.
- At trial the jury found Soicher failed to cooperate and that the failure materially disadvantaged State Farm, but also found State Farm did not unreasonably delay payment and that any unreasonable conduct did not cause Soicher damages. The trial court entered judgment for State Farm on all claims based on noncooperation.
- On appeal the court considered (1) whether State Farm properly pleaded noncooperation or tried that issue by consent, and (2) whether the case involved an unreasonable denial (versus unreasonable delay) under the statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether State Farm waived a noncooperation defense by failing to plead it specifically | Soicher: noncooperation is an affirmative defense or condition precedent that must be specially pleaded; State Farm did not do so, so the defense is waived | State Farm: noncooperation is not an affirmative defense (or in any event was covered by its general denial of performance); reservation-of-rights letter and trial management order gave notice | Held: Waived. State Farm did not plead noncooperation with required specificity as an affirmative defense or as a condition precedent, and reservation letter/trial order were not a substitute. |
| Whether the noncooperation issue was tried by express or implied consent under C.R.C.P. 15(b) | Soicher: she lacked notice that noncooperation (a contract-voiding defense) was being tried and would have prepared differently (e.g., expert) | State Farm: evidence of noncooperation was introduced at trial, policy cooperation clause was in evidence, and Soicher did not object, so issue was tried by consent | Held: Not tried by consent. Evidence was equally relevant to pleaded defenses (bad faith, delay) and Soicher’s trial strategy showed she treated evidence as responding to bad-faith/delay claims; State Farm offered no jury instructions on noncooperation. |
| Whether the jury should have been instructed on statutory "unreasonable denial" (vs. "unreasonable delay") under §§ 10-3-1115/1116 | Soicher: partial payment plus refusal to pay full demand amounts to an unreasonable denial; instruction should have been given | State Farm: this is a delay/value dispute, not a denial of coverage | Held: No reversible error. The court correctly treated the dispute as an alleged unreasonable delay (insurer conceded coverage but disputed amount). Even if instruction omission erred, any error was harmless because instructions allowed argument on delay as to both amounts. |
| Remedy following reversal of noncooperation-based judgment | Soicher: judgment for breach of contract should be entered because State Farm conceded liability for UM up to jury’s award against Manueke | State Farm: other jury findings (no unreasonable delay; no causation of damages from any unreasonable conduct) support judgment on statutory and bad-faith claims | Held: Remand with directions to enter judgment for Soicher on breach-of-contract in amount of the $125,000 jury award against Manueke (less amounts already paid, plus prejudgment interest) and to enter judgment for State Farm on bad-faith and statutory claims. |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177 (Colo. 2004) (insurer’s duty to investigate and adjust claims in good faith)
- State Farm Mut. Auto. Ins. Co. v. Secrist, 33 P.3d 1272 (Colo. App. 2001) (insured’s prejudicial noncooperation can forfeit coverage)
- Dinosaur Park Invs., L.L.C. v. Tello, 192 P.3d 513 (Colo. App. 2008) (affirmative defenses must be specifically pleaded)
- Wells Fargo Realty Advisors Funding, Inc. v. Uioli, Inc., 872 P.2d 1359 (Colo. App. 1994) (every contract contains implied covenant of good faith and fair dealing)
- Bailey v. Allstate Ins. Co., 844 P.2d 1336 (Colo. App. 1992) (each party to insurance contract owes duty of good faith and fair dealing)
- CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523 (Colo. App. 2010) (issue tried by implied consent requires party actually understood and acquiesced to the issue being tried)
- Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (U.S. 1988) (evidence relevant to pleaded claims does not automatically show an unpleaded claim was tried by consent)