*1 (Colo.1995) (finding public appropri- censure attorney neglected,
ate who and made misrepresentations in, separate legal two
matters).
Accordingly, accept we the conditional ad- inquiry mission and the panel’s recommenda- However, tion. member of least one rejected court would have the conditional admission and sent the case back to the grievance proceedings. committee for further
Ill hereby Russell publicly Edward Yates is respondent censured. It is ordered that the pay the costs of this in the Supreme
amount of to the Court $47.75 Committee, Grievance 600 Seventeenth Street, 920-S, Denver, Suite Colorado 80202- thirty within days after announce- opinion. ment of this BENDER, J., participate. does not HUIZAR, Petitioner,
Gloria COMPANY, ALLSTATE INSURANCE Respondent. No. 96SC643. Colorado, Supreme Court of En Banc. Feb. *2 judgment.
reversed the
See Huizar
All-
(Colo.App.1996).
I. Huizar, petitioner, pas-
The Gloria was a senger neigh- driven her an automobile bor, neighbor an uninsured motorist. The curb, hit a lost control of automobile and slamming post Huizar’s into the interior head windshield of the vehicle. Huizar imme- diately experienced pain her neck and days, began six she head. After medical Company, Allstate Insurance treatment. insurer, paid expenses Huizar’s her medical personal injury pursuant protection policy. her Because of her status, Huizar neighbor’s uninsured also looked Allstate for her additional claims. to agree Huizar and Allstate were unable compensation under about additional protection terms her uninsured motorist Kordick, Lloyd Lloyd Kor- Law Office Consequently, Huizar policy. elected to in- dick, Joseph Springs, Law Office of Colorado arbitration clause her insurance voke Archuleta, Archuleta, Joseph T. J. J. Trent provides: policy, which Denver, King, for Petitioner. agree on [Allstate] If or don’t [Huizar] LLP, Muldoon, Brian Holland & Hart damages receive [Huizar’s] Denver, Respondent. either, amount, request then at the disagreement be settled arbi- will Opinion delivered Justice MARTINEZ tration. of the Court. days proceedings, After two presented by case is The issue wheth- “$30,000 plus Huizar the arbiter awarded clause in an uninsured er a trial de novo the date of the accident and interest from provision an automobile insurance appropriate costs.” policy.1 trial violates $25,- The arbiter’s award exceeded allows the insured or insurer novo clause coverage required on merits minimum a trial after arbitration 000.00 demand Responsibility Financial stat- the amount awarded in the arbitration Colorado’s when specified limit. The ute.2 Allstate initiated an action district proceeding exceeds a filing a “motion novo” ruled that the trial de novo clause court trial court naming itself the defendant. The appeals unenforceable. consider, granted We certiorari "Whether 2. prejudicial appeals error the court of by upholding committed de novo’ ‘trial as not con- Allstate automobile trary public policy.” elsewhere, readily motion was based on the trial de novo clause obtained automobile in in Huizar n policy, provides: policies generally which surance not the result bargaining. See Schmidt v. Midwest Regardless of the method of Fam. Mut. Ins. 426 N.W.2d arbitration award exceeds the (Minn.1988) (recognizing although an in responsibility financial limits in the State *3 policy technically qualify surance not [$25,000.00], of Colorado has a adhesion, possesses a contract of some of right to trial on all issues in a court of contract). the earmarks of an adhesive In jurisdiction. competent This must be stead, provisions policy in a are often days exercised within 60 of the award. imposed on a take-it-or-leave-it basis. It is Costs, fees, including attorney are to be negotiated not a contract but one with terms paid by party incurring them. required by legislation or dictated In response, Huizar moved to dismiss the Thus, insurer. courts have assumed a requested action and that the trial court “heightened responsibility” to in scrutinize pursuant docket the arbiter’s award to sec- policies provisions unduly surance (1997). compromise the insured’s interests and have argued Huizar de novo clause any provision concluded that of an insurance unduly ability limited her to recover and was policy public policy princi which violates contrary therefore of ples of fairness is unenforceable. See Mil providing just compensation to in- victims 418, Henry, bank Ins. Co. v. 232 Neb. 441 jured by uninsured motorists. After addi- 143, (1989); N.W.2d 148 Voorhees v. Pre issue, briefing tional on the the trial court Co., 165, Mut. Ins. 128 N.J. 607 A.2d ferred denied Allstate’s motion and held that 1255, 1260 “patently trial de novo clause was unfair” to previously recognized We have that “a con permitted Huizar because it Allstate “to liti- provision tractual if void the interest gate liability ... [of issues as well as dam- enforcing provision clearly outweighed ages] twice if it’s not satisfied the first by contrary public policy.” FDIC v. Amer decision.” The trial court concluded that the Co., (Colo.1992) 1285, 1290 ican Cas. 843 P.2d trial de novo clause “limit[s] uninsured mo- (citing University Denver v. Industrial coverage against public torist is void [and] Comm’n, 292, 138 Colo. 335 P.2d policy.” (1959)). 294 principle We have extended this appealed, appeals Allstate and the court of to the conditions and terms of an insurance reversed, concluding that Colorado law does legislatively-ex contract that undermine specifically require binding See, pressed public policy. e.g., Meyer v. Huizar, for uninsured claims. motorist Co., State Farm Mut. Auto. Ins. 689 P.2d Thus, at appeals 840. the court of (household 585, (Colo.1984) 589 exclusion held that the trial de novo clause does not liability policy automobile held invalid as con public policy. agree. violate We do not trary public policy expressed in Colorado Act); Reparations
Auto Accident Newton v. II. Nationwide Mut. Fire Ins. 462, (1979) (insur 468, 1042, 1046 policies, Insurance as several courts policy provision permitted ance which insurer observed, ordinary, have differ from bilateral payments to subtract PIP from uninsured contracts. See Jones v. Horace Mann Ins. coverage motorist so as to reduce that cover (Alaska 1997); Wig 1361 age statutory to less than minimum violative Serv., Inc., gam v. Associates Fin. 677 in Colorado Auto Accident (Ind.App.1997); N.E.2d 91 Rodman v. Act). Reparations Ins.,
State Farm Mut. Auto.
208 N.W.2d
(Iowa 1973);
Avis,
Fidelity
Guaranty,
In
U.S.
&
Allstate Insurance
Co.
(Miss.1997).
Ferguson,
(Colo.1997),
Co. v.
competing
So.2d
we held that
ex-
enforced,
disparity
bargaining
Because of both the
cess clauses would not be
even in
power
expression
between insurer
insured and the
the absence of a direct
materially
coverage
specific
fact that
addressing
different
cannot
or a
statute
contract,
against
by negligent
be-
financial loss caused
despite
freedom
issue
irresponsible
financially
consequence
motorists.” Ch.
“an
or absurd-
cause
unintended
1,1965
(declaration
sec.
Colo.
Laws 333
Sess.
public policy would result.”
ity contrary to
purpose). The
Avis,
current uninsured motorist
we examined
Id.
requires insurers to
statute
offer uninsured
validity
insurance
facial
of clause
liability provi
under the
opera-
but the result created
policy,
policy.3
sions of an
insurance
automobile
particular
tion of
Uninsured mo
We determined that Colora-
circumstances.
injured
torist
insurance ensures
victims
adequate, fair
insurance laws favor
do’s
they
uninsured motorist recover as
timely resolution of claims. See id. Similar-
injured by
had been
a driver covered
scruti-
ly, here
not confine ourselves to
we do
required
insurance. See Terranova
face,
nizing the
but we
*4
Co.,
v.
Farm
Auto.
800 P.2d
State
Mut.
Ins.
by
examine whether the effects created
also
58,
(Colo.1990);
60-61
Alliance Mut. Cas. Co.
operation of the trial de novo clause are
the
Duerson,
1177,
117, 124,
184
P.2d
v.
Colo.
518
public policy.
consider
consistent with
We
(1974) (legislative
by
1181
intent is satisfied
policy
from several sources
derived
injured
recovery
mo
which assures
an
integrated approach
take
to under-
and
compensated
torist
least
the
will
at
to
standing public policy as it affects the resolu-
injured by
same extent as one
a motorist who
involving uninsured motorist
disputes
tion of
compliance
in
with Motor
Vehicle
claims.
Act);
Responsibility
Briggs
Financial
v.
by considering
begin
analysis
the
We
our
Co.,
Family Mut. Ins.
833 P.2d
American
pertinent public policies within the automo-
(the
859,
(Colo.App.1992)
purpose of
861
Next,
context.
we examine
bile insurance
compen
uninsured motorist
is to
operation of
created
the effects
by negligent
sate insureds
losses caused
closely
clause and
scrutinize
novo
we
motorists).
financially irresponsible
and
consistency
clause for
policy provision
An
void
policy.
if it
unenforceable
violates
“dilute, condition,
by attempting to
or limit
III.
Meyer
statutorily
coverage.”
mandated
v.
following public policies
pertinent
Co.,
State Farm Mut. Auto.
689 P.2d
provi-
of the trial de novo
to a consideration
(Colo.1984)
585,
(superseded by statute
589
(1)
policy against
dilution of the
sion:
Feghali,
as
Ins. Co. v.
814
stated Allstate
coverage evinced
uninsured motorist
863,
(Colo.1991));
see
v.
P.2d
Kral
(1997),
3
adoption of section
Mut. Ins.
American Hardware
(2)
policy against
delay
undue
access
(Colo.1989)
759,
(plaintiff
to
766
is entitled
speedy
favor of
resolu-
to
courts
coverage only
“to
extent
benefits
Consti-
disputes
tion of
contained Colorado
fully compensate
necessary to
the insured
(3)
II,
Article
Section
tution
loss, subject
the limits of the insurance
to
encouraging arbitration as an
in favor of
contract”).
litigation
embodied Colorado
alternative
Kral,
subrogation
clause
we held that
XVIII,
and in
Article
Section 3
Constitution
re
in an insurance
contained
(1997).
-223,
5 C.R.S.
sections 13-22-201
agreement
pursuant
lease-trust
executed
subrogation provision
enforceable
were
A
they
impair
to the extent that
did
compen
full
ability
gain
of the insured to
Assembly enacted the Motor
The General
(Act)
caused
the conduct
Responsibility Act
sation for
loss
Vehicle Financial
Kral,
availability
See
784 P.2d at
widespread
an uninsured motorist.'
1965 to “assure
Thus,
have held
protection
765-66.
Colorado courts
insuring public
of insurance
(1997).
However,
may reject
the insured
uninsured
10-4-609(1),
coverage.
3 C.R.S.
motorist
policies
unenforceable those insurance
which
C.
operate
significantly
dilute
mo-
uninsured
Arbitration as a method of alternative
Terranova,
coverage.
torist
at
dispute resolution is a convenient mode of
Colo,
63; Newton,
594 P.2d at
resolving disputes
pub
and is favored
1043; Briggs,
(recognizing
Ezell v. Mountain Bean & Elevator 409, 412, (1925); 76 Colo. 232 P. B. Wilson, Wilson 34 P. 175, 177 state, of this expressed Constitution, in the Colorado fa Assembly adopted The General the Uni- vors timely both access to the courts and (UAA) form Arbitration Act in 1975to reflect II, resolutions of claims. Article 6 of Section §§ its endorsement of arbitration. See 13- provides the Colorado -223, Constitution 22-201 to The General justice (1) open every Assembly adopted “[c]ourts of shall be UAA validate *5 (2) person, speedy remedy agreements, and arbitration a afforded for assure an effec- (3) every injury person, process, tive arbitration property provide neces- or charac (4) ter; sary procedural justice safeguards, provide right and and should be adminis procedure judicial an efficient sale, assis- delay.” tered without denial We necessary. § tance is See 5 II, recognized have that Article Section 6 of (1997). the Colorado Constitution ensures avail ability judicial of a forum to effectuate a In State Farm Mutual Automobile Insur- right right if that has accrued under the law. Broadnax, 531, ance v.Co. 535-37 Hollywood See Estate Stevenson v. Bar & (Colo.1992), rejected we constitutional chal- Inc., Cafe, 718, (Colo.1992); 721 lenges requiring binding to a statute arbitra- I, Sigman Partnership v. Ltd. 817 disputes tion in involving personal injury pro- Seafood 527, (Colo.1991); P.2d Delgado, 533 Dove v. tection benefits. Our decision in Broadnax (Colo.1991). 1270, 1275 was based on our observation that the arbi- subject judi-
tration award was
to the limited
A
party’s right
UAA,
burden on a
provided
of access
cial review
for in the
rather
to the courts does not violate this
than de novo review.
policy provided the burden is reasonable.
Broadnax,
we reviewed the Connecticut
377,381-82,
People
Spencer,
See
v.
Supreme Court’s consideration of the Con-
(1974) (“In
1084, 1086
524
proper
P.2d
ease
statute,
mandatory
necticut
arbitration
which
n
...
right
of free access to our courts
employed
judicial
a similar limited
review.
yield
rights
must
to the
of others
Broadnax,
(quoting
Act4 did not of access to the purposes binding inconsistent with the ar- specifically courts. found that We the re bitration, “avoiding congestion which are quirement prevailing party pay that a costs piecemeal litigation the courts with and level- $1,000.00 up of arbitration if the did ing playing avoiding field the risks position by not increase its at least 10% did superior that insurers use their eco- place an unreasonable burden on this subjecting nomic resources claims cov- right. Chmielewski, erage litigation.” See id. to undue -409, (1987), §§ repealed by § 4. See 13-22-401 to 6A C.R.S. concluded that the clause favors the insurer recognized at also A.2d 109. We may unlikely review also ren that de novo because it is that insured would
Broadnax
“ ‘merely way
proceedings
award,
high
der arbitration
seek
even if the
ever
to avoid
courts,
thereby
and would
to the
stations
expecta-
than the insured’s
award was lower
very
compulsory
risks the
arbitra
create the
tion,
expense
due to
additional
”
provision
designed to avoid.’
failing
higher
risk of
obtain a
award. See
Broadnax,
(quoting
P.2d at 537
Chmie
Group
Klopp,
v.
A.2d
Worldwide
109).
lewski,
Thus,
at
have
591 A.2d
we
“[wjhile
(Del.1992)
(recognizing that
acknowledged
de novo review
previously
that
may
par-
high
appealed
awards
either
proceedings
frustrate
of arbitration
ty,
experience suggests
common
it is
goals of
arbitration.
unlikely
appeal
an
such
insured would
Schermer,
award”);
an
E.
Irvin
Automo-
IV.
(1995) (not-
Liability
bile
Insurance
49.12
The arbitration
case
ing that
would be difficult to envision
“[i]t
mandatory arbitration when in
results in
willing
an insured would be
situation which
party.
voked
either
The Allstate
away
gamble
a favorable decision
both
provides
an
award not
also
damages ...
he could
where
exceeding the
financial
limits of Colorado’s
trial”);
up
end of
see
wind
a total loser
($25,000.00)
responsibility
binding
law
is
Co., 786
O’Neill v. Berkshire Mut. Ins.
also
However,
parties.5
ex
upon the
(D.Vt.1992)
F.Supp.
(applying
Ver-
$25,000.00
binding if
ceeding
law);
Mut. Ins.
mont
Nationwide
Co.
party elects to have the issues tried
Marsh,
15 Ohio
472 N.E.2d
St.3d
jurisdiction.
competent
in a court
party’s
exercise of
practical effect of
case,
in the
to a trial de novo
In this
Huizar invoked the arbitration
clause,
completed
requiring
participate
render
thus
Allstate to
*6
policy provides
for a
meaningless because
arbitration,
requiring
parties
both
Thus,
novo
all
the arbi-
on
issues.
by
be
the arbitration
the award did
bound
liability,
the amount of
ter’s determination
$25,000.00.
at-
Allstate made no
not exceed
damages,
all
and the awarded costs are
sub-
arbitration, nor
tempt to avoid
could it avoid
Nothing
preserved
ject to trial
novo.
a
policy.
Hui-
consistent -with
arbitration
process
be utilized at
from the arbitration
this
oral
explained
counsel
court at
zar’s
subsequent proceeding.
a
requested
argument that Huizar
arbitration
only
with the fair-
We are not
concerned
her
court
filing
rather than
claim district
face,
on its
also with
ness of the clause
expectation
of her
that Allstate
because
application. Although
of its
the unfairness
proceedings she
forestall
seemingly puts the in-
the insurance
requesting
Accord-
initiated
arbitration.
footing
equal
surer and the insured
be-
Huizar,
she would have been
ing to
since
party can demand a trial de
cause either
anyway, re-
required to arbitrate
Allstate
novo,
de novo
practical
a
matter the trial
necessary
questing
to make
arbitration was
unfairly
may
favor the insurer. See
clause
dispute.
progress toward resolution
Schermer,
Liability In-
E.
Automobile
Irvin
accuracy
expec-
of Huizar’s
Regardless of the
ed.1995)
(3d
(explaining
§ 49.12
surance
tation,
insurance
arbitration
under the
exceeding the state’s
“an arbitrator’s award
mandatory
parties once she
for both
became
responsibility limits would be chal-
financial
requested it.
insurer,
provi-
lenged by
and thus such
insurer”).
the trial de novo
After Allstate invoked
juris-
Many
sions
benefit
clause,
subjected to new
were
which have found identical
dictions
forum,
separate
proceedings in
increased
contrary
have
a
clauses
[$25,000]
Responsibility
will
Law of Colorado
policy provides:
5. The
may
judgment
binding
entered as a
be
Regardless
the method of
proper
exceeding
of the Financial
court.
the limits
costs,
delayed
case,
dispute.6 ing
resolution of the
unquantifiable
not to mention the
nothing
Because
survived from the arbitra-
hardship
prolonging
final
resolution of
tion,
reduced to a mean-
the case. That these costs
be substan-
or,
ingless
best,
exercise
non-binding
tial is evidenced
the fact
that Huizar
guide
evaluating
the claim for settlement
already incurred over three thousand dollars
purposes.
inquiry
Our
is whether this effect
in similar costs at arbitration.
of the trial de novo
previ-
clause offends the
Furthermore,
the interference here with a
ously
public policy.
discussed
party’s access to the
speedy
courts and
reso-
every
Not
deviation in uninsured mo
legal
claims is
unreasonable.
lution
coverage
torist
protection
from the
an in
Invoking
one’s
to an
pro-
provided
sured would be
if the uninsured
ceeding ultimately
impact
has no
or effect
motorist was
imper
insured constitutes an
other than to
delay
interfere with and
access
attempt
missible
to dilute uninsured motorist
to the courts and dilute uninsured motorist
coverage
See,
public policy.
in violation of
coverage.
Mandatory
The Colorado
Arbitra-
Houtz,
e.g.,
Union
Ins. Co.
Act,
Firelock,
required
reviewed
(Colo.1994)(recognizing
that an insurer
party demanding
pay
trial de novo to
may aggregate
damages
the amount of
from
$1,000.00
up
costs of arbitration
if the
multiple
purposes
calculating
insureds for
position by
did not increase its
at least
the amount of benefits due under insurance
13-22-405(3),
(1987),
10%. See
6A C.R.S.
coverage
violating
without
repealed by §
policy). But see Newton v. Nationwide Mut. Here,
consequence
no such
to a
attaches
Fire Ins.
request
novo, and, hence,
for a trial de
(1979) (insurance policy provision
parties are
discouraged
needlessly
from
permitted
which
pay
insurer to subtract PIP
requesting
clause,
a trial. Under the
coverage
ments from uninsured motorist
so
party may unilaterally
dissatisfied
render the
as to reduce that
to less than statu
entire
meaningless
requesting
tory
minimum violative of
a trial de novo. When considered in the
Act).
Reparations
Colorado Auto Accident
context,
uninsured motorists insurance
An
policy provision
is void and
unproductive delay
entirely
inconsistent
,
unenforceable,
unambiguously
even if
writ
with the
speedy
in favor of a
ten, when the
provi
effect
the contractual
disputes.7
resolution of
sion is to dilute or
legislatively
avoid
mandat
A number of our cases reflect
Terranova,
this State’s
coverage.
ed
*7
strong
dedication to
(Colo.1990).
of fa
On its surface the exercise of
voring
provides
arbitration because it
the trial de novo
under the
does
convenient,
parties thereto
directly
speedy,
with a
dilute uninsured motorist cover
litigation.
and efficient
age
alternative to
because the amount of the
See
available cov
Court,
City County
erage
&
Denver v.
possible
and the
District
award does not
of
1362;
However,
939 P.2d at
change
Judd Constr. Co. v.
to trial.
Evans
Venture,
922,
(Colo.1982);
when an
Joint
insurer invokes the trial de novo
924
clause,
Valley
Roaring
the amount that
the insured
Columbine
Constr. Co. v.
victim
Dist.,
(Colo.
ultimately
686,
Fork
necessarily
recovers is
Sch.
626
reduced.
690
1981);
expenses,
Rocky
The insured will incur additional
Ezell v.
Mountain Bean &
fees,
fees,
Co.,
attorney
process
such as witness
Elevator
232 P.
fees,
(1925).
fees,
present-
arbiter
and other costs of
681
While an arbitration clause is not
policy's
provision provides
6. The
delay.
Liberty
increase in cost and
See Field party
pay
litigation
Co.,
each
must
their own
ex-
(D.Haw.1991);
F.Supp.
769
1135
Mut.
penses,
pay
each
must select and
for one
Co.,
v. Allstate Ins.
63 Ohio St.3d
Schaefer
split
expense
arbitrator and
of a third arbitra-
(1992);
349 -215. per provided for sections 13-22-213 to policy merely it public because against nonbinding policy, see Water if an ex- mits the insurance award Under v. Board Employees Local $25,000.00, Works trial ceeds then the effect of the of Works, P.2d 52 Colo.App. Water expand a court’s tradi- de novo clause is (1980), encouraging arbi public policy of powers of favor of de tional limited review pro meaningless a not served tration is Although trial novo novo review. de unreasonably with interferes ceeding which “right” to a clause is couched of terms uninsured motorist and dilutes court access novo, subjects effectively arbi- trial it de Furthermore, the increases coverage. Thus, ter’s to de novo review. where award delay, coupled the fact that costs and with $25,000.00, the an award exceeds trial corresponding benefit derived there is no effectively changes limited novo clause therefrom, with the are inconsistent jurisdiction review of the court to conduct a procedure for providing an efficient policy of jurisdiction by giving general it conduct § legal claims. See 13-22- the resolution trial de novo. (1997). 202, 5 C.R.S. UAA, parties agreeing Pursuant expressly We note that the UAA does to a form of arbitra- agree judicial from permit contractual deviation provided from that tion which differs Thus, procedures. review the UAA neither (1997). 13-22-202, § The C.R.S. UAA. See expresses implies nor favor selecting arbi- provides for a method UAA Regard- of a clause. use novo ters, majority vote of the arbiters for or not the trial de less whether power, for a method of their exercise appellate UAA review clause conflicts with §§ hearing. conducting the 13-22-202 delay procedures, the increases in cost and (1997). -205, also UAA with the inconsistent parties may different provides that the make procedure providing an efficient arbiters, arrangements selecting exercis- review of arbitration. See arbiters, conducting ing power of the (1997). C.R.S. -207, 5 §§ 13-22-205 hearing. See (1997). Similarly, provides the UAA C.R.S. in unique Because nature of authority to award and for notice closely policies, scrutinize their surance we fees, expenses and unless the consistency public policy. operation for - §§ agree. 13-22-210 otherwise scrutiny con heightened Applying this provides also UAA C.R.S. impact potential unequal sidering the appellate-like of the arbi- for a limited review clause, invalidat -216, trial de novo we find §§ 13-22-213 to ter’s award. See already com ing has been arbitration which costs, needlessly dilutes pleted, it increases policy, an award the insurance Under timely impedes coverage, uninsured motorist $25,000.00, may does not exceed claims, unreasonably burdens resolution of provided section confirmed as *8 courts, the and renders right the of access to provided grounds specific the vacated on dispute a effective means of less for the or modified in section single of While no statement 13- resolution. specific provided for sections reasons review, statutory or any limited it -215. After such contained in 22-214 to judgment may and enforced. directly be reduced to a the trial prohibits constitutional law (1997).8 clause in the insurance before de novo us, the the de novo clause violates novo clause here The effect of the fair, adequate, favoring policy of Colorado parties to to allow the establish would be timely of resolution uninsured the arbi- which determines whether condition judicial claims. subject the review tration award Broadnax, P.2d at rejec- disputes in Broadnax. was to our limited review essential
8. This statutory challenges of constitutional injury personal protection binding arbitration of and, judgment consequently, respectfully V. I dissent. hold that We the trial de novo clause is Moreover, majority the while states its Therefore, may unenforceable. it not be re- intention to “examine the effects created upon lied to demand a new operation of trial de novo clause” for completed trial after arbitration has been “consistency” public policy, with Colorado Accordingly, and an award rendered. maj. op. majority any without acts judgment appeals of the court of is reversed findings evidence or factual record of case is remanded to the trial court necessary such “effects” and assumes facts for further proceedings consistent with this predicate judgment. to its At the same opinion. time, majority imports decisions from jurisdictions, relying upon other the work of SCOTT, J., VOLLACK, C.J., dissents, and Arkansas, Indiana, Iowa, Delaware, courts joins in the dissent. Missouri, Minnesota, Nebraska, Jersey, New Ohio, and Vermont. While the decisions in KOURLIS, J., participate. does note, worthy those states are of I believe dissenting: Justice SCOTT policies not in our found constitution or ex- pressly stated the Colorado General As- principles Judicial restraint of sembly do not constitute Colorado law. of give freedom contract dictate that courts disagree I Therefore with means em- express commonplace effect to the of terms ployed by majority judgment. to reach its contracts, even under in which circumstances pow- there be a disparity bargaining of The majority express has not identified er, long as so the contract is not a contract of in our statutes nor has it set forth a however, majority, adhesion. refuses to striking factual basis in the record for down express provisions of entirety. enforce a contract of novo clause in its insurance, any majority not on the basis of inexorable indicates it is “not concerned legislative enactment, “pub- upon but based with fairness [trial ] clause policy” judicially face, lic it has from sev- “derived on its but also the unfairness of its Maj. eral op. application,” maj. op. sources.” at 345. Because the at 347. While such majority say process does not how appropriate, its concern is I am unable to find in deriving any such is to showing be cabined the record before us facts how any upon or power indicate limitations it applied light Allstate has clause. exercises, join opinion I us,1 cannot nor its the absence of a factual before record is, no, ago, 1. The of a record your absence factual in this case was and the answer honor. There during arguments by attorneys clarified oral was no record matter substantiate a parties: both just number of statements made coun- Justice Martinez: have relied a lot No, honor, [Y]ou your sel.... no record. very good, arguments well-reasoned about the Right. very Justice Bender: I think practical implications really this and how you clear. no There is record.... Have made any development out works there. Is there any representations your any client made below, any that upon do we have factual record representations proceed- in the course of this rely go beyond which we theo- could ing which with [how deal Allstate uses or has retical here at the even-handedness to look so, provision], they? used the and if what are implications actually practical and how it is No, honor, your Mr. Muldoon: there has been no being used? investigation representa- into that issue no Mr. Kordick: am not aware this was ever the tions made to a court or to as to the subject finding. kind of fact frequency of the use. We know don't if it is make insureds that more use Muldoon, Justice Bender: Mr. was there *9 trial or not. development factual on this issue? I under- legal argument you making ... stand the Muldoon, your you Justice Bender: Mr. in brief court, any but in the trial ... are facts there say very that there are few cases in which a by that established that this is used requested.... any Is novo is there your every client almost case where the $25,000? evidentiary any- basis for that? we know is over Do award honor, thing you anything about Did point Mr. Muldoon: that was a made that? know Your Martinez, by just I believe moment about Justice a that? person select persuaded to insured will one arbitrator. be may be reasonable while will another. The two ar- [Allstate] Colorado select analysis of courts outside by the they If quite will select a third. cannot jurisdictions, it is bitrators the of those law agree days, on a third arbitrator within to before us impute matter another county a judge the of court of record the be found the and conduct that cannot facts jurisdiction pending rely upon of where arbitration is then to that of this case and record the The judg- appoint will third arbitrator. writ- a basis for our conduct of others as any of two by ten decision arbitrators will Surely such reliance this ment. person The process. determine the issues. issues of raises serious due pay person will the arbitrator selects. I Finally, clear that share I want make the pay [Allstate] will one se- [Allstate] many majority’s concerns about the of the The of expense the third arbitra- leet[s]. My case. concerns provision in this contract expenses tor and all other of arbitration predica- sympathy of for the because exist However, attorney equally. will shared be respect due for the of insured and ment the paid fees and fees to medical other prohibiting the language of our statute plain expert are not considered arbi- witnesses coverage, as uninsured motorist dilution of expenses. paid These costs will be tration Assembly. adopted by our General by party incurring them. (1997). Therefore, view, ap- more my the better reasoned and arbitration, Regardless of the method of be not to eviscer- propriate result here would any exceeding limits of award not clause, but rather ate the entire de novo Responsibility of Colorado Law Financial permitted Colora- to enforce the clause as [$25,000] binding may be will be en- may an insurer law. I would hold that do proper judgment as a court. tered novo, only demand a trial choose to Regardless of method of conditionally. As cost of the insurer’s exceeds the arbitration award trial and order to proceed choice to Responsibility in the limits State financial diluting avoid uninsured [$25,000], party of either has a Colorado guaranteed section right trial on all in a court of issues (1997), hold the insurer further jurisdiction. right competent This must be pay the insured’s arbitration costs must first days within 60 of award. exercised pursuing its precedent to as a condition fees, Costs, attorney are to be including judicial dispute between resolution of incurring paid by party them. its insured. the insurer and
Although her claim for additional benefits $25,000 Responsibili- I. exceeded the Financial anticipated by de novo ty the trial limits A. policy, it was provision of the Allstate Gloria majority’s of the facts omits Allstate, The recitation who ar- Huizar and demanded important that I consider certain details proceed to ar- bitration. Huizar elected majority ease. resolution As despite fact the third bitration notes, provision of the uninsured motorist of the Allstate made paragraph mecha- provided dispute resolution $25,000 and binding less. those awards request calling for indicates, nism arbitration language quoted As the above on, however, goes party. subject either to the to state that: Associa- rules American Arbitration (AAA). rules, an arbitra- following Under those objects, the meth-
If either
party.2
against either
tor
award costs
be used instead. The
will
od
arbitration, including
expenses of the
no
All other
no record and
devel-
[T]here's
Mr. Muldoon:
expenses
and the
actually support
witness
cost
that.
...
opment
statistics to
produced
request
any proof
at the
direct
provide:
rules
2. The AAA
arbitrator,
par-
equally
borne
shall be
ties,
they
agree
or unless
side shall
unless
shall
otherwise
expenses of witnesses
such ex-
party producing
the arbitrator in the
assesses
paid
such witnesses.
*10
9, 1994,
two-day regulations
professional
On December
after
and
ethical codes
hearing,
“sufficiently
give
an
that
arbitrator
issued
order
concrete” to
notice
“$30,000
awarding
plus
duty.
Huizar
interest
public
Rocky
Hosp.
from of a
Mountain
Mariani,
appropriate
the date
the accident and
&
Serv. v.
P.2d
Med.
525-
(Colo.1996)
sources).
January
(discussing potential
costs.” On
arbitrator
contravenes,
awarding
a second
issued
order
costs
“the When a contract
term
frus-
$3,319.88plus statutory
trates,
sum of
interest
goals
from
of a clear-
or interferes with
ly
the date of the accident.” The
policy
arbitrator’s
of the
stated
State Colora-
do,
paid
had
Corp.
orders confirmed
Allstate
all
void.
is
See Martin Marietta
v.
(Colo.1992)
Lorenz,
(free-
expenses
medical
and stated that Huizar “as-
wage
sought
serts no lost
claim”
yields
public policy
no dom of contract
where
is
compensation
expenses.”
“clearly expressed”
“specific
for “medical
Dur-
or
bars
statute”
enforcement);
ing
argument,
attorney
Inc.,
neither
Mktg.,
oral
was able
Corbin Sinclair
(conflict
questions
(Colo.App.1984)
to answer
about
the arbitration
detail,
proceedings
“broad,
other
general
than
confirm
statement”
enforcement) (cita-
sought an
policy
that Huizar
award well
excess of
insufficient to avoid
$25,000.
omitted).
tion
denying
for a
Allstate’s motion
majority
The
contends that
the trial de
novo, the
district court ruled that “the
novo clause
runs afoul
provision limiting uninsured motorist cover-
expressed in our constitution
age
against public policy.” Finding
is void
(1)
statutes, namely:
against dilu-
provision “patently
the insurance
unfair” to
uninsured motorist
litigate
Huizar because it “allows
[Allstate]
adoption
evinced
section
...
damages]
[of
issues
as well as
(1997); (2)
policy against
undue
twice
it’s not satisfied with the first deci- delay in access to the courts and in favor of
sion,”
provision
the court found the
unen-
speedy
disputes
resolution of
contained in
Const,
forceable.
6;
(3)
II,
Colo.
art.
Const,
favor of arbitration embodied in Colo.
B.
XVIII, §
explaining
art.
3. Instead of
how
provision
runs afoul of
majority correctly
*11
(UIM)
limiting
coverage,
underlying
uninsured motorist
values
unarticulated
the
—and
contrary
policy.
public
to this state’s
leg-
disparate set
unifying
purportedly
—a
constitu-
pronouncements
state
islative
allowing
I am
an insurer to
convinced
the
persuaded
am
provisions.
I
tional
pay
to
force its insured
costs of arbitration
provision is in direct conflict
by
the
that would otherwise be borne
insurer
operates
it
right
least
public policy,
by invoking
at
the
to a trial de novo would
diluting
litigat-
coverage.
the
pay
costs of
have
effect
UIM
force an insured to
the
to
Therefore,
insurer
twice,
I would hold that an
must
the
I think
court’s
ing a claim
if it
pay the
arbitration costs
exer-
insured’s
accordingly.
holding should be limited
right
to
trial de novo. This
cises
ás a matter of
follows both
con-
conclusion
A.
interpretation
logical
tractual
and as a
re-
against
quirement
of the
dilu-
By enacting
the General
section
coverage.
tion UIM
Assembly
public policy
of Col
established
previously,
As
the rules of the AAA
purchases
who
unin
noted
that an insured
orado
costs,
for
allow
injured by an
coverage and is
sured
incorporated by
these
are
reference
rules
to the
driver is entitled to benefits
uninsured
addition,
policy. In
into Allstate’s
while
compen
be
as the insured would
same extent
“Costs,
provides,
trial de novo clause
includ-
negligence
an
injured
if
due to the
sated
fees,
paid by
ing attorney
are to be are to be
motorist. See Kral
American
insured
them,”
party incurring
language
763-
Mut. Ins.
Hardware
only
trying
to
to the costs of
seems
refer
(Colo.1989).
court,
to
costs
ease
of arbitration.
required by
are
Auto insurers
Colorado
contrary interpretation
possible,
A
but
policyholders
least
their
at
statute to offer
against
light
dilution
of-the
$25,000
coverage
damages
caused
meaning
coverage
plain
as well as
UIM
involving uninsured motorists. See
accidents
used, I
language
would conclude that
(1997);
42-7-103(2),
§
8 C.R.S.
to
the Allstate
entitles Huizar
recover
purpose
is to
arbitrating
costs
incurred
her
she
—that
this statute is
say,
regard
claim
to whether Allstate de-
without
—behind
trial,
accidents will
regard
ensure that victims
auto
to the
to
mands
without
to
look
their own insurers
of such a trial.
able to
to
result
injuries when the driver
recover for their
object-
if
had
Independently, even Allstate
financially irre
or is
fault cannot be located
and invoked
to the use of the AAA’srules
ed
Kral,
Any
imposition of an arbitration as a C. condition of suit does not violate courts, require- majority possibility access even when the alludes imposed by policy may ment statute. See State Farm an insurance bear certain similar- Broadnax, maj. v. op. Mut. Auto. Ins. Co. ities to a contract of adhesion. See (Colo.1992). law, 531, 535-37 If the can state at 344r-345. Under Colorado ease how- ever, policies compel policy presumed then the are not being demanded a trial de novo. The insurers from forced to bear protect litigation embodied the UIM statute burden of at the instance of prevents duplicative coverage, diluting from an insured. insurers does a trial all issues the arbitra- Dairyland, v. to demand See Marez be adhesive. (Colo.1981); award Colorado’s financial re- P.2d 288-89 exceeds cf. (Colo. limit, Dressel, sponsibility allows the insur- Jones er, 1981). judicial The terms of an insurance contract or insured seek review when they are can be enforced where generally produces an excess v. Ameri unambiguous. hand, See FDIC $25,000.4 clear On other con- (Colo.1992); 1285, 1290 Cas. can *13 reciprocal go to if no to the fers Terranova, A in an at 60. clause 800 P.2d $25,000or award is less. arbitration rea ambiguous if it is insurance contract is situations, might insured wish In some the mean sonably susceptible to more than one advantage trial de clause. to take of the novo Ins. Co. v. ing. See Travelers Jefferies- if example, the insurer demanded arbi- For Eaves, Inc., Colo. resulting and the award was less tration than the insured had claimed but above the what in meaning clause of the arbitration threshold, responsibility financial the insured unmistakable; par- policy is either Allstate’s that a novo .might well be trial de relieved a trial if more than ty is entitled demand case, the remained the instant available. Therefore, $25,000 in is awarded arbitration. despite asked for the fact insured notwithstanding the term is enforceable the apparently the that she knew the value of appears in an insurance contract. fact that it sought claims she would entitle the insurer held, law, that never as a matter of We have persuaded trial demand a if she arbitra- the insurance, more, an without is a contract requested.5 to award the she had tors amount course, so, contract. To do adhesion beyond well the have ramifications hand, provi- the other the novo On necessarily raise dispute before us and would likely to in most sion is the insurer favor implications proportions of monumental in As one commenta- cases which is used. possess. case does this noted, “[i]t tor has is difficult to envision willing in which an insured would be
situation away III. gamble a favorable decision on both damages ... where he could analysis above outlined is reinforced up end a total loser at the of a trial.”6 wind in this by the absence of factual basis an insurer can use the Huizar contends that determine, time, prac- at this the record the insured to threat of to coerce effects of the trial de novo clause. tical accept less than the arbitra- amount All- coverage provisions The UIM tion, parties know that both even ease, many like state this fair, can be is because insured award provides that when the insured and policies, set of hurdles to to clear another forced agree on whether or how the insurer cannot judgment. obtain enforceable collect, the much the insured is entitled to record, though, persuad- this am not On at be matter submitted clause have a ed that trial de novo will Admittedly, request party. impact bargaining position on drastic here a twist to Allstate at issue adds negotiations. If By agreement to settlement the conventional arbitrate. large, is the insured including provision that allows either the arbitration award case, say party’s how While neither counsel could the inclu 5. 4.In the base award—before $25,000 initially, of interest and costs—exceeded the sought sion the record much Huizar had In a case where base award threshold. implies she more than the finan- asked for less, $25,000 push but interest costs limit, despite fact responsibility because cial responsibility total limit, above financial rejected were that some of Huizar’s claims arbitrator, likely binding in its the award would $25,- awarded exceeded amount Brokers, Ltd., entirety. Glenwood Ferrell v. Cf. 1993) (Colo. 000. (attorney fees 940-41 calculating and other costs not included in Schermer, Liability Insur- Irvin E. Automobile jurisdictional controversy pur amount § 49.12 poses). ance 3d may gain against leverage necessary give expressly the insurer than effect to negotiations. further If settlement the in public policy. stated surer litigating insists on the face of an claim, obviously valid insured can add IV. against
cause of action for bad faith go insurer when the to court. See Accordingly, pro- the trial de because Savio, Travelers Ins. Co. v. vision of the Allstate issue here (Colo.1985) (discussing ap standard wholly express conflict Colorado plicable “first-party” claims of bad faith as announced our General insurers); delay against or denial of benefits Assembly, due princi- and with deference to Trimble, Group, Farmers Inc. contract, ples of I respectfully freedom of (Colo.1984) (recognizing the stan dissent. part dard of conduct of an insurer *14 dealing arising with claims under an say I am authorized Chief Justice quasi- “must reflect [] the joins VOLLACK in this dissent. fiduciary relationship that exists between the insured”); insurer and Flickinger v. Wichita,
Ninth Dist. Prod. Credit Ass’n of (“[A]n (Colo.App.1991) insur subjects ance carrier damages itself to be yond monetary payments by called for
policy, including punitive damages, if it fails good faith to consider claims asserted under a it. issued And this is true of the State of PEOPLE whether one the claim is asserted Colorado, Complainant, party against insured ... or a third ....”) (citations omitted); Bucholtz v. America, Ins. Co. Safeco (“an (Colo.App.1988) insurer acts BLUNT, Attorney- Peter Howe bad faith in ... denying a ... claim when Respondent. recklessly ... disregards [it] knows or 97SA451. No. unreasonable”). fact that its conduct option seeking insured also has the costs Colorado, Supreme Court attorney fees the insurer maintains a En Banc. substantially groundless or vexatious de -202, §§ fense. See 13-17-102 & 2, 1998. Feb. (1997) (providing attorney fees justifica where “substantial defense lacks
tion” judgment and actual costs when ex offer). plaintiffs
ceeds settlement event, any the record this case is bereft of demonstrating evidence actual abuse of the trial If clause. Huizar develop were able to a record after remand supports the view insurers use the simply de novo clause order to obtain leverage post-arbitration undue settlement discussions, might inclined to reach the majority.
same conclusion as the In the record, support absence of such in the how- ever, I would decline invitation to inter- fere a dispute resolution mechanism any greater
created contract extent The notes “Allstate majority policies, simply of the identified insurer, Company, paid Insurance Huizar’s “public policy alludes to derived from several expenses” medical her and that “Huizar also maj. op. sources” a collective whole. See looked Allstate for her additional claims.” at 345. fact, Maj. op. paid at 343. In Allstate all of expenses Huizar’s medical costs of her arguably public policy, As to relevant each injury, $7,000. amount excess of believe, analyze we must whether the trial basis Huizar’s claim for additional dam- explicit de novo conflicts with the clear, ages entirely although the arbi- objectives purposes legis- or of the identified indicating trator alluded evidence policy. lative or enactment constitutional ongoing pain Huizar suffers from as a result maj. objection op. 346.1 have no consid- injuries. of her ering might “oper- how contractual term specific public policy “in at[e]” to frustrate a II. circumstances,” particular maj. op. at public policy challenge majority’s approach something A to enforcement of en- requires tirely majority identify a contractual term an examination can no different. any expressly pub- the various sources direct conflict with stated Colorado, yet policy, proceeds State of such as the or lic to strike down the state feder- constitution, statutes, inquiry al or administrative trial de novo clause based on an into Association, penses against any speci- Dispute part or thereof also American Arbitration parly parties. fied Resolution Procedures Insurance Claims 10 Association, (Jan. 1, 1994) (including parallel provision American Arbitration Accident (Jan. 1994); costs). Claims Arbitration Rules 14 see award of