*1 рrovisions of articles 40 to 54 of this title the rules and receipt
the commission or until such approved by
settlement has been the di-
rector.” disputed settlement of issues injury only and extent of purpose
serve a useful and beneficial claimant, employer, employ- carrier,
er’s insurance but also allow effi- public
cient use of resources. opinion, treats court’s awards statutorily authorized settlements as
being purposes one and the same for
reopening, statutory based sound
analysis good public policy. ignores It only statutory authorization set-
tlements, but also benefit settle-
ments, at, fairly arrived as an alternative litigation.
Accordingly, respectfully dissent. say
I am authorized to that Chief Justice joins me in the dissent.
ERICKSON
Jack O’CONNOR and Dan
O’Connor, Petitioners,
PROPRIETORS INSURANCE COMPA- Aviation, Respondents.
NY and CTH
No. 82SC389. Colorado,
Supreme Court of
En Banc.
Feb. 1985.
which insures direct and accidental loss damage of or airplane while it is in policy motion. The contains an exclusion provides which pertinent part: pol- icy to loss occurring while the aircraft is in violation of the terms of its Federal Aviation Airworthiness Oper- Certificate or ” ational Record .... petitioners The filed an insurancе claim respondents, refused pay. Subsequently, they suit, filed parties submitted the case to the trial court on facts. stipulation provided, part: Regulations Federal Aviation provide that an Airworthiness Certificate is ef- long fective as the mainte- performed nance is as set forth Howard, Sherman & Michael A. Wil- regulations. 21.181(a)(1). 14 C.F.R. liams, Reath, Denver, Ellen petition- W. for regulations categories contain two of in- ers. spections, inspections known as ‘annual’ Renner, Burke, Rodman & John R. Rod- inspections. and ‘100 hour’ An aircraft man, Renner, Denver, Paul respon- D. for being which is used for hire must have dents. an inspection 100 hour or annual for ev- ery 100 hours of time in All service. ROVIRA, Justice. aircraft must an annual granted each calendar We certiorari to months. C.F.R. consider wheth- 91.169(a), (b). pro- er an insurance company must establish a rating vide for causal connection certification of me- between insured’s vi- chanics who are perform olation of a authorized to and an otherwise required inspections. insured loss in order C.F.R. Part to be relieved from 65, Subpart An liability pursuant power D. airframe and policy to an insurance plant (A P) mechanic & is exclusionary clаuse. authorized to appeals The court of perform inspection, an 100 hour held that where and an provision there is a in an (AI) inspector aircraft policy is authorized to specifically excluding cov- erage inspection. an annual in the event of a Federal Aviation Agency (FAA) violation, the insured is not scope and detail of the 100 hour and entitled to recоver even there is no inspections Ap- are set forth in causal between viola- pendix D to 14 Although C.F.R. Part 43. tion and the accident. O’Connor v. Pro- different are per- authorized to prietors types inspections, form the two (Colo.App.1982). We affirm the inspections and detail of the are of the court of on the basis that the exactly respects.... the same in all appropriate did not bear the logged On June with 389.8 hours proof. burden of aircraft, Larry on the Kempton, Aircraft Inspector, performed certi-
I. inspection pursuant fied as an annual In petitioners’ airplane 1979 the was 14 C.F.R. 91.169 and determined that the damaged in a airplane crash. The in airworthy aircraft was condition at respondents insured September 22, 1978, under a that time. On aircraft, Doug- II. logged 499.6 hоurs Me- Tomes, Plant and Power las positions, of their both support chanic, certified principles of certain of insurance remind us inspection pursuant 100 hour guide analyzing us law which 91.169 C.F.R. and determined point out deciding this case. Petitioners at airworthy condition aircraft was policy must in an insurance that exclusions *3 purchased the air- time. Plaintiffs strictly construed be April, in craft 1979.... on tech- coverage based and a forfeiture is a not favored violations result nical 8, 1979, 593.8 hours September On Rice, v. 163 Colo. the law. See Grooms aircraft, damaged in logged was 234, P.2d 298 Moorman Manu- in mo- while the aircraft was an accident 413, Rivera, v. 155 Colo. facturing Co. the momen- power its own tion under (1964). P.2d 4 therefrom, under generated tum policy. At the time of terms of the argue Respondents that it is not accident, premiums paid and all were an insurer to public policy or the law for The and effect. policy was full force coverage, and that policies limited write 12 months less than accident occurred interpreted contracts are to be 22, 1978, September inspection after ordinary according to their and obvious after the approximately 15 months ambiguity. meaning a absent There is no inspection. June Fidelity & Guaran- Reed v. United States accident as to caused the what (1971). Co., 176 Colo. ty prevented. it could or how have agree We with each of these statements. agree is no evi- that there Defendants difficulty applying them to The by or caused dence that accident was us, arriving and in facts of the case before inspection fact that resulted proper a decision which accords at 22, 1978, designat- September was not accepted prin- each of weight to these well per- and not inspection ed as an annual ciples. by Inspector. formed issue starts with Our resolution re- also that the The dispute. of the review denial was based spondents’ poli- The clause states: inspection of the fact solely on to loss occur- cy does not designated as September was (1) operated in ring the aircraft while per- inspection and an annual its Federal Avia- terms of inspector. formed aircraft Operation- Airworthiness Certificate or Record_” law, an air- the air- Under federal contended that al only as of its certificate is effective in violation worthiness craft was and, requirements are alternatively, long all maintenance airworthiness certificate § (1984). 21.181(a)(1) 14 C.F.R. respondents required to show met. were requirements include an annu- the crash Maintenance any such violation caused §§ 91.165, 91.169 inspection. the exclusion. C.F.R. advantage take al order to parties stipulated that no such relying trial Schantini performed. had been Co., 43 Indemnity Aсcident & Hartford (1979), inspec- denied and detail of an annual Colo.App. P.2d in Appendix D to Part 43 summary judg- tion are described petitioners’ motion for Only those certified mechan- entered in favor C.F.R. ment and “inspection ics with authorization” respondents, holding that the absence inspection. an annual required inspection precluded perform C.F.R. Finding 65.95(a)(2). A 100-hour recovery by petitioners. powerplant, required dispositive, court of airframe Schantini regulations, may FAA opinion in a divided affirmed. certified mechanics holding both airframe The exclusionary clause to spe relates powerplant ratings. FAA safety regulation. cific A clause which would deny coverage when an acci To “inspection authorization,” obtain an dent occurs while the airсraft inwas viola a certificated mechanic must hold both the any tion of FAA may violate airframe and powerplant ratings for not public policy. The are so less years, than three must have a fixed voluminous and technical “that it nearly operations, pass base of must a written impossible to crash without a viola test, and must meet certain other stan- tion of at least onе of regulations.” those fully dards more set out in 14 C.F.R. Southwestern Insurance Co. v. Row § 65.91. Those per- authorized to sey, 806 (Tex.Civ.App. form an annual possess 1974). Thus, such a clause would in effect qualifications that are not allow the insurer premiums to receive those who inspections. 100-hour *4 when realistically it is incurring any First we review the clause to determine risk of
whether it is ambiguous. Unambiguous language evеn require does not the clause is construction or facially public interpretation. policy, violative of language may Where the of the applied be so policy as unambiguous, particular is clear and the facts of a it cannot case. policy be construed to Public mean other than does not favor the what it for says. given It feiture of plain coverage must be insurance and ordi- based on the nary meaning of the terms insured’s technical used. Massa- the insur policy. chusetts ance Mutual Insurance Co. v. American States Insurance DeSalvo, 115, 174 Aviation, Inc., Colo. 482 Co. v. Byerly P.2d 380 F.Supp. 456 (1971). Here, 967, unambigu- (S.D.Ill.1978); is 968-70 Avemco Insur ous: import “The obvious of the exclusion Chung, F.Supp. 142, ance Co. v. clause (D.Hawaii is that the insurance company 1975). does Rice, Grooms v. Cf. not wаnt to any plane insure 298, does not Colo. 429 P.2d 300-01 have a valid airworthiness certificate.” Manufacturing Rivera, Moorman Co. v. Ranger Co., Potter v. 413, 416-17, 732 F.2d (1964). 155 Colo. 395 P.2d (9th Cir.1984). Courts should be careful in implemen however, tation of policy, to avoid un Since the clause unambiguously denies disruption due parties’ expec of the settled coverage when a loss occurs while the tations and purposes coverage plane does not have a valid airworthiness expressed implied or poli the insurance certificate, we must determine whether the cy. against public clause is policy. is the “[I]t right fundamental of the insurer to decide question clause in excludes from cov- what it will what it will not erage insure loss which occurs while the aircraft against, providing provision is in violation of its Federal Avia- against public policy.” Royal Indemnity tion Airworthiness Certificate. It was ob- Co. v. F. viously John Cawrse Lumber designed protect the insurer F.Supp. (D.Or.1965). liability There is lit- for accidents caused dispute tle policies limiting insurance operation plane. of an unsafe Under the coverage by containing exclusionary here, claus- applying circumstances the exclusion es аre not finding to law unless such coverage absence fur- public policy. clauses violate Western Mu- thers a purpose material and reasonable Wann, tual Insurance Co. v. policy, Colo. the insurance and does not violate (1) public policy, We know of no because cause statutory provision declaring established, exclusion- accident has not been аry public clause violative of policy, regulation nor is the FAA violated relates so di- clause, face, public on its violative rectly operation the safe policy. that the violation could have contributed to that, prevented discovery affirming of an unsafe judg- condi- tate rather than ment in
tion that have caused the accident. favor should be vacated аnd the cause remanded equitable The use of doctrine to the trial court for a new trial in accord- forfeiture of to override legal standards causation unambiguous provi clear and forfeiture majority opinion. in the set forth policy in an sions should not be except compelling invoked under the most NEIGHBORS, Justice, dissenting: circumstances. Where the respectfully dissent and would hоld apparent, that an insurer who disclaims un- insured has the burden of der an clause an aircraft relationship. absence of such Further policy must a causal connection be- more, clearly when the tween the exclusion and the loss. implicitly safety-related, application precluded by public the exclusion should be I. policy only when the insured can show that poliсy in this case contains an exclu- the violation of the was not a potential sion clause with the for broad cause of the accident. Here the O’Connors application: stipulated that “there is no evidence that occurring to loss while the air- the accident was caused or resulted (1) operated craft in violation of the Sep from the fact that the terms оf its Federal Aviation Airworthiness *5 22, 1978, designated tember Operational Certificate or Record....” performed by annual and not jurisdictions presented Courts from other Thus, Inspector.” the similar clauses have the described vo proof, did not bear their burden of Federal luminous Aviation Administration apply. exclusion should Regulations governing “laby aviation as of the court of rinthine,” detailed,” “very compre and “so affirmed. virtually impossible that it hensive be to have a crash without a violation of at QUINN, J., part, dissents in and NEIGH- regulations.” least one of those See BORS, J., dissents. Southwestern Insurance Co. v. Row sey, (Tex.Civ.App. QUINN, Justice, dissenting part: 1974); Churchman, Roach v. 431 F.2d Although agree majority’s im- (8th Cir.1970); Ezzell, Thompson position proof in- the burden of on the Wash.2d 379 P.2d safety sureds to show that a violation of a treatise, Lee Kreindler states his Avia- regulation was not cause acci- Law: tion Accident loss, dent and I believe the case should be returned to trial court order to af- of some of ... [T]he [these opportunity satisfy exclusionary ford the insureds an to is so broad that clauses] parties stipulated virtually any give this burden. When accident would rise to “[tjhere liability part is no evidence as to what a disclaimer of Thus, company. caused the or it could accident how insurance those clauses prevented,” they relating were somewhat la- to a violation of a Federal Avia- boring proof regulation, play in the dark as to the burden of call into the hun- causation, so, understandably specific regulations on dreds of relating be- air cause, although every phase there was law from other to of aviation. I can state issue, jurisdictions personal experience on both sides of the this from that when acci- previously happen, court had not determined wheth- dents the attitude of the insur- proof company look, first, on er the burden of causation should ance is sometimes to provide or the insured. for fall on the insurer Consid- elements that will the basis view, fairness, disclaimer, my erations of dic- for a rather than basic to consider While, general liability. questions of no how direct the correlation between the doubt, companies argue the insurance FAA regulation and safety be before they must risks so as limit their to regulation precludes compute charge premiums be able to recovery. insured’s It is not clear from the risks, given practice in actual these opinion whether an incidental disclaimers of be and can are suffice, safety regu- will whether by companies misused to avoid primarily lation substantially must be safety Therefore, related. safety com- ponent holding of the court’s adds little to Kreindler, 1 L.S. Aviation Accident Law analysis. court’s In (rev. 1980). rule 4.11[1], at 4-33 ed. encourages litigation over the issuе case, for denying this the sole basis degree whether what particular and to under the clause is regulation safety related is not useful. fact that 100-hour adopted Under by the rule September designated was not as judges trial required of this state will be and was particular decide regula- whether a federal powerplant an PAA certified airframe and primarily tion is opera- direсted to the safe inspector. than mechanic rather an aircraft airplane designed tion of an or is to accom- parties inspec- that the two plish purpose. Nor, some sug- other tions are identical detail al- gested by majority, should the insured two different classes are negative by estab- authorized lishing that the violation did not cause the agree them. The that therе is party accident. We are told how a to a landing peti- the crash might go proving lawsuit about tioners’ was caused or resulted violation was not PAA this violation causally to an related aircraft accident. governing aircraft certification. Furthermore, by placing the burden majority the insur- concludes that proving re- that a company because liable *6 insured, majority latеd on the has char- violation, although there is question acterized of fact. issue accident, it caused the the in- excluded ques- a this determination is any coverage. justi- sureds from The court tion of law. result reached by finding fies this result that “the PAA majority is theories traditional directly violated relates so to the 2 judicial process. of operation safe Am.Jur.2d Adminis- viola- § (1962)(“The interpreta- рrevented tion trative Law 656 could have contributed to discovery tion of a involves a of unsafe condition that statute question law, statutory and construction caused P.2d at 285. accident.” 696 courts_”). is the function of majority assumes that there are some PAA are not safety What is involved this case is resolution related, places proving policy question: and the burden of of the broad Whether the of a relationship absence between the insured or the the bur- carrier bear den of air crash insured. loss when cause of an However, cursory reg- cannot be has examination determined and there regulation. ulations leads me to that all of violation conclude of an FAA ma- regulations pertaining jority by grafting aircraft and the carrier sides with operation its are promulgated illusory “safety” the Feder- distinction on the exclu- However, al subchap- sionary Aviation Administrator under clause. better rea- VI, “Safety Regulations ter Civil Aero- soned cases hold that the order nautics,” Program. advantage Federal Aviation take of such a clause §§ 49 1421-1432 policy, plead U.S.C. The court must a causal con- provide any guidance does on nection the issue between exclusion and the loss dispute parties may litigate their claimed. American States Insurance See Aviation, Inc., Byerly F.Supp. light Co. v. this decision. would (S.D.Ill.1978); South Carolina Insur appeals’ decision. reverse the court of Collins, 282, 237 Co. v. 269 S.C. Fireman’s Fund Insur S.E.2d McDaniel, F.Supp. v.
ance Co.
(N.D.Miss.1960),
grounds,
on other
aff'd
(5th Cir.1961);
Woods,
(Fla.Dist.Ct.App.
1981), review 412 So.2d
1982).1 requires insurance car- Public Colorado, of the State PEOPLE policies establish riers who write aviation Plaintiff-Appellant, disclaim causation when govern- the basis that the insured violated WANDEL, Gary Michael regulations. myriad ment Given Defendant-Appellee. highly regulations, many of which are such technical, way are in some and all which No. 82SA337. safety, viola- related to aviation when the Colorado, Supreme Court of to the loss it is contribute En to allow the carrier to avoid Banc. unconscionable Fire Puckett v. U.S. 19, 1985. Feb. (Tex.1984). Rehearing Denied March 1985. a causal Requiring the insurer to show the exclusion and the connection between consistent with the law constru-
loss excluding
ing policies clauses in accident
coverage when the insured has violated the generally Appleman, 6A J. In-
law. See Law and Practice
surance
(“The effect that majority rule is to the a causative connection
there
shown between the violation of law received; and, in
injury the absence the direct that such violation was injury, rеcovery proximate cause of the *7 denied.”).
would not be new, by creating unprece-
This cases, aviation insurance
dented rule for opportuni- deprived plaintiff
has regulation is not
ty to establish that the Therefore, safety. the court
related to the case to the trial court so
should remand suggested permitted where his yet be to to recover under 1. An alternative not would significant adopt conduct created a risk to the carrier a rule that a carrier could avoid premium paid. I believe this insured loss if it establishes for which approach for an otherwise preferable suggested significantly to that increased that its risk of loss was majority. precedent regulation. there is no an FAA the insured’s violation of approaches. company presumably these ad hoc While either of Since the insurance attractive, preferable possession I believe it is facts and evi- would have in its bright-line adopt rule which aircraft own- necessary risk was to establish that its dence increased, proof. ers and their insurance carriers can conduct bear the burden of relationship. analysis, their the insured would not be Under this