1                Opinions of the Colorado Supreme Court are available to the
2            public and can be accessed through the Judicial Branch’s homepage at
3              http://www.courts.state.co.us. Opinions are also posted on the
4              Colorado Bar Association’s homepage at http://www.cobar.org.
5
6                                                          ADVANCE SHEET HEADNOTE
7                                                                        May 29, 2018
8
9                                         2018 CO 44
0
1   No. 17SA31, Rooftop Restoration, Inc. v. Am. Family Mut. Ins. Co.—Unreasonable
2   Delay and Denial of Insurance Benefits—Statute of Limitations—Statutory
3   Interpretation.
4
5         In this case, the supreme court considers a certified question from the U.S.

6   District Court for the District of Colorado. Specifically, the supreme court determines

7   whether the one-year statute of limitations found in section 13-80-103(1)(d), C.R.S.

8   (2017), governs actions under section 10-3-1116(1), C.R.S. (2017), which creates a cause

9   of action to address the unreasonable delay or denial of insurance benefits.         The

0   supreme court concludes that the one-year statute of limitations does not apply to

1   actions brought under section 10-3-1116(1) because the legislature did not intend section

2   10-3-1116(1) to operate as a penalty within the context of the statutory scheme.

3   Consequently,     the   certified   question    is    answered     in    the    negative.
                     The Supreme Court of the State of Colorado
                         2 East 14th Avenue • Denver, Colorado 80203


                                        2018 CO 44

                           Supreme Court Case No. 17SA31
                             Certification of Question of Law
                 United States District Court for the District of Colorado
                             Case No. 15CV2560-WJM-MJW
                                         Plaintiff:
                    Rooftop Restoration, Inc., a Colorado corporation,
                                             v.
                                        Defendant:
         American Family Mutual Insurance Company, a Wisconsin corporation.

                              Certified Question Answered
                                          en banc
                                        May 29, 2018


Attorneys for Plaintiff:
Levin Sitcoff PC
Bradley A. Levin
Nelson A. Waneka
      Denver, Colorado

Furtado Law PC
David J. Furtado
Rodney J. Monheit
      Denver, Colorado

Attorneys for Defendant:
Campbell, Latiolais & Averbach, LLC
Colin C. Campbell
Kirstin M. Dvorchak
       Greenwood Village, Colorado
Attorneys for Amicus Curiae Colorado Defense Lawyers Association:
Gordon & Rees LLP
John R. Mann
      Denver, Colorado

Attorneys for Amicus Curiae Colorado Trial Lawyers Association:
Keating Wagner Polidori Free, P.C.
Zachary C. Warzel
Melissa A. Hailey
      Denver, Colorado

Attorneys for Amicus Curiae United Policyholders:
The Fowler Law Firm, LLC
Timms R. Fowler
      Fort Collins, Colorado

Taussig, Taussig & Smith, P.C.
Scott D. Smith
       Denver, Colorado




CHIEF JUSTICE RICE delivered the Opinion of the Court.

                                        2
¶1     The U.S. District Court for the District of Colorado certified a question to us

regarding the statute of limitations applicable to section 10-3-1116, C.R.S. (2017), which

governs claims for unreasonable delay or denial of insurance benefits. Specifically, we

accepted jurisdiction under C.A.R. 21.1 to answer the following question from the

district court:

       Is a claim brought pursuant to Colorado Revised Statutes § 10-3-1116
       subject to the one-year statute of limitations found in Colorado Revised
       Statutes § 13-80-103(1)(d) and applicable to “[a]ll actions for any penalty
       or forfeiture of any penal statutes”?

We hold that the one-year statute of limitations found in section 13-80-103(1)(d), C.R.S.

(2017), does not apply to an action brought under section 10-3-1116(1) because section

10-3-1116(1) is not an “action[] for any penalty or forfeiture of any penal statute[]”

within the meaning of section 13-80-103(1)(d).      Therefore, we answer the certified

question in the negative.

                            I. Facts and Procedural History

¶2     Denish and Betty Jo Chastain held an insurance policy issued by the defendant,

American Family Mutual Insurance Company (“American Family”). On August 30,

2013, the Chastains submitted a claim to American Family for hail damage to their roof.

American Family inspected the Chastains’ home and on September 3, 2013, estimated

that the cost to repair the hail damage was less than the policy’s $1000 deductible. The

Chastains disagreed with American Family’s estimate and subsequently assigned their

claim against American Family to their contractor, the plaintiff in this case, Rooftop

Restoration, Inc. (“Rooftop”).



                                            3
¶3    On May 13, 2014, Rooftop sent American Family an estimate which indicated

that the cost to repair the hail damage was approximately $70,000. On May 28, 2014,

American Family re-inspected the Chastains’ home and increased its estimate of the

covered damage to approximately $4000.         American Family sent the Chastains a

payment for approximately $3000—$4000 less their $1000 deductible—on May 30, 2014.

¶4    More than one year later, on September 11, 2015, Rooftop filed a complaint

against American Family in Denver District Court asserting two claims for relief:

(1) breach of contract; and (2) unreasonable delay or denial of insurance benefits under

section 10-3-1116(1).   American Family removed the case to federal district court

pursuant to federal diversity jurisdiction and moved for partial summary judgment,

arguing that Rooftop’s statutory claim for unreasonable delay or denial of insurance

benefits under section 10-3-1116(1) was barred by the one-year statute of limitations

provided in section 13-80-103(1)(d). Recognizing that no Colorado appellate court had

addressed this issue, the district court denied the summary judgment motion as

premature and certified the question of law to this court. We accepted the certified

question.

                               II. Standard of Review

¶5    The certified question raises an issue of statutory interpretation, which we

review de novo. Goodman v. Heritage Builders, Inc., 2017 CO 13, ¶ 5, 390 P.3d 398, 401.

                                    III. Analysis

¶6    The one-year statute of limitations in section 13-80-103(1)(d) applies to “[a]ll

actions for any penalty or forfeiture of any penal statutes.”      Although we have


                                           4
previously used a three-part test for determining whether a particular cause of action

operates as a penalty, we now hold that that test is only appropriate, indeed only

necessary, where the intent of the legislature is not clear.       In this instance, after

consulting an intimately related provision of state law, we conclude that the legislature

did not intend for the one-year statute of limitations found in section 13-80-103(1)(d) to

apply to section 10-3-1116(1).

¶7      To reach this conclusion, we first consider our previously adopted three-part test

and discuss why it is not applicable here. Next we examine section 13-80-103(1)(d) and

conclude that the legislature intended that one-year statute of limitations to apply only

to a very specific family of legal actions, of which section 10-3-1116 is not a member.

                                   A. The Kruse Test

¶8      In Kruse v. McKenna, 178 P.3d 1198, 1201 (Colo. 2008), we distilled a three-part

test to determine whether a statute is penal from two prior decisions of this court:

Palmer v. A.H. Robins Co., 684 P.2d 187, 214 (Colo. 1984), and Carlson v. McCoy, 566

P.2d 1073, 1075 (Colo. 1977). Under the Kruse test, a statute is deemed penal if: (1) the

statute asserted a new and distinct cause of action; (2) the claim would allow recovery

without proof of actual damages; and (3) the claim would allow an award in excess of

actual damages. Kruse, 178 P.3d at 1201; Palmer, 684 P.2d at 214; Carlson, 566 P.2d at

1075.

¶9      American Family urges us to use the Kruse test to identify the character of

section 10-3-1116, rather than looking to the text of the statute of limitations and the




                                             5
associated accrual provision to determine the intent of the legislature. We decline to do

so. Those prior decisions failed to consider the intent of the legislature as evidenced by

the statutory text and the broader statutory scheme in violation of a core tenet of

statutory interpretation. See Goodman, ¶ 7, 390 P.3d at 401. Accordingly, we now hold

that the Kruse test is not applicable when the intent of the legislature is clear that a

particular cause of action is or is not governed by a certain statute of limitations.

Indeed, even if a statute satisfied the Kruse test, that result would be meaningless if the

legislature explicitly determined that the statute was not penal for the purposes of

applying the appropriate statute of limitations. And, because our primary task when

construing statutory text is to give effect to the legislature’s intent, id., it follows that if

the legislature even implicitly indicates that a statute is not penal for the purposes of

identifying the correct statute of limitations, then our judicially created test must yield

to the intent of the legislature.

¶10    Although our decision today does not apply the Kruse test, we note that it may

be useful in other contexts and do not necessarily abandon it entirely. E.g., Kruse, 178

P.3d at 1198 (considering whether a claim under the Telephone Consumer Protection

Act was assignable to a third-party).1 For example, the Kruse test may still prove useful


1 While the decision in Kruse faithfully applied the Kruse test as it then stood, it also
concluded that if a cause of action is penal in nature then it cannot be assigned to a
third-party. 178 P.3d at 1198 (assuming that section 13-20-101, C.R.S. (2003), the
survival statute, prohibits the survivability of “penalties”). That conclusion, however,
rested on a flawed reading of the survival statute, and we now abandon that
interpretation. Guarantee Trust Life Ins. Co. v. Estate of Casper, 2018 CO 43, ¶ 10, __
P.3d __.


                                               6
in cases where the intent of the legislature is not clear from the plain meaning of the

relevant statutory text when viewed in the context of the statutory scheme as a whole.

But because the intent of the legislature in this instance is clear, as discussed below, the

three-part test is irrelevant to our resolution of the certified question. Instead, we turn

to the text of the statutory scheme itself.

                       B. The One-Year Statute of Limitations

¶11    Section 13-80-103(1)(d) provides for a one-year statute of limitations for “[a]ll

actions for any penalty or forfeiture of any penal statutes.” But the statute does not

define “penal”; similarly, section 10-3-1116 does not identify itself as a particular class

of statute, penal or otherwise. Therefore, we must examine the statutory context to

determine whether the limitations period provided in section 13-80-103(1)(d) applies to

a claim for unreasonable delay or denial of insurance benefits under section 10-3-1116.

¶12    When we interpret a statute, our objective is to effectuate the legislature’s intent.

Goodman, ¶ 7, 390 P.3d at 401. We begin with the statutory language itself and give the

text its ordinary and commonly accepted meaning. Id. And we consider the statutory

text as a whole, giving “consistent, harmonious, and sensible effect to all of its parts and

avoiding constructions that would render any words or phrases superfluous or lead to

illogical or absurd results.” Pineda-Liberato v. People, 2017 CO 95, ¶ 22, 403 P.3d 160,

164. We aim to ascribe the same meaning to words or phrases used throughout a

statutory scheme, absent any manifest indication to the contrary. Sigala v. Atencio’s

Market, 184 P.3d 40, 45–46 (Colo. 2008).          If the statutory language is clear and




                                              7
unambiguous, we look no further. Hernandez v. Ray Domenico Farms, Inc., 2018 CO

15, ¶ 6, 414 P.3d 700, 702.

¶13    Integral to any statute of limitations is the time of accrual: the time when the

proverbial clock starts ticking and the statute of limitations begins to run. Without

some date of accrual, a statute of limitations never begins to run. As a result, the

legislature has established a handful of separate dates of accrual which apply in

particular circumstances. § 13-80-108, C.R.S. (2017). When establishing a statute of

limitations, the legislature necessarily connects the statute of limitations to one of the

dates of accrual laid out in section 13-80-108. See, e.g., §§ 13-80-102(1), -103(1).

¶14    The one-year statute of limitations found in section 13-80-103(1)(d) applies to

“actions for any penalty or forfeiture of any penal statutes.” We first consider the plain

statutory text. The term “penalty,” as commonly used, means “[p]unishment imposed

on a wrongdoer, usually in the form of imprisonment or fine; especially a sum of money

exacted as punishment for either a wrong to the state or a civil wrong (as distinguished

from compensation for the injured party’s loss).”2 Penalty, Black’s Law Dictionary (10th

ed. 2014).   The fact that a penalty, as defined above, is “usually in the form of

imprisonment or fine” indicates that a penalty is often something imposed by the

state—a quality that section 10-3-1116(1) lacks. However, the above definition does not




2 Under this definition, penalties clearly carry a punitive element. However, we note
that a cause of action is not necessarily a penalty, as that word is used by the legislature,
simply because it carries a punitive element.


                                              8
wholly foreclose that section 10-3-1116(1) could qualify as a penalty. Consequently, we

next consider the statutory text in the context of the statutory scheme as a whole.

¶15   In particular, we consider the interplay between the one-year statute of

limitations, section 13-80-103(1)(d), and the accrual statute, section 13-80-108, both of

which were repealed and reenacted in the same 1986 legislation. 1986 Colo. Sess. Laws

695. The accrual statute provides that “[a] cause of action for penalties shall be deemed

to accrue when the determination of overpayment or delinquency for which such

penalties are assessed is no longer subject to appeal.” § 13-80-108(9). A cause of action

under section 10-3-1116(1), however, never leads to a determination of overpayment or

delinquency. Thus, if such a claim is deemed a cause of action for penalties in the

meaning of section 13-80-108(9), the claim would never accrue, and the statute of

limitations would be rendered meaningless. Nothing in the statute suggests that the

legislature intended section 10-3-1116(1) to operate outside any statute of limitations.

Nor is there any “manifest indication” that the legislature intended the words “penal”

or “penalties” to carry unique meanings in different parts of the statutory scheme. See

Sigala, 184 P.3d at 45–46. Consequently, it appears that the legislature considered a

defining feature of a cause of action for penalties to be a determination of either

overpayment or delinquency and that defining feature is conspicuously absent from a

cause of action under section 10-3-1116(1), where an insured must only file a complaint

alleging that an insurer delayed or denied the payment of insurance benefits without a

reasonable basis.




                                            9
¶16   American Family argues that the accrual statute is not before us. But while the

certified question does not squarely address the accrual statute, we review statutory

language in context when determining the intent of the legislature, Pineda-Liberato,

¶ 22, 403 P.3d at 164, and the accrual statute is directly implicated by the one-year

statute of limitations found in section 13-80-103(1)(d). American Family also argues that

if the accrual statute is relevant to our decision, then we should determine that a claim

under section 10-3-1116(1) accrues under section 13-80-108(8), a catchall provision that

establishes the accrual date for a “cause of action for losses or damages not otherwise

enumerated” in the accrual statute. But were we to adopt American Family’s strained

reading of the statutory scheme, a cause of action under section 10-3-1116(1) would

simultaneously be both a cause of action “for penalty or forfeiture of any penal statute”

(under section 13-80-103(1)(d)) and a “cause of action for losses or damages” (under

section 13-80-108(8)). That is precisely the type of incongruous interpretation we avoid

when considering statutory text in the context of the broader scheme, especially

considering that both sections were modernized and reenacted in the same 1986

legislation. See Pineda-Liberato, ¶ 22, 403 P.3d at 164 (citing Doubleday v. People, 2016

CO 3, ¶ 19, 364 P.3d 193, 196). Accordingly, we hold that the one-year statute of

limitations found in section 13-80-103(1)(d) does not apply to a cause of action brought

pursuant to section 10-3-1116(1).




                                           10
                                     IV. Conclusion

¶17    We answer the certified question in the negative and return this case to the

district court for further proceedings.




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