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                                                        ADVANCE SHEET HEADNOTE
                                                                 September 10, 2018

                                        2018 CO 68

No. 17SC247, Munoz v. Am. Fam. Ins. Co.—Prejudgment Interest—Statutory
Interpretation

       In this case, the supreme court considers whether an insured is entitled to collect

prejudgment interest when he settles an uninsured motorist claim with his insurer. We

hold that, under the plain language of the prejudgment interest statute, § 13-21-101,

C.R.S. (2017), an insured is entitled to prejudgment interest only after (1) an action is

brought, (2) the plaintiff claims damages and interest in the complaint, (3) there is a

finding of damages by a jury or court, and (4) judgment is entered. Because Munoz did

not meet all of these conditions, this court concludes he is not entitled to prejudgment

interest.
                    The Supreme Court of the State of Colorado
                    2 East 14th Avenue • Denver, Colorado 80203

                                      2018 CO 68

                         Supreme Court Case No. 17SC247
                       Certiorari to the Colorado Court of Appeals
                        Court of Appeals Case No. 16CA416

                                      Petitioner:

                                     Joel Munoz,

                                           v.

                                     Respondent:

                   American Family Mutual Insurance Company.

                                 Judgment Affirmed
                                       en banc
                                  September 10, 2018


Attorneys for Petitioner:
Franklin D. Azar & Associates, PC
Patricia A. Meester
Keith R. Scranton
       Aurora, Colorado

Levy Law, P.C.
Marc R. Levy
      Englewood, Colorado

Attorneys for Respondent:
Campbell Latiolais & Averbach, LLC
Clifton J. Latiolais, Jr.
       Denver, Colorado

Attorneys for Amici Curiae Colorado Civil Justice League and Colorado Defense
Lawyers Association:
Taylor Anderson, LLP
Lee A. Mickus
       Denver, Colorado

Attorneys for Amicus Curiae The Colorado Trial Lawyers Association:
The Gold Law Firm, LLC
Michael J. Rosenberg
      Greenwood Village, Colorado




JUSTICE BOATRIGHT delivered the Opinion of the Court.

                                        2
¶1       In this matter, we consider whether an insured is entitled to collect prejudgment

interest when he settles an uninsured motorist claim (“UM claim”) with his insurer in

lieu of filing a lawsuit and proceeding to judgment.1 We hold that, under the plain

language of the prejudgment interest statute, § 13-21-101, C.R.S (2017), an insured is

entitled to prejudgment interest only after (1) an action is brought, (2) the plaintiff

claims damages and interest in the complaint, (3) there is a finding of damages by a jury

or court, and (4) judgment is entered.         Because Munoz did not meet all of these

conditions, he is not entitled to prejudgment interest. We therefore affirm the court of

appeals.

                              I. Facts and Procedural History

¶2       After Joel Munoz was injured in a car crash with an uninsured motorist, he filed

a UM claim with his insurer, American Family Insurance Company (“American

Family”). During settlement negotiations, Munoz asked American Family to include

prejudgment interest in its offer, but it declined to do so, stating that because

prejudgment interest is required only after a judgment, it would not consider interest in

settlement negotiations.




1   Specifically, we granted certiorari to review the following issue:
         1. Whether, pursuant to section 10-4-609(4), C.R.S. (2016), an insured is
            “legally entitled” to prejudgment interest under section 13-21-101(1),
            C.R.S. (2016), when the insured chooses to settle an uninsured motorist
            claim with his insurer in lieu of filing a lawsuit and proceeding to
            judgment.

                                               3
¶3     American Family ultimately offered Munoz $10,008 to settle his claim, not

including prejudgment interest. Munoz stated that he would accept the offer, but again

asked American Family to add prejudgment interest, suggesting that he would

otherwise sue. American Family did not consider that a true acceptance, and the parties

were unable to resolve their dispute.

¶4     Munoz then sued.      In his complaint, he alleged that American Family had

breached its contract by refusing to pay all that he was entitled to under the uninsured

motorist policy, which he viewed as including prejudgment interest.          Munoz also

alleged that American Family did not have a reasonable basis to deny him this benefit

and that it had acted in bad faith by compelling him to litigate his claims to recover his

full benefits.

¶5     Munoz then filed a motion for determination of law, asking the court to decide

whether an insurance company must pay prejudgment interest on money received from

a settlement. Munoz argued that according to this court’s opinion in USAA v. Parker,

200 P.3d 350 (Colo. 2009), American Family was required to pay prejudgment interest

on its settlement offer. Parker stated that the uninsured motorist statute, § 10-4-609(4),

C.R.S. (2017), requires that an insured be able to recover the same amount of damages

from an insurance company as he would from a direct action against the tortfeasor. 200

P.3d at 353. Because prejudgment interest is an element of damages, Munoz reasoned

that he should be able to recover interest from the insurance company.

¶6     The trial court disagreed. It concluded that American Family was not required to

include prejudgment interest in any settlement offer because the claim did not result in

                                            4
a judgment through litigation. In so doing, the trial court distinguished Parker, finding

that it did not address whether an insurer must pay prejudgment interest on a

settlement, and ruling that requiring an insurer to do so would be contrary to the

uninsured motorist statute and lead to “an inconsistent and bizarre result.”2

¶7     Munoz then appealed the trial court’s determination of law. The court of appeals

agreed with the trial court, holding that insurance companies are not required to pay

prejudgment interest on a settlement. Munoz v. Am. Family Ins. Co., 2017 COA 25, ¶ 1,

__ P.3d __.    The division looked to the plain language of section 13-21-101 and

concluded that a court’s authority to award prejudgment interest exists only “if a

plaintiff has lawfully requested prejudgment interest, there is a jury verdict or court

finding that the plaintiff has damages, and a judgment is entered.” Id. at ¶ 10. Because

those prerequisites were not met here, the court of appeals concluded that Munoz was

not entitled to prejudgment interest. See id. at ¶¶ 10–13. The division also agreed with

the trial court’s interpretation of Parker, stating that while some language from that

opinion could be construed to support Munoz’s position, the opinion read as a whole

does not imply that an insured may collect prejudgment interest without first filing an

action and proceeding to judgment. Id. at ¶¶ 11–12.

¶8     Munoz filed a petition for certiorari, which we granted.




2 After the trial court’s ruling, the parties settled their remaining claims, understanding
that the settlement did not resolve the dispute over prejudgment interest.

                                            5
                                II. Standard of Review

¶9     We review questions of law and statutory interpretations de novo. Goodman v.

Heritage Builders, Inc., 2017 CO 13, ¶ 5, 390 P.3d 398, 401. In interpreting a statute, we

attempt to discern the General Assembly’s intent first by looking to the text of the

statute and giving words and phrases their plain and ordinary meaning. State Farm

Mut. Auto. Ins. Co. v. Fisher, 2018 CO 39, ¶ 12, 418 P.3d 501, 504. Only if the language

is ambiguous do we then resort to other interpretive rules of statutory construction; if

the language is clear, we apply it as written. Id.

                                      III. Analysis

¶10    In deciding whether Munoz is entitled to prejudgment interest, we first turn to

the text of the applicable statute. We conclude that the plain language of section

13-21-101 requires that certain conditions be met for a party to receive prejudgment

interest, and because Munoz did not meet these conditions, he is not entitled to

prejudgment interest.

¶11    Section 13-21-101 governs whether and when a party is entitled to collect

prejudgment interest.     It requires that the court add prejudgment interest to the

damages claimed by the plaintiff and assessed by the fact-finder:

              In all actions brought to recover damages for personal
              injuries . . . it is lawful for the plaintiff in the complaint to
              claim interest on the damages claimed from the date the
              action accrued. When such interest is claimed, it is the duty
              of the court in entering judgment for the plaintiff in the
              action to add to the amount of damages assessed by the
              verdict of the jury, or found by the court, interest on such
              amount . . . .


                                             6
§ 13-21-101(1) (emphases added). As the court of appeals noted, there are several

clauses in the statute indicating that prejudgment interest applies only after a judgment.

The following conditions must be met: (1) an action must be brought, (2) the plaintiff

must claim damages and interest in the complaint, (3) there must be a finding of

damages by a jury or the court, and (4) judgment must be entered. See Munoz, ¶ 10.

The statute is not ambiguous.      It requires that all four conditions be satisfied for

prejudgment interest to be awarded.

¶12    A pre-claim settlement does not satisfy any of these four conditions. When

parties reach a settlement prior to litigation, no action is brought, no damages or

interest are claimed in a complaint, no finding of damages is made by a jury or court,

and no judgment is entered. Such was the case here when American Family offered the

settlement; none of the conditions had been met, and so American Family was not

required to include prejudgment interest. And while Munoz has now filed an action

and demanded damages and interest in his complaint—thereby technically meeting the

first two requirements—he did so to determine whether he was entitled to prejudgment

interest on the settlement offered rather than to obtain a judgment on his underlying

claim. Thus, he has not met the required conditions to be entitled to prejudgment

interest.

¶13    This reading of the statute is consistent with what we have previously held to be

its purpose: “[T]o compensate the plaintiff for the time value of the amount of his or her

judgment.” Morris v. Goodwin, 185 P.3d 777, 780 (Colo. 2008); see also Seaward Constr.

Co. v. Bradley, 817 P.2d 971, 975 (Colo. 1991) (“The interest is compensatory and is

                                            7
awarded to indemnify the plaintiff for the loss of earnings on that money due to its

delayed payment.” (quoting Coale v. Dow Chem. Co., 701 P.2d 885, 890 (Colo. App.

1985))). When deciding whether to pursue a settlement or proceed to trial, parties must

weigh the benefit of an earlier resolution and the risk of going to trial. Judgments as a

result of a trial can take a long time to obtain, so the General Assembly has decided to

compensate a party for that waiting period. Though there is also some waiting period

before resolution by settlement, if the General Assembly had wanted to award interest

for that time period, it would have written the statute to reflect that outcome. It did not.

¶14    While Munoz attempts to argue otherwise, we find those arguments

unconvincing. Munoz first points to two cases—Morris and Seaward—where we held

that section 13-21-101 was ambiguous, urging us to do the same here. In those cases,

however, we interpreted section 13-21-101 in materially different contexts.

¶15    In Morris, we held that the statute was ambiguous as to how to calculate

prejudgment interest, not as to when a party was entitled to prejudgment interest. 185

P.3d at 779–80.     In Seaward, we considered whether the court should award

prejudgment interest on punitive damages. 817 P.2d at 975. We found that because the

statute did not expressly say whether prejudgment interest applies to punitive

damages, and because language in the statute could be construed either way, the statute

was ambiguous on that point. See id. at 974 (highlighting that the language “personal

injuries sustained” and “damages claimed” suggests interest is available for only

compensatory damages, but that the language “damages assessed by the verdict of the

jury” suggests interest is available for punitive damages as well (emphases added)).

                                             8
But because both punitive damages and compensatory damages presuppose litigation

and judgment, the ambiguity identified in Seaward is irrelevant to our interpretation

here.

¶16     Munoz also relies on Parker, where we considered which statute a court should

calculate prejudgment interest under when an insured succeeds in a UM claim against

his insurer. 200 P.3d at 353. In that case, Parker was injured in an accident by a

motorist who could not completely cover his damages. Id. at 354. He filed a UM claim

with his insurance company and ultimately received a judgment against the company

at trial. Id. A dispute then arose as to whether the insurance company owed Parker

prejudgment interest under the personal injury statute, calculated at nine percent per

annum, see § 13-21-101(1), or the wrongful withholding statute, calculated at eight

percent per annum, see § 5-12-102(1)(b), C.R.S. (2017). Parker, 200 P.3d at 354–56.

¶17     In answering this question, we stated that the uninsured motorist statute entitles

an insured to recover all the damages that he could recover in an action directly against

the tortfeasor, and that prejudgment interest is a form of damages. Id. at 358. We

concluded, therefore, that an insured may recover prejudgment interest against an

insurer. See id. Following this reasoning, we held that because prejudgment interest in

a direct action against a tortfeasor is calculated under the personal injury statute at nine

percent per annum, so too must prejudgment interest be calculated in a case against an

insurer. Id. at 359. Otherwise, an insured would recover less in a case against an

insurer than in one directly against the tortfeasor, in violation of the uninsured motorist

statute. See § 10-4-609(4).

                                             9
¶18   Munoz extrapolates the holding and language in Parker to mean that he is

entitled to prejudgment interest against his insurer in this case. But Parker did not hold

that an insured is entitled to collect prejudgment interest when he settles a claim with

his insurer. Instead, it pertained to collecting prejudgment interest from an insurer only

after obtaining a judgment against said insurer. See Parker, 200 P.3d at 354 (explaining

that the case against the insurer was tried to a jury, and after a mistrial and stipulation

to a court decision, the trial court awarded the insured a judgment including damages).

Munoz also argues that without prejudgment interest he would recover less against his

insurer than in a direct action against the tortfeasor (just like the plaintiff in Parker).

But again, Munoz is comparing a judgment to a settlement. Thus, the outcomes could

be different regardless of whether they were against a tortfeasor or an insurer. Under

the proper comparison, Munoz is actually in the exact same position as a plaintiff who

sues a tortfeasor. Neither receives prejudgment interest if they settle, and both may

receive prejudgment interest if a jury or court awards a judgment in their favor.

¶19   Hence, an insured is not entitled to collect prejudgment interest against an

insurer on a settlement.

                                    IV. Conclusion

¶20   The text of section 13-21-101 is unambiguous, and we are unpersuaded by

Munoz’s arguments in the alternative.       As a result, we hold that under the plain

language of section 13-21-101, an insured is entitled to prejudgment interest only after

(1) an action is brought, (2) the plaintiff claims damages and interest in the complaint,

(3) there is a finding of damages by a jury or the court, and (4) judgment is entered.

                                            10
Because Munoz did not meet all of these conditions, he is not entitled to prejudgment

interest. We therefore affirm the court of appeals.




                                            11
