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Ortiz v. Progressive Direct Insurance Co.

2024 COA 54. No. 23CA0292. Automobile Insurance Policies—Uninsured/Underinsured Motorist C overage—Default Judgment—Liability—Comparative Fault—Jury Instructions.

May 16, 2024

Camacho’s vehicle collided with Ortiz’s vehicle as Ortiz attempted to turn left into a parking lot. Camacho had only a learner’s permit, she was not supervised by an adult, and she was uninsured. Ortiz had an automobile insurance policy with Progressive Direct Insurance Company (Progressive) that included uninsured motorist (UM) coverage. Ortiz applied for UM benefits under his policy, and Progressive denied his claim, maintaining that Ortiz was more than 50% at fault for the collision. Ortiz sued Camacho for negligence and negligence per se and included Progressive as a codefendant, asserting claims for breach of contract, common law insurance bad faith, and unreasonable delay and denial of insurance benefits. Camacho failed to respond, and Ortiz moved for entry of a clerk’s default. Both Ortiz’s motion and the district court’s order granting the motion and entering default against Camacho were served on Progressive. Progressive did not file a response to either the motion or the corresponding order, though it answered Ortiz’s complaint. In a subsequent case management order (CMO), Progressive generally denied Ortiz’s claims against it and listed several affirmative defenses that it intended to assert, which did not include comparative fault. Ortiz later moved for partial summary judgment against both defendants. The district court denied Ortiz’s motion as to Camacho but declined to permit Progressive to contest Camacho’s liability, reasoning that the default established Camacho’s liability for purposes of moving forward with default judgment. However, Progressive participated in the damages hearing, which addressed causation and damages pertaining to Camacho. The district court awarded Ortiz $20,000 of the $100,000 that he requested for noneconomic damages and damages for permanent physical impairment, and Progressive then paid Ortiz the $86,958.66 total default judgment entered in favor of Ortiz against Camacho.

Progressive and Ortiz then proceeded to trial on the common law insurance bad faith and statutory unreasonable delay and denial of insurance benefits claims. Progressive conceded that Camacho was found liable for the crash but argued that her liability was the result of a “technical default” and that Progressive initially refused to pay UM benefits because it reasonably determined that Ortiz was more than 50% at fault. A jury found for Ortiz on both claims, awarding him $76,493.53 for statutory unreasonable delay and denial of insurance benefits and $140,000 for common law insurance bad faith. Progressive moved for a new trial based on alleged inconsistencies on the court’s orders, which purportedly identified comparative fault as an issue to be tried in the case. The district court denied the motion, noting that Progressive’s statement of the issues in the CMO did not include the particularized showing required under State Farm Mutual Automobile Insurance Co. v. Brekke, 105 P.3d 177 (Colo. 2004), regarding the basis for asserting such a defense, and Progressive did not attempt to make the required showing until nearly a year after default had already been entered against Camacho. The district court subsequently entered final judgment.

On appeal, Progressive contended that the district court erred in determining the effect of Camacho’s default. Progressive maintained that Ortiz had the burden to prove that he was entitled to UM benefits by showing that he was legally entitled to recover damages, and that he failed to do this because Camacho’s default did not establish that she was at fault for the accident. However, this argument is contrary to Brekke, which makes clear that Ortiz was legally entitled to recover damages against Camacho as a result of Camacho’s default. Therefore, the district court did not err on determining that Camacho’s default invoked Ortiz’s UM coverage.

Progressive also argued that the district court misconstrued and misapplied Brekke when it barred Progressive’s attempt to contest Camacho’s liability through an affirmative defense of comparative fault against Ortiz. Brekke required Progressive to set forth specifically the defenses it intended to raise as soon as practicable. The court concluded that Progressive’s failure to respond to Ortiz’s allegations against Camacho, its general denials of responsibility, its vague assertion that comparative fault might in some unspecified way be involved in the litigation, and its failure to adequately raise the issue of comparative fault until almost a year after default was entered against Camacho were insufficient for Progressive to show the necessity of its participation in the liability determination. The court therefore acted consistently with Brekke when it assessed the need for Progressive’s participation in the liability determination based on its specific insurer-insured relationship and Progressive’s insufficient pleading of its comparative fault defense. And, like the Brekke court, the district court sought to balance the parties’ interests and compensate for Progressive’s exclusion from the liability determination by allowing Progressive to participate in the damages hearing and proceed to trial on Ortiz’s claims against it. Accordingly, the district court correctly applied Brekke when it ruled that Progressive could not contest liability because it had not informed the court and its insured of its intent to do so as soon as was practicable.

The court of appeals declined to address, as unpreserved, Progressive’s assertion that the district court erred when it failed to reconcile alleged inconsistencies between the CMO and orders issued later in the proceedings.

Lastly, Progressive argued that the district court incorrectly told the jury Camacho was found to be at fault for the accident and that the jury instructions were deficient because they did not contain an instruction on comparative fault. Here, however, the jury instructions accurately informed the jury of the governing law, and the issue of comparative fault was not before the jury. Accordingly, the district court did not abuse its discretion.

The judgment was affirmed and the case was remanded with instructions to determine the issue of appellate attorney fees and costs.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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