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State Farm Mutual Automobile Insurance Co. v. Brekke12/6/2004
7). Because a damages hearing will be held regardless of the participation of the insurance provider, its participation in the damages hearing has a lesser impact on the dilution of UM coverage under section 10-4-609. By contrast, permitting the insurance provider to contest issues of liability or causation would require a separate hearing in circumstances where such a hearing is not otherwise required. Because holding an additional hearing to a greater extent impacts the dilution of UM coverage, such a hearing on liability or causation will be granted only when it clearly appears that the legitimate defenses of the insurance provider will not be presented to the court without such an additional hearing.
When making these determinations, the district courts have the ability to structure the role of the insurance provider appropriately based on the courts' broad power to consolidate claims, determine joinder, and determine misjoinder. See C.R.C.P. 18, 19, 20, and 21. As in similar questions on the permissive joinder of parties and court determinations as to joint or separate trials, the decision on the proper role for the insurance provider in the litigation falls within the sound discretion of the district court. See Sutterfield v. District Court, 165 Colo. 225, 231, 438 P.2d 236, 240 (1968); Moseley v. Lamirato, 149 Colo. 440, 447-48, 370 P.2d 450, 455 (1962); Willy v. Atchison, T. & S. F. Ry. Co., 115 Colo. 306, 321, 172 P.2d 958, 965 (1946). As we noted in Sutterfield, an abuse of discretion here occurs where the court's failure to properly order the proceedings virtually assures prejudice to a party. 617 P.2d at 558.
C. APPLICATION
We now examine the actions of the district courts in these two cases to determine whether they abused their discretion when they denied State Farm's requests for jury trials on the negligence claims and only allowed State Farm to participate in the damages hearings. The district courts in these cases did not have the benefit of our opinion, yet both courts treated the issues substantially as we direct in this opinion.
Brekke filed suit in September of 1998, about three years after the accident that injured her. State Farm did not allege that Brekke failed to fulfill her contractual obligations. More importantly, State Farm conceded that it was not challenging the liability of the uninsured motorist. State Farm had ample opportunity to raise legitimate defenses to Garcia's liability, but asked to contest only the amount of Brekke's damages.
The court acknowledged State Farm's right to a jury trial on its contract claims while denying it a jury trial on the negligence claim against Garcia. At the damages hearing, the court allowed State Farm to challenge Brekke's evidence, cross-examine Brekke's witnesses, and offer its own evidence.
In short, the district court in Brekke's case provided precisely the protection of State Farm's interests that we anticipate district courts will provide for the rights of an insurance provider based on the principles explained in this opinion. Specifically, the court allowed State Farm to participate only in the damages portion of the default judgment against Garcia because State Farm only challenged the amount of damages. Accordingly, the district court did not abuse its discretion.
In Shaffer's case, the court also bifurcated consideration of the contract claims against State Farm from the negligence claims against Rodriguez. It reserved State Farm's contract claim for later trial. State Farm did not, however, formally waive its right to contest Rodriguez's liability.
When Shaffer moved for a default judgment against Rodriguez on the tort claims,
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