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Bowen v. Farmers Insurance Exchange5/2/1996
In this action for recovery of underinsured motorist (UIM) benefits, plaintiff, Janice Bailey Bowen, challenges the amount of prejudgment interest that the trial court awarded in her favor and against defendant, Farmers Insurance Exchange (Farmers). We reverse and remand with directions.
On May 6, 1989, Bowen was injured in an automobile accident. On February 14, 1992, she made demand on Farmers for UIM benefits under the policy covering the car she was driving at the time of the accident. With Farmers' consent, Bowen settled her liability claim against the underinsured driver on August 5, 1993.
In December of 1993, Farmers stipulated as to the liability of the other driver and the amount of Bowen's damages. Thereafter, a dispute arose as to the amount of UIM benefits to which plaintiff was entitled.
Bowen brought this action against Farmers for breach of contract and declaratory judgment and sought prejudgment interest pursuant to § 5-12-102(1), C.R.S. (1992 Repl. Vol. 2). The trial court awarded Bowen prejudgment interest calculated from the date of the stipulation as to liability and damages.
In this appeal, Bowen contends that the trial court erred in awarding interest from the date of the stipulation rather than from the date of the accident. In the alternative, she argues that she was entitled to interest from the date Farmers should have informed her of the available coverage, or from the date she demanded payment of UIM benefits under the policy. We agree that the trial court erred in calculating prejudgment interest.
Section 5-12-102(1), which governs the award of prejudgment interest here, states, in pertinent part:
(a) When money or property has been wrongfully withheld, interest shall be an amount which fully recognizes the gain or benefit realized by the person withholding such money or property from the date of the wrongful withholding to the date of payment or to the date judgment is entered, whichever occurs first.
(b) Interest shall be at the rate of eight percent per annum . . . for all moneys . . .
after they are wrongfully withheld or after they become due to the date of the payment or to the date judgment is entered, whichever occurs first. (emphasis added)
The purpose of § 5-12-102(1) is to discourage persons responsible for the settlement of claims from stalling or delaying payment until final settlement or judgment. Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362 (Colo. 1989). The statute should be given a broad, liberal interpretation. Westfield Development Co. v. Rifle Investment Associates, 786 P.2d 1112 (Colo. 1990).
Prejudgment interest is available under the statute from the time a claim accrues, and the prevailing party is not required to establish tortious conduct on the part of the losing party in order to recover. In an action on a contract, the non-breaching party is entitled to recover interest from the time of the breach. Mesa Sand & Gravel Co. v. Landfill Inc., supra.
Under the policy at issue here, UIM coverage was coextensive with uninsured motorist (UM) protection. The UM provision stated, in pertinent part:
We will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured person. . . .
Determination as to whether an insured person is legally entitled to recover damages or the amount of damages shall be made by agreement between the insured person and
Page 1 2 3 4 Colorado Personal Injury Attorneys
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