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Union Insurance Company v. Houtz11/7/1994
We granted certiorari to review an order by the court of appeals in Houtz v. Union Insurance Co., 865 P.2d 847 (Colo. App. 1993), which reversed summary judgment in favor of Union Insurance Company (Union). The court of appeals held that Richard Houtz (Houtz) and Robert Jeffrey Etheridge (Etheridge) (the insureds) were entitled to $300,000 from Union, an amount representing the limit of liability under Union's uninsured/underinsured (UM/UIM) motorist coverage. We hold that the insureds are entitled to $60,000 in UM/UIM motorist coverage, in accordance with the unambiguous language in Union's policy. We further hold that Union's method of calculating underinsurance benefits, by aggregating amounts received by both injured insureds, does not violate public policy. We therefore reverse the judgment of the court of appeals and remand for further proceedings consistent with this opinion.
I.
The parties stipulated to the relevant facts. On February 24, 1988, the insureds were loading a disabled vehicle onto a transport trailer along the shoulder of Interstate 70. The insureds were standing behind the trailer when a vehicle driven by Thomas Eisinger swerved onto the shoulder and struck them. Both men suffered extensive injuries. Houtz's right leg was severely fractured, and his left leg was amputated. Etheridge suffered a head injury and both of his legs were fractured. The parties agreed that Eisinger's negligence was the cause of the accident, and that the insureds suffered damages equal to or exceeding $300,000 each.
Eisinger's vehicle was insured under an automobile liability policy issued by Farmers Insurance Exchange (Farmers). The Farmers policy provided liability coverage of up to $100,000 per person and $300,000 per occurrence. The insureds made claims against Farmers, Eisinger, and other individuals alleged to have been legally responsible for Eisinger's negligence. The insureds settled their claims against those parties, and received a total of $240,000. The payment in settlement was divided between the two insureds: Houtz received $127,500, and Etheridge received $112,500. The settlement amount included $100,000 each to Houtz and Etheridge under the Farmers policy.
The vehicle which was hauling the transport trailer was insured under a policy issued by Union to Anytime Auto Service Corporation. The Union policy provided UM/UIM motorist coverage with a liability limit of $300,000.
In an effort to receive additional compensation for their injuries, the insureds made a claim against Union under the UM/UIM motorist provision of the policy, arguing that Union was liable to the limit of liability of $300,000. The insureds argued that, under the language of the policy, the amount of underinsurance should be calculated separately for each injured insured, and that Union should pay them the collective amount by which they were underinsured, up to the $300,000 limit of liability. Under the insureds' calculation, since Houtz received $127,500 from the tortfeasor and the tortfeasor's carrier, Houtz was still underinsured by $172,500. Similarly, Etheridge argued that he was underinsured by $187,500, the difference between what he had received, $112,500, and the limit of liability under Union's UM/UIM motorist coverage. The insureds argued that they were underinsured by a total of $360,000. Since the limit of liability was $300,000, they argued that they were entitled to the entire $300,000.
Union took the position that the policy only required it to pay $60,000 in UM/UIM motorist benefits. Union arrived at this figure by adding the entire settlement amount received by both insureds from Farmers and the tortfeasor, for a total
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