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Farmers Insurance Exchange and American States Insurance Co. v. District Court for Fourth Judicial District11/22/1993
her attorney can decide whether her claim is worth more than $25,000 and whether they should go to trial if they believe Farmers settlement offer is too low.
Neely cites several Colorado cases in which insurance companies and insured persons have invoked the Uniform Declaratory Judgments Law to determine whether coverage existed or to ascertain the liability limits of an insurance policy. See, e.g., American Family Mut. Ins. Co. v. Bowser, 779 P.2d 1376 (Colo. App. 1989) (involving a declaratory judgment action filed by an insurance company after the insured made a claim under the policy, and the insurance company asserted it was not liable to pay for fire damage when there was proof of arson by the insured); O'Herron v. State Farm Mut. Auto. Ins. Co., 156 Colo. 164, 397 P.2d 227 (Colo. 1964) (involving a declaratory judgment action filed against the plaintiff by the defendant's insurance company, after the plaintiff had obtained a judgment against the defendant and the insurance company denied liability). However, these cases arose only after the insured has made a demand on the insurance company to defend a lawsuit or to pay a claim or judgment. Neely implies that we should extend these holdings to afford standing to a plaintiff in her position. In these cases, however, a clear controversy existed between the litigants, and there were legally protected, often contractual, interests at stake. We decline to extend them to confer standing to a plaintiff in Neely's situation, who lacks a judgment against the defendant and who has no legal rights against the insurance company.
The trial court relied on Beeson v. State Automobile and Casualty Underwriters, 32 Colo. App. 62, 508 P.2d 402, aff'd on other grounds, 516 P.2d 623 (Colo. 1973), to support its Conclusion that Neely has standing to bring a declaratory judgment action. We do not believe that Beeson should be applied in this case and conclude that the trial court erroneously relied on Beeson to resolve the standing issue. In deciding Beeson, neither this court nor the court of appeals addressed the question of whether the injured child had standing. The issue was not litigated. Instead, all of the parties, including the insurance companies, stipulated that they wanted the trial court to decide the issue of which policy would cover the injury to the child. Here, the insurance companies are not willing participants in the declaratory judgment action. To the extent that Beeson can be read to allow a plaintiff to pursue a declaratory judgment action against the insurance company of a defendant against whom she has not obtained a judgment of liability, we disapprove of it.
IV.
A trial court may not provide declaratory relief to a plaintiff who attempts to litigate the question of the limits of an alleged tortfeasor's insurance coverage prior to judgment against the tortfeasor. Patricia Neely does not have standing to bring a declaratory judgment action against the insurers of Earl Bryant. Until her claim is reduced to judgment, she has no legally protected rights or cognizable interest vis-a-vis the insurance companies. Because Neely does not have standing to bring the declaratory judgment action, we hold that the trial court abused its discretion in assuming jurisdiction and not dismissing the declaratory judgment action. The rule is made absolute.
JUSTICE ERICKSON does not participate.
Disposition
RULE MADE ABSOLUTE
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