The Colorado Supreme Court decided November 22, 2010, that the Colorado Court of Appeals committed error when it upheld the trial court’s grant of summary judgment (a decision on the law without a trial) in favor of an insurance company in a bad faith case brought by a severely injured vehicle passenger.
The vehicle’s driver lost control, seriously injuring five passengers,
including one passenger who was rendered paraplegic (complete paralysis
form the waist down) in the accident. The driver’s insurance provided
coverage of $100,000 per person and $300,000 per accident. The company
deposited the full $300,000 with the court and filed what is known as
an interpleader case, naming all of the injured passengers as defendants
and asking the court to decide how the insurance proceeds should be apportioned.
The insurance company settled with four of the injured passengers for
a total of $200,000. Because the insurance company could not serve the
remaining passenger, who resided in Florida, with legal process, the court
had no jurisdiction to litigate the nonresident’s claim.
The nonresident passenger, claiming that the insurance company refused
in bad faith to settle with her for the $100,000 in remaining insurance
coverage, then sued the driver. The insurance company undertook defense
of the case, as it was legally obligated to do.
In a later post (Part 2 – 12/02/2010), I will elaborate on the outcome
of this case.