v. LM General Insurance Company

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
October 15, 2020

2020COA147

No. 20CA0965, Trudgian v. LM General Insurance Company —
Insurance — Motor Vehicles — Claims Practices for Property
Damage; Regulation of Vehicles and Traffic — Registration
Upon Transfer

In this C.A.R. 4.2 interlocutory appeal, the division analyzes

the intersection of section 10-4-639(1), C.R.S. 2019, which states

that insurers must pay an insured registration fees “associated with

the total loss of a motor vehicle,” with section 42-3-115(1), C.R.S.

2018, which states that a vehicle’s owner may receive credit for

registration fees from the Division of Motor Vehicles for a cancelled

registration. The insurer asserts that, when read together, the two

statutes authorize it to wait to see if the owner will receive a credit

before it is required to pay the insured the registration fees. The

division disagrees and concludes that the insurer is required to pay

the registration fees.
COLORADO COURT OF APPEALS 2020COA147

Court of Appeals No. 20CA965
City and County of Denver District Court No. 19CV30732
Honorable Martin F. Egelhoff, Judge

Barbara Trudgian,

Plaintiff-Appellee,

v.

LM General Insurance Company,

Defendant-Appellant.

ORDER AFFIRMED AND CASE
REMANDED WITH DIRECTIONS

Division A
Opinion by CHIEF JUDGE BERNARD
Tow and Hawthorne*, JJ., concur

Announced October 15, 2020

Franklin D. Azar & Associates, P.C., Michael D. Murphy, Alexander Beale,
Aurora, Colorado, for Plaintiff-Appellee

Lewis Roca Rothgerber Christie LLP, Holly C. White, Lindsey C. Herzog, Denver,
Colorado, for Defendant-Appellant

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1 As is pertinent to this C.A.R. 4.2 interlocutory appeal, section

10-4-639(1), C.R.S. 2019, states that an insurer “shall” pay

registration fees when they are “associated with the total loss of a

motor vehicle.” To resolve this appeal, we must decide whether an

insurer is required to pay an insured such registration fees even

though the insured might get a credit from the Department of Motor

Vehicles, which we shall call “the department,” for the same fees

when the insured registers a replacement vehicle. We conclude that

the insurer is required to pay the registration fees.

I. Background

¶2 The named plaintiff in this putative class action, Barbara

Trudgian, whom we shall call “the insured,” bought auto insurance

from defendant, LM General Insurance Company, which we will call

“the insurer.” She paid registration fees for the vehicle, which was

later damaged in an accident.

¶3 The insurer decided that the vehicle was a total loss, so it gave

the insured an itemized settlement statement. But the insured

thinks that the insurer violated section 10-4-639(1) because (1) the

settlement statement did not include reimbursement for any

registration fees that she had paid for the vehicle for the period

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following the accident; and (2) the insurer has never reimbursed her

for those fees.

¶4 So the insured filed this lawsuit, which includes claims for

statutory bad faith, common law bad faith, breach of contract, and

a request for a declaratory judgment. Relying on C.R.C.P. 56(h), the

insurer filed a motion asking the trial court to decide, as a matter of

law, that section 10-4-639(1) does not require it to reimburse the

insured for any credit that the department gave or would give the

insured for registration fees that the insured had paid on the

vehicle during the period after the time of the accident.

¶5 The court disagreed with the insurer, concluding that section

10-4-639(1) “[u]nambiguously states that an insurer ‘shall’ pay

registration fees” associated with the total loss of a vehicle and that

this statute does not contain any “exception [to] or limitation on the

insurer’s statutory duty.” The court explained that the insured’s

contention that its duty to pay is “conditioned upon whether or not

a discretionary credit is applied or ‘will be applied’ at some point in

the future” is both “inconsistent with the mandatory duty”

established by section 10-4-639(1) and “in conflict with” the

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insurer’s “overarching obligation to pay claims in a reasonable

time.”

¶6 The court later certified its order for interlocutory appeal

under C.A.R. 4.2. We granted the petition because we concluded

that it meets the requirements for an interlocutory appeal. We now

affirm the court’s order.

II. Standard of Review and Principles of Statutory Interpretation

¶7 This appeal requires us to interpret statutes. We review such

issues de novo. People v. Ortiz, 2016 COA 58, ¶ 15.

¶8 When we interpret a statute, we must ascertain and give effect

to the legislature’s intent. Colo. Dep’t of Revenue v. Creager

Mercantile Co., 2017 CO 41M, ¶ 16. In doing so, “[w]e give effect to

words and phrases according to their plain and ordinary

meaning[s].” Denver Post Corp. v. Ritter, 255 P.3d 1083, 1089 (Colo.

2011).

¶9 If a statute’s language is clear, we apply it as the legislature

wrote it. Id. “[W]e will not interpret a statute to mean that which it

does not express.” Carruthers v. Carrier Access Corp., 251 P.3d

1199, 1204 (Colo. App. 2010).

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III. Analysis

¶ 10 There are two statutes at the core of this case. The first is

section 10-4-639(1), which states that “[a]n insurer shall pay . . .

any . . . registration fee associated with the total loss of a motor

vehicle.” The second is section 42-3-115(1), C.R.S. 2018, which, at

the time of the accident, specified that

• a vehicle’s owner, when “applying for registration in such

owner’s name during the same registration period of

another motor vehicle”;

• “may receive credit upon fees due for such new

registration for such portion of the fees paid for the

cancelled registration” (emphasis added);

• “as the department may determine to be proper and

proportionate to the unexpired part of the original term of

registration.”

¶ 11 According to the insurer, section 10-4-639(1) does not require

it to reimburse the insured for registration fees that the department

has or will credit to her under section 42-3-115(1), C.R.S. 2018. As

a result, the insurer continues, it cannot “calculate what amount of

money, if any, it owes to an insured for the loss . . . of . . . [the]

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registration fees” until the insured tells the insurer one of two

things: (1) she will not be registering a replacement vehicle,

meaning that she will not receive a credit from the department; or

(2) she has received a credit from the department and tells the

insurer how much it was. But, whether we read these two statutes

separately or together, we conclude that they do not say what the

insurer contends that they say.

¶ 12 Beginning with the plain language of section 10-4-639(1), the

use of the word “shall” requires the insurer to reimburse the

insured for the registration fee associated with the total loss of a

vehicle. See People v. Dist. Court, 713 P.2d 918, 921 (Colo.

1986)(“[T]he use of the word ‘shall’ in a statute is usually deemed to

involve a mandatory connotation.”). “[A]ssociated” means “related,

connected, or combined together.” Merriam-Webster Dictionary,

https://perma.cc/99DL-X4LB. Giving these terms their ordinary

meanings, section 10-4-639(1) requires an insurer to reimburse an

insured for the registration fee if it is connected to the total loss of a

vehicle. In other words, just like a totaled vehicle is a loss to the

insured, the associated registration fee is likewise a loss.

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¶ 13 Contrary to the insurer’s contention, nothing in section

10-4-639(1) creates an exception to this obligation. The statute

does not contain an exception, and we eschew creating one out of

thin air because “an exception not expressly made by the legislature

should not be read into a statute by the courts.” Dikeou v. Dikeou,

928 P.2d 1286, 1293 n.4 (Colo. 1996); see In re Marriage of Chalat,

112 P.3d 47, 57 (Colo. 2005)(“Straining the statute to read

otherwise would ignore its plain language . . . and read in a

judicially created exception that the General Assembly did not

include.”). And section 42-3-115(1), C.R.S. 2018, does not refer to

any such exception for insurers, either.

¶ 14 Even so, the insurer submits that, by not creating an

exception to its obligation to pay the insured’s registration fee under

section 10-4-639(1), the insured, and any other similarly situated

insureds, might receive a windfall allowing them to collect twice:

once from the insurer under section 10-4-639(1), and once in the

form of a credit from the department under section 42-3-115(1),

C.R.S. 2018. We disagree for five reasons.

¶ 15 First, unlike an insurer’s obligation to pay registration fees in

section 10-4-639(1), the credit provided in section 42-3-115(1),

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C.R.S. 2018, is not mandatory. “The owner . . . may receive credit

upon the fees due for such new registration for such portion of the

fees paid for the cancelled registration as the department may

determine to be proper and proportionate to the unexpired part of

the original term of registration.” § 42-3-115(1), C.R.S. 2018

(emphasis added). See Larry H. Miller Corp. Denver v. Urban

Drainage & Flood Control Dist., 64 P.3d 941, 946 (Colo. App.

2003)(“[T]he General Assembly’s use of the term ‘may’ is indicative

of a discretionary power to choose among alternatives.”); see also

People v. Kilgore, 992 P.2d 661, 663 (Colo. App. 1999)(“While [the

term ‘may’] can, in some instances, bear a mandatory meaning . . .

it is generally deemed to carry a permissive connotation, absent

evidence of a contrary legislative intent.”). Providing an exception to

an insurer’s mandatory obligation based on a discretionary credit

would be contrary to the ordinary meaning of these statutes.

¶ 16 Second, in construing a statute’s ordinary meaning, we read

the statutory scheme as a whole to “give consistent, harmonious,

and sensible effect to all parts of [the] statute.” Jefferson Cty. Bd. of

Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo. 2010). Title 10

applies to all types of insurance. Section 10-4-639(1) is part of

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Article 4, which deals with “Property and Casualty Insurance.” By

enacting Article 4, the General Assembly declared “that the health,

welfare, and safety of the people of the state of Colorado would be

enhanced by the expeditious handling of liability claims.”

§ 10-4-101, C.R.S. 2019; see § 10-3-1115(1)(a), C.R.S. 2019 (An

insurer “shall not unreasonably delay or deny payment of a claim

for benefits owed to or on behalf of any first-party claimant.”).

Interpreting section 10-4-639(1) as the insurer suggests we should

interpret it is contrary to this statutory scheme because it puts the

burden on the insured to provide information based on an

uncertain event — buying and registering a new vehicle — before

she can be compensated for the total loss of her covered vehicle.

¶ 17 Third, and relatedly, forcing the insured to wait to receive the

reimbursement for the registration fees until she has either decided

against registering a replacement vehicle or decided to register one

and the department has given her a credit would unnecessarily

delay the payment of her claim, undercutting the legislature’s

direction that such claims be resolved expeditiously. See § 10-3-

1115(1)(a); § 10-4-101.

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¶ 18 Fourth, the insured is only seeking registration fees for the

period when she was unable to use her vehicle after the accident

because of the total loss. She would not be in the position of

needing a replacement vehicle — and paying additional registration

fees — if her insured vehicle had not been a total loss. See State,

Dep’t of Health v. The Mill, 887 P.2d 993, 1005 (Colo. 1994)(“A

‘windfall’ is commonly understood to mean ‘an unexpected or

sudden gain or advantage.’” (quoting Webster’s Third New

International Dictionary 2619-20 (1986))).

¶ 19 Fifth, “[i]t is not within the purview of this court to question

the legislature’s choice of policy,” even if that policy results in a

windfall to insureds. City of Montrose v. Pub. Utils. Comm’n, 732

P.2d 1181, 1193 (Colo. 1987); see Volunteers of Am. Colo. Branch v.

Gardenswartz, 242 P.3d 1080, 1088 (Colo. 2010)(The legislature

“chose to allow a plaintiff to obtain the benefit of his contract, even

if the award resulted in a double recovery.”); see also Colo. Ins.

Guar. Ass’n v. Menor, 166 P.3d 205, 217 (Colo. App. 2007)(“[T]he

General Assembly has not amended § 8-41-203 to preclude such

windfalls.”).

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¶ 20 The insurer points to the legislature’s recent repeal of section

42-3-115(1), C.R.S. 2018, and to its related enactment of section

42-3-107(25), C.R.S. 2019 (effective January 1, 2020), to buttress

its contention. See Ch. 231, sec. 2, § 42-3-115, 2019 Colo. Sess.

Laws 2319. Section 42-3-107(25) now provides that the

“department shall allow a credit for . . . registration fees . . . if the

owner disposes of the vehicle during the registration period . . . .”

(Emphasis added.) The insurer asserts that, because the legislature

did not modify section 10-4-639(1) when enacting section

42-3-107(25), section 10-4-639(1) cannot be interpreted to require

insurers to pay registration fees that the department now must

credit to insureds.

¶ 21 But that is not what the 2019 statutory changes say. They did

not expressly create an exception to the insurer’s duty to reimburse

the insured for registration fees under section 10-4-639(1), and we

cannot create one out of whole cloth. See Dikeou, 928 P.2d at 1293

n.4. And, as our supreme court has explained, the legislature “that

amended the statute is not the same [legislature] that enacted the

statute that we construe here.” State v. Nieto, 993 P.2d 493, 504

n.6 (Colo. 2000). We cannot infer the intent of the predecessor

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legislature that enacted section 10-4-639(1) from the act of the

successor legislature that enacted section 42-3-107(25). Id.

¶ 22 Finally, the insurer submits that the United States District

Court’s decision in Monson v. Country Preferred Insurance Company,

No. 17-CV-02130-RBJ, 2018 WL 11016704 (D. Colo. Sept. 28,

2018), supports its interpretation. In Monson, as in this case, the

plaintiff claimed that an insurance company did not reimburse its

insured for registration fees under section 10-4-639(1). Id. at *2.

The insurer relies on the district court’s statement that a credit

from the department “may be relevant in determining the amount of

fees owed” by the insurer. Id. at *4. But this statement was made

in the context of discussing all the fees that the plaintiff sought

from the insurance company: “the total amount of fees related to

the replacement vehicle, minus a . . . credit” from the department.

Id. at *3. The insured in this case did not seek such additional fees.

¶ 23 More to the point, Monson held that section 10-4-639(1)

“mandates the insurance provider to pay . . . registration fee[s]

associated with a total loss.” Id. at *4. It decided, like we do, that

“a discretionary credit from the [department] does not relieve

insurance providers of their statutory duties as a matter of law.” Id.

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¶ 24 In the end, we conclude that section 10-4-639(1) means

exactly what it says: the insurer must pay registration fees

associated with the total loss of the insured’s vehicle.

¶ 25 The trial court’s order is affirmed, and we remand the case for

further proceedings.

JUDGE TOW and JUDGE HAWTHORNE concur.

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