Colorado Court of Appeals

Hughes v Essentia Ins. Court of Appeals voids policy provision limiting UM/UIM coverage—2022COA49 (05/05/22). Plaintiff insured two classic cars under an automobile insurance policy with Essentia Insurance Company. As a condition of this insurance, plaintiff was required to have and separately insure a “regular use vehicle.” The policy explicitly excepted regular use vehicles from its UM/UIM coverage. Plaintiff was driving her regular use vehicle when she was injured in a car accident. She sought to recover UM/UIM benefits under the policy, but defendant denied coverage because she wasn’t using one of the classic cars at the time of the accident. Plaintiff sued. The trial court concluded that the policy’s regular use vehicle exclusion adhered to CRS § 10‑4‑609 because plaintiff was protected through her regular use vehicle insurance policy, and it granted summary motion. On appeal, the Court of Appeals held that under DeHerrera v. Sentry Insurance Co., 30 P.3d 167 (Colo. 2001), UM/UIM benefits cover persons injured by uninsured or underinsured motorists and can’t be tied to the occupancy of a certain vehicle. Accordingly, it held plaintiff was entitled to recover UM/UIM benefits under the policy.

Gravina v. Frederiksen. Existence of contract does not obviate equitable remedies in case of breach—2022COA50A (05/05/22). The Frederiksens contracted with Gravina Siding and Windows Co. to replace their home’s cedar siding with steel siding for $42,116. Plaintiffs put down a $10,000 deposit toward the contract price. The work was to commence within 10 and 14 weeks after the contract was signed and was estimated to take up to four weeks to complete. Four and a half months after work began, and before the work was completed, Gravina Co. requested final payment on the outstanding contract balance. Plaintiffs terminated the contract and denied Gravina Co. further access to their property. Gravina Co. sued, alleging breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. The Frederiksens answered and counterclaimed against Gravina Co., its owner, and two of its employees. Gravina moved to dismiss, and the trial court dismissed all claims except the breach of contract claim against Gravina and the negligent supervision claim against the three individual third-party defendants. The trial court found that Gravina had materially breached the contract and the Frederiksens had properly terminated it, and it awarded Gravina a net judgment of $19,000 on its unjust enrichment claim. The court rejected the negligent supervision claim and request for attorney fees. The Court of Appeals found the trial court did not err in determining that Gravina breached the contract’s material terms and the Frederiksens were entitled to terminate the contract and recover actual damages. The Frederiksens contended that it was error for the trial court to allow Gravina to recover under an unjust enrichment theory because there was a contract. However, the Court of Appeals held that where a contract exists that does not provide explicitly for remedies with respect to a default at issue, a breaching party may recover for the other party’s unjust enrichment. The Frederiksens received a benefit from installation of siding on a portion of their home. Therefore, Gravina was entitled to pursue the unjust enrichment claim. Lastly, the Frederiksens contended that the trial court erred by denying their request for attorney fees. Given the manner in which the issues were resolved here, neither party was found entitled to an award of attorney fees and costs incurred on appeal.

US Supreme Court

Gallardo v. Marstiller. Supreme Court permits Medicaid to seek reimbursement from settlement payments allocated for future medical care—Docket: 20-1263 (06/06/22). Gallardo suffered catastrophic injuries resulting in permanent disability when a truck struck her as she stepped off her Florida school bus. Florida’s Medicaid agency paid $862,688.77 to cover Gallardo’s initial medical expenses and continues to pay her medical expenses. Gallardo’s suit against the truck’s owner and the School Board resulted in an $800,000 settlement, with $35,367.52 designated as compensation for past medical expenses. The settlement did not specifically allocate any amount for future medical expenses. The Medicaid Act requires participating states to pay for certain individuals’ medical costs and to make reasonable efforts to recoup those costs from liable third parties. Under Florida’s Medicaid Third-Party Liability Act, a beneficiary who accepts medical assistance from Medicaid automatically assigns to the state any right to third-party payments for medical care. Plaintiff filed a federal suit, seeking a declaration that Florida was violating the Medicaid Act by trying to recover from portions of the settlement compensating for future medical expenses. Florida contended that the agency was entitled to recover its past medical expenses from the portion of Ms. Gallardo’s settlement representing compensation for both past and future medical expenses. The Supreme Court held that the Medicaid Act permits a State to seek reimbursement from settlement amounts that are allocated for future medical expenses. The Court explained that the plain text of 42 U.S.C. § 1396k(a)(1)(A)—which broadly assigns to the state all of the beneficiary’s rights to payment for medical care from any third party—resolves this case. It explained that nothing in § 1396k(a)(1)(A) limits a beneficiary’s assignments to payments for past medical care already paid for by Medicaid; instead, the grant of “any rights … to payment for medical care” most naturally covers not only rights to payment for past medical expenses, but also rights to payment for future medical expenses. The relevant distinction is not between past and future medical expenses, but rather between medical and nonmedical expenses. The case involved obscure provisions of the Medicaid program, but it will be important to tort victims who obtain recoveries that cover medical expenses into the future.

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