July 24, 2017

Archives for September 12, 2016

Colorado Court of Appeals: Insurer’s Definition of “Resident Relative” Void as Against Public Policy

The Colorado Court of Appeals issued its opinion in Grippin v. State Farm Mutual Automobile Insurance Co. on Thursday, September 8, 2016.

Shane Grippin was seriously injured when he was hit by a truck while riding his motorcycle. After collecting the policy limits on the tortfeasor’s insurance and his motorcycle insurance, Grippin sought underinsured motorist benefits from State Farm pursuant to his grandparents’ four policies on which he was named as an “other household driver.” Although Grippin owned a home in Colorado Springs, he and his family resided approximately one week per month with his grandparents.

State Farm moved for summary judgment on the grounds that because Grippin did not reside primarily with his grandparents, he was not a “resident relative” as contemplated by the policies. Grippin responded that State Farm’s definition of “resident relative” was void as against public policy because the qualifier “primarily” diluted the statutory definition of resident relative. He alternatively argued the contracts were ambiguous because he was listed as an “other household driver” and therefore had a reasonable expectation of coverage. The trial court granted summary judgment in favor of State Farm, and Grippin appealed.

On appeal, the Colorado Court of Appeals evaluated Colorado’s statutory mandate of uninsured/underinsured motorist (UM/UIM) coverage and noted that insurance policy provisions that attempt to dilute, condition, or limit statutorily mandated coverage are void and unenforceable. The court of appeals evaluated the definition of resident relative under C.R.S. § 10-4-601(13) and found no qualifying language as to the insured’s primary residence. The court of appeals agreed with Grippin that a person can have multiple residences under Colorado law and the statute’s plain language does not restrict the definition of “resident relative” to a single, “primary” residence. State Farm argued that Grippin’s reading would render some statutory language superfluous, but the court of appeals disagreed, finding the statutory definition cohesive.

The court of appeals disagreed with Grippin’s alternative contention that the contracts were ambiguous, since the policies at issue unambiguously failed to list Grippin as a covered insured. The court also determined that Grippin could not rely on the doctrine of reasonable expectations because that doctrine would only apply after coverage was determined.

The court of appeals reversed the trial court’s grant of summary judgment and remanded for further proceedings.

Tenth Circuit: Attorney Fee Award Appropriate Where Oil and Gas Well Sustained Physical Damage

The Tenth Circuit Court of Appeals issued its opinion in Sundance Energy Oklahoma, LLC v. Dan D. Drilling Corp. on Friday, September 2, 2016.

Sundance contracted with Dan D. to drill several oil and gas wells, and used a standard International Association of Drilling Contractors (IADC) form for each individual well. Dan D. was unable to drill several of the wells because it could not acquire permits, so Sundance asked Dan D. to drill a different group of wells instead, including the Rother well, under the supervision of Tres Management. Although Dan D. did not have a contract, it began drilling the Rother well in December 2012 under the supervision of a Tres company man. Days later, Dan D.’s drill pipe became stuck in the hole. After several failed attempts to remove the pipe, the company man instructed the Dan D. employees to stop pulling on the pipe. A driller ignored the instructions and continued pulling on the pipe, causing the drilling line to break and throw debris, killing the driller. A medical examiner later determined the driller had substantial amounts of methamphetamine in his blood at the time of his death.

A subsequent OSHA investigation suspended all drilling at the Rother well, concluding that the drilling failure resulted from progressive fatigue on the drill line. OSHA issued a citation to Dan D. for failing to inspect and properly maintain the drill line. After the OSHA investigation concluded, Sundance attempted to fish out the stuck drill pipe, but the wellbore had deteriorated and the well was ultimately plugged and abandoned as a total loss.

Sundance sued Dan D. for damages, asserting that Dan D.’s negligence, gross negligence, and breach of implied contract to drill the well in a workmanlike manner resulted in the loss of the hole. Dan D. filed several motions in limine prior to trial, including objecting to the admission of the OSHA narratives and the medical examiner’s toxicology report. The district court denied the motion to suppress the toxicology report and partially denied the motion to suppress the OSHA reports, allowing only portions of the documents to be used. At trial, Sundance’s expert witness testified that Dan D.’s failure to log and track the ton miles of the drill line was “unheard of” in the industry, and that Dan D. should have slipped and cut the drill line to prevent the accident. Sundance relied on Dan D.’s gross negligence caused the line failure and the ultimate loss of the hole. Dan D. disagreed, arguing the fault should lie with Tres and the company man. Dan D. also argued that the IADC contract’s exculpatory provisions state that Sundance was liable for any loss or damage to the hole. Dan D. also asked the district court to instruct the jury that it should impute negligence to Tres, but the district court declined to do so. The district court instead instructed the jury that if it did not find Dan D. was grossly negligent, it should not consider whether an implied contract between the parties incorporated the IADC contract’s exculpatory provisions.

The jury returned a verdict for Sundance, finding Dan D. was grossly negligent and breached an implied contract to drill the well in a workmanlike manner. The jury attributed 75% of the loss to Dan D.’s negligence and 25% to Tres’ negligence, awarding Sundance $1.2 million in damages. Dan D. moved for a new trial under F.R.C.P. 59(a). The district court denied the motion and Dan D. appealed that order. Sundance then filed a motion for attorney fees, which the district court granted. Dan D. also appealed the attorney fee award. The appeals were consolidated.

Dan D. first argued the district court erred in instructing the jury that it need not consider whether the implied contract included the allocation of risk provisions if it found Dan D. grossly negligent, and refusing to impute Tres’ negligence to Sundance. The Tenth Circuit analyzed Dan D.’s claims for abuse of discretion and found none. The district court based its instruction regarding gross negligence on an Oklahoma Supreme Court case where a federal district court certified a question to the Oklahoma Supreme Court regarding whether an exculpatory provision was valid and enforceable. The Oklahoma Supreme Court ruled it was not enforceable in cases involving, among other things, gross negligence. The Tenth Circuit approved of the district court’s reliance on this case and found no abuse of discretion.

Dan D. also argued the district court should have granted a new trial based on its refusal to give Dan D.’s proposed instructions on whether Sundance owed Dan D. a non-delegable duty. The Tenth Circuit found that even if it agreed with Dan D. that the district court erred by not giving the proposed instruction, the error did not prejudice Dan D. because the jury’s verdict for Sundance on the breach of implied contract claim independently supported the damages award. Accordingly, any imputation of negligence would not have affected the breach of contract award.

The Tenth Circuit also found no error in the district court’s admission of the toxicology report or OSHA narratives. Because Dan D. did not object to the admission of any other evidence, and other evidence showed Dan D.’s failures, Dan D. could not show prejudice by the admission of the toxicology report or OSHA narratives.

Finally, the Tenth Circuit addressed Dan D.’s challenge to the attorney fee award. The Tenth Circuit evaluated Okla. Stat. tit. 12, § 940(A), which provides for attorney fees to the prevailing party in any action related to the negligent or willful injury to property, and found the statute applicable in the instant action. The Tenth Circuit noted the physical deterioration of the Rother well during the 12-day OSHA investigation was precisely the type of injury contemplated under § 940(A). Because Sundance prevailed in the action regarding physical injury to a well, the attorney fee award was appropriate.

The Tenth Circuit affirmed the district court.

Tenth Circuit: Unpublished Opinions, 9/9/2016

On Friday, September 9, 2016, the Tenth Circuit Court of Appeals issued no published opinion and three unpublished opinions.

Sable Cove Condominium Association v. Owners Insurance Co.

Wallin v. Miller

United States v. Sangiovanni

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.