October 23, 2017

Colorado Supreme Court: Agent May Exercise Apparent or Implied Authority to Reject UM/UIM Insurance Coverage

The Colorado Supreme Court issued its opinion in State Farm Mutual Automobile Ins. Co. v. Johnson on Monday, June 5, 2017.

Uninsured/Underinsured Motorist Insurance—Agency—Implied Authority.

This case presented two questions for the supreme court’s consideration. First, does the uninsured/underinsured motorist (UM/UIM) statute, C.R.S. § 10-4-609, require each named insured to reject UM/UIM coverage, or is one named insured’s rejection binding on all? And second, did the legislature, by enacting C.R.S. § 10-4-609, abrogate the common law agency principles of implied authority and apparent authority? The court started with the second question and concluded that nothing in the language of C.R.S. § 10-4-609 precludes an agent from exercising either apparent or implied authority to reject UM/UIM coverage on behalf of a principal. Turning to the facts of this case, the court concluded that the evidence presented at trial established that respondent Johnson delegated to his friend the task of purchasing insurance for their jointly owned car and that, in undertaking this task, the friend had implied authority to reject, and did in fact reject, UM/UIM coverage on Johnson’s behalf. Based on this conclusion, the court found it unnecessary to address the first question presented. The court thus reversed the court of appeals’ judgment and remanded the case for further proceedings consistent with this opinion.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Agency Decision Presumed to Apply Prospectively Only

The Tenth Circuit Court of Appeals issued its opinion in De Niz Robles v. Lynch on Tuesday, October 20, 2015.

Alfonzo De Niz Robles filed a petition for adjustment of status in 2007, relying on the Tenth Circuit’s opinion in Padilla-Caldera v. Gonzales (Padilla Caldera I), 426 F.3d 1294, 1300-01 (10th Cir. 2005), amended and superseded on reh’g, 453 F.3d 1237, 1244 (10th Cir. 2006), which held that 8 U.S.C. §§ 1255(i)(2)(A) allowed the Attorney General discretion in affording relief from removability under § 1182(a)(9)(C)(i)(I). After De Niz Robles filed his petition, the BIA issued In re Briones, 24 I. & N. Dec. 355 (BIA 2007), which overturned the Tenth Circuit’s decision in Padilla Caldera I. In 2013, the BIA ruled that De Niz Robles was categorically ineligible for relief due to its Briones decision, which it applied retroactively. De Niz Robles appealed to the Tenth Circuit.

Applying the Chevron test and guided by the Supreme Court’s ruling in National Cable & Telecommunications Ass’n v. Brand X Internet Services (Brand X), 545 U.S. 967 (2005), the Tenth Circuit determined it was required to decide whether Briones could reasonably apply retroactively, thereby overruling Tenth Circuit precedent. The Tenth Circuit analyzed the separation of powers doctrine, noting that judicial decisions are presumed to apply retroactively due to the impartial nature of the judiciary, whereas Congressional rule-making is presumably prospective only unless otherwise specifically stated. Because administrative rulemaking is a delegation of Congressional power, the Tenth Circuit found that administrative rules are presumptively prospective in application. However, when confronted with a situation where an administrative agency acts in a quasi-judicial capacity, such as the BIA did in Briones, the Tenth Circuit examined whether the administrative action is more akin to judicial function or legislative function.

The Tenth Circuit determined that, in applying its rules pursuant to a Congressional delegation of power, the BIA was acting in a quasi-legislative capacity. Examining due process and equal protection concerns, the Tenth Circuit determined it would contravene Supreme Court precedent and constitutional safeguards to allow the BIA’s decision to be applied retroactively. The Tenth Circuit therefore overturned the BIA’s refusal to consider De Niz Robles’ petition. The Tenth Circuit noted that at the time De Niz Robles filed his petition, Padilla Caldera I was the existing circuit precedent, and he was justified in his reliance on that precedent. The BIA argued that De Niz Robles should have understood that there was a conflict between § 1255 and § 1182, and that there was a chance the conflict would be resolved against De Niz Robles’ position. The Tenth Circuit found that approach illogical, noting that a litigant is justified in relying on the law at the time a petition is filed.

The Tenth Circuit remanded to the BIA for further proceedings consistent with its opinion.

Tenth Circuit: Witness Improperly Usurped Role of Jury by Opining on Lawfulness of Conduct

The Tenth Circuit Court of Appeals issued its opinion in United States v. Richter on Friday, July 31, 2015.

Brandon Richter and Tor Olson were former CEOs of Executive Recycling, Inc., a waste removal and recycling business in Colorado, Utah, and Nebraska. Executive also offered electronics recycling, promising customers that Executive would domestically recycle or destroy electronics that could not be resold and would do so in an environmentally friendly manner. However, between 2005 and 2008, Executive sold many items to Hong Kong and China for export, including cathode ray tubes (CRTs) that were eventually reused in new monitors or refurbished. One shipment, the GATU shipment, was featured on 60 Minutes because the CRTs were broken and could not be reused. The 60 Minutes episode attracted the attention of the EPA, ICE, and Colorado Attorney General’s Office. An EPA investigator asked Richter to supply records of Executive’s shipments over a three-year period, but Richter produced only four records, including an altered copy of the GATU invoice. A later federal search warrant uncovered many more shipping records and revealed that Richter had destroyed the original GATU invoice.

The government charged Executive, Richter, and Olson in the U.S. District Court for the District of Colorado with 13 counts of mail and wire fraud, one count of exporting hazardous waste in violation of the Resource Conservation and Recovery Act (RCRA), and one count of smuggling hazardous waste. The government contended defendants violated laws concerning hazardous waste when they exported the CRTs overseas, and their actions were contrary to the representations they made to their customers. The government also charged Richter and Olson with obstruction of justice. Before trial, defendants moved to dismiss the wire and mail fraud counts, arguing their customers were not deprived of money because they obtained the benefit they paid for—removal of electronic waste—and they were not deprived of property because the e-waste had no value to the consumers. The district court denied the motions. Defendants also disagreed with the jury instructions regarding “hazardous waste.” At trial, Richter and Olson argued that even if broken CRTs are regulated hazardous waste, they did not know the CRTs were broken. Following the trial, the jury returned verdicts against Richter and Olson on six counts of wire fraud, one count of mail fraud, and one count of smuggling. Richter was also convicted of obstructing justice based on his destruction of the original GATU invoice. Richter was sentenced to 30 months’ imprisonment followed by three years’ supervised release and was ordered to pay $70,144 in restitution. Olson was sentenced to 14 months’ imprisonment with three years’ supervised released and was ordered to pay $17,536 in restitution. They timely appealed.

The Tenth Circuit first evaluated Defendants’ contention that the jury instruction incorrectly defined waste under Colorado law, and that even if the instruction was correct they lacked fair notice that the definition might be criminally enforced against them. Reviewing the strictures of the RCRA, the Tenth Circuit noted that the RCRA makes it a crime to export hazardous waste without filing the proper notice of intent to export with the EPA or without consent of the receiving country. Colorado also has its own regulations, the Colorado Hazardous Waste Management Act, which generally mirrors the RCRA. However, the Colorado Act does not contain rules regarding broken CRTs and instead regulates the disposal of CRTs under its universal waste regulations. Richter and Olson argued that the jury instruction improperly defined hazardous waste by including a requirement that waste must be reused for its original intended purpose to be excluded. The Tenth Circuit ultimately disagreed, finding that since the Colorado statute was ambiguous it must look to legislative intent, which was to comply with the RCRA. The Tenth Circuit rejected Richter’s and Olson’s challenge to the jury instruction.

Defendants next argued that the government did not prove that they committed mail and wire fraud because their customers were not deprived of money or property. Defendants contended that since their customers’ property was relinquished to them for disposal, it was no longer the customers’ concern how the disposal occurred. The Tenth Circuit again disagreed, finding that the customers expected their waste to be disposed of within the United States using environmentally sound practices. Defendants would not have retained their customers if not for their deceptions. The wire and mail fraud convictions were affirmed.

The Tenth Circuit next addressed Defendants’ contention that the testimony of Mr. Smith was improperly admitted as lay witness testimony and exceeded the bounds of permissible testimony by infringing on the province of the jury. The Tenth Circuit examined Mr. Smith’s testimony, which included testimony that CRTs that had been removed from their housings were waste because they could not be used again for their original intended purpose without processing, and found that it was expert testimony. The Tenth Circuit further found that the scope of Mr. Smith’s testimony improperly instructed the jury on how it should rule. Because the Tenth Circuit found that the district court erred in allowing Mr. Smith’s testimony, it evaluated whether the error was harmless and found it was not. The government relied heavily on Mr. Smith’s testimony to prove whether the CRT use was improper, since he testified that CRTs could not be considered recycled if they had been “processed,” and Mr. Smith failed to define processing or explain its significance. The Tenth Circuit reversed the convictions.

Finally, the Tenth Circuit examined Richter’s conviction for obstruction of justice based on his destruction of the GATU invoice. The Tenth Circuit found that Mr. Smith’s testimony did not have a substantial impact on the obstruction of justice charge because there was plenty of evidence beyond Mr. Smith’s testimony.

The Tenth Circuit reversed Defendants’ convictions for smuggling and fraud and remanded for further proceedings. The Tenth Circuit affirmed Richter’s conviction for obstruction of justice.

Colorado Supreme Court: Governor’s Attestation Regarding Nurse Anesthetists Purely Administrative

The Colorado Supreme Court issued its opinion in Colorado Medical Society v. Hickenlooper on Monday, June 1, 2015.

Executive Powers and Functions—Standing.

To receive Medicare reimbursement, hospitals and other medical service providers must require certified registered nurse anesthetists (CRNAs) who administer anesthesia to do so under physician supervision. However, states may opt out of this requirement if the Governor submits a letter to the relevant federal agencies attesting that the opt-out is in the best interest of the state’s citizens and is consistent with state law. In 2010, Governor Bill Ritter, Jr. sent such an opt-out letter, which attested that Colorado law permits CRNAs to administer anesthesia unsupervised.

Here, the Supreme Court held that the Governor’s attestation to the federal agencies that Colorado law permits CRNAs to administer anesthesia without supervision is not a generally binding interpretation of Colorado law subject to de novo review. Instead, the attestation’s sole effect is to exempt certain Colorado hospitals from the federal physician supervision requirement. This decision, if reviewable at all, is reviewable only for a gross abuse of discretion. Because petitioners do not allege that such a gross abuse occurred in this case, the Court affirmed the court of appeals’ dismissal of petitioners’ claims.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Federal Agency Did Not Err in Denying Insurance Coverage to Appellants Who Planted Corn on Newly Broken, Non-Irrigated Acraege

The Tenth Circuit Court of Appeals published its opinion in Jagers v. Federal Crop Insurance Corp. on Tuesday, January 13, 2014.

In this appeal, the Tenth Circuit considered whether Appellee Federal Crop Insurance Corporation acted arbitrarily or capriciously in denying federal crop insurance coverage for corn that Appellants planted in 2008 on newly broken, non-irrigated acreage in Baca County, Colorado. The agency determined that coverage should be denied because Appellants failed to follow good farming practices by planting on this newly broken land without first allowing a fallow period. After they each received an unfavorable good farming practices determination, Appellants filed the instant action in the district court. The district court affirmed the agency’s unfavorable GFP determinations as to Appellants, and this appeal followed.

Appellants argued that the Court should overturn the agency’s determination as arbitrary and capricious because (1) the agency predetermined this result and made its decision based on bias and other improper motivations, and (2) the agency failed to follow its own procedures relating to the issuance of GFP determinations.  Specifically, appellants argued the agency’s good farming practices (“GFP”) determination should be overturned as arbitrary and capricious because (1) “issuance of the GFP Determinations at issue was predetermined” as early as June 2008 (2) the Risk Management Agency (“RMA”) was biased in favor of minimizing the number of non-irrigated acres that would receive insurance coverage; (3) the RMA “was motivated by its own pecuniary interests” to limit its own insurance liability; (4) the RMA was also motivated by “political pressures; and (5) the agency’s consideration of these improper financial and pecuniary motivations proved that the agency acted in bad faith and violated Appellants’ due process rights.

The court was not persuaded by any of these arguments. First, the record did not support Appellants’ assertion that the negative GFP determination was predetermined. As for Appellants’ argument that the negative GFP determination must be overturned because the agency was improperly motivated by financial concerns, Appellants cited to no authority for the proposition that an agency acts arbitrarily and capriciously by making a decision that is partially motivated by the desire to limit the expenditure of government funds. Similarly, Appellants cited to no authority for the proposition that an agency’s decision should be overturned if a critical internal report by an investigative arm of the same government department could potentially have pressured the agency into taking some type of responsive action. Nor was the court persuaded it was required to overturn the RMA’s GFP determination based on whatever internal political pressure resulted from the Office of Inspector General’s report. The court was also not persuaded the agency’s possible motivations to reach a particular result proved that the agency acted in bad faith or violated Appellants’ due process rights. The agency relied on objective scientific evidence to conclude that planting nonirrigated corn on newly broken lands in eastern Colorado without a fallow period was not a good farming practice.

Finally, the court turned to Appellants’ argument that the RMA’s GFP determination should be reversed under the Accardi doctrine, which requires an agency to adhere to the policy and regulations it promulgates. The Tenth Circuit found this argument unpersuasive for two reasons. First, the only policies Appellants cited were contained within RMA manuals and handbooks, not promulgated regulations. The Tenth Circuit was also unpersuaded by Appellants’ argument that the agency failed to follow its own procedures when it alluded to allegations of program abuse and fraud in the district court proceedings without having followed the established procedures for imposing sanctions for fraud. The agency’s GFP determination did not depend on these allegations, and there was no evidence the agency attempted to impose a sanction for fraud or program abuse. The agency examined the relevant data and articulated a satisfactory explanation for its decision, including a rational connection between the facts found and the decision made. Under its deferential standard of review, the court saw no error in the agency’s analysis, and it was not persuaded there was any other valid reason for overturning the agency’s GFP determination.

AFFIRMED.

Colorado Court of Appeals: District Court Erred by Giving Jurors Incorrect Test for Causation, which Was Not Harmless

The Colorado Court of Appeals issued its opinion in Reigel v. SavaSeniorCare L.L.C. on December 8, 2011.

Wrongful Death—Negligence—Duty of Care—Agents—Causation—Outrageous Conduct Claim—Punitive Damages—Amended Complaint—Noneconomic Damages—Evidence.

In this wrongful death action, defendants SSC Thornton Operating Company, L.L.C., doing business as Alpine Living Center (Alpine); SavaSeniorCare, L.L.C. (SSC), Alpine’s parent company; and SavaSeniorCare Administrative Services, L.L.C. (Administrative Services) appealed the verdicts in favor of the victim’s surviving spouse, Janis M. Reigel. The victim’s surviving sons, Brent Reigel and Bradley Reigel, cross-appealed the district court’s directed verdict in defendants’ favor on their claims and its award of costs to defendants for those claims. The judgment was reversed in part and vacated in part, and the case was remanded for a new trial on plaintiffs’ negligence claim against Alpine.

Dennis Reigel died shortly after being taken to a hospital emergency room from a nursing facility owned by Alpine. The court directed a verdict in defendants’ favor on the sons’ claims. The jury found in Ms. Reigel’s favor on her negligence and outrageous conduct claims, awarding her $450,000 in damages.

SSC and Administrative Services (collectively, the Sava Defendants) contended that the district court erred in denying their motion for directed verdicts on the negligence claim. Ms. Reigel did not establish that they owed a duty of care to Mr. Reigel because she did not present evidence to establish that Alpine’s employees were the Sava Defendants’ agents.

Alpine contended that the evidence was insufficient to support a jury finding of causation in connection with the negligence claim. The district court erred by giving the jurors an incorrect test for causation, which was a lower burden of proof than the “but-for” causation test, and this error was not harmless. Further, Alpine was not entitled to a directed verdict on the negligence claim because the evidence would have been sufficient to support a verdict under the correct test.

Defendants contended that the district court erred in denying their motion for directed verdicts on Ms. Reigel’s outrageous conduct claim. Though there is evidence that Alpine’s employees were abrupt, irresponsible, and lacking in sensitivity in responding to Ms. Reigel’s requests for help, the evidence was not sufficient to support an outrageous conduct claim.

Defendants also contended that the district court erred in allowing Ms. Reigel to recover punitive damages because the court abused its discretion in permitting Ms. Reigel to amend her complaint to request punitive damages shortly before trial. After the Reigels moved three times to compel discovery from defendants, after the substantial completion of discovery, and after establishing a prima facie proof of a triable issue, the court did not abuse its discretion in allowing the Reigels to amend their complaint.

The sons cross-appealed the district court’s directed verdict in defendants’ favor on the wrongful death claim and its award of costs to defendants for that claim. A wrongful death action involves a shared injury among survivors such that there is no individualized recovery of damages, because all damages awarded are owned jointly and distributed through the statutes of descent and distribution. Therefore, whatever noneconomic damages Ms. Reigel established were owned by the sons as well, and the sons were not required to prove these separately.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on December 8, 2011, can be found here.

Colorado Court of Appeals: Person Entitled to Enforce Promissory Note Need Not Be the Holder; Law of Agency Supplements the UCC

The Colorado Court of Appeals issued its opinion in Citywide Banks. v. Armijo on October 13, 2011.

Uniform Commercial Code—Foreclosure—Agency

Plaintiff Citywide Banks (Bank) appealed the order denying its motion for sale of the property owned by defendant. The order was affirmed.

In 2003, Dakota Lending, LLC (Dakota) executed a promissory note to Bank in exchange for a revolving line of credit that allowed Dakota to borrow up to $4 million. Dakota used this line of credit to finance its business of buying, selling, and holding real estate mortgages. As security, Bank took assignments of the promissory notes and deeds of trust that Dakota financed or acquired in its course of business.

In 2007, Kimberly Poladsky and RE Services, LLC (collectively, RE Services) executed a promissory note (Note) payable to Jaguar Mortgage Company. The Note was secured by a deed of trust that encumbered the property at issue. After a series of transfers, Dakota acquired the Note. Dakota then assigned all of its rights and interest in the Note and deed of trust to Bank. While Bank held the Note, it allowed Dakota to service the loan and retain for itself periodic payments made on the Note.

In 2008, RE Services sold the property to defendant. Title insurance was purchased from Stewart Title, which conducted the closing. At closing, defendant tendered the purchase price and Stewart Title accepted those funds as closing agent. Stewart Title did not demand production of the Note at closing and did not attempt to determine the identity of the Note holder. Bank alleged that Stewart Title also failed to obtain a release of the deed of trust at closing. Stewart Title issued a check payable to Dakota for the amount listed on the payoff statement, but Dakota never tendered the funds to Bank. Dakota is now defunct and its managers are under criminal indictment. Bank, which still holds the Note, has declared it in default.

Bank brought this action to foreclose its lien on the property based on the unpaid Note balance. The trial court determined that Dakota was Bank’s agent and had authority to receive the payoff of the Note and, therefore, Bank was not entitled to foreclose on the property.

On appeal, Bank argued that Colorado’s Uniform Commercial Code (UCC) establishes that Bank’s lien remains enforceable against the property because any payoff made to Dakota was ineffective. The Court of Appeals disagreed. Bank argued that UCC § 4-3-301 required payment to be made to the Note holder. The Court found that the section does not contain an explicit requirement that a “person entitled to enforce” an instrument must be the holder. UCC § 4-1-103 provides that the common law, including the law of agency, supplements the statutory provisions of the UCC. Under Colorado’s common law, payment to a holder’s authorized agent is equivalent to payment to the holder. The Court held that payment to a holder’s agent is equivalent to payment to the holder.

Bank also argued that it was error to find that Dakota was its agent. The Court disagreed, holding that the trial court’s finding was amply supported by the record.

Bank further contended that it was error to find that Dakota was authorized to accept payoff of the Note. The trial court found that Dakota had apparent authority to accept payoff of the Note. The Court upheld the ruling, but found that the facts established Dakota’s implied authority to accept a payoff.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on October 13, 2011, can be found here.