August 17, 2017

Colorado Court of Appeals: Petition to Vacate Appraisal Award Properly Denied

The Colorado Court of Appeals issued its opinion in Owners Insurance Co. v. Dakota Station II Condominium Association, Inc. on Thursday, July 27, 2017.

Appraisal Award in Insurance Dispute—Impartial Appraiser Standard.

Owners Insurance Company (Owners) issued a property damage policy to Dakota Station II Condominium Association, Inc. (Dakota). Wind and hail storms damaged buildings in the residential community owned by Dakota. The losses were combined into a single insurance claim, but there was a dispute about the total amount of damages. The parties invoked the insurance policy’s appraisal provision. Each party selected an appraiser. They submitted proposed awards of different amounts and then nominated a neutral umpire as provided in the insurance policy. The final award of about $3 million was a mix of four damage estimates from Owners’ appraiser, Burns, and two estimates form Dakota’s appraiser, Haber. Burns refused to sign the final determination of costs. Haber and the umpire agreed and signed the award, and Owners paid Dakota.

Dakota then sued Owners in federal court for breach of contract and unreasonable delay in paying insurance benefits. During discovery, Owners learned several facts about Haber that it alleged demonstrated she was not an impartial appraiser. Owners filed a petition to vacate the appraisal award under C.R.S. § 13-22-223. Following a hearing, the trial court denied the petition.

On appeal, Owners argued that the trial court erred by not analyzing the insurance policy’s appraisal dispute provision, as well as the conduct and hiring of Haber, under the Colorado Uniform Arbitration Act’s (CUAA) standards for a neutral arbitrator in C.R.S. § 13-22-211(2). The Colorado Court of Appeals found no error because the policy did not incorporate CUAA’s standards and the parties’ stipulation that CUAA applied did not specifically state whether the appraisers were to be held to the statutory standard.

Owners then argued that Haber was not an “impartial appraiser” under the insurance policy. This term was not defined in the policy and has not been construed by a Colorado appellate court. The trial court interpreted it as an appraiser who applies appraisal principles with fairness, good faith, and lack of bias. The court agreed that this was the correct reading of the policy provision and its intent. The trial court’s application of this standard was supported by the record.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

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.

Colorado Court of Appeals: District Court Erred in Concluding Injured Worker Not Entitled to UIM Benefits from Personal Insurer

The Colorado Court of Appeals issued its opinion in American Family Mutual Insurance Co. v. Ashour on Thursday, May 18, 2017.

Personal InjuriesWorkers Compensation ActPersonal Automobile Insurance PolicyUninsured Motorist Benefits—Underinsured Motorist Benefits.

Ashour was an employee and co-owner of Nubilt Restoration & Construction (Nubilt). While employed with Nubilt, Ashour was severely injured when he was pinned by a 30-foot truck to a nearby tractor-trailer. The accident was caused by the negligence of his co-employee Peake, who failed to set the airbrake on the truck that rolled backward and pinned Ashour to the other vehicle. After the accident, Ashour submitted a claim to Nubilt’s workers’ compensation carrier and subsequently received benefits. He also submitted a claim to Nubilt’s corporate liability insurance provider and received a settlement for that claim based on a policy rider that allowed for coverage of workplace injuries. Ashour then made a claim under his personal automobile insurance policy with American Family Mutual Insurance Company (AFI) for underinsured (UIM) benefits to recover the remainder of his alleged damages. AFI then filed an action for declaratory relief as to whether Ashour was owed UIM coverage when the policy limited UIM benefits to situations where the insured was “legally entitled to recover” from the owner or operator of an uninsured or underinsured motor vehicle. The district court denied Ashour’s motion for summary judgment and granted AFI’s motion for summary judgment.

On appeal, Ashour contended that the district court erred by ruling, as a matter of law, that his claim for UIM coverage under his automobile insurance policy with AFI was precluded because he was not legally entitled to sue his employer or co-employee in tort for his injuries based on their immunity under the Workers’ Compensation Act of Colorado (the Act). Nubilt and its workers’ compensation insurance carrier are immune from suit by Ashour for his injuries sustained in the course and scope of his employment. By extension, co-employees are also immune from suit for injuries to a fellow employee arising out of the scope of employment. However, this exclusive remedy is limited to suits by an injured employee against his employer or co-employee; an injured employee may receive workers’ compensation benefits and bring suit against a third-party tortfeasor. Here, AFI’s uninsured motorist/underinsured motorist (UM/UIM) policy provides coverage where the tortfeasor is underinsured. Underinsured tortfeasors are those who are covered by insurance at the time of the accident. Thus, Nubilt and Peake are effectively underinsured in that Ashour received benefits up to Nubilt’s workers’ compensation insurance limits but still has additional damages from his workplace injury. It is the exhaustion of Nubilt’s and Peake’s limits of liability coverage (i.e., workers’ compensation insurance) that triggers AFI’s obligation to pay UM/UIM benefits. Therefore, Ashour’s claim for UIM benefits under his policy with AFI is not barred by the exclusivity provisions of the Act or by the “legally entitled to recover” language of the policy.

The judgment was reversed and the case was remanded with directions to enter summary judgment in favor of Ashour, declaring, as a matter of law, that AFI must provide coverage of UM/UIM benefits to Ashour upon his proof that Peake was at fault for causing his injuries and of the extent of his damages in excess of the coverage offered him under the Act.

Summary provided courtesy of The Colorado Lawyer.

Bills Delaying Accrual of Property Tax Abatement Refund Interest, Encouraging Mental Health Treatment for Peace Officers, and More Signed

On Monday, April 24, 2017, the governor signed eight bills into law. To date, the governor has signed 166 bills this legislative session. Some of the bills signed Monday include a bill delaying the accrual date of the property tax abatement refund interest, a bill expanding consumer options in fingerprint-based background checks, and a bill allowing campus liquor licenses for on-campus consumption of alcoholic beverages. The bills signed Monday are summarized here.

  • HB 17-1049“Concerning the Elimination of Refund Interest Related to a Property Tax Abatement,” by Reps. Dan Thurlow & Matt Gray and Sen. Don Coram. If property taxes are levied erroneously or illegally and a taxpayer has not protested the valuation within the time permitted by law, then the taxpayer has 2 years from the start of the property tax year to file a petition for abatement or refund with interest. The bill delays the start of the refund interest so that it accrues from the date a complete abatement petition is filed, with the exception of an abatement or refund for taxes paid as a result of omitted property being added to the assessment roll.
  • HB 17-1115“Concerning the Establishment of Direct Primary Health Care Agreements to Operate without Regulation by the Division of Insurance,” by Reps. Perry Buck & Joann Ginal and Sens. Jack Tate & John Kefalas. The bill establishes parameters under which a direct primary care agreement may be implemented. An agreement may be entered into between a direct primary health care provider and a patient for the payment of a periodic fee and for a specified period of time. The provider must be a licensed, registered, or certified individual or entity authorized to provide primary care services.
  • HB 17-1120“Concerning the Designation of a Campus Liquor Complex on the Campus of an Institution of Higher Education that is Licensed to Serve Alcohol Beverages for Consumption on the Licensed Premises to Allow the Institution to Obtain Permits to Serve Alcohol Beverages at Other Facilities Within its Campus Liquor Complex, and, in Connection Therewith, Making an Appropriation,” by Rep. Yeulin Willett and Sen. Don Coram. The bill allows a higher education institution that has a license to serve alcohol beverages for on-premises consumption to apply for designation as a campus liquor complex, thereby allowing the institution to designate multiple facilities on the campus as locations for serving alcohol beverages.
  • HB 17-1184“Concerning Developing Additional Resources for Modern Technology Education in Public Schools,” by Rep. Crisanta Duran and Sen. Kevin Grantham. The bill directs the State Board of Education, in the course of revising the academic standards, to incorporate into the standards for each subject skills relating to the use of information and communications technologies to find, evaluate, create, and communicate information.
  • HB 17-1215“Concerning Mental Health Support for Peace Officers,” by Rep. James Coleman and Sens. Daniel Kagan & Bob Gardner. The bill encourages each sheriff’s office and each municipal police department to adopt a policy whereby mental health professionals, to the extent practicable, provide on-scene response services to support officers’ handling of persons with mental health disorders, and counseling services to officers.
  • SB 17-108“Concerning Continuation of the Regulation of Speech-Language Pathologists by the Director of the Division of Professions and Occupations, and, in Connection Therewith, Implementing the Recommendations of the 2016 Sunset Report of the Department of Regulatory Agencies,” by Sen. Larry Crowder and Rep. Janet Buckner. The bill extends the automatic termination date of the “Speech-language Pathology Practice Act” to September 1, 2022.
  • SB 17-189“Concerning Elimination of the Requirement that a Law Enforcement Agency is the Only Entity Authorized to Take Fingerprints for Purposes of a Background Check,” by Sen. John Cooke and Rep. Mike Foote. The bill removes the statutory requirement that a law enforcement agency is the only authorized entity able to take fingerprints for background checks. If an approved third party takes the person’s fingerprints, the fingerprints may be electronically captured using Colorado bureau of investigation-approved or federal bureau of investigation-approved livescan equipment.
  • SB 17-190“Concerning Prohibiting a Carrier from Setting Fees for a Dental Service that is Not Paid For by the Carrier,” by Sens. Dominick Moreno & Larry Crowder and Rep. Matt Gray. The bill prohibits a contract between a carrier and a dentist from requiring a dentist to provide services to a covered person at a fee set by, or subject to the approval of, the carrier unless the services are covered services under the person’s policy and the carrier provides payment for the service under the person’s policy in an amount that is reasonable and not nominal or de minimis.

For a complete list of the governor’s 2017 legislative decisions, click here.

Bills Limiting Evidence in Groundwater Appeals, Expanding Juvenile Court Jurisdiction, and More Signed

On Tuesday, April 18, 2017, Governor Hickenlooper signed 11 bills into law. To date, he has signed 158 bills this legislative session. The bills signed Tuesday include a bill limiting the evidence that may be submitted in appeals from groundwater decisions, a bill expanding the exception for possession of sexually exploitative material to prosecutors and others involved in investigations, a bill giving the juvenile court jurisdiction to decide parental responsibilities issues in juvenile issues, and more. The bills signed Tuesday are summarized here.

  • HB 17-1012“Concerning the Creation of a Pueblo Chile License Plate,” by Rep. Daneya Esgar and Sen. Leroy Garcia. The bill creates the Pueblo chile special license plate. In addition to the standard motor vehicle fees, the plate requires 2 one-time fees of $25.
  • HB 17-1110“Concerning Juvenile Court Jurisdiction Regarding Matters Related to Parental Responsibilities in a Juvenile Delinquency Case,” by Rep. Susan Beckman and Sen. Nancy Todd. The bill allows the juvenile court to take jurisdiction involving a juvenile in a juvenile delinquency case and subsequently enter orders addressing parental responsibilities and parenting time and child support in certain circumstances.
  • HB 17-1138“Concerning the Reporting of Hate Crimes by Law Enforcement Agencies,” by Rep. Joseph Salazar and Sen. Angela Williams. The bill requires the Department of Public Safety to include in its annual hearing information concerning reports submitted by law enforcement agencies about crimes committed in the state during the previous year, including but not limited to information concerning reports of bias-motivated crimes.
  • HB 17-1174“Concerning the Establishment of an Exception for Rural Counties from the Limitations on the Establishment of a Local Improvement District to Fund the Construction of a Telecommunications Service Improvement for Advanced Service,” by Rep. James Wilson and Sens. Lucia Guzman & Larry Crowder. The bill allows a rural county with a population of fewer than 50,000 inhabitants to establish a local improvement district to fund an advanced service improvement in an unserved area of the county.
  • HB 17-1193“Concerning the Installation of Small Wireless Service Infrastructure within a Local Government’s Jurisdiction, and, in Connection Therewith, Clarifying that an Expedited Permitting Process Applies to Small Cell Facilities and Small Cell Networks and that the Rights-of-Way Access Afforded Telecommunications Providers Extends to Broadband Providers and to Small Cell Facilities and Small Cell Networks,” by Reps. Tracy Kraft-Tharp & Jon Becker and Sens. Andy Kerr & Jack Tate. The bill clarifies that the expedited permitting process established for broadband facilities applies to small cell facilities and small cell networks, and that the rights-of-way access afforded to telecommunications providers for the construction, maintenance, and operation of telecommunications and broadband facilities extend to broadband providers as well as small cell facilities and small cell networks.
  • SB 17-036“Concerning Groundwater,” by Sens. Don Coram & Ray Scott and Reps. Jon Becker & Jeni Arndt. The bill limits the evidence that a district court may consider, when reviewing a decision or action of the commission or state engineer on appeal, to the evidence presented to the commission or state engineer.
  • SB 17-068“Concerning Early Support for Student Success Through Access to School Counselors, and, in Connection Therewith, Serving All Grades Through the Behavioral Health Care Professional Matching Grant Program and the School Counselor Corps Grant Program,” by Sen. Nancy Todd and Rep. Jonathan Singer. The bill adds elementary schools to the list of public schools eligible to receive a grant through the behavioral health care professional matching grant program.
  • SB 17-088“Concerning the Criteria Used by a Health Insurer to Select Health Care Providers to Participate in the Insurer’s Network of Providers, and, in Connection Therewith, Making an Appropriation,” by Sens. Angela Williams & Chris Holbert and Reps. Kevin Van Winkle & Edie Hooten. The bill requires health insurers to develop and use standards for selecting participating providers for its network and tiering providers if the insurer carries a tiered network.
  • SB 17-112: “Concerning a Clarification of the Effect of Statutes of Limitations on the Dispute Resolution Process when a Taxpayer Owes Sales or Use Tax to One Local Government but has Erroneously Paid the Disputed Tax to Another Local Government,” by Sen. Tim Neville and Rep. Dan Pabon. The bill seeks to clarify the General Assembly’s intent when it enacted a dispute resolution process in 1985 to address a situation when a taxpayer paid a sales and use tax to one local government when it should have instead paid that disputed amount to a different local government.
  • SB 17-115“Concerning Possession of Sexually Exploitative Material by Persons Involved in Sexually Exploitative Material Cases,” by Sen. John Cooke and Reps. Mike Foote & Yeulin Willett. Under current law there is an exception to the crime of possession of sexually exploitative material for peace officers while in the performance of their duties. The bill expands the exception to a prosecutor, criminal investigator, crime analyst, or other individual who is employed by a law enforcement agency or district attorney’s office and performs or assists in investigative duties.
  • SB 17-137“Concerning the Continuation of the Colorado Health Service Corps Advisory Council,” by Sens. Nancy Todd & Michael Merrifield and Rep. Dominique Jackson. The bill continues the Colorado Health Service Corps Advisory Council indefinitely.

For a list of all of Governor Hickenlooper’s 2017 legislative decisions, click here.

Bills Regarding Hearsay Exception, Free Speech on College Campuses, Juvenile Court Jurisdiction, and More Signed

On Tuesday, April 4, 2017, the governor signed 16 bills into law. He also signed 14 bills into law on March 30, and 12 bills on March 23. To date, the governor has signed 122 bills into law.

Some of the bills recently signed include a bill clarifying the hearsay exception for people with intellectual and developmental disabilities, a bill correcting the Colorado Uniform Trust Decanting Act, a bill clarifying that a juvenile court has jurisdiction to issue civil protection orders in dependency and neglect cases, a bill clarifying a student’s right to free speech on college campuses, and more. The bills signed since March 23 are summarized here.

April 4, 2017

  • HB 17-1051“Concerning Modernization of the Colorado ‘Procurement Code’,” by Reps. Bob Rankin & Alec Garnett and Sens. Andy Kerr & Don Coram. The bill reviews the entirety of the Colorado Procurement Code and makes several updates in an effort to modernize the Code.
  • HB 17-1101“Concerning the Creation of the Youth Corrections Monetary Incentives Award Program in the Division of Youth Corrections,” by Rep. Paul Rosenthal and Sens. Nancy Todd & Kevin Priola. The bill authorizes the Division of Youth Corrections to establish, at its discretion, a youth corrections monetary incentives award program. The purpose of the program is to provide monetary awards and incentives for academic, social, and psychological achievement to juveniles who were formerly committed to the Division to assist and encourage them in moving forward in positive directions in life.
  • HB 17-1103“Concerning a State Sales and Use Tax Exemption for Historic Aircraft on Loan for Public Display,” by Reps. Dan Nordberg & Dan Pabon and Sens. Dominick Moreno & Bob Gardner. The bill creates a state sales and use tax exemption for a historic aircraft that is on loan for public display, demonstration, educational, or museum promotional purposes in the state provided certain conditions are met.
  • HB 17-1107“Concerning the Implementation of a New Computer System by the Division of Motor Vehicles to Facilitate the Division’s Administration of the Operation of Motor Vehicles in the State,” by Reps. Dan Thurlow & Jeff Bridges and Sen. Beth Martinez Humenik. The bill makes statutory changes regarding implementation of a new computer system.
  • HB 17-1109“Concerning Prosecuting in One Jurisdiction a Person who has Committed Sexual Assaults Against a Child in Different Jurisdictions,” by Reps. Terri Carver & Jessie Danielson and Sens. John Cooke & Rhonda Fields. The bill allows a prosecutor to charge and bring a pattern-offense case for all such assaults in any jurisdiction where one of the acts occurred, rather than prosecuting each act in the jurisdiction in which it occurred.
  • HB 17-1111“Concerning Allowing Juvenile Courts to Enter Civil Protection Orders in Dependency and Neglect Cases,” by Rep. Susan Beckman and Sen. Rhonda Fields. The bill clarifies that the juvenile court has jurisdiction to enter civil protection orders in dependency and neglect actions in the same manner as district and county courts. The court must follow the same procedures for the issuance of the civil protection orders and use standardized forms.
  • HB 17-1149“Concerning Special License Plates Issued to Members of the United States Military who Served in the United States Army Special Forces,” by Reps. Tony Exum & Dafna Michaelson Jenet and Sen. Bob Gardner. The bill clarifies which individuals are eligible for a U.S. Army Special Forces license plate.
  • HB 17-1151“Concerning the Regulation of Electrical Assisted Bicycles,” by Reps. Chris Hansen & Yeulin Willett and Sens. Owen Hill & Andy Kerr. The bill defines electrical assisted bicycles and enacts several regulations regarding manufacture, labeling, and government oversight of such bicycles.
  • HB 17-1152: “Concerning the Authority of a Federal Mineral Lease District to Manage a Portion of the Direct Distribution of Money from the Local Government Mineral Impact Fund to Counties for the Benefit of Impacted Areas,” by Reps. Yeulin Willett & Diane Mitsch Bush and Sen. Ray Scott. The bill gives a federal mineral lease district the option to invest a portion of the funding it receives from the local government mineral impact fund in a fund.
  • SB 17-015“Concerning the Unlawful Advertising of Marijuana,” by Sen. Irene Aguilar and Rep. Dan Pabon. The bill makes it a level 2 drug misdemeanor for a person not licensed to sell medical or retail marijuana to advertise for the sale of marijuana or marijuana concentrate.
  • SB 17-016“Concerning the Optional Creation of a Child Protection Team by a County,” by Sens. Cheri Jahn & Tim Neville and Reps. Tracy Kraft-Tharp & Dan Nordberg. The bill allows counties and groups of contiguous counties to choose whether to establish a child protection team, at the discretion of the county director or the directors of a contiguous group of counties.
  • SB 17-048“Concerning Requiring an Officer to Arrest an Offender who Escapes from an Intensive Supervision Program in the Department of Corrections,” by Sen. John Cooke & Rep. Yeulin Willett. The bill requires a peace officer who believes that an offender in an intensive supervision program has committed an escape by knowingly removing or tampering with an electronic monitoring device to immediately seek a warrant for the offender’s arrest or arrest the offender without undue delay if the offender is in the presence of the officer.
  • SB 17-062“Concerning the Right to Free Speech on Campuses of Public Institutions of Higher Education,” by Sen. Tim Neville and Reps. Jeff Bridges & Stephen Humphrey. The bill prohibits public institutions of higher education from limiting or restricting student expression in a student forum, and prohibits those institutions for penalizing free speech.
  • SB 17-066“Concerning Clarifying Retroactively the Authority of a Municipality to Employ a Police Force without Going Through Sunrise Review,” by Sens. Rhonda Fields & John Cooke and Reps. Steve Lebsock & Lori Saine. The bill clarifies that municipalities may employ a police force without going through the review process for groups seeking peace officer status.
  • SB 17-076“Concerning Authority to Spend Money in the Public School Performance Fund,” by Sen. Kevin Priola and Rep. James Coleman. The bill allows the Department of Education to spend money received as gifts, grants, and donations for monetary awards to certain high-performing public schools and in purchasing tangible items of recognition for the schools.
  • SB 17-125“Concerning Allowing Certain Persons who Have Been Exonerated of Crimes to Receive in Lump-Sum Payments Compensation that is Owed to Them by the State,” by Sen. Lucia Guzman and Rep. Dan Pabon. The bill allows an exonerated person to elect to receive the remaining balance of the state’s duty of compensation in a lump sum rather than periodic payments.

March 30, 2017

  • HB 17-1059: “Concerning the Scheduled Repeal of Reports by the Department of Public Safety to the General Assembly,” by Rep. Dan Thurlow and Sen. Jack Tate. The bill continues indefinitely statutory reporting requirements.
  • HB 17-1076“Concerning Rule-making by the State Engineer Regarding Permits for the Use of Water Artificially Recharged into Nontributary Groundwater Aquifers,” by Rep. Jeni Arndt and Sens. Stephen Fenberg & Don Coram. The bill adds a requirement that the state engineer promulgate rules for the permitting and use of waters artificially recharged into nontributary groundwater aquifers.
  • HB 17-1147“Concerning Defining the Purposes of Community Corrections Programs,” by Rep. Lang Sias and Sen. Daniel Kagan. The bill statutorily defines the purpose of community corrections as to further all purposes of sentencing and improve public safety.
  • HB 17-1180: “Concerning Requirements for the Tuition Assistance Program for Students Enrolled in Career and Technical Education Certificate Programs,” by Reps. Faith Winter & Polly Lawrence and Sens. Andy Kerr & Tim Neville. The bill allows students in technical education programs to receive tuition assistance even if they do not meet credit hour requirements for the federal Pell grant program.
  • SB 17-024“Concerning the Hearsay Exception for Persons with an Intellectual and Developmental Disability when a Defendant is Charged with a Crime Against an At-risk Person,” by Sen. Rhonda Fields and Rep. Dave Young. The bill clarifies that the hearsay exception for a person with an intellectual and developmental disability applies if the defendant is charged under the increased penalties for crimes against at-risk persons.
  • SB 17-031“Concerning the Scheduled Repeal of Reports by the Department of Corrections to the General Assembly,” by Sen. Jack Tate and Rep. Jeni Arndt. The bill continues indefinitely reporting requirements for the Department of Corrections and makes other changes.
  • SB 17-033“Concerning the Authority of a Professional Nurse to Delegate Dispensing Authority for Over-the-Counter Medications,” by Sen. Irene Aguilar and Rep. Polly Lawrence. The bill allows a professional nurse to delegate to another person, after appropriate training, the dispensing authority of an over-the-counter medication to a minor with the signed consent of the minor’s parent or guardian.
  • SB 17-073“Concerning Promotion of the Runyon-Fountain Lakes State Wildlife Area,” by Sen. Leroy Garcia and Rep. Donald Valdez. The bill directs stakeholders interested in the Runyon-Fountain lakes state wildlife area (including the Colorado division of parks and wildlife, the city of Pueblo, and the Pueblo conservancy district) to cooperatively engage in a long-term process to promote the maximum beneficial development and maintenance of the area.
  • SB 17-110“Concerning Expanding the Number of Unrelated Children to No More than Four to Qualify for License-exempt Family Child Care,” by Sens. Larry Crowder & John Kefalas and Reps. James Wilson & Jessie Danielson. The bill expands the circumstances under which an individual can care for children from multiple families for less than 24 hours without obtaining a child care license.
  • SB 17-122“Concerning the Duties of the Fallen Heroes Memorial Commission, and, in Connection Therewith, Repealing the Commission and Shifting all Remaining Responsibilities to the State Capitol Building Advisory Committee,” by Sen. Jack Tate and Reps. Terri Carver & Jessie Danielson. The bill repeals the fallen heroes memorial commission and requires the state capitol building advisory committee to take on any remaining duties of the commission.
  • SB 17-123“Concerning a High School Diploma Endorsement for Biliteracy,” by Sens. Rachel Zenzinger & Kevin Priola and Reps. James Wilson & Millie Hamner. The bill authorizes a school district, BOCES, or institute charter high school to grant a diploma endorsement in biliteracy to a student who demonstrates proficiency in English and at least one foreign language.
  • SB 17-124“Concerning a Correction to the ‘Colorado Uniform Trust Decanting Act’,” by Sens. Beth Martinez Humenik & Dominick Moreno and Reps. Edie Hooten & Dan Nordberg. The bill changes one reference to the second trust to the first trust to conform with the Uniform Law Commission’s corrected version of the Act.
  • SB 17-134“Concerning the Exclusion of Certain Areas of an Alcohol Beverage Licensee’s Operation in the Application of Penalties for Certain Violations,” by Sen. Jack Tate and Reps. Dan Nordberg & Leslie Herod. The bill limits penalties for violations relating to the sale of alcohol beverages to a visibly intoxicated or underage person that occur in a sales room for licensees operating a beer wholesaler, winery, limited winery, or distillery, or in a retail establishment, for licensees operating a brew pub, vintner’s restaurant, or distillery pub.
  • SB 17-194“Concerning an Exception to the Statutory Deadlines for Making Income Tax Refunds for Returns Suspected of Refund-related Fraud,” by Sen. Tim Neville and Rep. Dan Pabon. The bill specifies that if the department of revenue makes a determination, in good faith, that there is a suspicion of identity theft or other refund-related fraud, then the statutory deadlines do not apply.

March 23, 2017

  • HB 17-1015: “Concerning Clarifying the Manner in Which Reductions of Inmates’ Sentences are Administered in County Jails,” by Rep. Edie Hooten and Sen. John Cooke. The bill clarifies and consolidates various statutory sections concerning reductions of sentences for county jail inmates.
  • HB 17-1040: “Concerning Authorizing the Interception of Communication Relating to a Crime of Human Trafficking,” by Reps. Paul Lundeen & Mike Foote and Sens. Cheri Jahn & Kevin Priola. The bill adds human trafficking to the list of crimes for which a judge can issue an order authorizing the interception of certain communications.
  • HB 17-1044“Concerning Autocycles, and, in Connection Therewith, Clarifying that an Autocycle is a Type of Motorcycle and Requiring Autocycle Drivers and Passengers to Use Safety Belts and, if Applicable, Child Safety Restraints,” by Rep. Diane Mitsch Bush and Sen. Nancy Todd. The bill amends the definition of “autocycle” and amends the restraint requirements for autocycles.
  • HB 17-1048“Concerning the Prosecution of Insurance Fraud,” by Rep. Mike Foote and Sen. Jim Smallwood. The bill amends language describing the criminal offense of insurance fraud.
  • HB 17-1065“Concerning a Clarification of Requirements Governing the Formation of Metropolitan Districts, and, in Connection Therewith, Limiting the Inclusion of Agricultural Land Within a Metropolitan District Providing Park and Recreational Services and Clarifying Signature Requirements Governing Judicial Approval of a Petition for Organization of a Proposed Special District,” by Rep. Kimmi Lewis and Sen. Vicki Marble. The bill subjects metropolitan districts to certain limitations regarding parks and recreation and clarifies which signatures can be counted by the district court in determining validity.
  • HB 17-1071“Concerning a Process for Repayment of Certain Criminal Monetary Amounts Ordered by the Court to be Paid Following Conviction,” by Reps. Cole Wist & Pete Lee and Sens. Daniel Kagan & Bob Gardner. The bill establishes a process for a defendant who has paid a monetary amount due for a criminal conviction in a district or county court to request a refund of the amount paid if the conviction was overturned or the restitution award was reversed.
  • HB 17-1092“Concerning Contracts Involving License Royalties with Proprietors of Retail Establishments that Publicly Perform Music,” by Rep. Steve Lebsock and Sen. Jack Tate. The bill expands the law covering contracts between performing rights societies and proprietors of retail establishments to cover investigations and negotiations between the two.
  • HB 17-1133“Concerning the Annual Report on Filing-Office Rules by the Secretary of State,” by Reps. Dan Nordberg & Edie Hooten and Sens. Dominick Moreno & Jack Tate. The bill repeals the requirement that the secretary of state annually report to the governor and legislature regarding filing-office rules promulgated under the “Uniform Commercial Code – Secured Transactions.”
  • HB 17-1136“Concerning Consistent Statutory Language for Electronic Filing of Taxes,” by Rep. Mike Foote and Sen. Bob Gardner. The bill changes the EFT and electronic filing requirements in the taxation statutes for consistency, specifying in all cases that the department may require EFT and electronic filing and that the department may promulgate rules to implement EFT and electronic filing.
  • HB 17-1148“Concerning Applications for Registration to Cultivate Industrial Hemp,” by Rep. Jeni Arndt and Sen. John Cooke. The bill adds a requirement to existing registration requirements that applicants to cultivate industrial hemp for commercial purposes provide the names of each officer, director, member, partner, or owner of 10% or more in the entity applying for registration and any person managing or controlling the entity.
  • HB 17-1157“Concerning Reliance by a Financial Institution on a Certificate of Trust,” by Reps. Tracy Kraft-Tharp & Dan Nordberg and Sen. Kevin Priola. The bill requires trustees to provide additional information in a certificate of trust when trustees open a trust deposit account and permits the bank to rely on the certificate of trust absent knowledge of fraud.
  • SB 17-008“Concerning Legalizing Certain Knives,” by Sen. Owen Hill and Rep. Steve Lebsock. The bill removes gravity knives and switchblades from the definition of illegal weapons.

For a list of the governor’s 2017 legislative decisions, click here.

Colorado Court of Appeals: Penalty of Two Times Covered Benefit for Insurance Bad Faith Upheld

The Colorado Court of Appeals issued its opinion in Nibert v. Geico Casualty Co. on Thursday, February 23, 2017.

Bad Faith—C.R.S. § 10-3-1116—Jury Instructions—Statutory Delay—Attorney Fees.

Nibert and her husband were injured when a car collided with their motorcycle. As relevant to this appeal, Nibert had an underinsured motorist (UIM) policy through Geico Casualty Co. (Geico) with a $25,000 coverage limit. Geico offered Nibert $1,500 to settle her claim.

Nibert sued Geico for breach of contract, common law bad faith, and statutory delay under C.R.S. § 10-3-1116. After discovery and before trial, Geico paid Nibert the $25,000 UIM coverage limit to settle the breach of contract claim.

A jury returned verdicts awarding Nibert $33,250 in noneconomic damages on her bad faith claim and $25,000 for her statutory delay claim. The trial court entered judgment on the jury’s verdict for the bad faith claim and judgment of $50,000 for damages on the statutory delay claim. It also granted Nibert’s motion for attorney fees in the amount of $118,875.30.

On appeal, Geico argued that the trial court failed to adequately instruct the jury on its theory of defense that challenges to debatable claims are reasonable. The trial court relied on the Colorado pattern jury instructions governing common law bad faith and first-party statutory claims. While it did not accept Geico’s tendered instructions on these issues, it allowed Geico to present expert testimony regarding the “fairly debatable” issue and to argue its theory of defense to the jury. The Colorado Court of Appeals concluded that the instructions, as given, adequately instructed the jury on the applicable law and the parties were afforded ample opportunity to present their case theories to the jury. The trial court’s ruling was neither manifestly arbitrary, unreasonable, or unfair, nor a misapplication of the law.

Geico then argued that the trial court erred in awarding Nibert recovery of two times her UIM benefit as a penalty. C.R.S. § 10-3-1116(1) provides a first-party claimant the right to bring an action for “two times the covered benefit.” Geico argued that the trial court should have allowed a setoff of the ultimate statutory damages award in the amount of $25,000 previously paid to Nibert on her UIM claim. The court agreed with other divisions that have concluded that a statutory damages award of two times a delayed benefit—even when that benefit has already been paid, resulting in an effective payment of three times the contracted benefit—is contemplated by the plain meaning of C.R.S. § 10-3-1116.

Geico also contended it was error to award attorney fees incurred to prosecute the common law bad faith and statutory delay claims, both before and after the date when payment of the UIM benefit was delayed. They argued the attorney fees should be limited to the period from the date the benefit was first delayed to the date the benefit was actually paid. The court found no support for Geico’s argument that the section does not contemplate an award of attorney fees incurred litigating anything other than a contractual claim or incurred for the time before and after a delayed benefit accrues and is paid.

The court also granted Nibert’s request for an award of her appellate attorney fees.

The judgment and order were affirmed, and the case was remanded for a determination of the amount of reasonable attorney fees and costs.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Insured Not Entitled to Prejudgment Interest when Settlement Reached Prior to Filing Suit

The Colorado Court of Appeals issued its opinion in Munoz v. American Family Mutual Insurance Co. on Thursday, February 23, 2017.

Prejudgment Interest under C.R.S. § 13-21-101(1).

Munoz was injured in a collision with an uninsured motorist (UM). Munoz opened a UM claim with his insurer, American Family Mutual Insurance Co. (American Family). American Family made settlement offers to Munoz but maintained it was not required to pay prejudgment interest because it was only required to do so after a judgment had been entered by a court. Munoz accepted American Family’s final offer, understanding that it did not include interest.

Munoz then sued American Family and the UM. Munoz moved under C.R.C.P. 56(h) for a determination whether American Family was required to include prejudgment interest as part of its UM claim settlement. The trial court ruled, as a matter of law, that the insured is entitled to such interest only when a judgment has been entered and interest is awarded as a component of damages assessed by the jury’s verdict or the court.

On appeal, Munoz argued that the trial court erred because prejudgment interest is a necessary element of compensatory damages that makes an injured party whole. American Family countered that the plain language of C.R.S. § 13-21-101 states that prejudgment interest can only be awarded after a judgment, based on a damages award determined by a trier of fact, has been entered. The Colorado Court of Appeals determined the plain language of the statute requires, prior to prejudgment interest being awarded, that (1) an action must be brought; (2) the plaintiff must claim damages in the complaint; (3) there must be a finding of damages by a jury or the court; and (4) judgment is entered.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Fine to Employer for Workers’ Compensation Insurance Lapse Unconstitutional As Applied

The Colorado Court of Appeals issued its opinion in Dami Hospitality, LLC v. Industrial Claim Appeals Office on Thursday, February 23, 2017.

Dami Hospitality, LLC, operates a motel in Denver, Colorado. For a period in 2006, Dami failed to carry workers’ compensation insurance. It paid the $1,200 fine and obtained insurance. In 2014, the Division of Workers’ Compensation informed Dami that it was again without workers’ compensation insurance and had been for periods during 2006 and 2007, as well as from September 2010 through the date of the division’s notice. Dami admitted receiving the Division’s June 28, 2014, notice, but denied receiving a notice the Division contended it had mailed four months earlier. Dami obtained the necessary insurance by July 9, 2014, but did not otherwise respond to the Division’s letter.

The Division imposed a fine of $841,200 based on C.R.S. § 8-43-409(1)(b)(II) and 7 CCR 1101-3 (Rule 3-6). Dami’s owner, Soon Pak, sent a letter to the Director captioned “Petition to Review,” asking the Director to reconsider the fine. Ms. Pak claimed that she relied on her insurance agent to obtain the necessary insurance and believed the hotel’s insurance policies contained workers’ compensation coverage. She also asserted that the fine was more than her business grossed in a year and it would bankrupt both the hotel and her individually. Ms. Pak’s insurance agent also submitted a letter claiming personal responsibility for the lapse in coverage. In a supplemental order, the Director again ordered Dami to pay the fine, asserting that the previous lapse in coverage should have put Dami on notice as to the need for insurance.

Dami appealed to the Industrial Claim Appeals Panel, which ruled that the Director had failed to consider the factors in Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo. App. 2005), to protect against constitutionally excessive fines. On remand, without taking additional evidence, the Director reinstated his original fine, concluding that Rule 3-6 inherently incorporated the Associated Business Products factors. Dami again appealed, but this time ICAO upheld the Director’s order. Dami appealed to the Colorado Court of Appeals.

The court of appeals first considered whether Dami was deprived of procedural due process. Dami argued that notice by mail was unreasonable, and that a hearing should have been held before the fine was imposed. The court of appeals disagreed. Dami did not request a prehearing conference when it received the first notice of the lapse in insurance, and Dami did not show that the address the Division had on file was incorrect. Therefore, the court found that Dami was not denied procedural due process.

Dami next contended that the $841,200 fine was constitutionally excessive in violation of the Eighth Amendment. Dami argued that section 8-43-409 is unconstitutional on its face because the General Assembly removed a penalty cap in 2005 and failed to impose a statutory deadline for notice of missing insurance coverage, which therefore granted the Director “complete discretion regarding the timing of notice and thus the size of the fine.” The court of appeals found no facial constitutional error, noting that other penalty statutes have been upheld despite a lack of cap or statutory deadline.

However, the court of appeals agreed with Dami that the penalty was unconstitutional as applied because the Director abused his discretion in applying the Associated Business Products factors to Dami’s situation. Dami also argued that the fine is grossly disproportionate both to its ability to pay and to the harm caused by the lack of workers’ compensation insurance. It asserts the Director should also have considered its ability to pay when weighing the constitutionality of the fine. The court of appeals again agreed that the fine was unconstitutional as applied.

The court of appeals evaluated whether Eighth Amendment protections apply to corporations, and determined that Dami’s status as a corporation did not deprive it of Eighth Amendment protections. The court cited Citizens United for the premise that individual constitutional protections can apply to corporations.

Evaluating the particular fine, the court of appeals determined that the Director abused his discretion in imposing the fine because he did not make specific findings regarding the Associated Business Products factors. The court of appeals found that the uncontroverted facts put Dami at the low end of the reprehensibility scale, since Ms. Pak relied on her insurance agent to supply all necessary insurance coverage and the agent admitted he had not informed Ms. Pak about workers’ compensation insurance. The court also found that because Dami had not had a single workers’ compensation claim in its existence and it had fewer than ten employees, there was no actual harm from Dami’s lack of workers’ compensation insurance and low risk of potential harm. The court noted that the record lacked any evidence of comparable fines because the Division failed to supply it, but the information Dami supplied showed that in FY 2006-2007 the total amount of fines for failure to carry insurance “would be $200,000.” The court of appeals also recognized that the Director should have considered Dami’s ability to pay before imposing the fine.

The court of appeals remanded for reconsideration of the excessive fine in light of the Associated Business Products factors.

Tenth Circuit: Concurrent Insurer Responsible for Proportional Shares of Loss for School Fire

The Tenth Circuit Court of Appeals issued its opinion in Philadelphia Indemnity Ins. Co. v. Lexington Ins. Co. on January 19, 2017.

In 2012, Philadelphia Indemnity Insurance Company issued an insurance policy to Tulsa School of Arts and Sciences (TSAS), an Oklahoma charter school. TSAS leased the Barnard Elementary School building from the Independent School District No. 1 of Tulsa County, Oklahoma. TSAS obtained the insurance policy, as required by the lease, naming the District as the payee. The District held a separate insurance policy on the building leased by TSAS and on over 100 other facilities the District owned. The building was damaged by fire on September 5, 2012. The total adjusted loss was $6,014,359.06. The insureds were paid; however, the insurers pursued litigation over which policy covered the damage. Both policies protected against fire damage and included identically worded “other insurance” provisions. Philadelphia sought a declaratory judgment in the U.S. District Court for the Northern District of Oklahoma in March 2013. The district court granted Philadelphia’s motion in December 2015 and denied Lexington’s request for summary judgment.

Rejecting Lexington’s arguments, the Tenth Circuit found that Philadelphia had standing. The court held that Philadelphia met the Constitutional requirement for a case or controversy in the context of a declaratory judgment. Philadelphia’s alleged injury was financial, definite, and concrete. The parties’ interests were adverse: either insurer would bear the loss or share it. Due to the causal connection of how the insurers’ policies interact with one another, a judicial determination of the insurers’ responsibilities under the policies would provide redress. The court stated that this action is between insurers for a declaration of the insurers’ responsibilities, and not an action to enforce a contract. Therefore, Philadelphia had standing.

The Tenth Circuit agreed with the district court’s conclusion. The court held that the district court properly applied Oklahoma insurance law in its decision on summary judgment. The panel applied the framework established by the Oklahoma Supreme Court in Equity Mutual Insurance v. Spring Valley Wholesale Nursery to affirm that both policies were primary polices, the identical policy provisions canceled each other out, and the total loss must be shared proportionally. This reasoning was further supported by the Fifth Circuit’s decision in Southern Insurance Co. v. Affiliated FM Insurance Co. In Southern Insurance, the court applied Mississippi law to hold that concurrent policies containing “other insurance” clauses canceled each other out and required pro rata calculation.

Philadelphia argued that the district court should have required Lexington to pay more because Lexington’s policy limit was $100 million, while its policy limit was $7 million. The court disagreed. Because Lexington’s policy included a “limit of liability” endorsement, Lexington’s policy limit was the amount of loss here and not the full $100 million.

Judge McHugh concurred in part and dissented in part. He agreed with Philadelphia. The district court should have used Lexington’s policy limit of $100 million and not the liability limit to determine the proportional share. The dissenting part also relies on a different interpretation of the default rule from Equity Mutual. Without expressly provided for in the insurance policy, the pro rata calculation should be based on the total policy limit of each policy. This conclusion would result in Philadelphia liable for 6.54% and Lexington 93.46%. The majority of the panel affirmed the lower court’s calculation apportioning 53.79% of the loss to Philadelphia, and 46.21% to Lexington.

Colorado Court of Appeals: Hail in Window Wells Retained Character as Surface Water for Insurance Purposes

The Colorado Court of Appeals issued its opinion in Martinez v. American Family Mutual Insurance Co. on Thursday, February 9, 2017.

Michael Martinez owned a home in Erie, Colorado. On August 3, 2013, a heavy rain and hail storm caused hail to collect in the window wells for his basement windows, and eventually the rain and hail overflowed into his basement windows, causing extensive damage. Martinez filed a claim with American Family, but the insurance company denied his claim after investigation, finding that the damage was caused by “flooding” or “surface water,” both of which were excluded under the insurance policy.

Martinez filed suit, seeking a declaratory judgment on the issue of coverage and asserting claims for contractual and extra-contractual damages. American Family moved for summary judgment on the issue of coverage, arguing that the insurance policy’s water damage exclusions for “flood” and “surface water” applied as a matter of law. The district court granted American Family’s motion, and Martinez appealed.

On appeal, Martinez raised two contentions: (1) the damage to his basement was not caused by “surface water” because the water that collected on his roof and melted hail did not fit the definition of surface water; and (2) even if the water was surface water, it lost that characteristic when it entered his window wells. The court of appeals disagreed on both counts. The court of appeals first evaluated the Colorado Supreme Court opinion in Heller v. Fire Insurance Exchange, 800 P.2d 1006 (Colo. 1990). The court found that the supreme court’s definition of surface water in Heller fit squarely with the issues raised by Martinez, although the facts in Heller differed significantly from those alleged by Martinez.

The court of appeals determined that the water on Martinez’s roof was unquestionably surface water, noting that dwellings were reasonably considered extensions of the earth’s surface. Likewise, melted hail was well within the definition of surface water. The court next evaluated Martinez’s claim that the water in his window wells lost its characteristic as surface water, and disagreed. The window wells were designed to retain the surrounding soil and allow water to drain, therefore they were reasonably considered extensions of the surface and did not transform the collected water into a different type of body of water.

The court of appeals affirmed the trial court’s entry of summary judgment in favor of American Family.

HB 17-1119: Providing a Workers’ Compensation Payment Mechanism for Uninsured Employers

On January 20, 2017, Reps. Tracy Kraft-Tharp & Lang Sias and Sens. Jake Tate & Cheri Jahn introduced HB 17-1119, “Concerning the Payment of Workers’ Compensation Benefits to Injured Employees of Uninsured Employers.”

The bill creates the ‘Colorado Uninsured Employer Act’ to create a new mechanism for the payment of covered claims to workers who are injured while employed by employers who do not carry workers’ compensation insurance. The bill creates the Colorado uninsured employer fund, which consists of penalties from employers who do not carry workers’ compensation insurance.

The bill creates the uninsured employer board to establish the criteria for the payment of benefits, to set rates, to adjust claims, and to adopt rules. The board is required to adopt, by rule, a plan of operation to administer the fund and to institute procedures to collect money due to the fund.

The bill was introduced in the House and assigned to the Business Affairs and Labor Committee.