February 20, 2018

Colorado Court of Appeals: When Liability Based on Respondeat Superior, Settlement with Agent is Setoff Against Jury Verdict for Principal

The Colorado Court of Appeals issued its opinion in Marso v. Homeowners Realty on Thursday, February 8, 2018.

Respondeat Superior—Agent—Amendment of Answer—Affirmative Defense—Setoff—Settlement—Statutory Prejudgment Interest.

Dilbeck was employed by or associated with Homeowners Realty, Inc., d/b/a/ Coldwell Banker Home Owners Realty, Inc. (Coldwell) and acted as the Marsos’ agent in their purchase of a house. Two years after the purchase, the Marsos discovered that uranium tailings had been used as fill material, creating a potential health hazard. The Marsos filed a complaint against Dilbeck and Coldwell alleging negligence against Dilbeck and respondeat superior liability against Coldwell. Before the scheduled trial date, the Marsos settled with Dilbeck for $150,000, inclusive of interest. The jury was instructed to determine the total amount of damages sustained by the Marsos and was not informed of the amount of the settlement with Dilbeck. The jury returned a verdict of $120,000 against Coldwell. In post-trial proceedings, the trial court set off the settlement payment of $150,000 against the $120,000 jury verdict, resulting in a zero recovery for the Marsos. Because the settlement payment exceeded the jury verdict, the court entered judgment in favor of Coldwell and later entered a cost award against the Marsos of approximately $30,000.

On appeal, the Marsos contended that the court abused its discretion in allowing Coldwell to amend its answer to assert the affirmative defense of setoff over the Marsos’ timeliness objection. Because Coldwell did not obtain the settlement agreement until shortly before trial and the Marsos had no right to rely on the absence of a setoff, the amendment did not result in legal prejudice to the Marsos. Under these circumstances, the court did not abuse its discretion in allowing Coldwell to pursue its setoff defense.

The Marsos next argued that the trial court erred when it set off the settlement payment against the jury verdict. When a party’s liability is based entirely on respondeat superior, a settlement with the agent is setoff against the jury verdict entered against the principal. Therefore, the trial court did not err in this regard.

The Marsos also contended that the trial court erred when it set off the settlement payment before statutory prejudgment interest accrued on the jury verdict. Statutory prejudgment interest accrues on the jury verdict before the setoff. Here, the court must calculate the interest that accrued on the jury’s verdict from the date of the Marsos’ injury to the date of Dilbeck’s settlement payment and add it to the jury verdict

The judgment and cost award in Coldwell’s favor was reversed, and the case was remanded for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Complicitor Liability Not Limited to Crimes Containing Culpable Mental State

The Colorado Supreme Court issued its opinion in People v. Childress on Monday, November 23, 2015.

Complicity—Mental State Requirement of Complicitor Liability—Applicability of Complicitor Liability to Strict Liability Offenses.

The People petitioned for review of the court of appeals’ judgment vacating defendant’s conviction of vehicular assault while operating a motor vehicle under the influence of alcohol or drugs. Although it was undisputed that defendant was not driving the vehicle in question, the jury was instructed that he could be found guilty as a complicitor. The court of appeals concluded that because vehicular assault while under the influence is designated a strict liability offense, it requires no culpable mental state on the part of the driver. It further found that the Supreme Court had previously held complicitor liability inapplicable to crimes lacking a culpable mental state requirement.

The Supreme Court reversed the judgment of the court of appeals. The Court reconsidered and clarified the reach and requirements of complicitor liability in this jurisdiction and determined that, as clarified, complicitor liability can extend to strict liability offenses. It remanded the matter to the court of appeals with directions to address any other of defendant’s assignments of error possibly impacting his conviction of vehicular assault.

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

Tenth Circuit: Strict Liability Offense Does Not Qualify as Crime of Violence for Sentencing

The Tenth Circuit Court of Appeals issued its opinion in United States v. Wray on Tuesday, January 27, 2015.

Reginald Gerome Wray pleaded guilty to being a felon in possession of a firearm and was sentenced to 77 months’ imprisonment and three years’ supervised release. On appeal, Mr. Wray disputed that his prior conviction for “sexual assault – 10 years age difference” constitutes a crime of violence to increase his base sentencing level. Mr. Wray argued that under the U.S. Supreme Court’s decision in Begay v. United States, 553 U.S. 137 (2008), his prior conviction should not count as a crime of violence for sentencing purposes.

The Tenth Circuit analyzed U.S.S.G. § 4B1.2 and its application note. The circuit addressed whether Mr. Wray’s offense qualified as a “forcible sex offense” under the language of the application note or if it was conduct that presented a serious risk of potential injury under the residual clause, § 4B1.2(a)(2).

The Tenth Circuit employed a categorical approach in determining whether Mr. Wray’s prior offense was a crime of violence. Analyzing Supreme Court precedent in Begay and Sykes, the Tenth Circuit found that Begay applied to strict liability or negligence crimes, while the Sykes analysis of whether the conduct was purposeful, violent, or aggressive defined the level of risk. Turning to Mr. Wray’s offense, the Tenth Circuit first addressed the government’s argument that all statutory rape offenses are necessarily forcible because minors are not legally able to consent and rejected it. Applying the reasoning of the Fourth Circuit in a similar matter, the Tenth Circuit found that not all sex offenses where there is no legal consent are forcible, and that the absence of legal consent does not preclude the possibility of actual consent. The Tenth Circuit further found that Colorado statutes specifically contemplate non-forcible sex offenses, and Mr. Wray’s offense was not categorically forcible.

Next, the Tenth Circuit evaluated whether Mr. Wray’s offense fell within the residual clause and found that it did not. Following Begay, the Tenth Circuit found that the elements of Mr. Wray’s offense indicated it was a strict liability crime, since the offender need not have knowledge of the victim’s age in order to be culpable. The Tenth Circuit found that because the crime at issue was a strict liability offense, it fell within the Begay exception and did not qualify as a crime of violence.

The case was remanded for resentencing.

Tenth Circuit: Ambiguities in Contract Preclude Summary Judgment

The Tenth Circuit Court of Appeals issued its opinion in Higby Crane Service, LLC v. National Helium, LLC on Tuesday, May 13, 2014.

Higby Crane Service entered into a contract with DCP Midstream, LLC to provide crane services at a gas processing plant of DCP’s wholly owned subsidiary, National Helium. The contract provided that Higby must maintain a commercial general liability (CGL) insurance policy throughout the term of the contract with DCP as an additional insured. In April 2008, a fire started at National Helium that severely damaged Higby’s crane, requiring more than $250,000 worth of repairs. National Interstate Insurance Co. (National) had issued Higby a commercial inland marine policy covering direct loss to certain property. National paid Higby under the policy, then National and Higby sued DCP for the loss. DCP counterclaimed for breach of contract due to Higby’s failure to obtain a CGL policy that could have indemnified DCP and asserted that Higby should bear the loss for damage to its crane. The district court granted summary judgment for plaintiffs National and Higby, and DCP appealed to the Tenth Circuit.

The Tenth Circuit reversed and remanded for additional proceedings to determine whether a CGL policy would have protected DCP from liability. The parties agreed the case should be decided under Colorado law, which provides that summary judgment on a contract dispute is inappropriate if the contract language is ambiguous. The Tenth Circuit determined that the contract was ambiguous as to what specific coverage would have been required under the CGL. The coverage may or may not have indemnified DCP. Because of this ambiguity, the grant of summary judgment was reversed and the case was remanded to the district court.

Colorado Court of Appeals: Printout of Liability Waiver Not Necessary Where Waiver Prerequisite to Playing in League

The Colorado Court of Appeals issued its opinion in Berenson v. USA Hockey on Thursday, October 10, 2013.

Summary Judgment—Best Evidence Rule—Exculpatory Agreement in Online Registration Process.

Annette Berenson appealed the summary judgment in favor of USA Hockey, Inc. and the Colorado Ice Hockey Referees Association (collectively, USA Hockey). The judgment was affirmed.

Berenson played in an amateur hockey league that required participants to register annually through the USA Hockey website. Players were required to signify agreement to the league’s terms by inserting their initials on a Web page with a liability waiver and release. Berenson was injured during a game and sued, seeking to hold USA Hockey liable for her injuries.

USA Hockey filed a motion for summary judgment based on the liability waiver and release Berenson had executed. Berenson testified that she could not remember whether she had agreed to the terms. USA Hockey submitted an affidavit from an employee stating that the online registration process could not be completed without executing the page with the waiver and release and confirming that Berenson had registered the year she was injured. The district court granted USA Hockey’s motion for summary judgment.

On appeal, Berenson argued that the facts stated in the employee’s affidavit were inadmissible as a matter of law and should not have been considered by the court. She contended that under the best evidence rule (codified in CRE 1002), the only admissible evidence showing she had executed the waiver and release would have been a printout of it, which was never produced. The Court of Appeals disagreed.

The Court noted that the primary purpose of the rule is “to prevent error and to guard against fraud in the ascertainment of content.” [See 5 Mueller and Kirkpatrick, Federal Evidence§ 10:17 (3d ed., 2007).] Based on the employee’s affidavit as to how the online registration process worked, there could be no issue of material fact as to whether Berenson had executed an exculpatory agreement with USA Hockey; she had to execute the liability waiver and release to complete the registration process and play in the league.

Summary and full case available here.

Colorado Court of Appeals: Issue Preclusion Does Not Bar Action of Insurer To Prove It Was Not Liable for Actions of Insured

The Colorado Court of Appeals issued its opinion in Shelter Mutual Insurance Co. v. Vaughn on Thursday, March 28, 2013.

Personal Injury—Intentional Acts Exclusion to Insurance—Issue Preclusion.

At a YMCA basketball game, Steven Vaughn, the father of a player, hit Alvin Miller, a referee, several times and injured him. Miller sued Vaughn for assault and battery. Shelter Mutual Insurance Company (Shelter) hired a lawyer to defend Vaughn under a reservation of rights. Miller amended his complaint to add a negligence claim. The assault and battery claim was dropped before trial. The jury found Vaughn negligent and awarded Miller damages.

Shelter filed a declaratory action, asserting that Vaughn’s intentional actions caused Miller’s injuries and therefore the judgment was not covered by Vaughn’s insurance policy. Vaughn argued that Shelter was precluded from claiming he acted intentionally given the jury verdict of negligence. The trial court disagreed, finding that the issue of whether Vaughn acted intentionally was not adjudicated at trial and Shelter’s interest was not identical to Vaughn’s. The court then found Vaughn’s actions were intentional and thus excluded under the policy. Only the ruling on issue preclusion was challenged on appeal.

Issue preclusion bars relitigation of issues actually litigated in and necessary to the outcome of a prior action. Of the four elements that must be proven, the Court of Appeals found two that were not. The Court found that Shelter was not in privity with Vaughn in the underlying trial. Although Shelter funded Vaughn’s defense, it was not a party to the litigation and its interests were not aligned with Vaughn’s. Vaughn wanted to deny all liability, but Shelter only wanted to prove that if Vaughn were liable, it was for intentional acts that would release it from its duty to indemnify. Shelter’s reservation of rights put Vaughn on notice of their divergent interests. The Court further held that Shelter did not have a full and fair opportunity to assert its own interests in the underlying trial and litigate the issue of whether Vaughn was negligent. Shelter’s interests conflicted with Vaughn’s interest.

In sum, issue preclusion will not bar an insurer from later denying coverage to its insured when the insurer defended the insured under a reservation of rights and the insurer had an interest in establishing a different set of facts than the insured in the underlying litigation. The judgment was affirmed.

Summary and full case available here.