March 4, 2015

e-Legislative Report: February 17, 2015

legislationCBA Legislative Policy Committee

For followers who are new to CBA legislative activity, the Legislative Policy Committee (“LPC”) is the CBA’s legislative policy making arm during the legislative session. The LPC meets weekly during the legislative session to determine CBA positions from requests from the various sections and committees of the Bar Association.

Meeting held Friday, February 13

SB 15-129 — Preserving Parent-child Relationships
Sponsor: Senator Kevin Lundberg (R)
The LPC voted to oppose this bill in part because of the fundamental way that it changed the presumption of parenting time away from the “best interest of the child” to a different standard more focused on the parents in divorce proceedings. The bill was heard in committee on Wednesday the 11th and was passed on a party line vote after substantial amendments. SB-129 was referred to the Appropriations Committee for consideration of the bill’s fiscal impact.

SB 15-174 — Uniform Substitute Decision Making Documents Act
Sponsor: Senator Patrick Steadman (D)
The LPC voted to oppose this bill. The committee felt that the bill conflicts with existing statute, was unnecessary in many respects and that it potentially created more gaps and questions with existing law than its adoption would solve.

HB 15-1091 — Policies On Juvenile Shackling In Court
Sponsors: Representative Susan Lontine (D), Senator Michael G. Merrifield (D)
The LPC was concerned that while this bill was very well intentioned, it raised significant potential problems with separation of power between the legislative and judicial branches.

At the Capitol: Week of February 9

SB 15-049 — Real Estate Title Vests In Entity Once Formed
Sponsors: Senator Beth Martinez Humenik (R), Representative Jon Keyser (R)
This bill, supported by the Bar, passed through the Senate this past week. It has been assigned to the House Business Affairs and Labor Committee and has not yet been calendared for a hearing.

HB 15-1121 — Wind Energy Generation
Sponsors: Representative Jon Becker (R), Senator Jerry Sonnenberg (R)
The bill, supported by the Bar, also passed through its first chamber (the House) last week. It will next be heard in the Senate, where it has been assigned to the Agriculture, Natural Resources & Energy Committee. It will be heard by that committee on February 19.

SB 15-077 — Parents’ Bill of Rights
Sponsors: Senator Tim Neville (R), Representative Patrick Neville (R)
The bill passed out of the Senate committee hearing on a party line vote, and was debated on the floor. The bill was passed with amendments, and now moves to the House for consideration. It has not been calendared for consideration.

SB 15-042 — Mandatory Reports Of Animal Abuse
Sponsors: Senator Jerry Sonnenberg (R), Representative Jon Becker (R)
This bill was Postponed Indefinitely (killed) in committee. It will not be considered again this year. The CBA was opposed to the legislation.

HB 15-1101 — Public Defender ADC Records Open Records
Sponsors: Representatives Rhonda Fields (D), Polly Lawrence (R)
This bill was Postponed Indefinitely (killed) in committee. It will not be considered again this year. The CBA was opposed to the legislation.

HB 15-1174 — Information Protections Domestic Violence Victims
Sponsors: Representative Terri Carver (R), Senator Laura Woods (R)
The CBA has not taken a position on this bill—though we are working with the sponsors to ensure that the program will work as intended and not harm the real estate transaction process as a result of its adoption or implementation. It is likely that the CBA and its sections will participate in stakeholder groups and work sessions this summer.

New Bills of Interest

Senate

SB 15-177 — HOA Construction Defect Lawsuit Approval Timelines
Sponsors: Brian DelGrosso (R), Mark Scheffel (R), Jonathan Singer (D), Jessie M. Ulibarri (D)
The bill states that when the governing documents of a common interest community require mediation or arbitration of a construction defect claim and the requirement is later amended or removed, mediation or arbitration is still required for a construction defect claim. These provisions are in section 2 of the bill.

Section 2 also specifies that the mediation or arbitration must take place in the judicial district in which the community is located and that the arbitrator must:

  • Be a neutral third party;
  • Make certain disclosures before being selected; and
  • Be selected as specified in the common interest community’s governing documents or, if not so specified, in accordance with the uniform arbitration act.

Section 1 adds definitions of key terms. Section 3 requires that before a construction defect claim is filed on behalf of the association:

  • The parties must submit the matter to mediation before a neutral third party; and The board must give advance notice to all unit owners, together with a disclosure of the projected costs, duration, and financial impact of the construction defect claim, and must obtain the written consent of the owners of units to which at least a majority of the votes in the association are allocated.

Section 4 adds to the disclosures required prior to the purchase and sale of property in a common interest community a notice that the community’s governing documents may require binding arbitration of certain disputes.

House

HB 15-1025 — Competency To Proceed Juvenile Justice System
Sponsors: Representative Paul Rosenthal (D), Senator Linda M. Newell (D)
The bill establishes a juvenile-specific definition of “incompetent to proceed” for juveniles involved in the juvenile justice system, as well as specific definitions for “developmental disability”, “intellectual disability”, “mental capacity”, and “mental disability” when used in this context. The bill clarifies the procedures for establishing incompetency, as well as for establishing the restoration of competency.

HB 15-1216 — Basis For Expert Opinion Testimony
Sponsors: Representative Kevin Priola (R), Senator John Cooke (R)
The bill prohibits a person from testifying concerning the person’s expert opinion unless certain conditions are met.

Tenth Circuit: FTCA Claims Subject to Jurisdictional Time Limitations

The Tenth Circuit Court of Appeals issued its opinion in Barnes v. United States on Wednesday, January 21, 2015.

Larry Barnes was indicted in Oklahoma federal court for two crimes related to possession and distribution of methamphetamine. He was convicted and sentenced to two concurrent 66-month sentences. Barnes appealed. While his appeal was pending, the government acquired evidence that testimony of an ATF agent, a Tulsa police officer, and a confidential informant had been fabricated, and asked the court to vacate Barnes’ conviction and immediately release him from prison. The court granted that motion on July 2, 2009.

Seeking redress, Barnes filed administrative tort claims with the BATF on May 20, 2010. Receiving no response from the BATF, Barnes filed a civil lawsuit in Oklahoma state court on May 13, 2011, which the government removed to federal court. On September 23, 2011, the BATF filed a motion to dismiss for lack of subject matter jurisdiction, arguing that since the FTCA vests exclusive jurisdiction over federal tort claims in the federal district court, and removal jurisdiction requires a colorable state court claim, and plaintiffs had no jurisdiction in state court, the federal court therefore lacked jurisdiction as well. On October 25, 2011, while its motion to dismiss was pending, the BATF notified Barnes via certified mail of its formal denial of the administrative claims. The letter specifically advised that any appeal must be filed within six months of the date of  mailing of the letter, or by April 25, 2011.

On March 23, 2012, the federal district court granted the BATF’s motion to dismiss, and dismissed the case without prejudice. On August 22, 2012, Barnes filed a second lawsuit in federal district court. The BATF again moved to dismiss, this time for lack of jurisdiction under F.R.C.P. 12(b)(1) due to the lawsuit being time-barred. The district court granted the motion to dismiss and Barnes appealed.

The Tenth Circuit analyzed the provisions of 28 U.S.C. § 2675(a) and 28 U.S.C. § 2401(b), and found the two sections acted like “book-ends” for the time limit to file an FTCA claim. Barnes argued that his second lawsuit was timely because he was filing under § 2675(a)’s “deemed denial” provision, but the Tenth Circuit found that the BATF’s October 25, 2011 letter explicitly triggered § 2401(b)’s six-month limitations period. The Tenth Circuit found that the court lacked jurisdiction due to the time-bar.

The Tenth Circuit also analyzed Supreme Court precedent in Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89 (1990), regarding jurisdictional bars and equitable estoppel. After a lengthy analysis, the Tenth Circuit concluded it was bound by previous circuit precedent to apply a jurisdictional bar to FTCA claims. Even analyzing Barnes’ claims under equitable estoppel principles, though, the Tenth Circuit still found no relief for Barnes, because he could not show “affirmative misconduct” by the BATF.

The Tenth Circuit found that the district court correctly dismissed the claims, but incorrectly did so with prejudice. Claims subject to a jurisdictional bar are properly dismissed without prejudice. The Tenth Circuit affirmed the judgment of the district court but remanded for correction of the dismissal as without prejudice.

Colorado Supreme Court: Error for Trial Court to Take Judicial Notice of Defendant’s Absence in Court

The Colorado Supreme Court issued its opinion in Doyle v. People on Tuesday, February 17, 2015.

Colorado Rules of Evidence—Judicial Notice.

Defendant petitioned for review of the court of appeals’ judgment affirming his conviction for violating a condition of his bail bond. At the request of the prosecution, the trial court took judicial notice of the fact that defendant failed to appear in court on a particular day, as mandated by the relevant condition of his bond. The court instructed the jury that although it need not accept this judicially noticed fact as true, a judicially noticed fact is one that the court has determined is not the subject of reasonable dispute and one that the court has accepted as true.

The Supreme Court reversed. The resolution of a factual matter at issue in a prior judicial proceeding does not become an indisputable fact within the contemplation of CRE 201 because it was reflected in a court record. Accordingly, the trial court erred in taking judicial notice that defendant failed to appear in court on a particular day. Because the jury was instructed that this judicially noticed fact was not subject to reasonable dispute and had already been accepted as true by the court, the error was not harmless.

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

Colorado Supreme Court: Excusing Noncompliance with Date Certain Coverage Period Would Fundamentally Alter Terms of Insurance Contract

The Colorado Supreme Court issued its opinion in Craft v. Philadelphia Indemnity Insurance Co. on Tuesday, February 17, 2015.

Claims-Made Insurance Policies—Notice Requirements in Insurance Policies—Notice-Prejudice Rule.

In this opinion, the Supreme Court answered a question of state law certified by the U.S. Court of Appeals for the Tenth Circuit. The question, as reframed by the Court, was whether Colorado’s notice-prejudice rule applies to a date-certain notice requirement in a claims-made insurance policy. The Court concluded that excusing noncompliance with such a requirement would alter a fundamental term of the insurance contract and would not serve the public policy interests that originally supported the adoption of the notice-prejudice rule. Accordingly, it answered the question in the negative and returned the case to the Tenth Circuit for further proceedings.

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

Colorado Court of Appeals: Snowplow is Motor Vehicle so Immunity Under CGIA Waived

The Colorado Court of Appeals issued its opinion in Roper v. Carneal on Thursday, February 12, 2015.

Motion to Dismiss for Lack of Subject Matter Jurisdiction—Colorado Governmental Immunity Act—Tort Claims— “Motor Vehicle” Versus “Special Mobile Machinery.”

Carneal, an El Paso County employee, was driving a county-owned snowplow when he allegedly failed to stop at a stop sign. Plaintiff, Roper, drove off the road to avoid Carneal and crashed, suffering personal injuries and damage to her car. She filed this action against Carneal and the Board of County Commissioners of El Paso County (County Board), alleging claims of negligence per se, negligence, respondeat superior, and property damage/loss of use.

Defendants moved to dismiss for lack of subject matter jurisdiction, arguing they were immune from suit under the Colorado Governmental Immunity Act (CGIA). The CGIA generally bars tort-related claims against public entities and employees, but waives immunity for a public employee’s operation of a motor vehicle under certain circumstances. Defendants argued the snowplow was “special mobile machinery” rather than a “motor vehicle,” and therefore the motor vehicle waiver of immunity did not apply.

The district court denied the motion to dismiss based on the nature of the vehicle (a modified dump truck with seats for two but generally driven by one operator and used exclusively on county roads to remove snow and ice). Defendants filed this interlocutory appeal.

The Court of Appeals reviewed the statutory definitions of “motor vehicle” and “special mobile machinery” and concluded the snowplow in this instance was a “motor vehicle”; therefore, governmental immunity was waived. The Court noted that a “motor vehicle” under CRS §42-1-102(58) must be designed primarily for travel on the public highways and generally and commonly used to transport persons and property over the public highways. The undisputed evidence was that the snowplow was a dump truck designed to remove snow and ice from the public highways by traveling on them. The Court found that a vehicle need only transport persons or property, despite the use of “and” in the statute, because requiring transport of both persons and property would be “absurd and unreasonable.” It further held that carrying sand and salt constituted transporting property.

The Court also held that the definition of “special mobile machinery” requires a finding that the vehicle is “only incidentally operated or moved over public highways.” Because it was exclusively driven over the public highways, the snowplow did not meet this requirement. The order was affirmed and the case was remanded for further proceedings.

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

Colorado Supreme Court: Entity that was Non-Existent when Contractual Duty Created Still May Be Subject to Interrelated Contracts Doctrine

The Colorado Supreme Court issued its opinion in S K Peightal Engineers, Ltd. v. Mid Valley Real Estate Solutions V, LLC on Monday, February 9, 2015.

Economic Loss Rule—Interrelated Contracts Doctrine.

In this civil case, the Supreme Court considered: (1) whether entities that did not exist at the time the relevant contracts were completed can still be subject to the economic loss rule through the interrelated contracts doctrine; and (2) whether commercial entities situated similarly to respondent, which was a third-party beneficiary to a contract that interrelated to the contract by which the home at issue was built, are among the class of plaintiffs entitled to the protections of the independent tort duty to act without negligence owed by construction professionals to subsequent homeowners when constructing residential homes. The Court held that (1) the fact that an entity was nonexistent at the time the relevant contracts were completed does not alter the analysis under the interrelated contracts doctrine; and (2) the independent duty at issue does not apply here because, as a third-party beneficiary of a commercially negotiated contract that interrelates to the contract under which the home was built, respondent cannot properly be considered a subsequent homeowner. The judgment was reversed and the case was remanded to the court of appeals to return to the trial court for further proceedings consistent with this opinion.

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

Informal Investiture of Nina Wang as U.S. District Court Magistrate Judge

WangNinaOn Monday, February 9, 2015, an informal investiture of Magistrate Judge Nina Wang was held at the Byron C. Rogers Courthouse. Magistrate Judge Wang is the newest magistrate judge for the U.S. District Court for the District of Colorado. She replaces Magistrate Judge Boyd N. Boland, who retired effective February 8, 2015.

Prior to her nomination to the U.S. District Court, Wang was a partner in the Intellectual Property group at Faegre Baker Daniels LLP, where she focused on complex intellectual property litigation. Wang has served as the Chair of the Colorado IP Section of the Colorado Bar; as Co-Chair of the Judicial Committee for the Colorado Women’s Bar Association; and as past-President of the Colorado Asian Pacific American Bar Association. She received her J.D. from Harvard Law School and her undergraduate degree, summa cum laude, from Washington University.

A formal investiture will be held at a later date.

Colorado Court of Appeals: Interlocutory Review Dismissed Because No Question of Law Involved

The Colorado Court of Appeals issued its opinion in Rich v. Ball Ranch Partnership on Thursday, January 29, 2015.

Contract—Question of Law—Interlocutory Appeal—CRCP 56(h)—CAR 4.2(b).

This case involves a dispute over operation of the Ball Ranch Partnership. Petitioners moved for a determination of a question of law pursuant to CRCP 56(h), asking the court to interpret a section of the partnership agreement.

CRS § 13-4-102.1(1) and CAR 4.2(b) authorize the Court of Appeals to allow “an interlocutory appeal of a certified question of law” in a civil case, if the lower court “certifies that immediate review may promote a more orderly disposition or establish a final disposition of the litigation” and “[t]he order involves a controlling and unresolved question of law.” Although the lower court certified this case for immediate review, a typical issue of contract interpretation, such as the issue in this case, is not such a question of law within the meaning of CRS § 13-4-102.1 and CAR 4.2. Because this case does not present any abstract or pure question of law underlying the district court’s interpretation of the contract, the petition was dismissed.

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

Tenth Circuit: Contract Conflict of Laws Rules Govern Claims for Benefits Under Insurance Policies

The Tenth Circuit Court of Appeals issued its opinion in Kipling v. State Farm Mutual Automobile Insurance Co. on Monday, December 29, 2014.

Kathryn Kipling and her husband, Christopher, were Colorado residents involved in a motor vehicle accident in Colorado in July 2009 in which Christoper was killed and Kathryn was severely injured. At the time of the accident, the Kiplings were in a 2005 Chevrolet Suburban owned by Quicksilver for Christopher’s business and personal use. The other driver was solely at fault for the accident, but was underinsured, so Kathryn Kipling filed an underinsured motorist claim against State Farm, Quicksilver’s insurer. State Farm tendered policy limits on the Suburban and on one other vehicle insured to Quicksilver in Colorado. Kipling sought additional compensation from UIM benefits for four vehicles owned by Quicksilver and insured in Minnesota, but State Farm denied coverage.

Kipling filed a diversity action in the U.S. District Court for the District of Colorado, seeking payment of the UIM benefits. State Farm moved for summary judgment, arguing that Minnesota law applied and prohibited stacking of coverage. The district court denied summary judgment and agreed with Kipling that Colorado law applied. After a jury trial to determine damages, the district court entered judgment on the verdict. State Farm filed an F.R.C.P. 59(e) motion to alter or amend the verdict, arguing that even under Colorado law it would not have to pay UIM benefits because Colorado law did not prohibit the policy from tying UIM coverage to occupancy of the insured vehicle. The district court denied the motion as an improper attempt to advance a new argument. State Farm appealed, raising two arguments: (1) the same argument raised in its F.R.C.P. 59(e) motion regarding tying UIM coverage to vehicle occupancy, and (2) the district court erred in applying tort conflicts-of-laws principles in resolving which state’s substantive law governed the claim.

The Tenth Circuit rejected State Farm’s first argument because it was not timely raised in the district court. The Tenth Circuit found no abuse of discretion in the district court’s denial of State Farm’s motion as untimely. And, after reviewing the record below, the Tenth Circuit agreed with the district court that the argument had not been made previously. The district court’s judgment on this point was affirmed. As to the conflict of laws argument, the Tenth Circuit examined the Restatement provisions concerning tort conflict of laws and contract conflict of laws. The district court applied tort conflict of laws principles, but the Tenth Circuit found that an insurance policy is more akin to a contract, and the correct analysis would have been under contract conflict of laws. The Tenth Circuit remanded to the district court to determine whether Colorado or Minnesota law applied under a conflict of laws analysis for contracts.

Colorado Supreme Court: Trial Court Abused Discretion by Allowing Change of Venue

The Colorado Supreme Court issued its opinion in In re Hagan v. Farmers Insurance Exchange; In re Ewald v. Farmers Insurance Exchange; In re Mayfield v. Farmers Insurance Exchange on Monday, January 26, 2015.

Change of Venue.

In these original proceedings under CAR 21, plaintiffs sought extraordinary relief from the trial courts’ orders granting a change of venue. The Supreme Court issued rules to show cause why those orders should not be vacated and venue transferred back to Boulder County District Court and consolidates its ruling here.

The Court held that the trial courts abused their discretion when they granted a change of venue in each of these cases. First, Boulder County District Court is a proper venue for all three cases; under CRCP 98(c)(1), plaintiffs were allowed to file their complaints in the county of their choice because defendant is a nonresident. Second, the trial courts granted the motions without the requisite evidentiary support. The affidavits that defendant submitted improperly focus on convenience to plaintiffs and do not satisfy the standard set forth in Sampson v. District Court, 197 Colo. 158, 160, 590 P.2d 958, 959 (1979). Consequently, the Court made the rules absolute and directed the transferee courts to return the cases to Boulder County District Court.

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

Tenth Circuit: Collateral Estoppel Bars Relitigation of Claims Decided in Other Federal Courts

The Tenth Circuit Court of Appeals issued its opinion in Stan Lee Media Inc. v. Walt Disney Co. on Tuesday, December 23, 2014.

In October 1998, legendary comic book artist Stan Lee entered into an employment agreement (“1998 agreement”) with a Colorado company he formed to create new characters, Stan Lee Entertainment, Inc. (the predecessor to Stan Lee Media). At the time, Lee had worked for Marvel for approximately 60 years, and the agreement expressly recognized he would continue to work for Marvel. In November 1998, Lee entered into a similar agreement with Marvel, transferring to Marvel essentially the same rights he had transferred to Stan Lee Media through the 1998 agreement. In 2001, Stan Lee repudiated the 1998 agreement, contending Stan Lee Media committed material breach and reclaiming ownership of the intellectual property rights. Over five years later, Stan Lee Media recorded the 1998 agreement with the U.S. Copyright Office, asserting in a cover letter that the 1998 agreement transferred to Stan Lee Media ownership rights in many famous characters, including Spider-Man and Iron Man.

Meanwhile, Marvel exploited the comic book universe by selling and licensing the character rights to major production companies in order to create, sell, and distribute motion pictures. These included 2002’s Spider-Man movie, which has grossed over $800 million worldwide. Despite Marvel’s success, Stan Lee Media did not assert ownership interests over the characters until 2007, at which time it filed lawsuits across the country. Many courts have considered Abadin v. Marvel Entm’t, Inc., No. 09 Civ. 0715 (PAC), 2010 WL 1257519 (S.D.N.Y. Mar. 31, 2010) (Abadin I) binding precedent, including the lower court in this action.

Stan Lee Media filed a claim against Disney in the U.S. District Court for the District of Colorado, alleging a single cause of action for federal copyright infringement. The district court granted Disney’s motion to dismiss, relying on Abadin I as precluding the Colorado litigation. Since the district court’s decision, the Ninth Circuit has issued a decision in a related suit. The U.S. District Court for the Central District of California dismissed Stan Lee Media’s claims on res judicata grounds, but the Ninth Circuit affirmed on different grounds, finding that Stan Lee Media failed to state a claim that is plausible on its face.

The Tenth Circuit reviewed the Ninth Circuit decision, the briefing in the Ninth Circuit and the Central District of California, and supplemental briefing submitted in the Tenth Circuit, and found that none of the elements of collateral estoppel can be reasonable debated, because each are present in the Tenth Circuit case.

The Tenth Circuit found that only the fourth element of collateral estoppel was seriously contested — Stan Lee Media alleges it did not have a full and fair opportunity to litigate the ownership issue. However, the Tenth Circuit rejected that argument. Stan Lee Media devoted five full pages in a response explaining how its claims met the Iqbal/Twombly and Rule 8 standards. Further, the Ninth Circuit’s decision was a dismissal with prejudice, so there is no point in allowing Stan Lee Media to amend its complaint. Finally, the Ninth Circuit’s singular and readily discernible rationale for dismissal — that Stan Lee Media’s claims are “simply implausible,” — clears all remaining obstacles to the application of collateral estoppel.

The Tenth Circuit affirmed the district court’s dismissal of Stan Lee Media’s complaint for failure to state a claim.

Colorado Supreme Court: Abuse of Discretion Not to Dismiss Lawsuit Filed After Expiration of Statute of Limitations

The Colorado Supreme Court issued its opinion in In re Malm v. Villegas on Tuesday, January 20, 2015.

Civil Procedure—Time for Service of Process.

Villegas petitioned for relief pursuant to CAR 21 from an order of the district court granting Malm’s motion to reopen her personal injury lawsuit. The court denied Villegas’s motion to reconsider and dismiss the action for failure to prosecute, despite the passage of more than seven years between the filing and service of the complaint. Relying largely on Malm’s self-reported efforts to find and serve Villegas, as well as Villegas’s failure to demonstrate prejudice from the delay, the district court found that service was made within a reasonable time. The Supreme Court issued a rule to show cause why the district court had not abused its discretion in declining to dismiss for failure to prosecute.

The Court made its rule absolute and remanded the case with directions to dismiss the action. The delay between filing and service of the complaint extended beyond expiration of the applicable statute of limitations and there were no factual findings that the delay was the product of either wrongful conduct by the defendant or some formal impediment to service. Because the service was not made within a reasonable time, the district court abused its discretion in declining to dismiss the lawsuit for failure to prosecute.

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