May 18, 2013

Tenth Circuit: Signed Release Barred Plaintiff’s Negligence Claim Against Outdoor Education Center

The Tenth Circuit published its opinion in Squires v. Breckenridge Outdoor Education Center on Tuesday, May 7, 2013.

In 2008, Plaintiff, a legally blind child with cerebral palsy and cognitive delays, was severely injured while skiing at Breckenridge Ski Resort in Colorado. Before the trip, Defendant sent documents regarding the trip to the participants’ parents, including Plaintiff’s mother, Mrs. Squires. The documents included a Letter to Students and a Release. Plaintiff and her mother signed the Release.

On the first day of skiing, Plaintiff was injured when another skier lost control and skied into the tethers connecting Plaintiff and her instructor. Plaintiff filed this action claiming Defendant’s negligence and gross negligence caused her injuries. Defendant moved for summary judgment, arguing the Release barred Plaintiff’s negligence claim and there was no evidence to support her gross negligence claim. The magistrate judge granted summary judgment in favor of Defendant on Plaintiff’s negligence claim, and denied Defendant’s motion on Plaintiff’s gross negligence claim. This claim proceeded to a jury, which found Defendant not liable. Plaintiff appealed.

On appeal, Plaintiff argued the Release was unenforceable. She reasoned that the Release was invalid under the four-part test articulated in Jones v. Dressel, 623 P.2d 370 (Colo. 1981), and that her mother did not make an informed decision as required by C.R.S. § 13-22-107.

In determining whether an exculpatory agreement is valid, Colorado courts consider four factors: (1) the existence of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language. Jones, 623 P.2d at 376.

Plaintiff challenged only the magistrate judge’s conclusion on the fourth factor. In making this  determination, Colorado courts examine “the actual language of the agreement for legal jargon, length and complication, and any likelihood of confusion or failure of a party to recognize the full extent of the Release provisions.” Chadwick v. Colt Ross Outfitters, Inc., 100 P.3d 465, 467 (Colo. 2004). The Tenth Circuit found the Release signed by Plaintiff and her mother clearly and unambiguously waived any negligence claims Plaintiff might have brought against Defendant. Contrary to Plaintiff’s argument, Colorado law does not require that exculpatory agreements refer to the specific activity in which the plaintiff participated and was injured.

The Tenth Circuit then turned to whether Mrs. Squires’s consent to the Release was voluntary and informed, as required by C.R.S. § 13-22-107. Plaintiff argued it was not voluntary and informed, because her mother did not understand the risks involved with adaptive skiing and, specifically, the use of bi-skis. Considering not only the language of the Release, but also the information Defendant provided to Plaintiff and Mrs. Squires in connection with the Release, as well as Mrs. Squire’s actual knowledge on the date she signed the Release, the Tenth Circuit concluded Mrs. Squires’s decision to Release Plaintiff’s prospective negligence claims against Defendant was informed. Mrs. Squires had sufficient information from which to evaluate the degree of risk Plaintiff faced.

The Court concluded the Release satisfied both the Jones test and the voluntary and informed requirement of § 13-22-107 and was, therefore, enforceable.

The magistrate judge’s order granting summary judgment to Defendant on Plaintiff’s negligence claim is AFFIRMED.

Colorado Court of Appeals: Underinsured Motorist Benefits Only Triggered When Policy Limits Reached on Tortfeasor’s Liability Policy

The Colorado Court of Appeals issued its opinion in Jordan v. Safeco Insurance Company of America, Inc. on Thursday, March 28, 2013.

Summary Judgment—Underinsured Motorist Benefits.

Plaintiffs Philip and Roberta Jordan appealed the district court’s summary judgment in favor of defendant Safeco Insurance Company of America, Inc. (Safeco) on their claim that Safeco unreasonably denied them underinsured motorist (UIM) benefits. The judgment was affirmed.

In 2009, the Jordans were involved in an automobile accident with J.F., a minor driver. The Jordans were injured and sued J.F. J.F.’s automobile insurance policy covered damages for injury to others up to $100,000 per person or $300,000 per accident. The Jordans settled for $60,000 and $38,500, respectively.

The Jordans sought underinsured motorist (UIM) benefits under their policy with Safeco, asserting that the policy covered all damages unpaid under the settlements, up to the policy limit. Safeco maintained that their UIM coverage would be triggered only if either of them had damages exceeding the $100,000 limit of J.F.’s policy, which neither did.

The Jordans sued Safeco, asserting claims for (1) common law bad faith breach of an insurance contract; (2) unreasonable delay and denial of payment of a claim in violation of CRS §§ 10-3-1115 and -1116; and (3) deceptive trade practice in violation of the Colorado Consumer Protection Act (CCPA). The Jordans moved for summary judgment under their unreasonable delay claims, and Safeco moved for summary judgment on the same claims and the bad faith claim. The parties stipulated that neither could prove damages in excess of $100,000, and the court granted the Jordans’ motion to dismiss their own CCPA claim.

The court granted Safeco’s motion for summary judgment. On appeal, the Jordans challenged only the grant of summary judgment in favor of Safeco under CRS §§ 10-3-1115 and -1116 and conceded that no material facts were disputed.

The Court of Appeals concluded that Safeco’s denial of coverage was permissible under the clear language of the policy, as well as the unambiguous terms of CRS § 10-4-609. The policy language unambiguously provides that payment of UIM benefits are only for damages above the tortfeasor’s insurance policy liability limit. Here, the damages did not exceed those limits.

The Jordans also argued that under CRS § 10-4-609, an insured’s good faith settlement with a tortfeasor necessarily exhausts the tortfeasor’s liability limits. That section, as amended January 1, 2008, requires that UIM coverage “shall be in addition to any legal liability coverage and shall cover the difference, if any, between the amount of the limits of any legal liability coverage and the amount of the damages sustained.” This is plain and unambiguous language. The trigger is the exhaustion of the tortfeasor’s “limits of . . . legal liability coverage.” The judgment was affirmed.

Summary and full case available here.

Colorado Court of Appeals: Colorado Governmental Immunity Act Does Not Provide Waiver for Unimproved Areas of State Park

The Colorado Court of Appeals issued its opinion in Burnett v. State of Colorado, Department of Natural Resources, Division of Parks and Outdoor Recreation on Thursday, March 28, 2013.

Negligence—Camping—Immunity—Waiver—Colorado Governmental Immunity Act—Public Facility—Injuries—Dangerous Conditions.

Sara Burnett appealed the trial court’s judgment dismissing her negligence claim against the Colorado Department of Natural Resources (CDNR). The judgment was affirmed.

Burnett was injured while camping in a designated campground in Cherry Creek State Park, which is operated by the CDNR, when she was struck by a falling tree branch while sleeping in her tent. Burnett contended that the trial court erred in determining that the CDNR did not waive immunity for her injuries under the Colorado Governmental Immunity Act (CGIA). Although the campsite and campground were public facilities under the CGIA, the tree itself was not a public facility and the state retained immunity for injuries resulting from branches falling from trees in unimproved parts of a state park. Because there is no waiver of immunity under the CGIA for dangerous conditions in an unimproved area within a state park, the trial court did not err in dismissing Burnett’s negligence claim.

Summary and full case available here.

Colorado Court of Appeals: Hotel Owes Intoxicated Guest Duty of Care; Summary Judgment Reversed

The Colorado Court of Appeals issued its opinion in Groh v. Westin Operators, LLC on Thursday, March 28, 2013.

Negligence—Hotel Contract—Duty of Care—Reasonableness—Breach—Proximate Cause.

Plaintiff Jillian Groh appealed the summary judgment entered in favor of defendant Westin Operator, LLC (Westin). The judgment was reversed in part and the case was remanded for further proceedings.

The Westin asked Groh and her guests to leave the hotel after Groh and her friends, who were intoxicated, became loud in the hotel. After Westin employees escorted Groh and her friends out of the front entrance to the hotel, one of Groh’s friends, who was also intoxicated, attempted to drive them home and rear-ended a vehicle that was traveling well below the speed limit. Groh sustained severe and permanent injuries.

On appeal, Groh argued that the Westin did not act reasonably in evicting Groh and her friends from the hotel, and that the trial court abused its discretion in granting summary judgment to Westin on her negligence claim. A hotel must evict a guest in a reasonable manner, which precludes ejecting a guest into foreseeably dangerous circumstances resulting from either the guest’s condition or the environment.

Here, a jury could find that the Westin set in motion the chain of events that led to Groh’s injury by entering her room without permission; deciding to evict her notwithstanding the absence of any complaints from other guests; and then—despite knowing that she was intoxicated and was accompanied by others who were as well—escorting her from the premises rather than allowing her to wait for a taxi in the lobby, a public area. Therefore, although the Westin properly terminated its contract with Groh and then could evict her, the disputed facts and favorable inferences in the record preclude finding, as a matter of law, that it did so in a reasonable manner. Because a reasonable jury could find a breach of this duty on the present record, the trial court erred in granting summary judgment to Westin on Groh’s negligence claim.

Summary and full case available here.

Colorado Court of Appeals: Exclusive Remedy Provision of Workers’ Compensation Act Did Not Bar Plaintiff from Seeking Damages in Tort

The Colorado Court of Appeals issued its opinion in Krol v. CF&I Steel on Thursday, March 14, 2013.

Summary Judgment—Workers’ Compensation—CRS §§ 8-41-401 and -402—Statutory Employer—“On and To”—Summary Judgment Sua Sponte.

Plaintiff Stanislaw Krow appealed the trial court’s motion of summary judgment in favor of defendant CF&I Steel. The judgment was reversed and the case was remanded with directions.

CF&I owns a rail mill in Pueblo. It has several industrial cranes on the property, many of them inside buildings. In July 2002, CF&I and Alpine Crane entered into a contract obligating Alpine to maintain and inspect CF&I’s cranes. In January 2007, CF&I and SK’s Industrial Management, LLC (SKIM) entered into a contract obligating SKIM to train CF&I’s employees to maintain and inspect the cranes. That month, Krol, an employee of SKIM, went to the mill to provide inspection training. While he was standing on top of one of the cranes, training a CF&I employee how to inspect a crane, the crane moved and Krol was injured.

Krol received workers’ compensation benefits through SKIM’s workers’ compensation insurance. He sued CF&I, asserting several tort claims. CF&I moved for summary judgment pursuant to CRS § 8-41-402, contending that the undisputed facts established that Krol was on its property when he was injured. Therefore, CF&I argued, it was Krol’s “statutory employer” and he could not seek additional compensation from CF&I as a matter of law. Krol argued that CRS § 8-41-402 applies only when the injured person was doing work both “on and to” another’s property, and there was at least a genuine issue of fact as to whether he was doing work to CF&I’s property when he was injured.

The district court granted summary judgment in favor of CF&I, agreeing with its argument. It also found that summary judgment was appropriate under CRS § 8-41-401, because if CF&I did not contract out the training work, it would do the work itself, and because SKIM carried adequate workers’ compensation insurance.

CRS § 8-41-402 states that if a landowner is a statutory employer, and the contractor, subcontractor, or person hired to do the work carries workers’ compensation insurance covering the injured party’s injuries, the injured party is deemed an employee of that statutory employer, and the injured party may not seek damages from the statutory employer. The Court of Appeals found that, contrary to the district court’s finding and CF&I’s argument, an injured party does not only have to have been “on” the landowner’s property when performing work for the statute to apply, but the injured party also must have been doing work “to” the property for it to apply. This determination was based on the plain language of the statute. The Court further held that there was a factual question as to whether the work Krol was performing was to CF&I’s property. Therefore, the grant of summary judgment was in error.

The district court also erred in alternatively granting summary judgment under CRS § 8-41-401, which provides immunity when the work contracted out by the entity sought to be held liable is part of that entity’s regular business, as defined by its total business operation. The Court held that although summary judgment may be granted for a reason not raised by a moving party, the court should not do so without first giving the parties notice and reasonable opportunity to argue the issue and present evidence. Thus, it was error for the district court to grant summary judgment on grounds not raised by CF&I and of which Krol had no notice to argue.

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.

Colorado Supreme Court: Summary Judgment Affirmed Where Action Not Filed Within Statutory Limitations Period

The Colorado Supreme Court issued its opinion in Pham v. State Farm Auto Insurance Co. on Monday, March 4, 2013.

Statute of Limitations—Uninsured/Underinsured Motorist Claims—CRS § 13-80-107.5.

Steven Pham, representing the estate of the driver of a car involved in a traffic accident, as well as the deceased driver’s parents and the five passengers in his car at the time, sought review of the court of appeals’ judgment. The court of appeals affirmed a summary judgment in favor of State Farm Automobile Insurance Company on the ground that plaintiffs’ claims were barred by the statute of limitations governing underinsured motorist claims, found at CRS § 13-80-107.5(1)(b).

The Supreme Court affirmed. The Court held that plaintiffs failed to file this action or demand arbitration of their underinsured motorist claims within either three years of the accrual of their cause of action or within two years after receiving payment of a settlement or judgment on an underlying bodily injury liability claim that had been preserved as prescribed by the statute.

Summary and full case available here.

Colorado Supreme Court: Pollution Exclusion Clause in Insurance Policy Bars Indemnification for Off-Premises Injuries

The Colorado Supreme Court issued its opinion in Mountain States Mutual Casualty Co. v. Roinestad on Monday, February 25, 2013.

Insurance—Duty to Indemnify—Pollution Exclusion Clauses.

Respondents were overcome by poisonous hydrogen sulfide gas while cleaning a large grease clog in a sewer near the Hog’s Breath Saloon & Restaurant. The district court concluded that the restaurant caused respondents’ injuries by dumping substantial amounts of cooking grease into the sewer. On summary judgment, the district court found the restaurant liable under theories of negligence and off-premises liability, and entered a damage award in respondents’ favor.

Mountain States Mutual Casualty Company sought a ruling that it had no obligation to indemnify the restaurant and the district court agreed, holding that dumping substantial amounts of cooking grease constituted a discharge of a pollutant under the policy’s pollution exclusion clause. The court of appeals reversed. It held that the terms of the pollution exclusion clause were ambiguous and that its application to cooking grease could lead to absurd results and negate essential coverage.

The Supreme Court reversed the judgment of the court of appeals. The restaurant discharged enough cooking grease into the sewer system to create a five- to eight-foot clog that led to a dangerous buildup of toxic gas—conduct that violated a city ordinance prohibiting the discharge of a pollutant in an amount that creates an obstruction to the sewer flow. The Court agreed with the district court that, under the circumstances of this case, the discharge of cooking grease amounted to a discharge of a pollutant. Accordingly, the Court held that the pollution exclusion clause barred coverage in this case.

Summary and full case available here.

Colorado Court of Appeals: Bashor-type Agreement Upheld as Permissible; Summary Judgment Reversed

The Colorado Court of Appeals issued its opinion in DC-10 Entertainment, LLC v. Manor Insurance Agency, Inc. on Thursday, February 14, 2013.

Insurance Coverage—Broker—Damages—Assignment of Claims—Assault and Battery Exclusion—Negligent Misrepresentation.

DC-10 Entertainment, LLC (DC-10) appealed the trial court’s summary judgment in favor of Manor Insurance Agency, Inc. (Manor). The judgment was reversed and the case was remanded for further proceedings.

DC-10, a nightclub and lounge, obtained insurance coverage through Manor, an independent insurance broker that services multiple insurance companies. Through Manor, DC-10 procured a commercial general liability policy with Penn-Star Insurance Company (Penn-Star) and a liquor liability policy with Founders Insurance Company (Founders).

Heaven Henderson suffered injuries when she was physically assaulted by an unknown assailant on DC-10’s premises. Henderson sued DC-10. DC-10 then submitted claims to Penn-Star and Founders for defense and indemnity coverage. Both companies denied the claim because the policies contained an assault and battery exclusion. DC-10 settled with Henderson and then sued Manor, asserting claims of negligence and negligent misrepresentation. The court granted Manor’s motion for summary judgment.

DC-10 contended the trial court erred in determining that the settlement agreement was insufficient to establish that DC-10 incurred damages. Because the agreement does not contain a pretrial stipulated damages award, DC-10 did not bear the burden of proving the reasonableness of the judgment. Instead, the burden shifted to Manor to prove that the damages award, as determined by the arbitration judge, was unreasonable. In challenging the reasonableness of the damages award, Manor also may raise the affirmative defense of collusion or fraud. Because these are factual issues, the trial court erred in granting summary judgment.

Manor challenged the enforceability of an assignment of proceeds of negligence claims against an insurance broker. Manor owed a duty to DC-10 to obtain the insurance coverage that DC-10 requested. An assignment of claims against an insurance broker, where the claim arises from a commercial transaction and the insured has the same expectations of the insurance broker that he or she would have of the insurer, is not prohibited. Accordingly, DC-10’s assignment of the proceeds from its negligence and negligent misrepresentation claims against Manor to Henderson, the injured third party, was enforceable.

Finally, Manor contended that DC-10’s negligence and negligent misrepresentations claims failed as a matter of law because DC-10 did not present evidence that assault and battery coverage, if obtained, would have covered the alleged patron-on-patron assault in the underlying lawsuit. Because the availability of coverage sought by DC-10 remained a disputed factual question, Manor did not meet its burden of proof on this issue on its motion for summary judgment.

Summary and full case available here.

Colorado Supreme Court: Out-of-State Counsel Should be Disqualified from Representing Plaintiff Pro Hac Vice when Attorney at Out-of-State Firm Consulted with Defendant

The Colorado Supreme Court issued its opinion in In re Liebnow v. Boston Enterprises, Inc. on Monday, February 4, 2013.

Pro Hac Vice Admission—Colo. RPC 1.7 and 1.10—Confidential Client Information.

The Supreme Court affirmed the district court’s order disqualifying plaintiff’s motion for pro hac vice admission of out-of-state counsel, where defense counsel previously had consulted out-of-state counsel at the same firm on the same case. The Court held that the trial court did not abuse its discretion in finding that (1) the consultation between defense counsel and out-of-state counsel concerned confidential information, which created a conflict under Colo. RPC 1.7(a)(2); and (2) the conflict was not waivable under Colo. RPC 1.7(b) because allowing the consulted attorney to represent plaintiff would undermine the fairness of the trial. The Court further held that the district court did not abuse its discretion in imputing the conflict to the rest of the firm under Colo. RPC 1.10 and disqualifying the firm.

Summary and full case available here.

Colorado Court of Appeals: Sufficient Evidence Existed to Support Future Damages Award Under Minnesota Law

The Colorado Court of Appeals issued its opinion in Target Corp. v. Prestige Maintenance USA, Ltd. on Thursday, January 31, 2013.

Damages—Contract—Choice of Law—Injuries—Preservation for Appellate Review—Standard of Review.

Defendant Prestige Maintenance USA, Ltd. (Prestige) appealed the trial court’s judgment awarding future damages to plaintiff Target Corporation (Target). The judgment was affirmed.

Prestige had contracted with Target to provide cleaning services at Target stores. The contract provided that Prestige would indemnify Target for, among other things, all injuries or damages relating to or arising out of Prestige’s performance of its services. While using a vacuum cleaner, a Prestige employee caused Johanna Cleveland, a Target employee, to fall and injure her right knee while working in a Colorado Target store. Target filed a breach of contract action against Prestige, seeking indemnification for Cleveland’s injuries and damages. The court ruled in favor of Target.

On appeal, Prestige contended that the trial court erred in awarding Target future damages in three categories: (1) future medical treatment; (2) future disability payments; and (3) future medical management costs. The parties’ cleaning contract contained a choice of law provision stating that Minnesota law shall “govern all matters arising out of or related to this Agreement, including its interpretation, construction, performance or enforcement.” Therefore, the court applied Minnesota law to determine the substantive issue of damages in this matter. Pursuant to Minnesota law, there was sufficient evidence to support the damages award for future medical treatment, future disability benefits, and future medical management, because it was more likely than not that Cleveland would incur these damages. The remaining two issues—the legal standards governing preservation for appellate review and the standard of review—were matters of judicial administration. Therefore, Colorado law was applied.

Summary and full case available here.

SB 13-023: Increasing the Limits on Damages that May be Recovered Under the Colorado Governmental Immunity Act

On Wednesday, January 9, 2013, Sen. Bill Cadman introduced SB 13-023 – Concerning an Increase in the Limitation on the Amount of Damages that May be Recovered by an Injured Party Under the “Colorado Governmental Immunity Act.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Currently, the “Colorado Governmental Immunity Act” (Act) sets as a maximum amount that may be recovered by a person suing a public entity or public employee for loss or injury caused by the entity or employee in any single occurrence, whether from one or more public entities and public employees:

  • For any injury to one person in any single occurrence, the sum of $150,000; and
  • For an injury to two or more persons in any single occurrence, the sum of $600,000, and, in such circumstances, the act prohibits any single person from recovering in excess of $150,000.

To ensure these limitations on damages reflect the effects of inflation since the specific limitations were last increased by the general assembly, the bill increases the damages limitation for any injury to one person in any single occurrence to $478,000. For an injury to two or more persons in any single occurrence, the bill increases the damages limitation to $990,000 and further specifies that, in such circumstances, a single person is precluded from recovering in excess of $478,000.

The bill further provides that the increased damages amounts are:

  • Exclusive of interest awarded; and
  • Adjusted for inflation every four years. The bill requires the attorney general to make this required adjustment on an every four-year basis commencing Jan. 1, 2018, to certify the amount of the adjustment, and to publish the amount of the adjustment on the attorney general’s web site.

The bill is assigned to the Judiciary Committee.

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