October 22, 2014

Tenth Circuit: Order for Co-Insurer to Pay Half Defense Costs Affirmed; Denial of Prejudgment Interest Affirmed

The Tenth Circuit Court of Appeals published its opinion in Yousuf v. Cohlmia on Tuesday, January 21, 2014.

Dr. Ashard Yousuf sued Dr. George Cohlmia and Cardiovascular Surgical Specialists Corporation (CVSS) in Oklahoma state court for defamation, tortious interference with business relations/contract, intentional infliction of emotional distress/outrage, negligence, and breach of contract. Dr. Yousuf alleged that Dr. Cohlmia made a series of false statements to local media disparaging Dr. Yousuf’s professional reputation. Dr. Cohlmia denied that the statements he made were false.

CVSS held a professional liability policy with Physicians Liability Insurance Company (PLICO) and two identical general commercial liability policies with American National Property and Casualty Company (ANPAC) (one for each business location), each of which covered Dr. Cohlmia as an additional insured. Dr. Cohlmia demanded that both insurers provide for his defense, pursuant to their respective policies. PLICO agreed to defend the lawsuit under a reservation of rights and requested ANPAC to share in the defense. ANPAC refused, contending its policy did not cover the alleged wrongdoing and that it owed no duty to defend. ANPAC further claimed that even if it erred in refusing to defend Dr. Cohlmia, PLICO had no right to indemnification or contribution for the defense costs it incurred.

After various state proceedings, PLICO sought to recover its defense costs in federal district court. The court concluded the defense costs should be evenly divided between the insurers and granted summary judgment for PLICO. Once summary judgment for PLICO was granted, PLICO and ANPAC negotiated an agreement, stipulating that ANPAC’s portion was $206,698.78. PLICO then moved for prejudgment interest in the amount of $149,110.57, contending that the district court was required to include prejudgment interest of fifteen percent per year from the date of the judgment pursuant to title 36, section 3629(B) of the Oklahoma Statutes. The court denied prejudgment interest.

ANPAC appealed from the district court’s grant of summary judgment in favor of PLICO. PLICO cross-appealed the district court’s denial of its motion for prejudgment interest. The Tenth Circuit applied Oklahoma law in interpreting the insurance policies at issue and concluding ANPAC breached its duty to defend Dr. Cohlmia.

The court concluded that the provision in ANPAC’s policy providing coverage for “personal injury” resulting from “the publication or utterances of a libel or slander or of other defamatory or disparaging material” was broad enough to encompass the tort of intentional interference with business relations. It rejected ANPAC’s contention that such an interpretation is against public policy because it extends coverage to include intentional wrongdoing.

The court affirmed the district court’s grant of summary judgment requiring ANPAC to reimburse PLICO for one-half of its defense costs.

In response to PLICO’s cross-appeal on the district court’s failure to award prejudgment interest, ANPAC argued the district court was correct in concluding that prejudgment interest was barred under the Tenth Circuit’s decision in Regional Air because PLICO prevailed on a summary judgment rather than a jury verdict, and also because prejudgment interest is unavailable in Oklahoma where the damages are not certain, liquidated, or reasonably ascertainable. The Tenth Circuit overruled Regional Air on its interpretation of the Oklahoma statute providing for prejudgment interest. It held that PLICO’s claim for prejudgment interest was not defeated simply because the judgment was entered pursuant to summary judgment rather than a jury verdict. It did affirm the district court’s denial because the attorney fees were not liquidated under Oklahoma law as they were subject to a reasonableness determination.

Tenth Circuit: Amended Maliscious Prosecution Decision

The Tenth Circuit Court of Appeals published its opinion in Myers v. Koopman on Wednesday, January 8, 2013.

The court denied the appellee’s Petition for Panel Rehearing but sua sponte amended its December 20, 2013 decision, nunc  pro tunc, by removing a footnote sentence. The former decision was summarized here.

Colorado Supreme Court: Attractive Nuisance Doctrine Applies to All Children, Not Just Trespassing Children

The Colorado Supreme Court issued its opinion in S.W. v. Towers Boat Club, Inc. on Monday, December 23, 2013.

Attractive Nuisance—CRS § 13-21-115.

The Supreme Court considered whether, under Colorado’s premises liability statute, CRS § 13-21-115, the attractive nuisance doctrine applies to both trespassing children and licensees or invitees. The Court held that the doctrine permits all children, regardless of their classification, to bring a claim for attractive nuisance. The Court therefore reversed the judgment of the court of appeals, which had found that the doctrine only protects trespassing children.

Summary and full case available here.

Tenth Circuit: Tortious Interference with Contract Claims Failed

The Tenth Circuit Court of Appeals published its opinion in Vazirani v. Heitz on Friday, December 20, 2013.

Anil Vazirani is an independent insurance agent, also known as a producer, who contracts with insurance companies to sell life-insurance and annuity products. He owns and manages Vazirani & Associates Financial, LLC and Secured Financial Solutions, LLC. In 2005, Vazirani contracted with Aviva Life and Annuity Company, a provider of life-insurance and annuity products. After approximately four years, Defendants Mark Heitz and Jordan Canfield, executives at Aviva, cancelled the contract.

In October 2009, Vazirani filed suit in federal court. The amended complaint named Heitz and Canfield as defendants, claiming that they (1) tortiously interfered with Vazirani’s contractual relationship with Aviva; (2) tortiously interfered with Vazirani’s business expectancies; (3) entered into a civil conspiracy to tortiously interfere with Vazirani’s contract with Aviva and Vazirani’s business expectancies; and (4) aided and abetted in each other’s tortious acts. The district court granted the Defendant’s motion for summary judgment on all claims.

Vazirani argued on appeal that the district court erred in granting summary judgment because he presented enough evidence that a jury should have been permitted to decide the tortious-interference claims. The court applied Arizona law and held that because the Defendants were acting within the scope of their authority, they were the employer and could not interfere with their own contract unless they acted with purely personal reasons without any motivation to serve Aviva. The court held that Vazirani failed to prove any personal motivation and a lack of business motives and affirmed the district court.

Colorado Court of Appeals: Underinsured Motorist Judgment for Claimant Affirmed

The Colorado Court of Appeals issued its opinion in Hansen v. American Family Mutual Insurance Co. on Thursday, December 19, 2013.

Personal Injury—Insurance Policy—Underinsured Motorist Coverage—Ambiguity—CRS § 10-3-1115—Covered Benefit.

Claimant was injured while riding as a passenger in her boyfriend’s vehicle. After settling a claim with the boyfriend’s insurer for policy limits, she pursued an underinsured motorist (UIM) claim with American Family Mutual Insurance Company. American Family denied the claim because claimant did not reside with the named insureds (her parents). Claimant filed an action against American Family, asserting a breach of contract claim, common law claim, and statutory claim.The trial court entered judgment in favor of claimant on her statutory claim and awarded her attorney fees and costs. Claimant filed a motion to amend the judgment and requested that the court award a statutory penalty of two times the covered benefit, or $150,000. The trial court granted claimant’s motion.

On appeal, American Family argued that the trial court erred in concluding that the insurance policy was ambiguous and by referring its construction to the jury. The Court of Appeals disagreed. American Family prepared and delivered to claimant a lien holder statement, which created an ambiguity in the insurance policy as to the identity of the named insured, because it was inconsistent with the declaration pages maintained by the insurance company. Therefore, the trial court did not err in reaching this conclusion.

American Family also argued that because claimant’s claim for coverage under the policy was “fairly debatable,” it cannot be found to have unreasonably delayed or denied payment of a benefit under the statutory claim as a matter of law. The Court disagreed. The policy was arguably unambiguous as to the named insured, so American Family was not entitled to judgment as a matter of law on claimant’s statutory claim.

Furthermore, the court did not err in awarding claimant two times the covered benefit. According to CRS § 10-3-1115, the award to be made to the prevailing claimant is not the damages suffered by the claimant caused by the delay in the payment of the benefit; rather, it is two times the covered benefit that was unreasonably delayed or denied. There is no dispute that the covered benefit under the reformed policy was $75,000. Therefore, claimant correctly received $150,000. The judgment was affirmed.

Summary and full case available here.

Colorado Court of Appeals: Tort Claims in Breach of Contract Action Barred by Economic Loss Rule

The Colorado Court of Appeals issued its opinion in Van Rees, Sr. v. Unleaded Software, Inc. on Thursday, December 5, 2013.

Negligence—Fraud—Fraudulent Concealment—Constructive Fraud—Negligent Misrepresentation—Colorado Consumer Protection Act—Civil Theft—Contract—Economic Loss Rule—Duty of Care.

Plaintiff John Van Rees, Sr. appealed the trial court’s dismissal of his claims against defendant Unleaded Software, Inc. (Unleaded). The judgment was affirmed.

Van Rees and Unleaded executed three contracts wherein Unleaded agreed to design and build a website, perform “search engine optimization” (SEO) services for the website, and host the website on a dedicated server. Van Rees brought this action due to the lack of work performed. Unleaded moved to dismiss the seven tort claims—all the claims except the three breach-of-contract claims—as barred by the “economic loss rule,” which the court granted.

Van Rees contended that the trial court erred in dismissing his claims without sufficient written analysis. A trial court, however, need not make findings of fact and conclusions of law when it dismisses a complaint for failure to state a claim under CRCP 12(b)(5).

Van Rees argued that the trial court erred in dismissing his claims of fraud, fraudulent concealment, constructive fraud, and negligent misrepresentation because he alleged duties independent of the three contracts. Here, all alleged misrepresentations related directly to contractual duties. Because Van Rees failed to allege any independent duty on which to base his tort claims, the trial court did not err in dismissing those four claims.

Van Rees also contended that the trial court erred when it dismissed his negligence claim. Van Rees, however, failed to allege that Unleaded owed him a duty of care independent of its contractual duties.

Van Rees further argued that the trial court erred in dismissing his claim under the Colorado Consumer Protection Act (CCPA). This dispute pertains to a private contract between two sophisticated business entities, and Van Rees does not allege any harm or potential harm to identifiable segments of the public. Therefore, Van Rees failed to allege sufficient facts to support a CCPA claim.

Finally, Van Rees contended that the trial court erred in dismissing his civil theft claim. Van Rees’s civil theft claim fails, however, because it arises out of the alleged breaches of contract, and nothing in the complaint could be construed to establish an independent legal duty.

Summary and full case available here.

Tenth Circuit: Danger-Creation Exception to State Actor Liability for Only Own Acts Not Met

The Tenth Circuit Court of Appeals published its opinion in Hernandez v. Ridley on Wednesday, November 13, 2013.

Jose Hernandez, Jr., and Salvador Hernandez were killed by a motorist while they were performing road construction in Oklahoma. Their representative sued their employer, Duit Construction Company, and the motorist and alleged a substantive due process claim against a host of Oklahoma Department of Transportation (ODOT) employees. All ODOT employees except the director and the resident engineer on the construction project were dismissed by the district court. The question is whether the two remaining employees are entitled to qualified immunity.

Normally, state actors are only liable for their own acts. Hernandez argued that the ODOT employees were liable for the acts of the third-party driver because they created the danger that caused the deaths. This argument failed because it did not meet the threshold to invoking the danger-creation exception to the rule. There must be private violence, but Hernandez alleged negligence of the driver, not deliberateness. The court went on to state that Hernandez also failed to meet the second element of the threshold, affirmative conduct on the part of the state in placing the plaintiff in danger.

Because the plaintiff failed to meet either threshold to the danger-creation exception, the court reversed the failure to dismiss the remaining ODOT employees from the suit.

Colorado Supreme Court: Colorado’s Premises Liability Statute Does Not Apply Solely to Matters Related to the Land

The Colorado Supreme Court issued its opinion in Larrieu v. Best Buy Stores, L.P. on Monday, June 24, 2013.

CAR 21.1 Certified Question—Colorado Premises Liability Statute—Landowner Liability for Activities Conducted or Circumstances Existing on Real Property.

The Supreme Court considered a reformulated certified question from the U.S. Court of Appeals for the Tenth Circuit: whether Colorado’s premises liability statute, CRS § 13-21-115, applies as a matter of law only to those activities and circumstances that are directly or inherently related to the land. The Supreme Court held that the statute is not, as a matter of law, restricted solely to activities and circumstances that are directly or inherently related to the land. That restriction does not appear in the statutory language, and the Court declined to adopt it now. Instead, the Court held that the premises liability statute applies to conditions, activities, and circumstances on the property that the landowner is liable for in its legal capacity as a landowner. This inquiry necessitates a fact-specific, case-by-case inquiry into whether (1) the plaintiff’s alleged injury occurred while on the landowner’s real property, and (2) the alleged injury occurred by reason of the property’s condition or as a result of activities conducted or circumstances existing on the property.

Summary and full case available here.

Colorado Court of Appeals: Tenant Not in Control of Sidewalk and Therefore Not Considered Landowner Under Premises Liability Act

The Colorado Court of Appeals issued its opinion in Jordan v. Panorama Orthopedics & Spine Center on Thursday, June 6, 2013.

Premises Liability—Common Area—Landowner.

In this premises liability case, defendant Panorama Orthopedics & Spine Center, PC (Panorama) appealed the judgment entered in favor of plaintiff Barbara Jordan. The judgment was reversed.

Plaintiff tripped and fell on a common area sidewalk leading to the building in which Panorama leased office space. She successfully sued Panorama under the Premises Liability Act (Act).

Panorama contended on appeal that the district court erred by determining that it was a landowner under the Act. A party need not hold title to the property to be considered a landowner within the meaning of the Act. A tenant may, depending on the circumstances, be regarded as a landowner. However, Panorama was not a landowner within the meaning of the Act, because there was no evidence that it was in possession of the sidewalk or that it was responsible for creating a condition on the sidewalk or conducting an activity on the sidewalk that caused plaintiff’s injuries. Therefore, the district court’s judgment against Panorama was dismissed.

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.

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.

Colorado Court of Appeals: In Interlocutory Appeal, Immunity Found Not Waived Under CGIA and Trial Court’s Order Reversed

The Colorado Court of Appeals issued its opinion in Daniel v. City of Colorado Springs on Thursday, October 11, 2012.

Governmental Immunity—CRS § 24-10-106(1)(e)—Public Parking Lots.

Defendant, the City of Colorado Springs (City), brought this interlocutory appeal of the district court’s order denying its motion to dismiss, on governmental immunity grounds, the complaint filed by plaintiff Marilyn Daniel. The order was reversed and the case was remanded.

Plaintiff alleged she was injured when she fell after stepping into a hole in a parking lot for the public Valley Hi Golf Course, which was owned and maintained by the City. She asserted the City knew or should have known about the dangerous condition of the parking lot.

The City moved to dismiss pursuant to CRCP 12(b)(1) for lack of subject matter jurisdiction under the Colorado Governmental Immunity Act (CGIA). Plaintiff argued that immunity had been waived, under CRS § 24-10-106(1)(e), for a dangerous condition of any public facility located in any park or recreation area maintained by a public entity. The City responded that the phrase “in any park or recreation area” includes only places and areas within a golf course, but not the parking lot. The trial court denied the City’s motion to dismiss and the City brought an interlocutory appeal.

On appeal, the Court of Appeals emphasized that waiver was for a dangerous condition located in any park or recreation area. It also noted that before the 1986 amendments to the CGIA, the statute had excepted immunity for a “public parking facility” and that this section was deleted by the amendments. The Court followed other decisions that found this deletion was intended to remove the exclusion from governmental immunity to such areas. It therefore was error to find that the City’s immunity was waived. The order was reversed and the case was remanded with directions to dismiss the complaint against the City.

Summary and full case available here.