Rucker v. Federal National Mortgage Association – ‘For Sale’ sign alone does not change prospective buyer’s status. (CA 07/28/16). Ellyn and David Rucker decided to purchase a house that their daughter, Kristin, would rent from them. David placed an offer on a house for which Kristin had had a showing with a Heter & Co. listing agent, but Ellyn had not seen the property, so Kristin took Ellyn to the house. There was a “For Sale” sign in the yard and a small notice on the door warning that trespassers would be prosecuted. After walking around the house and looking through some windows, Ellyn started walking from the house down the paved walkway to return to the car. She fell and sustained injuries. Ellyn sued the Federal National Mortgage Association and Heter broker for damages, alleging she was an invitee under the Premises Liability Act because the “For Sale” sign constituted an implied invitation to the public. She also argued that she was an invitee because she was present on the property for purposes of a business transaction. The trial court disagreed and concluded Ellyn was a trespasser, finding that because she never obtained the express or implied consent of the landowner, she did not have an invitation to enter the property. The court did not address Ellyn’s business transaction argument. Ellyn filed an interlocutory appeal, seeking review of both the “For Sale” and business transaction orders. The court of appeals limited its review to the “For Sale” sign issue. Ellyn contended that the “For Sale” sign created an implied representation that the public was requested, expected, or intended to enter the premises. The court of appeals disagreed. It found that the “For Sale” sign created only an invitation to contact the listing agent, not to enter the property. Because the listing agent or landowner did not have a practice of allowing others to enter the property without express permission, Ellyn could not show that her entrance on the property was as an invitee.

Home Loan Investment Co. v. St. Paul Mercury Insurance Co. – (10th Cir. 07/05/16). Ms. Rosemarie Glas owned a property in Grand Junction called White Hall with a mortgage through Home Loan Investment Co. When she stopped making payments on the loan, Home Loan accepted a deed in lieu of foreclosure from Ms. Glas in order to allow her to sell White Hall. Ms. Glas also informed Home Loan that she was unable to pay certain utilities and the insurance on the property. Home Loan contacted St. Paul to obtain insurance for the property, and completed a form from St. Paul by checking the option that it was the mortgagee in possession of the property. Later, there was a fire, and White Hall was almost completely destroyed. Home Loan submitted a claim to St. Paul for the value of the property, but St. Paul denied the claim, determining that Home Loan did not qualify as a mortgagee in possession and there was no foreclosure proceeding underway so there was no coverage. Home Loan filed suit in Colorado state court, alleging claims for common law breach of contract and statutory bad faith pursuant to C.R.S. §§ 10-3-1115 and -1116. St. Paul removed the action to federal court, citing diversity jurisdiction. Prior to trial, St. Paul moved for summary judgment, but the district court denied the motion. At trial, St. Paul argued that Home Loan had never had “possession” or “care, custody, or control” sufficient to trigger coverage under the policy. St. Paul also argued that because its position was “fairly debatable,” it could not have acted unreasonably for purposes of the bad faith statutes. St. Paul renewed its motion for summary judgment and moved for judgment as a matter of law after Home Loan rested. The district court denied the motions. The jury returned a verdict for Home Loan on the common law breach of contract and statutory bad faith claims. St. Paul then moved for a judgment in its favor under F.R.C.P. 50(b), or, alternatively, a new trial under F.R.C.P. 59(a). The district court denied both motions, and St. Paul appealed to the Tenth Circuit on the statutory bad faith claim. St. Paul raised three issues on appeal: (1) the district court erred in denying its motion because its denial was reasonable as a matter of law, and the district court erroneously instructed the jury on assessing the standard for reasonableness; (2) C.R.S. §§ 10-3-1115 and -1116 only provide remedies for unreasonable claims handling activities, not underwriting practices; and (3) the district court erred in calculating the amount of damages under C.R.S. § 10-3-1116 because it awarded the covered benefit plus twice that amount as damages, for a total of three times the covered benefit. The Tenth Circuit examined and rejected each contention in turn. The Tenth Circuit first addressed St. Paul’s argument that because its denial was “fairly debatable,” it was not unreasonable as a matter of law. Home Loan responded that fair debatability is only one factor in the overall reasonableness analysis. St. Paul next argued that C.R.S. §§ 10-3-1115 and -1116 only provide a remedy for claims-handling activities, not underwriting activities. The Tenth Circuit evaluated the statutes and found nothing to support St. Paul’s position. The Tenth Circuit instead held that the Colorado legislature intended to capture all aspects of the insurance relationship and provide a remedy for bad faith, regardless of whether the bad faith arose out of claims handling or underwriting. Note that this seems contrary to the Colorado Supreme Court decision in Hansen. Finally, St. Paul argue the district court erred in awarding three times the covered benefit. The Tenth Circuit again disagreed, reading the statute to provide for an award of the covered benefit plus two times that amount as a penalty. It relied on the Court of Appeals decision in Hansen, which, of course, was reversed on other grounds. There was a strong dissent.

ACE Fire Underwriters v. Romero –  Tenth Circuit holds that hitting a tractor and a trailer is one accident, not two for purposes of an aggregate limit – No. 14-2073 (10th Cir. 08/01/16). ACE Fire Underwriters Insurance Company appealed the district court’s declaration that a policy ACE issued offered total coverage up to $2 million for an accident involving two insured vehicles: a tractor and trailer. The trailer detached from the tractor. The driver pulled off the roadway to reattach, then hoped to make a quick u-turn and continue down the road. But before he could complete the turn, another vehicle collided with the trailer, killing the vehicle’s driver. As the insurer of the tractor and the trailer, ACE reached a settlement with the Estate of the vehicle’s driver. But the parties conditioned the settlement upon litigating the available limits of the policy. ACE maintained that the policy provisions limited its liability to $1 million per accident, regardless of the number of covered autos involved. The Estate, on the other hand, insisted that ACE’s liability under the policy was $1 million per covered auto involved in each accident. That interpretation of the policy would cap ACE’s liability in this case at $2 million because, according to the Estate, the tractor and the trailer were both involved in the accident. Under the terms of the settlement, ACE initially paid the Estate $1 million. But it agreed to pay it an additional $550,000 if the court accepted the Estate’s interpretation of the policy. The Tenth Circuit agreed with ACE that the policy instead limits its liability to only $1 million.

Rucker v. Federal National Mortgage Association – ‘For Sale’ sign alone does not change prospective buyer’s status. (CA 07/28/16). Ellyn and David Rucker decided to purchase a house that their daughter, Kristin, would rent from them. David placed an offer on a house for which Kristin had had a showing with a Heter & Co. listing agent, but Ellyn had not seen the property, so Kristin took Ellyn to the house. There was a “For Sale” sign in the yard and a small notice on the door warning that trespassers would be prosecuted. After walking around the house and looking through some windows, Ellyn started walking from the house down the paved walkway to return to the car. She fell and sustained injuries. Ellyn sued the Federal National Mortgage Association and Heter broker for damages, alleging she was an invitee under the Premises Liability Act because the “For Sale” sign constituted an implied invitation to the public. She also argued that she was an invitee because she was present on the property for purposes of a business transaction. The trial court disagreed and concluded Ellyn was a trespasser, finding that because she never obtained the express or implied consent of the landowner, she did not have an invitation to enter the property. The court did not address Ellyn’s business transaction argument. Ellyn filed an interlocutory appeal, seeking review of both the “For Sale” and business transaction orders. The court of appeals limited its review to the “For Sale” sign issue. Ellyn contended that the “For Sale” sign created an implied representation that the public was requested, expected, or intended to enter the premises. The court of appeals disagreed. It found that the “For Sale” sign created only an invitation to contact the listing agent, not to enter the property. Because the listing agent or landowner did not have a practice of allowing others to enter the property without express permission, Ellyn could not show that her entrance on the property was as an invitee.   Home Loan Investment Co. v. St. Paul Mercury Insurance Co. – (10th Cir. 07/05/16). Ms. Rosemarie Glas owned a property in Grand Junction called White Hall with a mortgage through Home Loan Investment Co. When she stopped making payments on the loan, Home Loan accepted a deed in lieu of foreclosure from Ms. Glas in order to allow her to sell White Hall. Ms. Glas also informed Home Loan that she was unable to pay certain utilities and the insurance on the property. Home Loan contacted St. Paul to obtain insurance for the property, and completed a form from St. Paul by checking the option that it was the mortgagee in possession of the property. Later, there was a fire, and White Hall was almost completely destroyed. Home Loan submitted a claim to St. Paul for the value of the property, but St. Paul denied the claim, determining that Home Loan did not qualify as a mortgagee in possession and there was no foreclosure proceeding underway so there was no coverage. Home Loan filed suit in Colorado state court, alleging claims for common law breach of contract and statutory bad faith pursuant to C.R.S. §§ 10-3-1115 and -1116. St. Paul removed the action to federal court, citing diversity jurisdiction. Prior to trial, St. Paul moved for summary judgment, but the district court denied the motion. At trial, St. Paul argued that Home Loan had never had “possession” or “care, custody, or control” sufficient to trigger coverage under the policy. St. Paul also argued that because its position was “fairly debatable,” it could not have acted unreasonably for purposes of the bad faith statutes. St. Paul renewed its motion for summary judgment and moved for judgment as a matter of law after Home Loan rested. The district court denied the motions. The jury returned a verdict for Home Loan on the common law breach of contract and statutory bad faith claims. St. Paul then moved for a judgment in its favor under F.R.C.P. 50(b), or, alternatively, a new trial under F.R.C.P. 59(a). The district court denied both motions, and St. Paul appealed to the Tenth Circuit on the statutory bad faith claim. St. Paul raised three issues on appeal: (1) the district court erred in denying its motion because its denial was reasonable as a matter of law, and the district court erroneously instructed the jury on assessing the standard for reasonableness; (2) C.R.S. §§ 10-3-1115 and -1116 only provide remedies for unreasonable claims handling activities, not underwriting practices; and (3) the district court erred in calculating the amount of damages under C.R.S. § 10-3-1116 because it awarded the covered benefit plus twice that amount as damages, for a total of three times the covered benefit. The Tenth Circuit examined and rejected each contention in turn. The Tenth Circuit first addressed St. Paul’s argument that because its denial was “fairly debatable,” it was not unreasonable as a matter of law. Home Loan responded that fair debatability is only one factor in the overall reasonableness analysis. St. Paul next argued that C.R.S. §§ 10-3-1115 and -1116 only provide a remedy for claims-handling activities, not underwriting activities. The Tenth Circuit evaluated the statutes and found nothing to support St. Paul’s position. The Tenth Circuit instead held that the Colorado legislature intended to capture all aspects of the insurance relationship and provide a remedy for bad faith, regardless of whether the bad faith arose out of claims handling or underwriting. Note that this seems contrary to the Colorado Supreme Court decision in Hansen. Finally, St. Paul argue the district court erred in awarding three times the covered benefit. The Tenth Circuit again disagreed, reading the statute to provide for an award of the covered benefit plus two times that amount as a penalty. It relied on the Court of Appeals decision in Hansen, which, of course, was reversed on other grounds. There was a strong dissent.   ACE Fire Underwriters v. Romero –  Tenth Circuit holds that hitting a tractor and a trailer is one accident, not two for purposes of an aggregate limit – No. 14-2073 (10th Cir. 08/01/16). ACE Fire Underwriters Insurance Company appealed the district court’s declaration that a policy ACE issued offered total coverage up to $2 million for an accident involving two insured vehicles: a tractor and trailer. The trailer detached from the tractor. The driver pulled off the roadway to reattach, then hoped to make a quick u-turn and continue down the road. But before he could complete the turn, another vehicle collided with the trailer, killing the vehicle’s driver. As the insurer of the tractor and the trailer, ACE reached a settlement with the Estate of the vehicle’s driver. But the parties conditioned the settlement upon litigating the available limits of the policy. ACE maintained that the policy provisions limited its liability to $1 million per accident, regardless of the number of covered autos involved. The Estate, on the other hand, insisted that ACE’s liability under the policy was $1 million per covered auto involved in each accident. That interpretation of the policy would cap ACE’s liability in this case at $2 million because, according to the Estate, the tractor and the trailer were both involved in the accident. Under the terms of the settlement, ACE initially paid the Estate $1 million. But it agreed to pay it an additional $550,000 if the court accepted the Estate’s interpretation of the policy. The Tenth Circuit agreed with ACE that the policy instead limits its liability to only $1 million.