Case Update

Stresscon Corp. v. Travelers Property Casualty Company of America. – Court of Appeals expands notice-prejudice rule (CA 09/12/13). In this construction case, the general contractor and the concrete company settled their dispute without litigation and without the insurance company of the settlement or obtain its consent. The insurance company argued that the notice–prejudice rule does not apply to breaches of “no voluntary payment” clauses, and insurers are prejudiced as a matter of law whenever an insured settles with a third-party claimant before that third party has filed a lawsuit. The Court of Appeals disagreed, and held that the notice–prejudice rule applies to “no voluntary payment.” On cross-appeal, the concrete company argued that the trial court improperly reduced its damages. The Court held the trial court did not err when it reduced the damages by the amount another insurer paid to the concrete company to satisfy the judgment in the first trial.

 Mullins v. Medical Lien Management, Inc. – Medical Lien claimant prevails on claim against interplead settlement funds (CA 09/26/13). This action stems from settlement of a car accident by Mullins. MLM claimed to hold a medical lien of $17,081.10, an amount in excess of the settlement funds, which represented charges for care provided to Mullins as a result of injuries sustained by Mullins. Mullins argued that the trial court abused its discretion by allowing MLM’s witness to testify as a lay witness about the reasonableness and necessity of SpineOne’s medical bills. The Court held that the witness’s conclusions did not involve a process of reasoning that could not be reached by an ordinary citizen without specialized training or experience. Therefore, the trial court did not err in allowing this witness to testify about his lay opinion. The Court also affirmed the trial court’s exclusion of the amount of consideration paid by MLM in purchasing the medical lien, finding this evidence immaterial.

Smith v. Kinningham – Trial Court did not err in excluding Medicaid benefits, as such benefits are collateral source benefits.  (CA 07/03/13). The Court of Appeals held that Medicaid benefits were collateral source benefits and thus, under CRS § 10-1-135(10)(a), evidence of Medicaid benefits paid on behalf of a plaintiff was inadmissible at trial for any purpose.  The Court did not address whether plaintiffs’ award should have been reduced post-verdict.

Strudley v. Antero Resources Corporation – Court of Appeals finds trial court has no authority to modify case management order (CA 07/03/13). In this toxic-tort case, Strudleys asserted that the trial court erred by entering a modified case management order, which required the Strudleys to present evidence to support their claims before full discovery could commence, because such orders are not permitted as a matter of Colorado law. The Court of Appeals agreed, holding that a trial court may not enter case management orders such as entered here before allowing discovery on matters central to a plaintiff’s claims.

Mid Valley Real Estate Solutions V, LLC v. Hepworth-Pawlak Geotechnical, Inc. – Court of Appeals extends duty owed to and definition of ‘homeowners’ for purposes of economic loss rule (CA 08/01/13). The Court found that there is an independent duty of care on the part of a design professional in residential construction that renders the economic loss rule inapplicable in that context. The Court also held that because the duty arises from the services provided on the residential project, the attributes of the owner harmed [bank] does not limit the scope of the duty. Thus, while Mid Valley a traditional homeowner, it could sue to recover.

Carolina Casualty Insurance v. Nanodetex Corporation, et al – Malicious prosecution exclusion interpreted (10th Cir. 08/19/13). The Insureds were successfully sued for malicious abuse of process. Upon review, the Tenth Circuit held that the term “malicious prosecution” in the exclusion does not encompass all claims of malicious abuse of process, but only claims whose elements are essentially those of the common-law cause of action for malicious prosecution.

Planning Partners International, LLC v. QED, Inc. – Court holds that determination of attorneys’ fee award is discretionary (SC 07/01/13). Petitioner argued that apportionment is not mandatory when determining reasonable attorney fees under a contract providing for such an award. The Supreme Court agreed, concluding that the determination of whether and how to apportion attorney fees is typically within the discretion of the trial court.

In Re DCP Midstream, LP v. Anadarko Petroleum Corp. – Supreme Court holds courts have a duty to consider appropriate scope of discovery under Rules (SC 6/24/13). The Supreme Court held that CRCP 26(b) requires trial courts to take an active role managing discovery when a scope objection is raised. The trial court must determine the appropriate scope of discovery in light of the reasonable needs of the case and tailor discovery to those needs. To resolve a dispute regarding the proper scope of discovery, the trial court should, at a minimum, consider the cost–benefit and proportionality factors set forth in CRCP 26(b)(2)(F).