COLORADO SELECT CASE LAW UPDATE

Colorado Supreme Court

LHM Corp. v. Martinez– Finality of Judgment and appeal – 2021CO78 (12/13/21). The supreme court considers whether a judgment is final for purposes of appeal when the district court has determined that a plaintiff who prevails on a claim under the Colorado Consumer Protection Act is entitled to an award of attorney fees but has not yet determined the amount of those fees. The supreme court reaffirms the bright-line rule adopted in Baldwin v. Bright Mortgage Co., 757 P.2d 1072 (Colo. 1988), and holds that a judgment on the merits is final for purposes of appeal notwithstanding an unresolved issue of attorney fees. In so doing, the court overrules Ferrell v. Glenwood Brokers, Ltd., 848 P.2d 936 (Colo. 1993), and the cases that followed it to the extent those cases deviated from Baldwin’s bright-line rule.

Colorado Court of Appeals

Dream Finders Homes v. Weyerhaeuser NR – Sophisticated buyer limited to contractual warranty claims – 2021COA143 (12/2/21). A division of the court of appeals considered whether sophisticated buyers of a defective product, who received a warranty from the manufacturer of the product, may assert tort claims based on the manufacturer’s alleged misrepresentations about the product and failure to disclose the defect, even though the buyers received the remedy specified in the warranty and the warranty expressly excluded the very type of damages the buyers seek to recover through their tort claims. The division held that the economic loss rule bars the buyers from asserting such tort claims because the manufacturer did not owe the buyers a duty of care under tort law independent of its contractual duties. The division also held that the economic loss rule does not generally bar private rights of action under the Colorado Consumer Protection Act. However, despite its holding, the division concluded that trial court did not err by denying the buyers’ motion for judgment notwithstanding the verdict on their CCPA claim because they failed to prove one of the elements of the claim.

Accetta v Brooks Towers Condominium Ass’n, Inc. –Court holds attorney’s fees awardable to prevailing party in CCIOA case – 2021COA147 (12/09/21). A July 2021 decision [2021 COA 87] by another division of the court of appeals concluded that section 38-33.3-118 provides the exclusive means for a common interest community association that existed before the effective date of the CCIOA to elect to be governed by the entirety of CCIOA. In this challenge to the attorney fees and costs awarded in the merits litigation, the majority concluded that section 38-33.3-123(1)(c)—which requires a court to award reasonable attorney fees and costs to the prevailing party “[i]n any civil action to enforce or defend the provisions of [CCIOA] or of the declaration, bylaws, articles, or rules and regulations”—applies to a civil action concerning a common interest declaration that predates CCIOA as provided in section 38-33.3-117(1)(g). Accordingly, the division concluded that defendants are entitled to recover their attorney fees, including those incurred in this appeal, and remands the case to the trial court to determine the amount of such fees and award them to defendants. Judge Welling dissented.

Tenth Circuit Court of Appeals

Hall v. Allstate Fire – Tenth Circuit affirms summary judgment on bad faith case due to insured’s failure to cooperate – No. 21-1040 (10th Cir. 2021). Plaintiff-Appellant Neil Hall appealed the district court’s grant of summary judgment in favor of Defendant-Appellee Allstate Fire and Casualty Insurance Company on his claim for underinsured motorist benefits due to his failure to cooperate. Hall was injured in a car accident caused by underinsured motorist Teri Johnson. Johnson only carried $25,000 in liability insurance coverage. Hall carried underinsured motorist coverage through Allstate. Allstate gave Hall permission to settle with Johnson for her $25,000 limit. Hall’s counsel submitted a request for benefits to Allstate asserting that he was entitled to more than the $25,000 he had received. An Allstate claims adjuster reviewed the medical expenses in the letter and determined that the reasonable amount of expenses was $25,011.68. Allstate sent Hall’s counsel a payment of $11.68 along with a letter that stated: “I will be in contact with you to resolve the remaining components of your client’s claim.” Counsel did not respond to any of the five attempts over three months: two voicemails and three letters. Without any prior notice to Allstate, Hall filed suit against Allstate for breach of contract, statutory unreasonable delay or denial of payment of benefits, and common law bad faith. The district court dismissed for failure to cooperate.  The Tenth Circuit affirmed, finding that because the insured’s failure to cooperate resulted in a material and substantial disadvantage to the insurer, the insurer properly denied coverage on this ground.

Goodwill Industries Central v. Philadelphia Indemnity – Tenth Circuit denies COVID coverage claim – No. 21-6045 (10th Cir. 2021). Goodwill Industries of Central Oklahoma, Inc., suspended operations of its retail stores and donations centers on March 25, 2020, to comply with state and local orders regarding the COVID-19 pandemic. After suffering losses due to the shutdown, Goodwill sued its insurer, Philadelphia Indemnity Insurance Company (“Philadelphia”), under its commercial lines policy. The policy provided coverage for “loss of Business Income” when the insured must suspend its operations due to “direct physical loss of or damage to” covered property. The district court granted Philadelphia’s motion to dismiss, concluding the policy did not cover Goodwill’s loss and that the policy’s Virus Exclusion barred coverage. Finding no reversible error in that judgment, the Tenth Circuit affirmed.