Category Archives: Contracts

Allstate Insurance v. Medical Lien Managment, Inc., 2015CO32 (May 26, 2015)

The future belongs to those who prepare for it today. – Malcolm X. Medical debt financing companies require a plaintiff to assign the proceeds of their potential future settlement funds up to the amount of medical expenses financed and then demand that the tortfeasor’s insurance company pay them directly. Here, notwithstanding such a demand, Allstate paid the plaintiff, not MLM, who sued. The Court noted an assignment is a transfer of one’s right to performance to another. A conditional right to funds is assignable. But a right to a future right to funds is not, unless it is to all or a determinable portion of the funds. A demand for specific performance of payment of future funds may be enforceable. But an assignment cannot increase an obligor’s burden to perform. Here, the assignment was ill-defined and not independently determinable and thus not an assignment at the time it was made.

 https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2013/13SC131.pdf

**Disclaimer: the author represents a company engaged in business similar to MLM.

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Filed under Contracts, Personal Injury

Dean Craft v. Philadelphia Indemnity Insurance Co, 2015CO11 (Feb. 17, 2015)

“Know the Gaps” – Farmer’s Insurance ad. The Colorado Supreme Court granted review of, and answered in the negative the following certified question from the Tenth Circuit Court of Appeals: “whether the notice-prejudice rule applies to the date-certain notice requirement of claims-made policies.” The notice-prejudice rule (set forth in Friedland v Travelers) allows insureds to avoid the consequence of late notice of a claim under a “prompt-notice” provision if the insurer is not prejudiced. A “claims-made” policy, different from an “occurrence” policy, typically requires that notice of an occurrence be given by a date-certain as a condition precedent to coverage. The date-certain provision is, therefore, a material condition of coverage. Applying the notice-prejudice rule would alter the parties’ agreed allocation of risk, something the Court declined to do.

https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2014/14SA43.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9669&courtid=2

To read the 10th Circuit’s order following this opinion, click HERE.

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Filed under Contracts, Insurance, Interlocutory Review

S K Peightal Engineers, LTD, a Colorado corporation; Hepworth-Pawlak Geotechnical, Inc., a Colorado corporation; Steve Pawlak; and Daniel E. Hardin v. Mid Valley Real Estate Solutions V, LLC, 2015CO7 (February 9, 2015)

“Before the home reached the market, the Great Recession struck.” – Opinion.  Here, a series of loan contracts for the construction of a home and a later default resulted in a Deed in Lieu of foreclosure. The home was transferred to a corporate subsidiary of the lender. Lender later sued contractor for negligent construction. The lower courts declined to apply the economic loss rule (ELR) to bar the tort claims. The Court reversed, clarifying that the ELR applies to parties with contract remedies, including third-party beneficiaries who are not subsequent purchasers. Here, the subsidiary was a third-party beneficiary to a contract between the contractor and lender and thus not a “subsequent purchaser.” But, the Court remanded for further fact finding regarding the interrelatedness of the contracts and the scope of the contractual duties to determine if the ELR applies.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2013/13SC728.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9655&courtid=2

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Filed under Contracts

Gary Justice, Kathleen Hopkins, Eugene Halaas, Jr., and Robert Laird, Jr. v. The State of Colorado, Governor Hickenlooper, Colorado PERA, Carole Wright, and Maryann Motza, 2014CO75 (Oct. 20, 2014)

A contract is a promise the law will enforce. The Contract Clauses of Colorado’s and the US’s Constitutions protect existing contracts from laws that would later impair their performance. Public employees have received retirement benefits from PERA since 1931. Cost of living adjustments (COLA) began in 1969 and have evolved ever since. In 2000, the statutory COLA rate was 3.5%. In 2010, the legislature changed it to 2%. Employees who retired between 2001 and 2010 sued the State for violating the Contracts Clause, claiming a violation of their contractual right to the 3.5% COLA at the time of their retirement. The Court ruled there was no contract right guaranteeing a particular COLA formula because 1) it has changed repeatedly over time and 2) there is no express intent that the 2000 legislature intended to bind the 2010 legislature regarding the COLA formula for pre-2010 retirees.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2012/12SC906.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9546&courtid=2

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Filed under Constitutional, Contracts, Government

Atlantic Richfield Company v. Whiting Oil and Gas Corporation, f/k/a Equity Oil Company, 2014CO16 (March 3, 2014)

“A non-vested property interest is void unless it is certain to vest, if at all, within 21 years after the death of a life in being at the time the interest was created.” Common-law Rule Against Perpetuities (RAP). This case involves a nondonative commercial transaction dating back to 1968, amended in 1983 to include a non-exclusive revocable option. When the plaintiff sought to exercise the option in 2006, defendant claimed the RAP voided the option. The trial court, affirmed by the court of appeals, held that the option was enforceable as reformed under the Statutory RAP (USRAP). The Court affirmed on different grounds, holding that the RAP does not apply in commercial transactions; the rule against unreasonable restraint on alienation does. By holding that the RAP does not apply to revocable options, USRAP reformation was inapplicable. Plaintiff could exercise its option.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2010/10SC688.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9267&courtid=2

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Filed under Contracts, Property

Alva Hickerson v. Thomas Vessels, 2014CO2 (January 13, 2014)

“Don’t wait for the last judgment – it takes place every day.” Albert Camus. In this case, four issues are at play: 1) the equitable doctrine of laches (prevents a party from waiting too long to bring a claim); 2) the statute of limitations for collecting a debt (six years); 3) the doctrine of partial payment (restarts the six years after a partial payment); and 4) the separation of powers doctrine (prevents application of equitable doctrines to expressly conflicting statutes). The court of appeals held that laches cannot shorten a limitations period because the separation of powers doctrine prevented it. The Court reversed because laches does not conflict with the statute of limitations, and the partial payment doctrine does not preclude laches, even though it effectively lengthens the time within which a claim can be brought. The Court remanded for review of the laches claim.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2012/12SC198.pdf

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Filed under Constitutional, Contracts

Jennifer Hansen v. American Family Mutual Ins. Co. 2013COA173 (Dec. 19, 2013)

Twice the covered benefits plus attorneys’ fees and costs is what an insurance company must pay if it acts in bad faith when deciding an uninsured or underinsured insurance claim under CRS 10-3-1116. In this case, the claimant/plaintiff was awarded $0 damages on a statutory bad faith claim, but ultimately recovered three times the amount of UIM coverage available under the policy: double for statutory bad faith and a third under the settlement of a bad faith breach of contract claim. The court of appeals affirmed. First, it held that the policies were ambiguous on the identity of the insured, allowing the jury to conclude claimant was an insured. Then it held that even if the question of coverage was fairly debatable, delay or denying coverage was not necessarily reasonable. And finally, a successful statutory claim independently entitles a claimant to double the covered benefits.

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/11CA1430-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9194&courtid=1

 

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Filed under Contracts, Insurance, Personal Injury

In re the Estate of Carol S. Gattis, deceased. Scott M. Gattis, Linda L. Spreitzer, and Amy G. Goeden, as Personal Representatives, v. John E. McNutt; Timothy A. McNutt; and Christopher L. Boortz, 2013COA145 (Nov. 7, 2013)

This is a case of how NOT to flip a house. Defendants bought a house, repaired damage caused by expansive soils, and then sold it to Plaintiffs. In the standardized Seller Property Disclosure form, Defendants claimed no knowledge of expansive soils. Plaintiffs brought a nondisclosure tort claim after the soils damaged the home. Defendants asserted the Economic Loss Rule as a defense, which was rejected by the trial court. As a matter of first impression, the court of appeals held the economic loss rule does not bar nondisclosure tort claims arising from a house built on expansive soils. First, home sellers owe home buyers an independent duty to disclose latent defects of which they are aware. Second, common law duties remain with standardized form contracts that do not set out a standard of care, limit rights to specific disclosures, or provide express remedies for nondisclosure.

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/12CA1269-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9127&courtid=1

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Filed under Contracts, Property, Torts

Annette Berenson v. USA Hockey and Colorado Ice Hockey Referees Association, 2013COA138 (Oct. 10, 2013)

“They’re saying it’s because I agreed to the latest terms and conditions on iTunes!” Kyle Broflovski – South Park. If you click “I Agree” to an online waiver, can they prove it? The Best Evidence Rule codified in CRE 1002 states that to prove the contents of a writing, the original writing is required, unless an exception applies. An amateur female hockey player registered online to play in a league online, was injured, and sued the league. The league claimed she released her claims, but did not provide the release and did not claim an exception. Instead, it submitted an affidavit stating a waiver had to be initialed to complete online registration; she had registered; so she must have released her claims. The court, over a dissent, held that because the terms of the contract were not in dispute, the original contract was not required, and thus the league’s affidavit was admissible.

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/12CA1013-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9104&courtid=1

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Filed under Contracts, Evidence, Personal Injury

Jerry Mullins v. Medical Lien Management, Inc., 2013COA134 (Sept. 26, 2013)

This case is a fight over $17,000.00. This appeal is about civil procedure. Plaintiff filed an interpleader action to determine who was entitled to funds recovered from a tortfeasor in a personal injury case. Medical Lien Management (MLM) filed an Answer and Counterclaims. Plaintiff then amended the Complaint, which MLM Answered without reasserting its counterclaims. 1 1/2 years later, Plaintiff claimed MLM had waived or abandoned its right to assert the Counterclaims. The trial court disagreed. The court of appeals did too because: 1) there is no requirement that counterclaims be repleaded in response to an amended complaint; 2) MLM prosecuted its claims, which did not prejudice Plaintiff; 3) technical defects must be disregarded if they do not affect the rights of the parties; and 4) a claim not pleaded but still tried can be decided. Evidentiary rulings were also upheld.

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/11CA0699-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9094&courtid=1

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Filed under Contracts, Proceedure