Articles Posted in Contracts

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Plaintiff-petitioner Charissa Schultz was injured in a 2015 car accident in which the other driver failed to stop at a stop sign. The other driver’s insurance company settled for its $25,000 policy limit, and Schultz made a demand on her own uninsured/underinsured motorist benefits under her GEICO policy, which also had a $25,000 limit. In April 2017, after months of correspondence and apparent review of an MRI performed on Schultz in April 2015, GEICO offered Schultz its full policy limit, and it did so without requesting that she undergo an independent medical examination (“IME”). Indeed, GEICO’s claim logs reveal that at the time GEICO decided to offer Schultz its policy limits, it “concede[d] peer review wouldn’t be necessary,” indicating an affirmative decision not to request an IME. A few months later, Schultz filed the present lawsuit asserting claims for bad faith breach of an insurance contract and unreasonable delay in the payment of covered benefits. GEICO denied liability, disputing the extent and cause of Schultz’s claimed injuries and asserting that causation surrounding the knee replacement surgeries was “fairly debatable” because Schultz had preexisting arthritis, which GEICO claimed may independently have necessitated her surgeries. To establish its defense, GEICO ordered the IME and the district court granted that request. The Colorado Supreme Court concluded GEICO’s conduct had to be evaluated based on the evidence before it when it made its coverage decision and that, therefore, GEICO was not entitled to create new evidence in order to try to support its earlier coverage decision. The Court also concluded the district court abused its discretion when it ordered Schultz to undergo an IME over three years after the original accident that precipitated this case and a year and a half after GEICO had made the coverage decision at issue. View "Schultz v. GEICO Casualty Company" on Justia Law

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R. Parker Semler, a member of a condominium association, filed a breach-of- contract claim against the law firm that employed the association’s attorney. He alleged the attorney had a contract with the association’s president not to represent one association member against another. He also alleged that the attorney had, on behalf of other association members he was representing, acquired a deed conveying ownership of parking spaces over which Semler also claimed ownership, thereby breaching the contract and damaging Semler. The trial court dismissed the claim for lack of standing. A division of the court of appeals reversed, concluding that Semler had sufficiently alleged a breach-of-contract claim as a third-party beneficiary, and concluding that the strict privity rule, which “precludes attorney liability to non-clients absent fraud, malicious conduct, or negligent misrepresentation” did not bar Semler’s claim. The Colorado Supreme Court determined the strict privity rule barred Semler's breach-of-contract claim, and as such, he lacked standing to assert it. View "Bewley v. Semler" on Justia Law

Posted in: Contracts

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When Charlotte Fischer moved into a nursing home, she received an admissions packet full of forms. Among them was an agreement that compelled arbitration of certain legal disputes. The Health Care Availability Act (“HCAA” or “Act”) required such agreements contain a four-paragraph notice in a certain font size and in bold-faced type. Charlotte’s agreement included the required language in a statutorily permissible font size, but it was not printed in bold. Charlotte’s daughter signed the agreement on Charlotte’s behalf. After Charlotte died, her family initiated a wrongful death action against the health care facility in court. Citing the agreement, the health care facility moved to compel arbitration out of court. The trial court denied the motion, and the court of appeals affirmed, determining the arbitration agreement was void because it did not strictly comply with the HCAA. At issue was whether the Act required strict or substantial compliance. The Colorado Supreme Court held "substantial:" the agreement at issue her substantially complied with the formatting requirements of the law, notwithstanding the lack of bold type. View "Colorow Health Care, LLC v. Fischer" on Justia Law

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U.S. Welding sought review of the court of appeals’ judgment affirming the district court’s order awarding it no damages whatsoever for breach of contract with Advanced Circuits. Notwithstanding its determination following a bench trial that Advanced breached its contract to purchase from Welding all its nitrogen requirements during a one-year term, the district court reasoned that by declining Advanced’s request for an estimate of lost profits expected to result from Advanced’s breach prior to expiration of the contract term, Welding failed to mitigate. Because an aggrieved party is not obligated to mitigate damages from a breach by giving up its rights under the contract, and because requiring Welding to settle for a projection of anticipated lost profits, rather than its actual loss, as measured by the amount of nitrogen Advanced actually purchased from another vendor over the contract term, would amount to nothing less than forcing Welding to relinquish its rights under the contract, the Colorado Supreme Court concluded the district court erred. The court of appeals’ judgment concerning failure to mitigate was therefore reversed, and the case was remanded for further proceedings. View "U.S. Welding, Inc. v. Advanced Circuits, Inc." on Justia Law

Posted in: Business Law, Contracts

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This case arose from a series of transactions in which petitioners Rocky Mountain Exploration, Inc. and RMEI Bakken Joint Venture Group (collectively, “RMEI”) sold oil and gas assets to Lario Oil and Gas Company (“Lario”). In the transaction, Lario was acting as an agent for Tracker Resource Exploration ND, LLC and its affiliated entities (collectively, “Tracker”), which were represented by respondents Davis Graham & Stubbs LLP and Gregory Danielson (collectively, “DG&S”). Prior to RMEI’s sale to Lario, RMEI and Tracker had a business relationship related to the oil and gas assets that were ultimately the subject of the RMEI-Lario transaction. The RMEI-Tracker relationship ultimately soured; Tracker and Lario reached an understanding by which Lario would seek to purchase RMEI’s interests and then assign a majority of those interests to Tracker. Recognizing the history between Tracker and RMEI, however, Tracker and Lario agreed not to disclose Tracker’s involvement in the deal. DG&S represented Tracker throughout RMEI’s sale to Lario. In that capacity, DG&S drafted the final agreement between RMEI and Lario, worked with the escrow agent, and hosted the closing at its offices. No party disclosed to RMEI, however, that DG&S was representing Tracker, not Lario. After the sale from RMEI to Lario was finalized, Lario assigned a portion of the assets acquired to Tracker, and Tracker subsequently re-sold its purchased interests for a substantial profit. RMEI then learned of Tracker’s involvement in its sale to Lario and sued Tracker, Lario, and DG&S for breach of fiduciary duty, fraud, and civil conspiracy, among other claims. As pertinent here, the fiduciary breach claims were based on RMEI’s prior relationship with Tracker. The remaining claims were based on allegations that Tracker, Lario, and DG&S misrepresented Tracker’s involvement in the Lario deal, knowing that RMEI would not have dealt with Tracker because of the parties’ strained relationship. Based on these claims, RMEI sought to avoid its contract with Lario. Lario and Tracker eventually settled their claims with RMEI, and DG&S moved for summary judgment as to all of RMEI’s claims against it. The district court granted DG&S’s motion. The Colorado Supreme Court granted certiorari to consider whether: (1) Lario and DG&S created the false impression that Lario was not acting for an undisclosed principal (i.e., Tracker) with whom Lario and DG&S knew RMEI would not deal; (2) an assignment clause in the RMEI-Lario transaction agreements sufficiently notified RMEI that Lario acted on behalf of an undisclosed principal; (3) prior agreements between RMEI and Tracker negated all previous joint ventures and any fiduciary obligations between them; (4) RMEI stated a viable claim against DG&S for fraud; and (5) RMEI could avoid the Lario sale based on statements allegedly made after RMEI and Lario signed the sales agreement but prior to closing. The Supreme Court found no reversible error and affirmed. View "Rocky Mountain Exploration, Inc. and RMEI Bakken Joint Venture" on Justia Law

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Charlotte Fischer was moved into a nursing home; after she died, her family initiated a wrongful death action against the health care facility in court. Citing a clause in the admissions agreement, the health care facility moved to compel arbitration out of court. The trial court denied the motion, and the court of appeals affirmed, determining the arbitration agreement was void because it did not strictly comply with the Health Care Availability Act ("HCAA"). In this case, the Colorado Supreme Court considered whether section 13-64-403, C.R.S. (2017) of the HCAA, the provision governing arbitration agreements, required strict or substantial compliance. The HCAA required that such agreements contain a four-paragraph notice in a certain font size and in bold-faced type. Charlotte’s agreement included the required language in a statutorily permissible font size, but it was not printed in bold. Charlotte’s daughter signed the agreement on Charlotte’s behalf. The Supreme Court held the Act demanded only substantial compliance. Furthermore, the Court concluded the agreement here substantially complied with the formatting requirements of section 13-64-403, notwithstanding its lack of bold-faced type. Accordingly, the Supreme Court reversed the judgment of the court of appeals and remanded for further proceedings. View "Colorow Health Care, LLC v. Fischer" on Justia Law

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The U.S. District Court for the District of Colorado certified a question of Colorado law to the Colorado Supreme Court regarding the statute of limitations applicable to section 10-3-1116, C.R.S. (2017), which governed claims for unreasonable delay or denial of insurance benefits. Specifically, the question centered on whether a claim brought pursuant to Colorado Revised Statutes section 10-3-1116 was subject to the one-year statute of limitations found in Colorado Revised Statutes section 13-80-103(1)(d) and applicable to “[a]ll actions for any penalty or forfeiture of any penal statutes.” The Supreme Court held the one-year statute of limitations found in section 13-80-103(1)(d), C.R.S. (2017), did not apply to an action brought under section 10-3-1116(1) because section 10-3-1116(1) was not an “action[] for any penalty or forfeiture of any penal statute[]” within the meaning of section 13-80-103(1)(d). Therefore, the Court answered the certified question in the negative. View "Rooftop Restoration, Inc. v. Am. Family Mut. Ins. Co." on Justia Law

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In 2009, a fire started in an apartment building owned by respondents Guillermo and Evelia Barriga and insured by petitioner American Family Mutual Insurance Company (“American Family”). American Family made various payments to the and on behalf of the Barrigas, totaling $209,816.43. However, after a substantial amount of repair work had been completed, the contractor revised its estimate for the cost of the repairs. The revised estimate was higher than American Family’s initial estimate, primarily because of the need for additional repairs and asbestos remediation. In response, American Family initiated a third-party appraisal process outlined in the insurance policy intended to provide an impartial assessment of the needed repair costs. The appraiser fixed the award at $322,141.79. American Family then paid that award, less the $209,816.43 that had been previously paid to the Barrigas, resulting in a payment of $122,325.36. American Family also made an additional payment of $5435.44 for emergency board-up services. The Barrigas sued American Family for breach of contract, common law bad-faith breach of insurance contract, and unreasonable delay and denial of insurance benefits under section 10-3-1116(1), C.R.S. (2017). The jury found for the Barrigas on all claims, awarding damages, as relevant here, of $9270 for breach of contract and $136,930.80 for benefits unreasonably delayed or denied. The issue raised on appeal for the Colorado Supreme Court's review centered on whether an award of damages under section 10-3-1116(1), C.R.S. (2017), had to be reduced by an insurance benefit unreasonably delayed but ultimately recovered by an insured outside of a lawsuit. The Court held that an award under section 10-3-1116(1) must not be reduced by an amount unreasonably delayed but eventually paid by an insurer because the plain text of the statute provided no basis for such a reduction. The Court also concluded that a general rule against double recovery for a single harm did not prohibit a litigant from recovering under claims for both a violation of section 10-3- 1116(1) and breach of contract. View "Am. Family Mut. Ins. Co. v. Barriga" on Justia Law

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In 2012, Khalil Laleh brought a forcible entry and detainer action against his brother, Ali Laleh. The litigation later grew so unwieldy that the trial court appointed Gary Johnson as an accounting expert (and later as a special master) to resolve the feuding brothers’ complex accounting claims. The Laleh brothers signed an engagement agreement with Gary C. Johnson and Associates, LLC, setting forth the scope of Johnson’s services and payment. Johnson commenced work, but before he completed his accounting reports for the trial court, the brothers settled their case and the court dismissed the suit. Johnson later informed the trial court that Khalil and Ali refused to pay both his outstanding fees and his costs incurred post-settlement in attempting to collect the outstanding fees. Following a hearing, the trial court issued an order ruling that Johnson’s fees were reasonable, and that he was entitled to the post-settlement costs he incurred in trying to collect his outstanding fees. In reaching the latter conclusion, the trial court relied on language in the engagement agreement stating that the Lalehs “are jointly and severally responsible for the timely and complete payment of all fees and expenses” to Johnson. The Colorado Supreme Court concluded that a separate provision of the engagement agreement authorized the award of the disputed post-settlement collection costs. View "Laleh v. Johnson" on Justia Law

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In March 2016, Catholic Health Initiatives Colorado (d/b/a Centural Health – St. Anthony North Hospital) filed suit against architectural firm Earl Swensson Associates (“ESA”) after ESA designed Catholic Health’s new hospital, Saint Anthony North Health Campus (“Saint Anthony”). Catholic Health alleged that ESA breached its contract and was professionally negligent by failing to design Saint Anthony such that it could have a separately licensed and certified Ambulatory Surgery Center (“ASC”). In December 2016, Catholic Health filed its first expert disclosures, endorsing Bruce LePage and two others. Catholic Health described LePage as an expert with extensive experience in all aspects of preconstruction services such as cost modeling, systems studies, constructability, cost studies, subcontractor solicitation, detailed planning, client relations, and communications in hospital and other large construction projects. Catholic Health endorsed LePage to testify about the cost of adding an ASC to Saint Anthony. At a hearing, ESA argued that the lack of detail in LePage’s report prevented ESA from being able to effectively cross-examine him. ESA further argued that striking LePage as an expert was the proper remedy because Rule 26(a)(2)(B)(I) limits expert testimony to opinions that comply with the Rule, and LePage offered no opinions in compliance. In 2015, the Colorado Supreme Court amended Colorado Rule of Civil Procedure 26(a)(2)(B) to provide that expert testimony “shall be limited to matters disclosed in detail in the [expert] report.” In this case, the trial court concluded that this amendment mandated the exclusion of expert testimony as a sanction when the underlying report fails to meet the requirements of Rule 26. The Supreme Court concluded the amendment created no such rule of automatic exclusion. Instead, the Court held that the harm and proportionality analysis under Colorado Rule of Civil Procedure 37(c) remained the proper framework for determining sanctions for discovery violations. Because the trial court here did not apply Rule 37(c), the Court remanded for further development of the record. View "Catholic Health v. Swensson" on Justia Law