Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Siloam Springs Hotel, LLC operated a Hampton Inn hotel in Siloam Springs, Arkansas. It purchased a general liability insurance policy from Century Surety Company covering the Hampton Inn for the period of November 13, 2012, through November 13, 2013. Siloam Springs purchased the Commercial Lines Policy through Century Surety's agent, RCI Insurance Group of Claremore, Oklahoma. On January 21, 2013, several guests at the Hampton Inn suffered bodily injury due to a sudden, accidental leak of carbon monoxide from the heating element of an indoor swimming pool. Siloam Springs sought coverage under the Commercial Lines Policy. Century Surety denied coverage, relying on an exclusion set out in the Commercial Lines Policy. That provision (the "Indoor Air Exclusion") excluded from coverage "[b]odily injury' . . . arising out of, caused by, or alleging to be contributed to in any way by any toxic, hazardous, noxious, irritating, pathogenic or allergen qualities or characteristics of indoor air regardless of cause." After Century Surety removed the case to federal court, the parties filed cross-motions for summary judgment. In its motion, Century Surety asserted that because the insurance contract was to be performed in Arkansas, Oklahoma choice-of-law rules made Arkansas law applicable. It further argued that the Indoor Air Exclusion unambiguously excluded coverage for the carbon-monoxide based injuries to the guests at the Hampton Inn. For its part, Siloam Springs "decline[d] to contest" Century Surety's assertion that Arkansas law applied because, it asserted, "Arkansas law does not differ from Oklahoma law in any way material to [the] coverage dispute." As to the merits, Siloam Springs asserted the Indoor Air Exclusion was ambiguous and, as such, had to be construed in favor of coverage. Without definitively resolving whether Oklahoma or Arkansas law applied, but relying on precedent from Arkansas, the district court granted summary judgment to Century Surety. The issue this case presented for the Tenth Circuit's review called for the Court to determine the citizenship, for purposes of diversity jurisdiction, of a limited liability company ("LLC"). Because the materials before the Court did not demonstrate that complete diversity of citizenship existed at the time of the filing of the complaint, the matter was remanded to the district court for further proceedings. View "Siloam Springs Hotel v. Century Surety Co." on Justia Law

Professional golfing legend Jack Nicklas' participation in a developer's plan to build a luxurious golf course and housing plan allegedly led plaintiffs-appellants Jeffrey and Judee Donner to invest $1.5 million in the development. "Plans went awry:" the developer's parent company went bankrupt, and the project was never built. The Donners settled with the developer's parent company in its bankruptcy proceedings, then sued Jack Nicklaus and Jack Nicklaus Golf Club, LLC for intentional misrepresentation, negligent misrepresentation, and violation of the Interstate Land Sales Full Disclosure Act. The district court dismissed the action, holding in the alternative: (1) the complaint failed to state a valid claim for relief; and (2) defendants were entitled to summary judgment because the Donners elected their remedies by entering into a settlement agreement with other parties. After review, the Tenth Circuit disagreed with the district court with respect to two issues: (1) the dismissal of the claim involving intentional misrepresentation of Mr. Nicklaus's membership status; and (2) the award of summary judgment to Mr. Nicklaus and Nicklaus Golf, finding the settlement agreement did not include defendants, and the Donners neither affirmed nor repudiated a contract. The case was affirmed in all other respects, and remanded for further proceedings. View "Donner v. Nicklaus" on Justia Law

Plaintiff Kathryn Kipling sued State Farm Automobile Insurance Company in Colorado federal district court for breach of contract because it did not pay her benefits under four insurance policies issued in Minnesota. The court determined that she would be entitled to benefits under Colorado law but not under Minnesota law. It then applied tort conflict-of-laws principles to rule that Colorado law governed. After its review, the Tenth Circuit held that the court erred by not applying contract conflict-of-laws principles. The district court was reversed and the matter remanded for further consideration. View "Kipling v. State Farm Mutual Automobile" on Justia Law

Stan Lee Media claimed to own intellectual-property rights in a number of popular Marvel Enterprises comic-book characters. Its claims derived from a 1998 contractual agreement with Stan Lee, in which he transferred all of his ownership rights in characters he created while working at Marvel to Stan Lee Media in exchange for salary and other benefits. Stan Lee Media brought copyright infringement claims against Marvel Enterprises' corporate owner, The Walt Disney Company. Disney disputed whether Stan Lee Media had any interest whatever in the Marvel characters. The Ninth Circuit addressed the complex question of ownership in "Stan Lee Media, Inc. v. Lee," (2014 WL 5462400 (9th Cir. Oct. 29, 2014)), finding that Stan Lee Media could not even allege any right to ownership of the disputed properties. The Tenth Circuit concluded that the Ninth Circuit’s decision on the ownership issue was entitled to collateral-estoppel effect in subsequent cases involving claims for relief premised on that issue. Thus, because Stan Lee Media was precluded from alleging ownership of the at-issue intellectual properties, Stan Lee Media’s copyright-infringement claim failed here as a matter of law. View "Stan Lee Media v. Walt Disney Company" on Justia Law

Two companies, Derma Pen, LLC and 4EverYoung, entered a sales distribution agreement. Under the agreement, Derma Pen, LLC obtained the exclusive right to use the DermaPen trademark in the United States. 4EverYoung had a contractual right of first refusal, allowing purchase of Derma Pen, LLC’s U.S. trademark rights upon termination of the distribution agreement. Derma Pen, LLC terminated the agreement, and 4EverYoung wanted to exercise its contractual right of first refusal. The parties reached an impasse, and 4EverYoung started using the DermaPen trademark in the United States. Derma Pen, LLC sued and requested a preliminary injunction to prevent 4EverYoung’s use of the trademark. The district court declined the request, concluding that 4EverYoung was likely to prevail. This appeal to the Tenth Circuit followed, presenting the question: whether Derma Pen, LLC was likely to prevail on its claims of trademark infringement and unfair competition by proving a protectable interest in the trademark. The Court concluded Derma Pen, LLC was likely to prevail by satisfying this element. The district court was reversed and the case remanded for further proceedings. View "Derma Pen v. 4EverYoung Limited" on Justia Law

The issue at the heart of this appeal to the Tenth Circuit centered on indemnity stemming from a promise by Martin K. Eby Construction Company’s predecessor to build a water pipeline. Eby engaged another company (the predecessor to Kellogg Brown & Root, LLC), promising to indemnify claims resulting from Eby’s work. While building the water pipeline, Eby accidentally hit a methanol pipeline, causing a leak. At the time, no one knew about the leak. It was discovered over two decades later, and the owner of the methanol pipeline had to pay for the cleanup. The owner of the methanol pipeline sued to recover the expenses from Kellogg and Eby. Kellogg and Eby prevailed, but Kellogg incurred over $2 million in attorneys’ fees and costs. Kellogg invoked Eby’s indemnity promise, suing Eby and its liability insurer, Travelers Casualty and Surety Co. The district court granted summary judgment to Eby and Travelers, leading Kellogg to appeal. To resolve the Kellogg-Eby portion of the appeal, the Tenth Circuit focused on the enforceability of Eby’s promise of indemnity: the promise was broad enough to cover the pipeline owner’s claims against Kellogg for its inaction after Eby caused the leak, but the indemnity clause was not conspicuous; thus, it was unenforceable. The Kellogg-Travelers appeal turned on Kellogg’s argument that Travelers’ insurance policy covered liabilities assumed by its insured (Eby). The Tenth Circuit concluded that because the indemnity clause was unenforceable, it is as if Eby never agreed to assume Kellogg’s liabilities. In the absence of Eby’s assumption of Kellogg’s liabilities, Travelers did not insure Kellogg. Accordingly, Kellogg was not entitled to indemnity from Eby or insurance coverage from Travelers, and Eby and Travelers were entitled to summary judgment. View "Martin K. Eby Construction v. OneBeacon Insurance" on Justia Law

Colorado Golf Club Holding Company LLC (CGC Holding), Harlem Algonquin LLC and James Medick proposed certification of a class action suit. They alleged a group of lenders conspired to create a fraudulent scheme to obtain non-refundable up-front fees in return for loan commitments , and misrepresented their ability and their objective to make good on the promises to meet certain financing obligations as part of a scheme to entice borrowers to pay the up-front fees. The class intended to offer generalized proof that the lenders concealed the financial history of Sandy Hutchens, the principal defendant, and his use of pseudonyms, to preserve the superficial integrity of the operation. The borrowers argued that had they known about this pretense, no putative class member would have taken part in the financial transactions that caused each to lose its up-front fees, amounting to millions of dollars of cumulative losses. The ultimate issue this case presented for the Tenth Circuit's review centered on whether the class could pursue claims under the Racketeer Influenced and Corrupt Organizations Act (RICO). In opposing the claims, the lenders argued that each class member would have to demonstrate that it relied on the lenders’ misrepresentations or omissions to satisfy RICO’s causation element, making a single trial unwieldy and unworkable. The Tenth Circuit held that the lenders were wrong in this respect: RICO class-action plaintiffs are not entitled to an evidentiary presumption of a factual element of a claim. The Court agreed with the district court that a class could be certified in this context. Plaintiffs' theory sufficiently allayed any concerns about Rule 23(b)(3)’s requirement that common issues predominate over those idiosyncratic to individual class members. The Tenth Circuit affirmed certification of the class, but reversed the district court with regard to certification decision as to the lenders’ law firm and lawyers, Broad and Cassel, Ronald Gache and Carl Romano. Because several claims were not properly before the Court in this interlocutory appeal, the Court declined to address: (1) whether plaintiffs’ claims constituted an impermissible extraterritorial application of RICO; (2) whether the plaintiffs could prove proximate cause; or (3) whether the district court properly exercised personal jurisdiction over certain defendants. View "CGC Holding v. Gache" on Justia Law

Westar Energy was an electric company based in Topeka, Kansas that owned several sources of electricity, including the Jeffrey Energy Center (JEC). The JEC was a coal-fired power plant composed of three units: Unit 1, Unit 2, and Unit 3. In 2005, Westar began a project to upgrade the JEC’s existing flue gas desulfurization (FGD) system. Wahlcometroflex Inc. (Wahlco) was a Delaware corporation that designed and manufactured a number of products including FGD dampers. On December 22, 2006, Westar and Wahlco entered into a contract under which Wahlco agreed to manufacture and deliver dampers to Westar for Units 1, 2, and 3. This case involved a dispute over the meaning and application of a liquidated damages in that contract provision under Kansas law. The district court held that Westar did not need to establish that Wahlco's late delivery of the equipment actually delayed Westar’s production schedule in order to recover contractual liquidated damages. Finding no error in that judgment, the Tenth Circuit affirmed. View "Wahlcometroflex v. Westar Energy" on Justia Law

Plaintiffs DISH Network Corporation and DISH Network LLC sought a declaratory judgment that their commercial general liability and excess liability insurers (collectively the Insurers), Arch Specialty Insurance Company, Arrowood Indemnity Company, Travelers Indemnity Company of Illinois, XL Insurance America, Inc., and National Union Fire Insurance Company of Pittsburgh, Pa., had a duty to defend and indemnify plaintiffs in an underlying patent infringement action. The district court granted summary judgment in favor of the Insurers, plaintiffs appealed, and the Tenth Circuit reversed and remanded for further proceedings. On remand, the Insurers moved again for summary judgment, but on different grounds. The district court granted the Insurers’ motions, and plaintiffs appealed. Finding no reversible error this time, the Tenth Circuit affirmed the district court's judgment. View "Dish Network v. Arch Specialty Insurance" on Justia Law

Plaintiffs Brett Woods and Kathleen Valdes were state employees and representatives of a class of New Mexico state and local government employees who alleged they paid for insurance coverage through payroll deductions and premiums pursuant to a policy issued by Standard Insurance Company (Standard), but did not receive the coverage for which they paid and, in some cases, were denied coverage entirely. Plaintiffs filed suit in New Mexico state court against three defendants: Standard, an Oregon company that agreed to provide the subject insurance coverage; the Risk Management Division of the New Mexico General Services Department (the Division), the state agency that contracted with Standard and was responsible for administering benefits under the policy; and Standard employee Martha Quintana, who Plaintiffs allege was responsible for managing the Division’s account with Standard and for providing account management and customer service to the Division and state employees. Plaintiffs' ninety-one-paragraph complaint, stated causes of action against Standard and the Division for breach of contract and unjust enrichment; against Standard for breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and Unfair Practices Act violations; and against Standard and Ms. Quintana for breach of the New Mexico Trade Practices and Fraud Act. The issue this appeal presented for the Tenth Circuit's review centered on whether remand to the state court pursuant to the Class Action Fairness Act (CAFA) was required under either of two CAFA provisions: the state action provision, which excludes from federal jurisdiction cases in which the primary defendants are states; or the local controversy exception, which requires federal courts to decline jurisdiction where, among other things, there is a local defendant whose alleged conduct forms a significant basis for the claims asserted by plaintiffs and from whom plaintiffs seek significant relief. The Court concluded that neither provision provided a basis for remand, and therefore reversed the decision of the magistrate judge remanding the case to state court. But because the Tenth Circuit could not determine whether Defendants have established the amount in controversy required to confer federal jurisdiction, the case was remanded to the district court for the resolution of that issue. View "Woods v. Standard Insurance Co." on Justia Law