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

The Federal Depository Insurance Corporation (FDIC), acting as receiver of the New Frontier Bank, used proceeds from the sale of cattle belonging to a limited liability company (LLC) to pay down a loan of one of the two LLC members. According to the complaint, the FDIC had no authority to do so because the payment was contrary to the members' agreement. Ignoring the separate entity status of an LLC, the other LLC member brought suit in its own name against the United States under the Federal Tort Claims Act (FTCA) for what it claimed to be the FDIC's wrongful disbursement of the proceeds. The LLC sued the government under the Fifth Amendment Takings Clause. The district judge dismissed the suit for failure to state a claim. The Tenth Circuit agreed dismissal was appropriate, the Appellate Court concluded dismissal should have been for lack of jurisdiction as to the member's claims and as to the LLC's claim because the United States Court of Federal Claims had exclusive jurisdiction. View "ECCO Plains, LLC., et al v. United States" on Justia Law

The New Mexico Supreme Court recognized a new tort called "malicious abuse of process," which subsumed causes of action for malicious prosecution and abuse of process. Nanodetex Corporation and two of its principals (the Insureds) were successfully sued for malicious abuse of process. They then sought indemnification from Carolina CasualtyInsurance Company, which covered the Insureds under a management liability policy (the Carolina Policy). Carolina denied the claim, relying on an exclusion in the policy for losses arising from claims for "malicious prosecution." It sought a declaratory judgment that it was not liable for the damages arising from the malicious-abuse-of-process judgment. On Carolina's motion for summary judgment, the district court agreed with Carolina and also rejected the Insureds' counterclaims. The Insureds appealed. Upon review, the Tenth Circuit reversed the declaratory judgment, holding 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. Because the judgment against the Insureds in the tort case was affirmed on appeal on a claim that was not substantially the same as common-law malicious prosecution, the exclusion in the Carolina Policy did not apply. View "Carolina Casualty Insurance v. Nanodetex Corporation, et al" on Justia Law

Plaintiff-Appellant Cynthia Pfeifer filed suit against Defendant-Appellee Federal Express Corporation in the District of Kansas, alleging that the company fired her in retaliation for receiving workers' compensation benefits. Plaintiff filed suit fifteen months following the termination within the applicable state statute of limitations, but outside the limit of six months enumerated in her employment agreement. The district court granted Defendant's motion for summary judgment, concluding that the contract clause was reasonable and was not a violation of public policy. Because no Kansas law appeared to control the outcome of the case, the Tenth Circuit certified two questions to the Kansas Supreme Court regarding the ability of parties to shorten the applicable statute of limitations by contract, and if not, then was the six-month limitation unreasonable in this case? The Kansas Court responded that the contract clause in question here did violate public policy. Because of that answer, the Court did not respond to the Tenth Circuit's second question. In light of these answers, the federal district court was reversed and the case remanded for further proceedings. View "Pfeifer v. Federal Express Corporation" on Justia Law

An Oklahoma City car dealer, Automax Hyundai South, sued its insurance company for refusing to defend it when the dealership was sued by customers. Two aggrieved customers brought claims against Automax relating to car purchases they made. The customers won their cases at the state court. The district court ruled that the insurance company had no duty to defend or indemnify Automax in the underlying lawsuits. Upon review of the district court record and the policy at issue, the Tenth Circuit agreed with Automax and concluded the insurance company had a duty to defend. View "Automax v. Zurich, et al" on Justia Law

Defendant-Appellant Lloyds of London Syndicate 2003 ("Lloyds") appealed the district court's denial of its summary judgment motion and subsequent grant of summary judgment in favor of Plaintiff-Appellee Brecek & Young Advisors, Inc. ("BYA") in an action arising out of a professional liability insurance contract. The district court concluded Lloyds failed to pay sufficient indemnity to BYA for claims brought against BYA in an arbitration before the National Association of Securities Dealers. The underlying suit alleged BYA agents mismanaged and unlawfully "churned" the investment accounts of its clients. The court concluded the claims brought in the arbitration did not relate back to earlier claims brought outside the policy period and, therefore, rejected Lloyds' argument coverage was precluded altogether. Additionally, the court rejected BYA's argument that Lloyds was equitably estopped from denying coverage due to its course of conduct in receiving and defending the claims. Upon review, the Tenth Circuit concluded that the district court erred in its interpretation of the law of the case, and therefore abused its discretion in making its judgments in this case. Accordingly, the district court's decisions were reversed and the case remanded for further proceedings. View "Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003" on Justia Law

Defendant-Appellant Indiana Lumbermens Mutual Insurance Company (ILM) appealed the district court's denial of its motion for judgment as a matter of law, or in the alternative, for a new trial following a $2.2 million jury verdict in favor of Plaintiff-Appellee Ryan Development Company, L.C., d/b/a Agriboard Industries (Agriboard). This case arose from a fire that destroyed a Texas manufacturing facility in April 2009. Agriboard, manufactured building panels made of compressed straw. At the time of the fire, Agriboard was insured under a fire and related losses insurance policy issued by ILM with various coverages including lost income. By May 2009, ILM had paid $450,000; Agriboard filed suit and thereafter ILM paid $1.8 million. Agriboard continued to seek recovery under the policy, but ILM refused to pay the amount requested and Agriboard re-filed suit, seeking $2.4 million in unpaid coverages. The trial court denied ILM's motion for judgment as a matter of law, or in the alternative, for a new trial. ILM timely appealed that denial to the Tenth Circuit. Upon review, the Tenth Circuit found no abuse of the trial court's discretion in denying ILM's motion and affirmed the lower court's judgment. View "Ryan Development Co. v. Indiana Lumbermens Mutual Ins. Co." on Justia Law

Petitioner Jose Cardoza brought this lawsuit pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), to challenge United of Omaha Life Insurance Company’s calculation of his long-term disability benefits (LTD benefits). United of Omaha answered, asserting its calculation was appropriate, and counterclaimed, demanding that Petitioner reimburse it for payments of short-term disability benefits (STD benefits) which it claimed were miscalculated. On cross-motions, the district court granted Petitioner's motion for summary judgment and denied United of Omaha’s motion, concluding United of Omaha’s decision to calculate Petitioner's LTD benefits and recalculate his STD benefits as it did was arbitrary and capricious. United of Omaha appealed. Upon review, the Tenth Circuit concluded that the district court erred in granting Petitioner's motion for summary judgment with respect to United of Omaha’s LTD benefits calculation: "[t]he plain language of the long-term disability benefits policy instructed United of Omaha to base its calculation of Cardoza’s LTD benefits on his earnings as verified by the premium it received. Thus, United of Omaha’s decision to do so was reasonable and made in good faith." The district court did not err, however, in granting Petitioner's motion for summary judgment with respect to United of Omaha’s recalculation of his STD benefits and demand for reimbursement "United of Omaha’s decision to recalculate Cardoza’s STD benefits based on his earnings verified by premium rather than his actual earnings was not reasonable." The Court therefore reversed in part, affirmed in part, and remanded the case to the district court for further proceedings. View "Cardoza v. United of Omaha Life Insurance" on Justia Law

In this appeal the Tenth Circuit addressed: (1) whether a foster child in Oklahoma had a "contractual or statutory" relationship with the insurance company that provided foster care liability insurance to the foster child's foster parent, such that the insurer owed the foster child either contractual obligations or an implied duty of good faith and fair dealing; (2) whether a judgment creditor may garnish a judgment debtor's insurance policy in excess of the insurer's actual liability to the judgment debtor; and (3) whether a defendant's status as intervenor in a co-defendant's cross-claim against a plaintiff was relevant to matters adjudicated solely between the defendant and the plaintiff. Upon review, the Court concluded that the answer to all three questions was no. Accordingly, the Court affirmed the judgment of the district court. View "Colony Insurance v. Burke" on Justia Law

Plaintiff James Bannister was injured in a motorcycle accident on the freeway near Oklahoma City in 2009. According to Bannister, he was forced to lay down and slide his motorcycle at a high speed when a car in front of him braked suddenly, that car having been cut off by another car. Bannister slammed into the wall of the freeway and suffered substantial injuries. He did not collide with any other vehicle; neither of the aforementioned cars remained at the scene of the accident; and no witnesses besides Bannister ever gave an account of the crash. Bannister filed an insurance claim with his insurer, defendant State Farm Automobile Insurance Company (State Farm). State Farm denied Bannister’s claim, finding him to be majority at fault in the accident. Bannister subsequently filed suit in Oklahoma state court, and State Farm removed the case to the Western District of Oklahoma. By the time the case went to trial, Bannister sought relief solely on a tort theory: that State Farm violated its duty of good faith and fair dealing in denying his claim. The jury found in favor of Bannister, but the district court granted State Farm’s renewed motion for judgment as a matter of law (“JMOL”), ruling essentially that the evidence showed that State Farm’s denial of Bannister’s claim was based on a reasonable dispute regarding whether Bannister was majority at fault, and that no evidence suggested that further investigation would have undermined the reasonableness of that dispute. Bannister failed to “make a showing that material facts were overlooked or that a more thorough investigation would have produced relevant information” that would have delegitimized the insurer’s dispute of the claim. As such, the Tenth Circuit concluded his inadequate-investigation theory of bad faith was without merit, and JMOL in favor of State Farm was appropriate. View "Bannister v. State Farm Mutual Auto Ins Co" on Justia Law

Plaintiff-Appellee Larry Frederick brought a putative class action suit against Hartford Underwriters Insurance Company (Hartford) in Colorado state court; Hartford removed the case to federal court. Looking to the face of Plaintiff’s complaint, the district court concluded that the amount in controversy did not exceed $5,000,000 (which was required for federal jurisdiction under the Class Action Fairness Act (CAFA)). Accordingly, the district court remanded the case to state court. In reaching its decision, the district court acknowledged that the Tenth Circuit had not defined the burden a defendant must carry to prevent a remand in a CAFA suit. Faced with this question, the Tenth Circuit held that a defendant in these circumstances is entitled to present his own estimate of the amount at stake and must show by a preponderance of the evidence that the amount in controversy exceeds the amount in 28 U.S.C. 1332(d)(2) (currently $5,000,000). The Court emphasized that the preponderance standard applies to punitive damages as well, and that such damages cannot be assumed when calculating the amount in controversy. Accordingly, the Court reversed the district court and remanded the case for further proceedings. View "Frederick v. Hartford" on Justia Law