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

At the heart of this appeal was the dispute over the scope of an insurance policy. The insureds, BV Jordanelle, LLC and BV Lending, LLC (collectively, "BV") obtained a mortgage on real property as security for a loan and acquired a title-insurance policy from Old Republic National Title Insurance Company. When the borrower defaulted, BV foreclosed on the property. But when a municipal assessment went unpaid, the municipality foreclosed, too. BV and the municipality litigated in state court; the municipality prevailed and obtained title to the property. After losing title to the property, BV sued Old Republic in federal district court, alleging that Old Republic had breached the title insurance policy by: (1) refusing to compensate BV for its loss of the property; and (2) failing to defend BV in the state-court litigation. The district court granted judgment on the pleadings to Old Republic, concluding that the policy did not entitle BV to either payment for its loss of the property or a defense in the state-court suit. BV appealed, but finding no reversible error, the Tenth Circuit affirmed. View "BV Jordanelle v. Old Republic National" on Justia Law

Darrell Jent suffered serious injuries while working on an oil rig. The rig’s owner, Precision Drilling Company, L.P., paid him a settlement, then made a claim on its insurance. The insurance company, Lexington Insurance Company, denied the claim. Precision sued, contending that Lexington should have reimbursed the money it paid Jent. Lexington issued two insurance policies covering Precision for accidents exactly like Jent's. However, Lexington argued that under Wyoming state law, the policies were a nullity, so any coverage here was more illusory than real and that Precision was solely responsible. "There can be no doubt that Wyoming law usually prohibits those engaged in the oil and gas industry from contractually shifting to others liability for their own negligence." The district court agreed with Lexington and granted its motion for summary judgment. After review, the Tenth Circuit reversed, finding that the district court misinterpreted the statute that was grounds for Lexington's motion. The case was then remanded for further proceedings. View "Lexington Insurance v. Precision Drilling" on Justia Law

In December 2007, a driver rear-ended Donald Etherton’s vehicle. He injured his back in the accident. Etherton filed a claim with his insurer, Owners Insurance Company (“Owners”), seeking uninsured or underinsured motorist coverage up to his policy limit. After months of back and forth, Owners offered to pay an amount significantly lower than the policy limit. Etherton sued, alleging claims for (1) breach of contract and (2) unreasonable delay or denial of a claim for benefits. A jury found in Etherton’s favor on both claims. The district court entered judgment for Etherton, awarding $2,250,000 in damages. Owners appealed, arguing the trial court erred: (1) by denying Owners' motion for a new trial based on the allegedly erroneous admission of expert testimony; (2) by denying its motion for judgment as a matter of law based on Owners' purported reasonableness; and (3) in granting Etherton's motion to amend the judgment. Finding no reversible error, the Tenth Circuit affirmed in all respects. View "Etherton v. Owners Insurance Company" on Justia Law

In June 2012, a hailstorm damaged Plaintiff KCOM’s motel. Soon a dispute arose between KCOM and its insurer, defendant Employers Mutual Casualty (EMC), over the extent of the damage. In October 2012, following receipt of an inspection report, KCOM submitted a proof of loss of $631,726.87. EMC admitted coverage but not the amount of loss. Dissatisfied, KCOM invoked the insurance contract’s appraisal provision. KCOM claimed there were issues with the appraisal process, prompting it to ultimately file suit against EMC, alleging breach of contract, unreasonable delay and denial of benefits, and bad faith breach of the insurance contract. The threshold question presented for the Tenth Circuit's review in this state law diversity action was whether the Court had appellate jurisdiction over the district court’s non-final order denying confirmation of a property loss appraisal. The Court concluded it did not, and dismissed the appeal. View "KCOM, Inc. v. Employers Mutual Casualty Co." on Justia Law

Home Loan Investment Company, a financial institution, held a deed of trust on a property in Grand Junction, Colorado, known as White Hall. The owner had stopped making payments on the loan and offered Home Loan a deed to White Hall in lieu of foreclosure. Home Loan opted instead to work with the owner in selling the property, with the hope of being paid out of the proceeds of the sale. Because the owner indicated she could no longer pay insurance premiums on White Hall, Home Loan contacted St. Paul Mercury Insurance Company to obtain coverage for the value of its loan. On September 15, 2011, White Hall was nearly destroyed in a fire. Home Loan tendered a claim to St. Paul for the loss, equal to the outstanding loan balance. St. Paul denied Home Loan’s claim because White Hall did not meet the definition of “foreclosed property” in Home Loan’s policy. St. Paul determined Home Loan had never been a mortgagee in possession of the property and therefore White Hall did not qualify as a Foreclosed Property. Home Loan filed suit in Colorado state court, alleging claims for common-law breach of contract and violations of sections 10-3-1115 and 10-3-1116 of the Colorado Code, which provided a statutory remedy for unreasonable delay or denial of insurance benefits. St. Paul removed the action to federal court, invoking diversity jurisdiction. Prior to trial, St. Paul moved for summary judgment, but the district court denied the motion. At trial, St. Paul argued Home Loan never had “possession” or “care, custody, or control” of White Hall sufficient to trigger coverage under the policy. St. Paul further maintained that, because its coverage decision was “fairly debatable,” it could not have acted unreasonably for purposes of the Colorado statutes. The jury returned a verdict in favor of Home Loan and against St. Paul on both the common-law breach of contract claim and the statutory claim. St. Paul did not challenge the jury’s verdict on Home Loan’s breach of contract claim; the only questions before the Tenth Circuit concerned Home Loan’s statutory bad faith claim under Colorado law. Finding no reversible error, the Tenth Circuit affirmed the district court on all issues. View "Home Loan Investment Co. v. St. Paul Mercury Insurance Co." on Justia Law

Sheldon Hathaway became embroiled in a stranger-originated-life-insurance (STOLI) scheme at the involving his neighbor, Jay Sullivan. Here, Intervenor Defendant-Appellant Windsor Securities, LLC (Windsor) loaned Defendant-Appellant the Sheldon Hathaway Family Trust (the Trust) $200,000 to finance the initial premium on a life insurance policy (the policy) for Hathaway. In exchange, Windsor “receive[d] a moderate return on [its] investment” if a trust repaid the loan. Alternatively, Windsor “foreclose[s] on the life insurance policy that was pledged as collateral” when a trust fails to do so. That’s what happened here. But before Windsor could profit from its investment, Plaintiff-Appellee PHL Variable Insurance Company (PHL) sought to rescind the policy based on alleged misrepresentations in Hathaway’s insurance application. The district court ultimately granted PHL’s motion for summary judgment on its rescission claim, and allowed And it allowed PHL to retain the premiums Windsor already paid. On appeal, Windsor and the Trust (collectively, the defendants) argued the district court erred in granting PHL’s motion for summary judgment because there was at least a genuine dispute of material fact as to whether PHL waived its right to rescind the policy. Alternatively, they argued the district court erred in granting summary judgment because, at a minimum, a genuine dispute of material fact existed as to: (1) whether the application contained a misrepresentation; and (2) whether PHL relied on that misrepresentation in issuing the policy. Finally, even assuming summary judgment was appropriate, defendants argued the district court lacked authority to allow PHL to retain the paid premiums. The Tenth Circuit affirmed, concluding no genuine dispute of material fact existed as to whether PHL waived its right to rescind the policy. Nor was there any genuine dispute of material fact as to whether the application contained a misrepresentation or whether PHL relied on that misrepresentation in issuing the policy. Lastly, the Court held the district court had authority to allow PHL to retain the paid premiums. View "PHL Variable Insurance v. Sheldon Hathaway Family Trust" on Justia Law

In the early morning of November 11, 2007, Sofia Roberts caused a motor-vehicle accident that killed five people (including herself) and severely injured two others. She was driving a Chrysler 300 that she had obtained from the Marc Heitz Auto Valley automobile dealership (Heitz) a few days earlier. The Chrysler had been delivered to Heitz by Bob Moore Auto Group (Moore) earlier that day. Her estate was sued by the estates of Brant Winton and Rebecca Burgess (two of the others killed in the accident) and two survivors, Daniel Cosar and Marcus Moore (collectively, the Victims). The suits were settled for $3,000,000 each for the survivors and the Winton estate and $5,000,000 for the Burgess estate. Allstate Insurance Company (Allstate), the insurer on Roberts’s personal automobile-liability policy, contributed its policy limit of $50,000. The judgment limited execution to other applicable insurance policies. Three insurance carriers (for the Heitz or Moore dealerships), Universal Underwriters Insurance Company (Universal), Phoenix Insurance Company (Phoenix), and National Union Fire Insurance Company of Pittsburgh, PA (National) (collectively, the Insurers), then sued the Victims at a federal district court in Oklahoma under diversity jurisdiction, seeking declaratory judgments that their policies did not cover Roberts for the accident. The district court granted summary judgment to the Insurers. The Victims appealed, arguing Heitz still owned the Chrysler at the time of the accident and that Universal is therefore responsible under the “garage” and “umbrella” coverages of its policy for Heitz. Alternatively, the Victims argued that Moore owned the vehicle at the time of the accident and that Phoenix and National were liable under their policies for Moore. After review, the Tenth Circuit found no reversible error and affirmed the district court’s judgments. View "Universal Underwriters Ins Co. v. Winton" on Justia Law

A jury found that Defendant-Appellant American Family Mutual Insurance Company (American Family) breached its insurance contract and unreasonably denied payment of underinsured motorist (UIM) benefits to Plaintiff-Appellee Patrick Adamscheck. On appeal, American Family challenged three district court rulings: (1) the district court’s decision denying American Family’s motion for partial summary judgment on the ground that workers’ compensation benefits could not be offset against any recovery at trial; (2) the district court’s pre-trial decision to exclude American Family’s biomechanics engineering expert; and (3) the district court’s post-verdict calculation of damages to include the jury’s award of $395,561 in UIM benefits, plus twice that amount for statutory damages on the unreasonable-denial-of-benefits claim. After review of the trial court record, the Tenth Circuit affirmed in part, but vacated the verdict and remanded for additional proceedings. The Tenth Circuit concluded the district court correctly determined that workers’ compensation benefits may not be offset against UIM coverage under Colorado law. But the district court failed to fulfill its gatekeeping obligation under Rule 702 of the Federal Rules of Evidence, and therefore erred in excluding American Family’s expert. Because the record was inadequate to allow the Court to perform the district court’s gatekeeping function in the first instance, and because it could not conclude this error was harmless, the Tenth Circuit vacated the verdict and remanded for a new trial. The Tenth Circuit did not reach American Family’s objection to the calculation of statutory damages, which was not first presented to the district court. View "Adamscheck v. American Family Mutual Ins." on Justia Law

Boardwalk Apartments, L.C. sued State Auto Property and Casualty Insurance Co. for breach of an insurance policy, contending that State Auto had underpaid on the policy after one of Boardwalk’s eight apartment buildings (Building 1) was destroyed in a fire. In district court, State Auto contended that Boardwalk was underinsured under the policy’s coinsurance provision. Under this provision, Boardwalk’s insurance benefits were reduced if the value of the Boardwalk apartment complex exceeded the policy limit. Before trial, the district court issued two rulings: (1) for purposes of the policy’s coinsurance provision, the value of the apartment complex did not include the cost of complying with laws and ordinances regulating the construction and repair of buildings ("law-and-ordinance costs"); and (2) the district court excluded reference at trial to either the coinsurance provision or the possibility that Boardwalk was underinsured. At trial, the jury valued the Boardwalk complex below the policy limit. Based on this valuation, the district court concluded that Boardwalk was not underinsured under the coinsurance provision. In addition to valuing the apartment complex, the jury found that State Auto had underpaid for the loss of Building 1. As a result, the court awarded damages to Boardwalk. State Auto appealed. After review, the Tenth Circuit concluded: (1) the district court abused its discretion by excluding reference to the coinsurance provision; and (2) incorrectly construed the coinsurance provision. In light of these errors, the Court reversed and remanded for a new trial. View "Boardwalk Apartments v. State Auto Property" on Justia Law

Plaintiff-Appellant Corey Christy purchased a commercial general-liability insurance policy from Travelers in the name of his sole proprietorship, K&D Oilfield Supply. Subsequently, Christy registered his business as a corporation under the name K&D Oilfield Supply, Inc. Christy renewed his CGL Policy annually, but did not notify Travelers that he had incorporated his business. After Christy formed K&D, Inc., he was in an accident and made a claim under the CGL Policy. Travelers denied coverage based on Christy’s failure to inform it of the change in business form, and Christy filed this action. On cross motions for summary judgment, the district court found in favor of Travelers. Because there was a material factual dispute as to whether Christy knew or should have known Travelers would have considered the formation of K&D, Inc. material to its decision to renew the Policy, summary judgment based on Christy’s legal duty to speak was inappropriate. And because the existence of a legal duty governs whether Christy engaged in a material misrepresentation by not informing Travelers he had formed K&D, Inc., the Tenth Circuit held the district court erred in reforming the Policy on that basis at this stage of the proceedings. Accordingly, the Court reversed the district court’s grant of summary judgment and remanded for further proceedings. But because Christy had not met his burden to come forward with evidence in support of his claim for breach of the implied covenant of good faith and fair dealing, the Tenth Circuit affirmed the district court’s grant of summary judgment on that claim. View "Christy v. Travelers Indemnity" on Justia Law