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

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

Plaintiffs Delbert Soseeah, Maxine Soseeah and John Borrego filed this action against defendants Sentry Insurance, Dairyland Insurance Company, Peak Property and Casualty Insurance Company, and Viking Insurance Company of Wisconsin (collectively Sentry) claiming, in part, that Sentry failed to timely and properly notify them and other Sentry automobile insurance policyholders of the impact of two New Mexico Supreme Court decisions regarding the availability of uninsured and underinsured motorist coverage under their respective policies. The complaint alleged that Delbert Soseeah, after being injured in a motor vehicle accident, made a claim for UM/UIM benefits under two policies of automobile insurance issued by Sentry to Mrs. Soseeah. According to the complaint, Mrs. Soseeah “never executed a valid waiver of UM/UIM coverage under the” two policies and, consequently, Mr. Soseeah “demanded that . . . Sentry reform” the two policies “to provide stacked uninsured/underinsured motorist coverage limits equal to the limits of the liability coverage on each of the vehicles covered by the” policies pursuant to the two New Mexico Supreme Court decisions. Sentry purportedly refused to reform the policies and rejected Mr. Soseeah’s claim for UM/UIM benefits. The complaint alleged that Sentry, by doing so, violated New Mexico’s Unfair Practices Act (UPA), violated a portion of New Mexico’s Insurance Code known as the Trade Practices and Frauds Act (TPFA), breached the implied covenant of good faith and fair dealing, and breached the terms of the two policies. The district court granted plaintiffs’ motion for class certification. Sentry subsequently sought and was granted permission to appeal the district court’s class certification ruling. Because plaintiffs failed to establish that all members of the general certified class suffered the common injury required by Rule of Civil Procedure 23(a)(2), the Tenth Circuit concluded that the district court abused its discretion in certifying the general class. Because the district court’s certification ruling did not expressly address the Rule 23 factors as they applied to each of the identified subclasses, the Court did not have enough information to determine whether the district court abused its discretion in certifying two subclasses. Consequently, the Court directed the district court on remand to address these issues. View "Soseeah v. Sentry Insurance" on Justia Law

Blue Mountain Energy appealed a Benefits Review Board decision affirming an award of black lung benefits to Terry Gunderson. An administrative law judge (ALJ) originally denied benefits under the Black Lung Benefits Act (BLBA), and Gunderson appealed to the Board and then to the Tenth Circuit Court of Appeals. The Tenth Circuit remanded for further proceedings because the ALJ did not sufficiently explain the basis for the denial. The ALJ again denied benefits, and the Board vacated and remanded the ALJ’s decision because it did not comply with the Tenth Circuit’s remand. On the second remand, the ALJ awarded benefits, and the Board affirmed. Blue Mountain petitions for review, arguing that the ALJ violated the Administrative Procedure Act (APA). Specifically, Blue Mountain contended the ALJ gave the preamble to the regulations redefining compensable pneumoconiosis in 20 C.F.R. 718.201 the force and effect of law, even though the preamble had not been subject to APA notice and comment. Blue Mountain also contended its rights under the APA were violated when the ALJ refused to reopen the proceedings to allow it to submit evidence challenging the medical literature cited in the preamble. After review, the Tenth Circuit found no reversible error as Blue Mountain argued, and affirmed. View "Blue Mountain Energy v. Director OWCP" on Justia Law

Lee Ann Helfrich received benefits through her federal-employee health-insurance plan, the Blue Cross and Blue Shield Service Benefit Plan, for the treatment of injuries she sustained in a car accident. After Helfrich reached a settlement with the other driver’s insurance company, Blue Cross and Blue Shield Association (BCBSA) and Blue Cross and Blue Shield of Kansas City (BCBSKC) sought reimbursement for the benefits paid, as provided in the terms of the Plan. Helfrich appealed the district court’s judgment requiring her to reimburse BCBSA and BCBSKC (together Blue Cross) because the Federal Employees Health Benefits Act of 1959 (FEHBA) preempted a Kansas insurance regulation prohibiting subrogation and reimbursement clauses in insurance contracts. Finding no reversible error in the district court’s judgment, the Tenth Circuit affirmed. View "Helfrich v. Blue Cross & Blue Shield Assoc" on Justia Law

Pursuant to a scheduling order issued by the magistrate judge that included a report of the parties’ discovery conference, the initial date agreed for disclosures was April 6, 2011. It was undisputed that plaintiff Sun River had a "D&O" insurance policy, which potentially covered securities-related counterclaims asserted by defendants, thus requiring Sun River to disclose the policy pursuant to the scheduling order. No disclosure of the policy was made until eighteen months later, only after counsel for defendants repeatedly pressed the issue based on other information raising suspicions of an undisclosed policy, and then filed a motion to compel its production. By that time coverage under this “claims made” policy had lapsed. When the omission came to light, defendants moved for an order sanctioning Sun River under Rule 37(b)(2)(A) by dismissing Sun River’s claims against defendants and entering a default judgment for defendants on their counterclaims against Sun River. The magistrate judge held an evidentiary hearing on the motion, taking testimony from Sun River's former attorneys, in-house counsel James Pennington and outside counsel (and counsel-of-record) Stephen Csajaghy regarding events surrounding their failure to timely disclose the policy. The magistrate judge ultimately recommended that the motion for sanctions be granted insofar as it sought a default judgment against Sun River on defendants’ counterclaims, but denied insofar as it sought dismissal of Sun River’s claims against defendants, which were not affected by the operative nondisclosure. The district court agreed with the magistrate judge about counsel’s performance with respect to disclosure of the D&O Policy, but concluded that Sun River should not be held responsible in the matter. Instead, the district court decided counsel were culpable for the disclosure violation and should be held personally liable for the attorney fees expended by defendants in pursuing the motion for sanctions. The attorneys moved for reconsideration, arguing: (1) Rule 37(c) did not authorize sanctions on counsel; (2) counsel acted with substantial justification, precluding the imposition of sanctions; (3) any sanction should have been imposed on Sun River, Pennington’s employer at the time of the initial nondisclosure, rather than on counsel; and (4) due process precluded the imposition of a sanction on Csajaghy, who had withdrawn and was not present at a July 2013 pretrial conference when the district court redirected the focus of the requested sanction from Sun River to counsel. The district court reaffirmed the sanction against both counsel and reduced it to judgment. The Tenth Circuit reversed as to the sanction against Pennington, and affirmed it against Csajaghy. While the district court found that the failure to disclose the insurance policy was not substantially justified, it did not find that Pennington acted in bad faith, vexatiously, wantonly, or for oppressive reasons. The district court did not abuse its discretion in concluding that Csajaghy’s unfounded assumption about Pennington’s review of the D&O Policy was insufficient to establish a substantial justification for his failure to disclose the policy. View "Sun River Energy v. Nelson" on Justia Law

A Union Pacific Railroad train t-boned an SRM dump truck as the truck crossed the tracks in the path of the train. The collision killed the truck driver and derailed the train causing extensive damage to the train’s engines, its cars, and three of its workers. The three injured train workers sued Union Pacific, SRM, and SRM’s primary auto liability insurer, Bituminous Insurance Company, in state court. Union Pacific cross-claimed against SRM and SRM counter cross-claimed. As SRM’s excess liability insurer, Great American Insurance Company, received notice of the claims and monitored the case for potential exposure under its umbrella policy. Under Oklahoma law, a primary insurer owes its insured a duty to initiate settlement negotiations with a third-party claimant if the insured’s liability to the claimant is clear and the insured likely will be held liable for more than its insurance will cover. Here, SRM sought to extend this obligation Great American. Specifically, SRM claimed that Great American breached its insurance policy and duty of good faith and fair dealing by not proactively investigating claims against SRM and by refusing to tender its policy limits to spur settlement negotiations. The district court granted Great American’s motion for summary judgment on SRM’s claims and denied SRM’s request to reconsider. The Tenth Circuit found no reversible error in the district court judgment and affirmed. View "SRM v. Great American Insurance" on Justia Law

Defendant-Appellants Carl McCaffree, Jimmy Helvey, and Sam McCaffree (director-defendants) and the Federal Deposit Insurance Corporation (FDIC) appealed the district court's grant of summary judgment to BancInsure, Inc. BancInsure issued a Directors and Officers Liability Insurance Policy to Columbian and its parent Columbian Financial Corporation (CFC). the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as receiver. By operation of law, the FDIC-R succeeded to "all rights, titles, powers, and privileges of [Columbian], and of any stockholder, member, accountholder, depositor, officer, or director" of Columbian. BancInsure received notice of potential claims the FDIC-R intended to file against the bank's officers and directors. In anticipation of such a suit, CFC and director-defendant Carl McCaffree brought suit against BancInsure seeking a declaratory judgment that the policy covered claims made after the date Columbian was declared insolvent, but before the expiration of the policy. The district court ultimately held that the policy remained in effect until May 11, 2010, relying in part on its finding that a regulatory endorsement in the policy "provide[d] coverage for actions brought by deposit insurance organizations as receivers during the policy year," which would have been meaningless if the policy terminated upon appointment of a receiver. On appeal, the Tenth Circuit sua sponte determined that no case or controversy existed at the time of the district court's judgment and remanded with instructions to vacate the judgment for lack of jurisdiction. BancInsure filed the instant action against the director-defendants in Kansas state court seeking a declaratory judgment that it owed no duty of coverage to the director-defendants for claims brought against them by the FDIC-R. The FDIC-R joined and removed the action to the federal district court in Kansas. At approximately the same time, the FDIC-R brought claims against several of Columbian's former directors and officers alleging negligence, gross negligence, and breach of fiduciary duty. The district court held that claims by the FDIC-R were unambiguously excluded by the policy's "insured v. insured" exclusion and that BancInsure was not judicially estopped from denying coverage. Finding no reversible error in that judgment, the Tenth Circuit affirmed. View "BancInsure v. FDIC" on Justia Law

The appeals before the Tenth Circuit in this opinion concerned the regulations (as a part of the Affordable Care Act ("ACA")) that required group health plans to cover contraceptive services for women as a form of preventive care ("Mandate"). In response to religious concerns, the Departments implementing the ACA (Health and Human Services ("HHS"), Labor, and Treasury) adopted a regulation that exempted religious employers (churches and their integrated auxiliaries) from covering contraceptives. When religious non-profit organizations complained about their omission from this exemption, the Departments adopted a regulation that allowed them to opt out of providing, paying for, or facilitating contraceptive coverage. Under this regulation, a religious non-profit organization could opt out by delivering a form to their group health plan’s health insurance issuer or third-party administrator or by sending a notification to HHS. The Plaintiffs in the cases here were religious non-profit organizations. They argued that complying with the Mandate or the accommodation scheme imposed a substantial burden on their religious exercise. The Plaintiffs argued the Mandate and the accommodation scheme violated the Religious Freedom Restoration Act (“RFRA”) and the Religion and Speech Clauses of the First Amendment. While Tenth Circuit recognized the sincerity of Plaintiffs’ beliefs and arguments, it concluded the accommodation scheme relieved Plaintiffs of their obligations under the Mandate and did not substantially burden their religious exercise under RFRA or infringe upon their First Amendment rights. The Court affirmed the district court’s denial of a preliminary injunction to the plaintiffs in Little Sisters of the Poor Home for the Aged v. Sebelius, (6 F.Supp. 3d 1225 (D. Colo. 2013)), and reversed the district courts’ grants of a preliminary injunction to the plaintiffs in "Southern Nazarene University v. Sebelius," (No. CIV-13-1015-F, 2013 WL 6804265 (W.D. Okla. Dec. 23, 2013)), and "Reaching Souls International, Inc. v. Burwell," (No. CIV-13-1092-D, 2013 WL 6804259 (W.D. Okla. Dec. 20, 2013)). View "Little Sisters of the Poor v. Burwell" on Justia Law

Cornhusker Casualty Company appealed a district court’s summary-judgment ruling, arguing that the district court incorrectly concluded that Cornhusker was estopped from asserting noncoverage as a defense to the claims of Shari and Steve Skaj. The Skajs cross-appealed the district court’s sua sponte entry of summary judgment against them on their counterclaim for attorneys’ fees. Vincent Rosty filed a cross-appeal too, alleging that the district court erred in granting summary judgment to Cornhusker on some of his tort-based counterclaims. R&R Roofing, Inc. was a Wyoming construction company primarily operated by Randy Rosty and Steven Rosty. R&R purchased a Cornhusker commercial liability policy listing “R&R” and “Randy Rosty” as the named insureds. Vincent, who was an R&R employee at that time, did not appear as a named insured under the Policy. Vincent drove R&R’s dump truck to the Skaj home to deliver roofing supplies. The truck was accidentally knocked into second gear, rolled forward toward Ms. Skaj as she approached, and pinned her against a parked motor home, injuring her. A laboratory test performed later that day detected the presence of marijuana and methamphetamines in Vincent’s bloodstream. The Skajs ultimately sued R&R, Steven, and Vincent, asserting several negligence claims. Counsel retained by Cornhusker to defend against the Skajs’ lawsuit sought and received an extension of “the answer deadline for all defendants.” Communication related to that request indicated that defense counsel at that point “d[id] not know if [she would] be representing all of the defendants.” Defense counsel filed an answer to the Skajs’ complaint on behalf of Steven and R&R only, noting, “I do not represent Vincent Rosty.” In filing its answer, Cornhusker did not attempt to advise Vincent of its decision at that time not to represent him. An entry of default against Vincent issued, and the non-defaulting defendants were dismissed from the litigation. The Skajs sought to recover a judgment as to Vincent. Cornhusker hired separate representation for Vincent who opposed the default-judgment proceedings. The state court issued a default-judgment order assessing a total in damages and costs of $897,344.24 against Vincent. One week after the default-judgment hearing, Cornhusker sent Vincent a letter purporting for the first time to deny coverage on grounds that Vincent was not a named insured to the R&R policy. Cornhusker repeated this ground in its declaratory judgment action in federal district court. Vincent responded by counterclaiming against Cornhusker, asserting various contract and tort theories. The Skajs filed their own counterclaim, seeking a declaration “that Cornhusker [was] required to pay the judgment in the underlying action." All parties filed motions for summary judgment, but the court announced that there would be no trial. It declared that Cornhusker was estopped from denying coverage to Vincent because Cornhusker had represented that it would provide a defense, never reserved its rights, and did not advise Vincent of its decision to deny coverage until more than sixteen months after the entry of default. Cornhusker appealed the district court's judgment. But finding no reversible error, the Tenth Circuit affirmed the court's judgment. View "Cornhusker Casualty Co. v. Skaj" on Justia Law

In 1998, a driver hit pedestrian-plaintiff Roberta Folks with the side mirror of his vehicle and injured her. State Farm, the driver’s insurer, informed Folks she could receive basic personal injury protection (“PIP”) benefits under the driver’s policy. She received $104,000 in medical expenses and essential services. In 2002, State Farm told her she had exhausted the benefits available to her under the policy. Folks subsequently joined a lawsuit seeking additional PIP benefits in 2004. Over the course of the litigation, Folks unsuccessfully sought to certify a class on three attempts. In response to her last attempt in 2011, the district court determined she failed to satisfy the requirements of Rule 23(a) and Rule 23(b)(2) and denied class certification. A jury heard Folks’s individual claims and found in her favor in 2012. The district court amended the judgment in 2013 to correct errors in the calculation of damages. On appeal, Folks alleged the district court erred in denying class certification. She also argued the district court miscalculated the treble damages and statutory prejudgment interest to which she is entitled. Finding no error, the Tenth Circuit affirmed. View "Folks v. State Farm Mutual" on Justia Law