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Colorado Court of Appeals Opinions
December 19, 2013

The Court of Appeals summaries are written for the Colorado Bar Association by licensed attorneys Teresa Wilkins (Denver) and Paul Sachs (Steamboat Springs). Please note that the summaries of Opinions of the Colorado Court of Appeals are provided as a service by the Colorado Bar Association and are not the official language of the Court. The Colorado Bar Association cannot guarantee the accuracy or completeness of the summaries.

2013 COA 173. No. 11CA1430. Hansen v. American Family Mutual Insurance Company.
Personal Injury—Insurance Policy—Underinsured Motorist Coverage—Ambiguity—CRS § 10-3-1115—Covered Benefit.

Claimant was injured while riding as a passenger in her boyfriend’s vehicle. After settling a claim with the boyfriend’s insurer for policy limits, she pursued an underinsured motorist (UIM) claim with American Family Mutual Insurance Company. American Family denied the claim because claimant did not reside with the named insureds (her parents). Claimant filed an action against American Family, asserting a breach of contract claim, common law claim, and statutory claim.The trial court entered judgment in favor of claimant on her statutory claim and awarded her attorney fees and costs. Claimant filed a motion to amend the judgment and requested that the court award a statutory penalty of two times the covered benefit, or $150,000. The trial court granted claimant’s motion.

On appeal, American Family argued that the trial court erred in concluding that the insurance policy was ambiguous and by referring its construction to the jury. The Court of Appeals disagreed. American Family prepared and delivered to claimant a lien holder statement, which created an ambiguity in the insurance policy as to the identity of the named insured, because it was inconsistent with the declaration pages maintained by the insurance company. Therefore, the trial court did not err in reaching this conclusion.

American Family also argued that because claimant’s claim for coverage under the policy was “fairly debatable,” it cannot be found to have unreasonably delayed or denied payment of a benefit under the statutory claim as a matter of law. The Court disagreed. The policy was arguably unambiguous as to the named insured, so American Family was not entitled to judgment as a matter of law on claimant’s statutory claim.

Furthermore, the court did not err in awarding claimant two times the covered benefit. According to CRS § 10-3-1115, the award to be made to the prevailing claimant is not the damages suffered by the claimant caused by the delay in the payment of the benefit; rather, it is two times the covered benefit that was unreasonably delayed or denied. There is no dispute that the covered benefit under the reformed policy was $75,000. Therefore, claimant correctly received $150,000. The judgment was affirmed.

2013 COA 174. No. 12CA2298. People v. Crouse.
Medical Marijuana—Colo. Const. art. XVIII, § 14(2)(e)—Controlled Substances Act—Supremacy Clause.

During a search of defendant’s home, Colorado Springs police officers seized marijuana and marijuana plants. The prosecution charged defendant with one felony count of cultivation of more than thirty marijuana plants and one felony count of possession of between 5 and 100 pounds of marijuana with the intent to distribute. At trial, defendant raised an affirmative defense that Colo. Const. art. XVIII, § 14 (MM Amendment) expressly authorized his possession, because he was a medical marijuana patient and the marijuana that he possessed was medically necessary to treat his condition. The jury acquitted him of both charges.

Relying on § 14(2)(e) of the MM Amendment, defendant moved the trial court to order the police to return the seized marijuana plants and marijuana. Section 14(2)(e) requires the return of marijuana seized from a medical marijuana patient to the patient if a jury acquits the patient of state criminal drug charges arising from the seized marijuana (return provision). The trial court agreed and ordered the police to return the seized items, which they did.

On appeal, the prosecution contended that the Controlled Substances Act (CSA), 21 USC §§ 801 et seq., preempts the return provision. The Court of Appeals rejected this contention for three reasons. First, the CSA cannot be used to preempt a state law under the obstacle preemption doctrine. Second, even if obstacle preemption applies, CSA § 885(d), which prevents federal prosecution of “any duly authorized officer of any State . . . who shall be lawfully engaged in the enforcement of any law . . . relating to controlled substances,” would preclude applying prohibitions in other CSA sections to police officers complying with a court order issued under the return provision. Third, and making the same assumption, the recipient patient’s involvement in the return process does not create obstacle preemption because the federal government could not commandeer state officials to seize and hold marijuana, and the MM Amendment does not require patients to either demand return or accept returned marijuana. Therefore, the trial court’s order was affirmed.

2013 COA 175. No. 12CA2326. Foundation for Human Enrichment v. Industrial Claim Appeals Office.
Unemployment Compensation Tax Liability—Out-of-State Workers—Colorado Employment Security Act.

In this unemployment compensation tax liability case, petitioner Foundation for Human Enrichment (Foundation) sought review of a final order of the Industrial Claim Appeals Office (Panel). The issue on appeal was whether coordinator services carried out by twenty-one individuals, who lived and worked out of state and performed various administrative and clerical duties for Foundation workshops, constituted covered “employment” for tax purposes under the Colorado Employment Security Act (CESA), CRS §§ 8-70-101 to 8-82-105. The Panel concluded that the out-of-state coordinators were covered employees under the CESA and that the Foundation was responsible for paying unemployment compensation taxes for these individuals.

The Court of Appeals disagreed with the Panel. The out-of-state coordinators’ services to the Foundation were not “employment” under the CESA. CRS § 8-70-117 applies only when the worker performs all of his or her services in Colorado, performs a portion of his or services in Colorado, or resides in Colorado. None of those circumstances was present here. The coordinators lived in eleven states and provided all of their services in those states. Based on the definition of “employment” enacted in each state, the coordinators’ services would have been covered under the unemployment compensation laws of the state where they worked and resided. Therefore, the Division of Unemployment Insurance lacked statutory authority to impose tax liability against the Foundation with regard to the out-of-state coordinators. The order was set aside and the case was remanded with directions.

2013 COA 176. No. 13CA0093. Barry v. Bally Gaming, Inc.
Limited Gaming Act of 1991—Administrative Remedies—Outrageous Conduct—Contract Claims—Colorado Consumer Protection Act—Jurisdiction.

Plaintiff Charles Barry brought this action after he played a slot machine manufactured by Bally Gaming, Inc. (Bally) in the Lady Luck casino owned and operated by CCSC/Blackhawk, Inc. (Lady Luck). The slot machine indicated that he had won $31,202.41, but it was later determined that the machine had malfunctioned, voiding his winnings. The trial court dismissed Barry’s claims, finding that he failed to exhaust administrative remedies.

On appeal, Barry asserted that the district court erred in dismissing his outrageous conduct and contract claims because the Colorado Limited Gaming Control Commission (Commission) did not have exclusive jurisdiction over those claims. Through the Limited Gaming Act of 1991 (Act), the General Assembly vested in the Commission the authority to regulate limited gaming, and this regulatory power was intended to embrace all aspects of the operation of gaming in Colorado. Barry’s outrageous conduct and contract claims present precisely the type of patron dispute governed by the Act and the “patron disputes” regulation. Accordingly, the district court correctly ruled that these claims fell within the Commission’s exclusive regulatory authority and properly dismissed them.

Barry also contended that the district court erred in concluding that his Colorado Consumer Protection Act (CCPA) claim was within the Commission’s exclusive jurisdiction. Barry, however, failed to assert a CCPA claim that was distinct from a claim falling within the Commission’s exclusive regulatory jurisdiction. Accordingly, the district court correctly ruled that the Commission had original and exclusive jurisdiction over Barry’s CCPA claim and properly dismissed that claim.

Barry further asserted that even if he were required to pursue his administrative remedies, exhaustion here was unnecessary because (1) the matter in controversy raised questions of law that were not within the Commission’s expertise or capacity, and (2) further administrative review before the Commission would have been futile. The Court of Appeals disagreed. Barry’s claims centered not on questions of law but on factual issues falling squarely within the Commission’s regulatory authority and expertise. Moreover, Barry failed to show that exhausting his administrative remedies would be futile. Barry’s remedy was to file an appeal and not a separate action in district court after he had exhausted his administrative remedies. The judgment was affirmed.

Colorado Court of Appeals Opinions

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