Colorado Insurance Defense – Patterson Ripplinger, P.C.

February – 2020

February 17, 2020

Frank Patterson and Karl Chambers received a successful ruling from the Court of Appeals in Donna Roulston v State Farm (18CA1600, ann’d 2/13/20) on issues that arise frequently in bad faith/unreasonable delay cases. The great majority of these cases are nothing more than disagreements over the value of the claimants injuries and damages. The unreasonable delay statute, C.R.S. 10-3-1115, creates a tremendous incentive for claimants and their attorneys to create value disputes and to file suit alleging unreasonable delay. Following the Supreme Court’s ruling in Schultz v Geico, many claimants argue in litigation that the insurance carrier’s decisions are frozen in time as of its pre-suit evaluation. They argue the carrier is forbidden from obtaining post-suit medical examinations and that it is precluded from introducing any evidence it did not explicitly rely upon prior to suit. Fortunately, the Court of Appeals in Roulston recognized that when a contract claim is unresolved at the time suit is filed, the carrier continues investigating and evaluating it. The carrier is allowed to continue its investigation and to introduce evidence at time of trial as to its ongoing evaluation. The Court also recognized that the act of evaluating a claim is not a one-time event, that it occurs over time as information is received. Unfortunately, the Court’s opinion was not selected for official publication. If anyone wants a copy, we would be happy to provide one.

Frank and Karl note there are a couple of caveats to keep in mind in similar situations. First, Colorado law is still that the insurance company’s actions or decisions must be judged by the information known to the company at the time of the act or decision. A claimant can still ask the jury to consider what the insurer actually knew at an earlier time and ask the jury to conclude the insurer lacked the information it should have had. They can also argue the insurance company was trying to back-fill information after suit was filed.

Colorado Court of Appeals Oral Arguments

March – 2019

March 29, 2019

Frank Patterson successfully defeated a bad faith set-up case in the trial of Lloyd Sidley vs Roshan Dulal and State Farm Mutual Automobile Ins Co. Trial was before Judge Frederick Martinez in Arapahoe County. Plaintiff was severely injured in a motorcycle accident, with medical expenses in excess of $1 Million. The defendant had only $25,000 in liability coverage. Plaintiff’s attorney sent a letter to State Farm saying plaintiff would accept the limits in settlement of the claim if State Farm satisfied 3 conditions – 1) supply proof of the liability limits; 2) perform due diligence in determining whether there was any other liability insurance; and 3) provide an affidavit, which he provided, signed by the insured which indicated the defendant’s assets. State Farm did all three and offered its limits. Plaintiff filed suit against State Farm’s insured, arguing that State Farm failed to satisfactorily complete the three conditions, thus exposing the insured to a large excess verdict and making State Farm liable for the excess. The trial court allowed State Farm to intervene and bifurcated the trial to determine first whether a settlement had been reached. The jury quickly returned a verdict that State Farm had properly completed the conditions and that there was indeed a settlement for $25,000.

This case is a good example of a situation with large damages and little insurance, where the plaintiff’s attorney was trying to set-up the insurance company to be on the hook for all the damages. It was clear that counsel never had any real intent to settle. He was going to argue that the insurer failed to satisfy the conditions no matter what it had done. We were fortunate in this case that our insurance client was allowed to intervene in the underlying injury suit rather than having to wait until a sizable judgment was entered against its insured and then fight it in separate litigation.

December – 2018

December 3, 2018

Karl Chambers tried the case of Grace Stean and Adam Stevens v. Margaret Molloy in a four day trial in Arapahoe District Court.

This action arose out of a motor vehicle accident involving plaintiff’s wife, Grace Stean, and our client, Margaret Molloy. Ms. Stean claimed that she was injured in the accident, including an alleged mild traumatic brain injury and a cervical facet injury. Plaintiff, Adam Stevens, was not involved in the accident, but claimed that he suffered a loss of consortium due to his wife’s injuries. We admitted that defendant negligently caused the accident, but challenged the injuries and damages claimed by Ms. Stean and her husband. Ms. Stean settled her claim prior to trial and Mr. Stevens elected to litigate his loss of consortium claim. Our defense was that he did not suffer a loss of consortium. The jury agreed and returned a defense verdict finding that Mr. Stevens did not suffer a loss of consortium.

October – 2018

October 30, 2018

Frank & Hillary Patterson obtained a Defense Verdict in an October trial over UIM benefits. The case is Velvet Entz v. State Farm Mutual Automobile Insurance Company, Pueblo County District Court, 2016CV030960. Plaintiff claimed the accident caused serious cervical injuries including a herniated disc, with past medical expenses of $160,000 and an anticipated future cervical surgery at a cost of $140,644.00 – $244,430. The liability carrier had previously paid its $100,000 in limits. Plaintiff demanded the full UIM policy limits of $500,000. The last and lowest offer to settle by Plaintiff was $350,000.

Frank and Hillary disputed causation. In the trial they admitted plaintiff may have had a slight exacerbation of some pre-accident complaints but denied that the disc herniation or subsequent surgeries were the result of the accident. They argued that plaintiff had a pre-existing degenerative condition in her cervical spine for which she sought periodic chiropractic treatment in the years preceding the accident and that her post-accident treatment was not consistent with a herniation caused by the accident. Instead, they argued that the significant herniation at C5-6 occurred 8 months after the accident and it was not related to the accident.

The jury agreed, finding that Plaintiff’s total damages from the accident were $4,300. Since she had already recovered the liability limits far in excess of that, State Farm owed no UIM payment.

Plaintiff’s treating doctors who testified were Dr. Lloyd Mobley, Dr. Roger Sung, Dr. John Warner, DC and Dr. William Anderson, DC. The defense expert who testified was Dr. Henry Roth.

September – 2018

September 28, 2018

Karl Chambers gave oral arguments in the case Bailey v. State Farm Mutual Automobile Insurance Company. In a published opinion, the Colorado Court of Appeals affirmed the judgment of the trial court in favor of our client, State Farm. The plaintiff sued the party that caused the accident along with State Farm seeking underinsured motorist benefits from State Farm claiming that his damages exceeded the liability policy limits of the at-fault party. Shortly before trial the liability insurer for the at-fault party agreed to pay the judgment regardless of the amount. The jury returned a verdict for an amount greater than the at-fault party’s policy limits and his insurer paid the full amount of the judgment. Notwithstanding the fact that the full amount of the judgment was paid by the liability insurer the plaintiff argued that he was still entitled to $100,000 in UIM coverage. We argued that there was no UIM coverage because the entire judgment had been paid by the liability insurer. The trial court agreed with us and entered a judgment only against the at-fault party. Plaintiff filed an appeal of the trial court’s judgment and the Court of Appeals also agreed with us that no UIM benefits were owed because the entire judgment was paid by the liability insurer.

Colorado Court of Appeals Oral Arguments

August – 2018

August 3, 2018

Patrice Fujisaki Sauter v. State Farm Fire & Casualty Company

On August 1, 2018, attorneys Frank Patterson and Hillary Patterson obtained a directed verdict for the defendant in the case of Patrice Fujisaki Sauter. v. State Farm Fire & Casualty Company (Denver County District Court, 2017CV33275).

Plaintiff Patrice Fujisaki Sauter is the daughter of the deceased homeowner and State Farm insured, Rose Fujisaki. Plaintiff alleged a hail and wind storm caused damage to Rose Fujisaki’s home and lightweight concrete tile roof. State Farm determined the concrete tile roof was not damaged in the hail/wind event, but had sustained unrelated damage from improper installation and footfall. State Farm issued payment to Rose Fujisaki for other damage to the property caused by hail/wind. Plaintiff lived in the home, but did not own the home, was not the named insured on the State Farm policy, and was not the personal representative of the Estate of Rose Fujisaki. Plaintiff brought a first-party claim in her own right alleging breach of contract, common law bad faith, and unreasonable delay and denial pursuant to C.R.S. §§ 10-3-1115 and 10-3-1116.

Plaintiff’s claims of breach of contract and common law bad faith were dismissed on summary judgment because Plaintiff was not the homeowner or policyholder, and therefore had no standing to pursue those claims. The Court denied summary judgment on the claim of unreasonable delay/denial, ruling a fact question remained as to whether Plaintiff had authority to assert the claim on behalf of the Estate of Rose Fujisaki. Plaintiff never moved to amend the pleadings and presented no other timely evidence of her standing to assert claims on behalf of the Estate of Rose Fujisaki.

At trial, The Honorable Judge Martin F. Egelhoff ruled on State Farm’s oral motion for directed verdict after Plaintiff rested her case-in-chief. Judge Egelhoff held that, viewing the evidence in the light most favorable to the nonmoving party, Plaintiff had not presented any evidence that she had legal authority to pursue a claim of unreasonable delay/denial under C.R.S. §§ 10-3-1115 and 10-3-1116 on behalf of the Estate of Rose Fujisaki. Therefore, Plaintiff lacked standing and her remaining claim was dismissed pursuant to C.R.C.P. 50.

March – 2018

March 1, 2018

Frank Patterson argued the Fisher vs State Farm case in the Supreme Court in October 2017. He receives periodic calls from insurers asking about the status. The Supreme Court has not yet issued a ruling, and there is no deadline to issue its ruling, but it is likely to do so by May or June.

Frank Patterson was honored with selection to the “TOP 100” in Colorado Super Lawyers 2018 following a blue ribbon review process. Frank has been listed annually in Super Lawyers for many years and has long been recognized in the legal community as one of the best trial lawyers around. Trial success followed from his earliest years in practice. It is believed he was the youngest attorney ever selected to the American Board of Trial Advocates when he was selected in the early 90’s. Congratulations Frank!

Frank Patterson was honored again by 5280 Magazine as a Top Lawyer in personal injury defense. Congratulations again, Frank!

Frank and Hillary Patterson teamed up with Frank’s wife, Robin, and Joe Buchholz to win the 2017 CDLA golf tournament. Pictured here are the happy Pattersons with the traveling trophy. Not bad for a team with a novice (Hillary) and a new hip (Robin). They hope to defend the title this year at the CDLA conference in Telluride.

February – 2018

February 28, 2018

Frank Patterson and Karl Chambers won a summary judgment motion in a declaratory relief action entitled Viking Insurance Co v. Mark Achter; Monica Achter; Little Willie J. Ortiz, II; Darrell J. Ortiz in Pueblo County, case number 2017 CV 030215. The case involved an excluded driver who was involved in the accident. Because the Complaint in the underlying bodily injury suit identified the excluded driver as the operator of the vehicle at the time of the accident, the declaratory relief action could be pursued without awaiting the conclusion of the underlying suit. The trial court agreed the exclusion was consistent with Colorado law and Viking was not obligated to defend or indemnify for the accident.

January – 2018

January 30, 2018

Frank Patterson and Lindsay Dunn won a defense verdict in an important bad faith “set-up” case in El Paso County with exposure of almost $10 million. The jury found for defendant State Farm on all claims after a 7-day jury trial.

Plaintiff Melanie Rountree was insured through State Farm for auto insurance liability policies totaling $1,250,000. She was 100% at fault in causing an auto accident on January 19, 2013. Rountree, while extremely intoxicated, drove her vehicle through a red light and collided with Patrick Kirchhofer’s vehicle, causing serious and permanent injuries to Mr. Kirchhofer, including partial paralysis. Ms. Rountree claimed that State Farm unreasonably failed to timely make an offer to settle, causing a judgment to be entered against Ms. Rountree in the amount of $4,102,526.05. State Farm paid its policy limits plus interest and costs after judgment was entered, leaving an unpaid judgment balance of $3,469,598.25 as of the second trial. Rountree entered into a Bashor Agreement with Kirchhofer and was represented at the bad faith trial by the same lawyers who had represented Kirchhofer. She sought the unpaid amount of the judgment, plus two times the insurance limits (a total of $2.5 million) for unreasonable delay under C.R.S. § 10-3-1115 and 1116, punitive damages of $3,469,598.25, and attorney fees. In closing, the total requested by her attorneys was $9,439,196.50, plus attorney fees in excess of $500,000.00.

State Farm provided Rountree a defense to the Kirchhofer suit and Rountree later hired personal counsel. During the underlying litigation, Kirchhofer’s attorneys sent a letter demanding a settlement offer from State Farm. The letter purposely did not say State Farm’s limits would be accepted as a full and final settlement. Rountree and her attorneys advised State Farm not to offer its policy limits because that would immediately expose Rountree’s personal assets for further negotiations. They still hoped to convince Kirchhofer’s attorneys to accept policy limits for a full release. State Farm agreed to Rountree’s request. When State Farm’s policy limits were not offered by the deadline Kirchhofer’s attorneys revoked their “demand”, claimed it was bad faith and argued State Farm was now exposed to the full damages suffered by Kirchhofer. They demanded $12 million at mediation and $27 million at the injury trial. After the injury trial Rountree entered into the Bashor Agreement, assigning her bad faith claim proceeds to Kirchhofer.

During the bad faith trial, Frank Patterson and Lindsay Dunn convinced the jury that State Farm never had a reasonable opportunity to settle the case for several reasons. First, it was following the request of its insured in not making the policy limits offer. Second, Kirchhofer and his lawyers had no intent to settle for the State Farm policy limits. The lawyers were trying to create a “set-up”, a way to claim bad faith and open the policy limits.

This case is important for insurers because there is a surge of “set-up” cases in Colorado as a result of the punitive provisions of C.R.S. § 10-3-1115 and 1116. This case shows that juries will consider the question whether the insurer had a reasonable chance to settle, and that set-up cases raise real doubts about the plaintiff’s intent to settle.

October – 2017

October 20, 2017

Frank Patterson made oral arguments before the Colorado Supreme Court on the important Fisher v State Farm case on October 18. He expects a ruling by late Spring. The Court of Appeals surprised everyone in 2015 by announcing a rule that UM/UIM carriers were required to make piecemeal payments of portions of the UM/UIM claim which were “undisputed”. Typically, these would be economic damages such as medical expenses. The Court discovered this requirement in the “Unreasonable Delay/Denial” statute which, Frank argued, makes no mention whatsoever of partial payments or even of the UM/UIM statute. In effect, the Court of Appeals created a new pay-as-you-go medical coverage like the old PIP or No-Fault system. Unfortunately, this new mandate from the Court of Appeals came with no guidelines, regulations or legislative guidance such as exist with MPC or existed under the old PIP system. The case has generated substantial claims disputes and subsequent litigation over demands for “Fisher” payments. We hope the Supreme Court reverses this unfortunate misinterpretation of Colorado statutes and reinstates the system which had worked well for almost 50 years. Frank is happy to answer questions about the case or about the current state of the law in relation to Fisher.

Colorado Supreme Court Oral Arguments