Colorado Court of Appeals Opinions for Aug. 26

By Jessica Folker and Clara Geoghegan

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

Owners Insurance Company v. Dakota Station II Condo Association 

The Colorado Court of Appeals ruled that insurance award money can be vacated when there is appraiser bias despite an insurance policy requiring at least one impartial appraisal representative. The novel state law ruling was the court’s second time hearing the case after it was remanded by the Colorado Supreme Court in 2019

Dakota Station Condo Association filed a claim with Owners Insurance Company after its 49-building residential property sustained damage during a storm. When the parties couldn’t agree on an amount for damages, Dakota Station invoked the appraisal provision of its insurance agreement. Both parties nominated an impartial appraiser to present damage estimates to an umpire. The umpire accepted two estimates from Dakota Station’s representative, Laura Haber, and four from Owners Insurance Company totaling a $3 million payout. 

Even though Owners Insurance paid the award money, it later filed a motion to vacate the award claiming that Haber was a biased appraiser. In Owners Insurance Company v. Dakota Station I, the Colorado Supreme Court set a clear definition of a biased appraiser and remanded the case to a trial court to look at Haber potential conflict of interests. 

Using the new definition from the state supreme court, that neutral appraisers be “unbiased, disinterested, without prejudice and unswayed by personal interest,” a trial court ruled Haber was “the antithesis of that of an impartial appraiser.”

Dakota Station appealed the ruling and claimed the lower court did not follow the law of the case in addition to other complaints. A division of the Colorado Court of Appeals found that the law of the case did not prevent the trial court from revisiting its prior ruling since the earlier decision was no longer sound due to changes in the law. It also emphasized that the law of case doctrine does not apply when a trial court resolves factual questions. The second branch of the law of case — the mandate rule — also compelled the court of appeals to follow the state supreme court’s previous ruling. 

Rejecting a handful of other arguments from Dakota Station, the Colorado Court of Appeals upheld the trial court’s decision. 

In re the Estate of Joseph Celestino Gallegos, deceased 

The Colorado Court of Appeals ruled that a 2010 amendment to the state Probate Code grants heirship to adopted children despite a conflicting provision of the Children’s Code.

Joseph Gallegos had two children before he died in December 2016: Patricia Vialpando, born in 1990 and Shennae Finan, born in 1989. Vialpando was legally adopted by her maternal grandparents in 1991 and Finan did not know Gallegos was her father until two years after his death. 

Since he left no will and was unmarried at the time of his death, Vialpando was named by a probate court as Gallego’s only heir and appointed as his estate representative. Finan moved to modify the court’s appointment of heirship after she learned about her father two years after his death. She pointed to section 19-3-608 CRS 2020 in the state Children’s Code to argue that her sister’s 1991 adoption severed any rights to intestate succession. Gallego’s two brothers joined the motion through the company Gallego’s Ranch, a joint partnership of the three brothers.

A district court ruled that intestate succession of an adopted child is governed by the 2010 addition to the state Probate Code, section 15-11-119(3) CRS 2020. The amendments deems children who are adopted by relatives of either genetic parent as heirs when a biological parent dies without a will. The district court named both daughters as heirs to Gallegos’ estate.

Finan appealed the ruling arguing that since the Children’s Code specifies that “a child’s status as an heir at law” is severed upon final adoption, the 2010 amendment had no effect on Vialpando’s status as an heir after her 1991 adoption. 

The Colorado Court of Appeals looked at the contradicting laws to determine which should be applied in this case. It applied statutory construction — looking at statute specificity and recentness — to rule that Gallegos’ estate was subject to the Probate Code not the Children’s Code. It further ruled the lower court did not apply the 2010 amendment retroactively since the law was in effect at the time of Gallegos’ death in 2016. 

The Colorado Court of Appeals upheld the previous ruling and delegated both sisters as heirs. 

In re Marriage of Cerrone

​​Dennis Cerrone and Jill Cerrone divorced in 2016 after 24 years of marriage. Their separation agreement required Dennis to pay Jill nearly $2,500 per month in maintenance for the next 11 and a half years.

The separation agreement states it cannot be modified “except by its own terms or by operation of law or by written agreement of the Parties with approval by the court.” The agreement’s section on maintenance stated that the maintenance is “contractual in nature and shall be non-modifiable for any reason whatsoever by the Court.”

Three years after the divorce, Dennis moved for his maintenance obligation to be declared “automatically terminated by operation of law” as of May 25, 2018, when Jill remarried. A district court magistrate denied the motion, concluding the parties had agreed in writing the maintenance obligation would survive Jill’s remarriage. The district court later reviewed the magistrate’s decision and agreed with the magistrate.

A division of the Court of Appeals reversed the order, finding the magistrate and district court erroneously concluded the husband’s maintenance obligation continued after the wife’s remarriage. In doing so, the court declined to follow its decision in In re Marriage of Parsons, insofar as that decision held that the “mere presence of a nonmodification clause is, on its own, sufficient” to continue a maintenance obligation after the recipient’s remarriage.

The court concluded the Parsons division diverged from the plain language of the maintenance termination statute when it found the presence of a nonmodification clause is enough to overcome the presumption that the obligation to pay maintenance ends when the recipient remarries. A separation agreement or decree must include an “express provision” that maintenance will continue after remarriage, the division concluded.

State of Colorado v. Center for Excellence in Higher Education

​​In this consumer protection case, a division of the Court of Appeals reversed a $3 million judgment against CollegeAmerica, finding the consumer protection claims against it must be retried because the state hadn’t proved the for-profit school’s alleged deceptive practices have a significant public impact.

The Colorado Attorney General’s Office sued CollegeAmerica in 2014 for violations of the Colorado Consumer Protection Act and the Uniform Consumer Credit Code. The state alleged, among other things, that the school made false or misleading statements in its promotional materials and failed to disclose information about the earnings and job placement rates attained by its students.

The case went to trial in 2017 but a decision wasn’t issued until August 2020. In 2019, the governor signed into law HB19-1289, which amended the CCPA to say the state isn’t required to prove a deceptive trade practice has a significant public impact. The trial court concluded this amendment was a clarification of the law that should apply retroactively, upholding a pretrial ruling that the state was not required to show significant public impact. The trial court ruled against CollegeAmerica and ordered it to pay $3 million in civil penalties.

On appeal, CollegeAmerica argued the 2019 amendment was a change to the law, rather than a clarification. Because neither the statute’s text nor legislative history show clear retroactive intent, the college argued, the amendment should not apply retroactively and the state should have to prove significant public impact.  

The Court of Appeals sided with the college, reversing the $3 million in fines. The division concluded a new trial is necessary because the trial court didn’t make any factual findings on whether there had been significant public impact. The division also granted CollegeAmerica’s request that the case be remanded to a new judge because the trial judge took nearly three years to issue a decision. 

The division also ruled against the state in its cross-appeal asking the court to find that CollegeAmerica’s institutional loan program was unconscionable under the UCCC. The lower court had found the college violated the consumer lending law with respect to certain borrowers but declined to find the entire lending scheme unconscionable.

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