Court Opinions: Colorado Court of Appeals Opinions for June 23

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

Marriage of Olsen

The Colorado Court of Appeals unanimously reversed and remanded a ruling in a case focused on who gets pre-embryos after a divorce.

Jamie Fabos and Justin Olsen have continued to dispute their frozen pre-embryos after they divorced. The case went back to the appeals court after Olsen appealed a district’s court’s judgment on remand after the first appeal. In this new appeal, the court reviewed the district court ruling awarding the pre-embryos to Fabos based on the balancing test from In re Marriage Rooks

In the Rooks case, the Colorado Supreme Court came up with a nonexhaustive list of factors when considering a situation like this including:

  • The intended use of the pre-embryos; the Supreme Court added that someone wanting to become a genetic parent with the pre-embryos has a greater interest than someone donating them
  • The physical ability or inability of the person seeking to implant pre-embryos to have a genetic child through different means
  • The original reasoning for using in vitro fertilization
  • The hardship to the party seeking to not become a genetic parent
  • If an attempt was made to use the pre-embryos as unfair leverage
  • Other factors on a case-by-case basis

After giving birth to twins in 2011 through IVF, the couple had two more embryos placed in frozen storage. They also filled out an informed consent form where they said they would donate the pre-embryos to another couple if there was mutual death or incapacity or when Fabos reaches the age of 55. The form, however, did not contain a choice for what happens if they get divorced, but rather the form said the court or settlement agreement would decide on what to do with the embryos if the couple separated.

After filing for divorce, Fabos and Olsen disagreed on what to do with the embryos. A district court eventually gave them to Fabos so she could donate them to another couple, but Olsen appealed. The appeals court then reversed and remanded the district court to reconsider using the Rooks standards which had been announced after the district court’s first ruling. The appeals court further ordered that the lower court not give more weight to Fabos’ religious beliefs that the pre-embryos should be protected like a human life, versus Olsen’s interest in not procreating using these embryos. That assertion was based on a prior court ruling in this case.

The district court ruled in favor of Fabos to donate the embryos to a third party. Olsen again appealed, as the district court stayed the judgment pending a mandate from the appeals court.

The appeals court agreed with Olsen saying the district court should have followed the plan laid out for them (not weighing Fabos’ religious beliefs more versus Olsen not wanting to procreate with these pre-embryos). The appeals court added that this case is not one of the rare circumstances where a party wanting to donate the embryos can overcome another party who doesn’t want to procreate with the pre-embryos.

The appeals court concluded that Olsen will get the embryos to discard and remanded the case to the district court. The case is also remanded to enter the judgment and the entry of collateral orders that may be necessary to enact the judgment.

Colorado Division of Insurance v. Statewide Bonding, Inc., and Brian Cole

In a case that had multiple facets, the appeals court ruled the Colorado Division of Insurance has jurisdiction to investigate insurance producers in the state that provide immigration bonds and it is not preempted by federal law. A portion of this case was also reversed and remanded with further directions

Statewide Bonding and Brian Cole appealed an order from the commissioner of insurance who upheld a decision from an administrative law judge that found the respondents violated the state’s insurance regulations and resulted in civil penalties. 

The appeals court said the commissioner’s jurisdiction to oversee insurance producers that provide immigration bonds is not preempted by federal law. The respondents also appealed the commissioner’s order that reversed the ALJ’s award for attorney’s fees in favor of the respondents. The appeals court reversed in part and affirmed in part regarding that issue.

Immigration delivery bonds are used when an undocumented immigrant has been detained by Immigration and Customs Enforcement. An immigration bond can be used to release that person before the deportation process is complete. It’s then used to make sure they continue to go to upcoming hearings. 

The bonds can be paid in full directly to ICE by a sponsor, or a sponsor can purchase a surety bond through an agent who acts on behalf of an insurance company and thus becomes the co-obligor on the bond. In that situation, a sponsor pays a premium to the agent. That agent then makes sure the undocumented immigrant makes it to the hearings. If they don’t go to the hearing, the insurance company has to pay the full bond to ICE. Generally, whoever pays the bond premium is required to pledge collateral to the insurance group in order to protect the insurance company from losses if the immigrant fails to appear in court.

In 2017, the Colorado Division of Insurance received a complaint from a probation officer who believed that an undocumented immigrant was possibly being extorted by Libre by Nexus, Inc., which was involved in posting the immigrant’s bond. An investigation then ensued.

An investigator found the National Association of Insurance Commissioners’ website had no information Libre was licensed. The investigator then discovered the bond had been digitally signed by Brian Cole as the agent. Cole served as the president of Statewide, which was listed as the “Agent-Bonding Company.” It was then found that when the bond was posted, the respondents were licensed by the division as non-resident insurance producers.

What made this different was this bond identified an insurance company, Financial Casualty and Surety, Inc. as the obligor. That group was not licensed in Colorado to conduct an insurance business. Later, Libre was identified as the indemnitor of the bond. For this agreement, Libre agreed to pay the premium while providing collateral to Statewide. Instead, however, of Libre paying the premium or posting collateral to Statewide, they leased an ankle monitor to the undocumented immigrant. That monitor included a variety of fees.

The investigator sent a letter requesting the respondents provide information related to the immigrant’s bond along with other queries about their business. Many of those questions were answered except for the request connected to immigration bonds that were posted that FCS agreed to indemnify. 

Another letter was then sent to the respondents, that focused on their transactions in Colorado connected with FCS and Libre, which included even more inquiries about the business. The respondents objected to the request, citing federal immigration law. Instead of providing the information, Statewide gave up its license in Colorado to act as a non-resident insurance producer in 2018. Cole also surrendered his license.

The division continued on, saying that even though they surrendered their license, they can still enforce the state’s insurance licensing laws on them. The Division then requested more responses, but the respondents said their inquiries were targeted at Libre, not them and the licensing laws didn’t apply. The division continued sending the respondents a formal notice they had violated the law in Colorado by not giving full responses.

A formal notice was then filed with the Office of Administrative Courts saying the respondents didn’t provide complete information during the second inquiry. The respondents eventually served the division with requests for the investigative file so they can prepare for a hearing. The division said it would produce documents up to the second inquiry letter. The respondents then filed a motion to compel disclosure of the whole file after finding some portions had been redacted, while not being listed on the division’s privilege log. The ALJ granted that motion, but in the notice for compliance, the division moved for a second protective order, revealing it had redacted some items before the second inquiry letter. The ALJ also granted the second protective order.

During an administrative hearing, the ALJ said the second letter was within the rights of the division. Due to the respondents not providing a fuller response to the second letter, the ALJ imposed a $500 fine against each respondent plus a statutory surcharge. The ALJ also ordered the division to pay the respondents attorney fees of $1,567.50 as a sanction for the misrepresentation regarding the 15 pages of documents withheld.

Both the respondents and the division filed exceptions to the ALJ’s decision. The commissioner then issued an order upholding the fines against the respondents and reversing the attorney’s fee award against the division. 

As for the federal aspect of the case, the court of appeals said since Cole and Statewide were licensed by Colorado authorities, they can be investigated by them. They added that federal law says the states can deal with insurance unless the federal law mandates it does so.

The court of appeals did disagree with the respondents who also said the commissioner committed an error by affirming the ALJ’s conclusion that the division’s second inquiry letter was within the rights of that agency. The appeals court said the second inquiry letter was good as it fits within the division’s authority and it’s within the scope of the investigation.

The appeals court did agree with the respondents who said the commissioner’s reversal of the ALJ’s order that imposed sanctions on the division (paying legal fees), was an abuse of discretion. The court of appeals continues saying the division had not disclosed the existence of the 15 pages of the file and did not reference it on a privilege log.

In the end, the appeals court reversed the portion of the commissioner’s order that set aside the ALJ’s award for attorney’s fees, while remanding with instructions to reinstate the ALJ ruling. The order, otherwise, was affirmed.

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