Court Opinions: Colorado Court of Appeals Opinions for March 30

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

Fontanari Jr. et al. v. Snowcap Coal Company Inc.

The Colorado Court of Appeals unanimously reversed an order and remanded a case involving attorney fees.

Snowcap Coal Company Inc. operated an underground coal mine, with part of it under the land owned by the Fontanari plaintiffs. They included Rudolph Fontanari Jr. and Ethel Fontanari, trustees of a revocable living trust, along with the Fontanari Revocable Living Trust. According to the court opinion, they were recognized collectively as Fontanari.

In 2013, Snowcap applied to the Colorado Division of Reclamation, Mining and Safety to be partially released from its performance bond, which was filed to ensure Snowcap complied with a reclamation plan, after completing some reclamation work. 

On Feb. 16, 2017, Fontanari filed objections to the request, claiming to the division that Snowcap’s operations damaged Fontanari’s property. Inspections revealed a large amount of surface water from an irrigation ditch made its way into the mine through an improperly reclaimed air shaft.

Snowcap submitted a repair and reclamation plan for the shaft. Fontanari filed an objection with the division, arguing the plan was deficient in many ways, but the division approved it. Fontanari filed a letter objecting and requested a hearing before the Mined Land Reclamation Board, which approved Snowcap’s proposal. 

Fontanari filed a complaint for judicial review of MLRB’s decision and the district court affirmed the ruling. In the district court’s order, it awarded Snowcap about $125,000 in attorney fees. Although Snowcap didn’t request fees at the end of the MLRB proceedings, in the district court it moved for an omnibus award under Colorado Revised Statute 34-33-128(4) encompassing all the legal costs it incurred since Fontanari filed an objection with the division. 

The district court granted the award, signing Snowcap’s proposed order without alterations. The order provided that Snowcap is entitled to recover attorney fees and costs defending against Fontanari’s objections and appeal since Feb. 16, 2017, under 34-33-128(4).

Fontanari appealed on multiple grounds including the court didn’t have the authority to issue an award for fees incurred during the MLRB proceedings; the court shouldn’t have awarded fees to Snowcap for the judicial review phase of the proceedings; the amount awarded was unreasonable; and court’s findings were inadequate to support its ruling.

The Colorado Court of Appeals found the district court lacked the authority to award fees to Snowcap for the agency phase of proceedings under either 34-33-128(4) or 34-33-124(5). The appeals court also concluded the lower court failed to make sufficient findings to justify an award of fees for the judicial review phase. 

The appeals court reversed the district court’s order and remanded the case so the lower court can consider whether a fee award is “just and proper” for the judicial review phase under 34-33-124(5).

People v. Larsen

The Colorado Court of Appeals unanimously affirmed a judgment and remanded a case connected to merged counts.

Emmett Larsen was convicted by a jury in 2013 of one count each of sexual assault on a child by one in a position of trust (SAOC-POT) as part of a pattern and SAOC-POT with a victim under 15 years old. Larsen was sentenced to a controlling indeterminate prison term of eight years to life.

His convictions were upheld by the Colorado Court of Appeals on direct appeal, but Larsen sought habeas corpus relief from the federal district court. In the habeas petition, Larsen argued the jury findings and verdicts weren’t sufficient to support his conviction on the pattern count. Larsen contended the question of whether sexual assault was committed as a pattern wasn’t submitted to and found beyond a reasonable doubt by a jury.

Larsen argued the conviction violated his Sixth and 14th Amendment rights. The federal court agreed with Larsen finding he was entitled to habeas relief. The federal court, however, observed the proper remedy wasn’t clear, given Larsen’s multiple convictions and how they were entered on the mittimus. 

The federal court found the question of remedy was more appropriate for state courts and conditionally granted the writ of habeas corpus while instructing the state courts to take action to remedy the constitutional violation.

In postconviction court, the parties disagreed on how to interpret the mittimus from Larsen’s sentencing and how the court should comply with the federal district court’s order. The mittimus showed Larsen was found guilty of SAOC-POT as part of a pattern (count one) and SAOC-POT with a victim under 15 years old (count two) which merged into count one for sentencing. 

Prosecutors argued the previous trial court couldn’t legally merge the convictions because they were based on separate instances of contact. Prosecutors contended either the court meant it was sentencing Larsen concurrently on the two counts, not merging them, or the counts were improperly merged making the sentence illegal.

Prosecutors contended the postconviction court should keep count one and revert it to a lower class felony without the pattern enhancement and resentence Larsen on both counts one and two.

The defense argued count one had to be vacated due to the constitutional issues identified in the federal court and count two couldn’t be reinstated because the trial court merged it into count one, therefore it was vacated. 

The postconviction court vacated count one, leaving the conviction on count two, concluding there was a separate verdict and conviction for count two, which wasn’t impacted by the issues of count one. The postconviction court sentenced Larsen on count two to time served and 20 years to life of sex offender intensive supervision probation.

Larsen made multiple contentions on appeal including the postconviction court erred by sentencing him on count two arguing that the count was vacated and couldn’t be reinstated.

The appeals court affirmed the judgment, holding that when a defendant is convicted of multiple counts on multiple jury verdicts and some of those counts merge, the merged counts could be reinstated. 

Under appeals court review, it found the mittimus incorrectly stated Larsen pled guilty, when he was convicted by a jury. The mittimus also showed Larsen was still convicted and sentenced for count one, but the conviction on that count had been vacated. The case was remanded to trial court with directions to correct the mittimus to show Larsen was convicted after trial and count one was vacated. 

Blakeland Drive Investors, LLP IV v. Taghavi et al.

The Colorado Court of Appeals unanimously affirmed a judgment in part, reversed in part and remanded a case involving environmental property damage. 

The toxic substances at the center of the case come from leaking underground gasoline storage tanks on the property owned first by Duggan Petroleum Company and later by Rashid Taghavi and Taghavi, Inc. In 1997 Blakeland Drive Investors, LLP IV bought lots seven through 10 which have remained undeveloped. Duggan owned lot five at the time, where it operated a gas station. In 1999, Duggan found its underground gas storage tanks had leaked. 

Colorado Division of Oil and Public Safety ordered further monitoring of the leaks, which showed two toxic substances going through the soil and groundwater on lot five. One of the substances was BTEX, which is a carcinogenic element of gasoline and migrates through water or vapor. The other toxic substance was MTBE, which is a compound made from petroleum hydrocarbons that dissolves in water and are tough to separate from it.

Colorado banned MTBE in 2000 and it was phased out of the state by 2002. By 2001, the toxic substances on lot five were migrating downslope to lots seven through 10, according to court records. 

Duggan tried to remove the substances, but it was unsuccessful and in 2000 Duggan sold the property to Willary Metro, LLC, which sold it in 2003 to Rimfire31, Inc. No leaks had been reported on lot five during Willary Metro and Rimfire31’s ownerships.

Taghavi bought lot five from Rimfire31 in 2004 and operates a gas station and convenience store, which remains open. Taghavi received an environmental report that notified him of the leaks and toxic substances. After he acquired the property, Taghavi reported another leak from the gas storage containers, but little information is known about it, according to court records.

Duggan remained liable for contamination on lot five, according to the OPS, and Duggan continued monitoring and efforts for remediation. In 2006, OPS issued a no-further-action-required letter to Duggan because of the reduced levels of toxic substances on lot five. Taghavi got a copy of the letter.

The storage tanks leaked again in 2010, but only released BTEX because MTBE had been phased out. Taghavi hired an environmental organization to conduct tests and report on the leak and it found BTEX and MTBE on lot five were migrating to lots seven through 10. The environmental group continued monitoring the migration until 2016 when it stopped reporting.

In 2017 BDI attempted to sell lots seven through 10 and it learned of the migration of BTEX and MTBE from lot five onto its property. BDI’s had its own assessment and found the chemicals present on lots seven through 10 at levels above the limits required for detection. 

BDI sued Duggan and Taghavi for continuing trespass, continuing nuisance and negligence. Taghavi denied liability and designated Willary Metro and Rimfire31 as nonparties at fault.

After a bench trial, Duggan and Taghavi were found liable for the migration of the chemicals from lot five onto lots seven through 10. Damages were calculated in favor of BDI at $490,000. The trial court held Duggan and Taghavi jointly and severally liable based on what it determined was the indivisible nature of contamination they caused through leaking storage tanks. 

Only Taghavi and Taghavi, Inc. appealed, seeking a review of the trial court’s judgment. The questions being asked before the Colorado Court of Appeals included whether the trial court properly held Taghavi jointly and severally liable with codefendant Duggan.

The trial court’s judgment as to joint and several liability was reversed, but the judgment was affirmed in all other respects. The appeals court found the trial court was required to make special findings that apportion liability between Taghavi and Duggan for contamination of the chemicals on lots seven through 10.

The case was remanded on that matter to make special findings determining the percentage of fault attributable to Taghavi and Duggan for the apportionment damages. The trial court can consider additional evidence from the parties. 

Fear v. GEICO Casualty Company

The Colorado Court of Appeals unanimously reversed a judgment and remanded a case involving auto insurance.

Colorado Revised Statute 10-3-1115(1)(a) provides an insurance company cannot unreasonably delay or deny payment of a claim for benefits owed to or on behalf of a first-party claimant. An insurer would violate this mandate if it delayed or denied authorizing payment of a covered benefit without a reasonable basis. If the insurer unreasonably delayed or denied payment of the covered benefit, the claimant can bring an action to recover attorney and court fees and two times the covered benefit.

In Fisher II, the Colorado Supreme Court considered whether auto insurers have to pay undisputed portions of an underinsured motorist claim, even though portions of the claim remain disputed. In Fisher II the state’s high court held the plain language of 10-3-1115 and -1116 prohibited an insurer from withholding payment of undisputed covered benefits owed to an insured, simply because other portions of an insured UIM claim remain disputed.

Marcus Fear was injured when an underinsured motorist crashed into his vehicle. Fear’s economic losses, including medical bills and other out-of-pocket expenses were nearly $22,000 and he settled with the at-fault driver’s auto insurer, with GEICO’s consent, for the policy limit of $25,000. 

Fear filed a claim with his own insurer, GEICO, which had issued him a policy of $100,000 in UIM coverage. Fear asserted he was entitled to the UIM benefits because the sum of his economic and noneconomic damages exceeded $25,000 and the settlement with the tortfeasor didn’t make him whole.

In an internal evaluation of Fear’s claim, GEICO’s adjuster estimated the claim’s total value was between $27,500 and $34,000. GEICO set aside reserves to pay its share of the projected amount, and accounted for a $25,000 offset of Fear’s settlement with the at-fault driver’s insurer, setting an internal negotiation range between $2,500 and $9,000 for the UIM claim. 

GEICO began by offering him $2,500. After Fear submitted documentation showing he incurred $1,504 in additional medical expenses, GEICO increased its offer by the same amount, to just over $4,000. Both of the offers required Fear to accept the money in full satisfaction of the UIM claim and GEICO didn’t offer to make partial payment while the claim was still pending.

Fear didn’t accept the offers or otherwise attempt to negotiate and he rejected GEICO’s request to sit for a recorded interview and didn’t sign any releases that allowed GEICO to speak with treatment providers. Fear then filed suit in district court asserting a claim for unreasonable delay under 10-3-1115. 

Fear alleged the holding in Fisher II compelled GEICO to pay him $4,004 without requiring a release because the amount, which corresponded to the minimum of GEICO’s negotiation range, was owed under the UIM policy. Fear also alleged GEICO’s failure to do that amounted to an unreasonable delay under 10-3-1115. Fear also asserted he was entitled to get from the insurer an additional two times the covered benefits, along with attorney fees and costs. 

After a bench trial, the court ruled in Fear’s favor awarding him $9,000 in noneconomic damages and based on the low end of the adjuster’s internal evaluation, concluded $7,200 of that amount was and had been, undisputed since the time the evaluation was created. 

After offsetting Fear’s $25,000 settlement and accounting for the $21,761 in economic damages, the court found GEICO had unreasonably delayed paying Fear $3,961 in UIM benefits. The court ruled Fear was entitled to a penalty of double that amount, along with attorney fees and costs. 

After offsetting the $25,000 settlement, the court awarded Fear a total of $13,683 and later added about $46,000 in attorney fees and costs to the judgment.

GEICO appealed and the Colorado Court of Appeals reversed (GEICO didn’t appeal the $9,000 in noneconomic damages). The appeals court concluded the court erroneously relied on GEICO’s internal evaluation of the UIM claim to measure Fear’s undisputed noneconomic damages. The appeals court held an insurer’s internal evaluation of first-party claimant’s noneconomic damages doesn’t establish an undisputed amount of benefits owed and is not subject to immediate payment.

The appeals court reversed the award of statutory penalties under 10-3-1116 and the accompanying award of attorney fees and remanded the case so the lower court can recalculate the judgment if needed.

CORRECTION NOTE: This article was updated March 30 to clarify the court later added attorney fees and costs to the initial judgment in Fear v. GEICO Casualty Company.

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