in the united states court of appeals for the tenth ... · for the tenth circuit ... the district...

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Appeal Nos. 15-1006 and 1007

IN THE UNITED STATES COURT OF APPEALSFOR THE TENTH CIRCUIT

GLADYS JONESPlaintiff-Appellant

vs.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANYDefendant-Appellee

APPEAL FROM THE UNITED STATED DISTRICT COURTFOR THE DISTRICT OF COLORADO

HONORABLE RICHARD P. MATSCH, SENIOR DISTRICT JUDGEDISTRICT COURT CASE NO. 2013-CV-577-RPM

OPENING BRIEF OF APPELLANTGLADYS JONES

ORAL ARGUMENT REQUESTED

Meredith A. Quinlivan, (#38016) Troy R. Rackham, (#32033)GAIENNIE LAW OFFICE, LLC FENNEMORE CRAIG, PC3801 East Florida Avenue, Suite 100 1700 Lincoln Street, Suite 2900Denver, Colorado 80210 Denver, Colorado 80203(303) 455-5030 (303) 291-3200Attorney for Plaintiff-Appellant Attorney for Plaintiff-AppellantGladys Jones Gladys Jones

Appellate Case: 15-1006 Document: 01019452838 Date Filed: 06/30/2015 Page: 1

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TABLE OF CONTENTS

I. PRIOR OR RELATED APPEALS.................................................................. 1

II. JURISDICTION.............................................................................................. 1

III. ISSUES PRESENTED FOR REVIEW. ....................................................... 2

IV. STATEMENT OF THE CASE. ................................................................... 3

A. THE FACTS. .................................................................................................. 3

1. The Accident. ........................................................................................... 3

2. The State Court Personal Injury Case. ...................................................... 4

B. COURSE OF PROCEEDINGS. ............................................................................ 5

1. State Farm's First Summary Judgment Motion. ........................................ 6

2. Jones' Amendment of Her Complaint to Include Common Law andStatutory Bad Faith Claims....................................................................... 7

3. Jones' Expert Disclosure. .......................................................................... 8

4. April 25, 2014 Pretrial Conference. .......................................................... 9

5. State Farm's Second Motion for Summary Judgment...............................11

6. Hearing on State Farm's Renewed Summary Judgment Motion...............12

7. District Court's Summary Judgment Order. .............................................13

8. Final Judgment. .......................................................................................14

9. This Appeal. ............................................................................................15

V. SUMMARY OF THE ARGUMENT. ............................................................15


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VI. LEGAL ARGUMENT................................................................................17

1. THE DISTRICT COURT ERRED WHEN IT DISMISSED JONES' BAD FAITH CLAIMS(HER THIRD AND FOURTH CLAIMS).....................................................................17

A. Standard of Review. ................................................................................17

B. The District Court Erred When it Dismissed Jones' Bad Faith ClaimsWithout Giving Jones an Opportunity to Respond..........................................18

C. The District Court Erred When It Dismissed Jones' Bad Faith ClaimsBecause There Were Factual Dispute as to Whether Defendant State Farm’sDelay or Denial of Benefits was Reasonable Under the Circumstances..........22

D. The Finding that State Farm Set Forth an “Arguable Defense” to Jones'Claims Does Not Establish a Lack of Factual Dispute....................................28

2. THE DISTRICT COURT ERRED IN RULING THAT PLAINTIFF’S EXPERTTESTIMONY WAS INADMISSIBLE. ........................................................................29


B. Jones’ Expert Testimony Should Not Have Been Precluded Because It isAdmissible to Show That a Reasonable Insured Should Not Be Expected ToKnow That The At-Fault Driver Did Not Have Insurance Coverage UntilCopies Of The Relevant Insurance Policies Were Provided And A NecessaryReview Could Be Performed. .........................................................................31

3. THE DISTRICT COURT ERRED IN RULING THAT INTEREST SHOULD BECALCULATED FROM THE DATE OF THE JUDGMENT IN THE TRIAL COURT MATTER. .. ....................................................................................................................33


B. Prejudgment Interest Should Have Been Calculated from the Date of theWrongful Withholding, which was the Date of the Adams County DistrictCourt Order on August 17, 2012. ...................................................................34

VII. CONCLUSION...........................................................................................37


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VIII. REQUEST FOR ORAL ARGUMENT. ......................................................37

IX. CERTIFICATION OF COMPLIANCE. .......................................................37


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TABLE OF AUTHORITIES

CasesAtlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138 (10th Cir.

2000) .................................................................................................................30

Beaird v. Seagate Tech., Inc., 145 F.3d 1159 (10th Cir. 1998) ..............................20

Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ......................................................19

Century 21 Real Estate Corp. v. Meraj Int’l Inv. Corp., 315 F.3d 1271 (10th Cir.

2003) .....................................................................................................18, 28, 29

Combined Com. Corp. v. Pub. Serv. Co., 865 P.2d 893 (Colo. App. 1993) ...........34

D & H Marketers, Inc. v. Freedom Oil & Gas, Inc., 744 F.2d 1443 (10th Cir. 1984)

........................................................................................................................... 2

Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993) ..................................30

Davis Cattle Co. v. Great W. Sugar Co., 393 F.Supp. 1165 (D. Colo. 1975).........34

De Herrera v. Sentry Ins. Co., 30 P.3d 167 (Colo. 2001) ......................................23

Dodge v. Cotter Corp., 328 F.3d 1212 (10th Cir. 2003) ....................................2, 30

E.B. Jones Constr. Co. v. City & Cnty. of Denver, 717 P.2d 1009 (Colo. App.

1986) .................................................................................................................36

Goebel v. Denver & Rio Grande W. R.R. Co., 215 F.3d 1083 (10th Cir. 2000) ....31,

32


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Hall v. Bellmon, 935 F.2d 1106 (10th Cir. 1991) ............................................20, 22

Hollander v. Sandoz Pharm. Corp., 289 F.3d 1193 (10th Cir. 2002).....................30

Hurd v. Am. Hoist and Derrick Co., 734 F.2d 495 (10th Cir. 1984) ......................18

Kumho-Tire Co. Ltd. v. Carmichael, 526 U.S. 137 (1999) ..............................30, 31

Marathon v. Ashland Pipe Line LLC v. Md. Cas. Co., 243 F.3d 1232 (10th Cir.

2001) .................................................................................................................18

Mesa Sand & Gravel v. Landfill, Inc., 776 P.2d 362 (Colo. 1989) ..................35, 36

Michaelson v. Michaelson, 884 P.2d 695 (Colo. 1994) .........................................35

Northington v. Jackson, 973 F.2d 1518 (10th Cir. 1992).......................................22

Patterson v. BP America Production Co., 2015 COA 28 (Colo. App. March 12,

2015) .................................................................................................................36

Pignanelli v. Pueblo Sch. Dist. No. 60, 540 F.3d 1213 (10th Cir. 2008)................18

Porter Constr. Servs. v. Ehrhardt, Keefe, Steiner, & Hottman, P.C., 131 P.3d 1115

(Colo. App. 2005)..............................................................................................34

R.W. Beck, Inc. v. E3 Consulting, LLC, 577 F.3d 1133 (10th Cir. 2009) ...............18

Riccatone v. Colorado Choice Health Plans, 315 P.3d 203 (Colo. 2013)........23, 29

Rocky Mt. Tool & Mach. Co. v. Tecon Corp., 371 F.2d 589 (10th Cir. 1966)........33

Ross v. Old Republic Ins. Co., 134 P.3d 505 (Colo. App. 2006)............................35


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Scott v. Comm'r of Internal Rev., 236 F.3d 1239 (10th Cir. 2001).........................35

Simms v. Okla. ex rel. Dep’t of Mental Health & Substance Abuse Servs., 165 F.3d

1321 (10th Cir. 1999) ............................................................................17, 18, 24

Stansbury v. Comm'r of Internal Rev., 102 F.3d 1088 (10th Cir. 1996) .................35

State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177 (Colo. 2004).............23, 29

Sutton v. Utah State Sch. for Deaf & Blind, 173 F.3d 1226 (10th Cir. 1999).........17

Torres v. First State Bank of Sierra County, 550 F.2d 1255 (10th Cir. 1977)..20, 22

United States v. Arney, 248 F.3d 984 (10th Cir. 2001) ..........................................30

United States v. Velarde, 214 F.3d 1204 (10th Cir. 2000) ...............................31, 32

USAA v. Parker, 200 P.3d 350 (Colo. 2009) ...................................................17, 34

Statutes28 U.S.C § 1291..................................................................................................... 2

28 U.S.C. § 1332.................................................................................................... 1

C.R.S. § 10-3-1115 ................................................................................................ 2

C.R.S. § 10-3-1116 ................................................................................................ 2

C.R.S. § 5-12-102 ...........................................................................................34, 36

Other Authorities


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Erin Krisofco, CRS §§ 10-3-1115 and -1116: Providing Remedies to First-Party

Claimants, 39 Colo. Law. 69 (2010) ..................................................................23

Grund, et. al, West’s Colorado Practice Series: Personal Injury Practice – Torts

and Insurance, 8A Colo. Prac., Personal Injury Torts and Insurance § 56 (3d ed.)

..........................................................................................................................23

Rules10th Circuit Rules 28.2 .......................................................................................... 1

Federal Rules of Appellate Procedure 3 ................................................................. 2

Federal Rules of Appellate Procedure 4 ................................................................. 2

Federal Rules of Civil Procedure 56 ............................................. 17, 19, 22, 24, 28

Federal Rules of Evidence 702..................................................................30, 32, 33


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I. PRIOR OR RELATED APPEALS.

Pursuant to 10th Cir. R. 28.2(C)(1), undersigned counsel notifies the Court

that no other appeal besides this consolidated case (Nos. 15-1006 and 15-1007)

was previously before this or any other appellate court under the same or similar

title. Additionally, no cases are known to be pending in this or any other court that

will directly affect this Court’s decision in the pending appeal.

II. JURISDICTION.

This appeal arises from the final judgment of the district court in Gladys

Jones v. State Farm Mutual Automobile Insurance Company, 2013-CV-577-RPM.

The district court had jurisdiction over this case pursuant to 28 U.S.C. § 1332(a)

because Plaintiff ("Jones"), a Colorado citizen, asserted claims against Defendant

("State Farm"), an Illinois citizen. Aplt. App., at 64-68.

On November 10, 2014, the district court denied State Farm's summary

judgment motion, but nevertheless dismissed Jones' Third and Fourth Claims for

Relief. (Order on Summary Judgement, hereafter “Order”). Id., at 267-71. The

district court further ordered the parties to "attempt to stipulate to the amount of a

judgment to be entered for the plaintiff by December 1, 2014." Id. The parties

could not stipulate, so they tendered their respective positions on the appropriate

amount of a judgment. Id., at 267-71. On December 12, 2014, the district court

concluded that the appropriate amount of the judgment "should be the policy


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limit," so the district court entered an Order for Entry of Final Judgment in Jones'

favor for "$100,000, plus costs and post-judgment interest." Id., at 283. The

district court confirmed this Order in a Final Judgment. Id., at 282.

The district court's final judgment effectively ended the case in the trial

court. Jones timely appealed pursuant to Fed. R. App. P. 3 and 4, so jurisdiction is

appropriate pursuant to 28 U.S.C § 1291. See Dodge v. Cotter Corp., 328 F.3d

1212, 1221 (10th Cir. 2003) (quoting D & H Marketers, Inc. v. Freedom Oil &

Gas, Inc., 744 F.2d 1443, 1444 (10th Cir. 1984) (en banc)).

III. ISSUES PRESENTED FOR REVIEW.

1. Did the district court err when it dismissed the Third and Fourth

Claims for Relief in Jones' Amended Complaint, which asserted claims for

common law bad faith and statutory bad faith under C.R.S. §§ 10-3-1115(1)(A)

and 10-3-1116(1), when State Farm did not move for summary judgment on those

claims and when there were genuine issues of disputed fact regarding whether

State Farm’s delay or denial of benefits was reasonable under the circumstances?

2. Did the district court erroneously conclude that Jones' proffered expert

testimony was inadmissible to show that a reasonable insured should not be

expected to know that an at-fault driver did not have insurance coverage until

copies of the relevant insurance policies were provided and a necessary review

could be performed?


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3. Whether the district court erred when it held that interest should be

calculated from the date of the district court's judgment rather than the date that the

insurance benefits should have been paid but were not?

IV. STATEMENT OF THE CASE.

A. The Facts.

1. The Accident.

On July 7, 2008, Karen Barrios, who was 13 at the time, recklessly drove a

vehicle to a strip mall in Aurora, Colorado. [Doc. 44, at 1]. The Plaintiff, Jones,

was shopping at Walt's Meats, a store in the strip mall. Id., at 1-2. When Jones left

the store, Barrios put the vehicle in drive and drove it forward into Walt’s Meats.

Id. The car crashed into Jones. Id. Jones was severely injured from the impact.

Id. The Aurora Police Department was called to the scene. Id., at 2.

The police investigation revealed that Barrios took the subject vehicle from

the home of Karine Dazna Cordero-Gomez, where Barrios was staying. Id., at 1-2.

Ms. Condero-Gomez identified Luis A. Rivera as the owner of the vehicle. Id.

The police also discovered that Gilberto Garcia had previously been a registered

owner of the vehicle. Id. Consequently, in its accident report, the police listed

Garcia as an additional owner of the vehicle. Id. There was no proof of insurance

in the vehicle at the time of the incident. Id. The police did not note, or discover,

any other automobile insurance during its investigation. Id.


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The police cited Barrios with careless driving and failure to provide proof of

insurance. Id. The citation summoned Barrios to appear in municipal court on the

traffic charges. Id. Barrios appeared in municipal court on August 7, 2008 and

pled guilty to careless driving and failure to provide proof of insurance. Id.

After the July 7, 2008 accident, Jones notified her own insurer, State Farm,

that a possible claim for uninsured and/or underinsured motorist ("UIM") benefits

existed. Id. State Farm opened a claim and began its own investigation regarding

the at-fault driver, parents, and possible owners or other insurers of the vehicle. Id.

at 2, 4-8; [Doc. 43, 2-8]. State Farm determined from its own investigation that no

applicable liability insurance existed. [Doc. 44, at 2]. Yet, State Farm refused to

provide uninsured motorist benefits to Jones to cover the substantial injuries she

sustained in the July 7, 2008 accident. Id.

2. The State Court Personal Injury Case.

On July 5, 2011, Jones sued in state court to recover damages for her

significant injuries from the accident the 13-year old Barrios caused when she took

the vehicle from Ms. Condero-Gomez's home and drove it into Walt's Meats. [Doc

43, at 7; Doc. 44-6]. Jones sued Barrios, the unknown parents or guardians of

Barrios, Gilberto Garcia and Luis A. Rivera. [Doc 43, at 7; Doc. 44-6]. Jones did

not sue State Farm in the case. Id.


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State Farm apparently resumed its investigation into whether there was any

insurance applicable to the adverse vehicle at the time of the accident. [Doc. 44, at

7-8]. State Farm also intervened in the state court action. [Doc. 44, at 7-8]. The

state court eventually entered default against Barrios, her parents, and Luis Rivera,

who all were served but never appeared. [Doc. 44, at 8]. Jones dismissed Mr.

Garcia from the suit because he could not be located. [Doc. 44, at 8].

After entering default, the state court held a damages hearing. Id. The

hearing was on June 25, 2011, which is an important date because that is when

Jones and State Farm first became sure that there was no insurance coverage

available from the tortfeasor or owner of the vehicle. Id. Specifically, Mr. Rivera

appeared and testified for the first time. Id. At the hearing, he denied ownership

of the vehicle Barrios drove and testified that he did not have automobile insurance

on the vehicle. Id., at 8, 13. Until that date, despite diligent investigation, neither

Jones nor State Farm actually knew whether there was any insurance on the vehicle

in question. Id., at 13. The state court entered judgment in Jones' favor, and

against Rivera and Barrios, for $74,651.78. Id., at 8.

B. Course of Proceedings.

On February 11, 2013, Jones initiated this action in state court. Aplt. App.,

at 49-52. Jones asserted three claims for relief. Id., at 50-52. They were: (1)


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uninsured motorist claim; (2) breach of contract; and (3) violation of C.R.S. §§ 10-

3-1115(1)(A) and 10-3-1116(1). Id., ¶¶19-31.

State Farm removed the matter to the district court based on removal and

diversity jurisdiction. Aplt. App., at 64-68. State Farm later answered Jones'

complaint. Id., at 69-75. Shortly thereafter, the parties stipulated to dismissal of

the third claim from Jones' initial complaint, which alleged a claim for statutory

bad faith under C.R.S. §§ 10-3-1115(1)(A) and 10-3-1116(1). Id., at 77. The

district court granted this stipulation and dismissed Jones' third claim. Id., at 79.

1. State Farm's First Summary Judgment Motion.

Two months later, before discovery was complete, State Farm filed its first

Motion for Summary Judgment (“First Motion”). Id., at 83-90. There, State Farm

argued that Jones' claims should be dismissed under the applicable statute of

limitations. Id.. Specifically, State Farm argued that Jones' UIM claim had

accrued at some point more than three years before February 11, 2013, when she

filed the action against State Farm. Id.

Jones responded and maintained that her claim was timely. Id., at 92-102.

Jones specifically argued that there were disputed issues of fact and that, based on

the facts she identified in her response, her claims did not accrue until June 25,

2012. Id., at 96-102. Jones argued that her UIM claim did not start to accrue until


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Mr. Rivera testified for the first time that he did not have insurance on the vehicle

in question. Id.

The district court heard oral argument on State Farm's First Motion on

August 21, 2013. Aplt. App., at 114. After hearing argument by counsel, the

district court denied State Farm's First Motion because there were outstanding

issues of material fact with regard to when the statute accrued. Id.

2. Jones' Amendment of Her Complaint to Include Common Lawand Statutory Bad Faith Claims.

After the district court denied State Farm's summary judgment motion, the

court held a scheduling conference. Aplt. App., at 115. At the scheduling

conference, the district court stated that it would allow Jones to amend her

complaint to add claims for bad faith. Id.; see also id., at 119:9-16. Specifically,

the district court ruled:

THE COURT: I'll let you amend the complaint for bad faith. I don’tunderstand State Farm's position in this case. I really don't. I mean,as I said at the hearing on the motion for summary judgment, nobodyknew who owned the vehicle and who might have insurance. Anduntil that's established – which even today we don't know. So I thinkyou're in bad faith. I don't understand what you are doing in this case.

Id., at 119:9-16. Thus, the district court allowed Jones to reassert her claims for

bad faith against State Farm. Id.

Jones did just that. She filed a Motion to Amend the Complaint, pursuant to

the grounds discussed in the September 6, 2013 hearing. Id., at 125-26. Jones


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attached to her filing a proposed Amended Complaint. Id., at 128-34. Jones'

Amended Complaint alleged claims against State Farm for statutory bad faith

under C.R.S. §§ 10-3-1115(1)(A) and 10-3-1116(1) (the Third Claim for Relief)

and for common law bad faith (the Fourth Claim for Relief). Id., at 131-32, ¶¶ 32-

41. The district court granted Jones' motion to amend and accepted Jones'

Amended Complaint, with the bad faith claims, as filed. Id., at 136.1

State Farm answered Jones' Amended Complaint. Id., at 137-45. The

district court held another status conference on November 25, 2013. [Doc. 36, at

3]. There, the district court reaffirmed the viability of Plaintiff’s Third and Fourth

Claims for Relief. Id.

3. Jones' Expert Disclosure.

Thereafter, the parties undertook additional discovery. On April 15, 2014,

Jones filed her expert witness disclosures, identifying Chad Hemmat, Esq. as a

retained expert. Aplt. App., at 160. Jones endorsed Hemmat to testify as "that Ms.

Jones did not breach the statute of limitations in this area." Id. Jones also

endorsed Hemmat to testify "that the attorney letters to State Farm Insurance were

simply to put State Farm on notice of a potential claim and did not specifically

reference whether a determination was made that this was a uninsured or

1 The Third Claim for Relief was reinstated and intended to cover actions byDefendant “going forward” based on Defendant’s continued conduct. Aplt. App.,at 120:13-121:5. The Fourth Claim for Relief was permitted for the first time. Id.,at 136.


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underinsured matter." Id. Finally, Jones endorsed Hemmat to testify consistent

with his deposition testimony, which had been taken in the case already. Id.

In connection with his anticipated role as an expert, State Farm deposed

Hemmat on January 9, 2014. Aplt. App., at 284-361. Hemmat testified regarding

his background and experience – that he has been a licensed attorney in Colorado

since 1999 – and his experience. Id., at 4-5. Hemmat explained that he practices

“[e]xclusively plaintiff work” and that “98 percent of his work is auto accident

personal injury claims.” Id., at 5. He specifically described his familiarity with

UM/UIM claims. Id., at 5-6. Hemmat testified at length about how, when, and to

what extent claimants must investigate other drivers and involved parties’

coverage, the availability of any UM/UIM coverage, and the general process of

pursuing UM/UIM claims. See id. Hemmat also testified regarding the

reasonableness of the actions here with regard to investigating liability and

UM/UIM coverage here. See id.

4. April 25, 2014 Pretrial Conference.

On April 25, 2014, the district court held a pretrial conference in anticipation

of the upcoming May 27, 2014 trial. Aplt. App., at 184-197. At the time of the

hearing, there was no motion to preclude Hemmat’s testimony. It did not appear

the district court had reviewed Hemmat’s deposition testimony and proposed trial

testimony prior to the hearing. After limited discussion by the parties, and without


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any motion pending, the district court ruled that Hemmat's testimony is not

admissible and the court was “not going to allow” Hemmat to testify regarding the

matters identified in his disclosure. Id., 187:23 – 188:5.

The district court then turned to the outstanding claims for relief. Id., at

188:6 -196:20. After brief discussion by counsel, and without any pending motion

relating to Jones' Third and Fourth Claims for Relief, the district court stated: “… I

don’t see the bad faith claim anyway.” Id., at 194:8-9. State Farm's counsel

inquired as to whether the court wanted to receive argument on Jones' Third and

Fourth Claims for Relief, and the court indicated that it would need to review

factual evidence to evaluate the claims. Id., at 194:11-16 (“MR. PATTERSON:

Do you want me to argue it right now? THE COURT: No, no. I need the

transcripts I suppose.”)

The parties then discussed the fact that all evidence regarding the accrual

date for statute of limitations purposes had been preserved through deposition

testimony and that there were no credibility disputes. Id., at 188:6 -196:20. State

Farm stipulated that if Jones' claim was timely filed it had no defense to

nonpayment, so the parties agreed that resolution of the accrual question would

resolve Jones’ First and Second Claims for Relief. Id. The parties agreed that the

question regarding accrual could be resolved through dispositive briefing, as

opposed to at trial. Id. The district court therefore vacated the trial and instructed


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the parties to submit summary judgment briefing on the statute of limitations

question. Id., at 195-96.

After the hearing, the district court entered a minute order confirming its

order for summary judgment briefing and vacating the May trial. Id., at 163. No

order was entered at the hearing or in the minute order regarding Plaintiff’s Third

and Fourth Claims for Relief. Id., at 163, 195-96.

5. State Farm's Second Motion for Summary Judgment.

As discussed with the district court, State Farm filed a renewed Motion for

Summary Judgment. Aplt. App., at 164-82. State Farm again argued that Jones'

First and Second Claims for Relief were barred by the statute of limitations. Id., at

172-82. State Farm also suggested that "[a]t the Pretrial Conference on April 25,

2014, the Court dismissed Plaintiff's bad faith and statutory violation claims and

vacated the trial date." Id., at 165.

Jones responded, identifying facts showing that her UI claim could not have

accrued prior to the time she learned that Mr. Rivera did not have an applicable

policy to cover the automobile in question. Id., at 198-222. Jones therefore argued

that her claim was not time-barred and summary judgment should be denied. Id.

Plaintiff also clarified that, at the April 25, 2014 conference, “there was discussion

regarding Plaintiff’s bad faith claims; however, the Court did not dismiss

Plaintiff’s bad faith and statutory violation claims.” Id., at 199. Moreover, Jones


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sought summary judgment in her favor on her bad faith claims because of State

Farm's failure to meet its contractual obligations, combined with its unreasonable

conduct and its unreasonable delay or denial of benefits. Id., at 218-221. In her

prayer for relief, Jones urged the district court to deny State Farm's motion for

summary judgment and "enter judgment against State Farm for it's [sic] breach of

the insurance contract and violation of C.R.S. §§ 10-3-1115 and 1116." Id., at 221-

22.

In its Reply in Support of its Motion for Summary Judgment, State Farm

acknowledged the dispute regarding the status of Plaintiff’s Third and Fourth

Claims for Relief, specifically stating that “only the accrual date of the statute of

limitations was being addressed in this Motion.” Id., at 225. State Farm therefore

only sought relief on Jones' first two claims for relief on the basis of the statute of

limitations. Id. State Farm clarified that it was requesting entry of judgment

against Jones only on Jones " Uninsured Motorist ("UM") Claim and Breach of

Contract Claim." Id.

6. Hearing on State Farm's Renewed Summary Judgment Motion.

On October 23, 2014, after State Farm's renewed summary judgment motion

was fully briefed, the district court held a hearing. Aplt. App., at 240-64. At the

hearing, the district court only discussed issues related to the First and Second

Claims for Relief. Id. Jones' counsel specifically sought to clarify the status of the


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Third and Fourth Claims for Relief, renewing the request for relief for State Farm's

bad faith. Id., at 260:4-7. The district court acknowledged that Jones had bad faith

claims remaining, but indicated those were "not before me right now." Id., at

260:4-9.2 The district court requested supplemental submissions from the parties

to address various factual concerns and took State Farm's renewed summary

judgment motion under advisement. Id., at 263.

As noted in the minute order from the hearing, there was brief discussion

regarding Jones’ Third and Fourth Claims for Relief. Id., at 239. Still, the district

court never entered an order relating to those claims for relief. Id. After the

October 23, 2014 hearing, both parties filed supplemental submissions in response

to the district court's questions regarding the accrual date for Jones’ First and

Second Claims for Relief. [Docs. 49 and 50].

7. District Court's Summary Judgment Order.

The district court entered its Order on Summary Judgment (“SJ Order”) on

November 10, 2014. Aplt. App., at 267-71. The vast majority of the district court's

order focused on the question of whether the statute of limitations barred Jones'

claim. Id., at 267-70. The district court concluded that “plaintiff’s knowledge of

2 Ironically, in discussing an issue raised by the first time at the hearingbetween the district court and State Farm (whether estoppel applied to bar StateFarm’s denial of benefits), the district court recognized that it could not dispose ofany such arguments without allowing the parties “a chance to argue about it….”Id., at 262:23-263:6. The district court noted that such a disposition would beunfair, stating that “[w]e still have due process I think.” Id., at 264:8.


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lack of insurance was reflected” in various submissions by her counsel, and agreed

with Jones that her UM claim did not accrue until June 25, 2012, when Rivera

denied ownership and possession of any applicable insurance policy. Id., at 270.

The district court therefore denied State Farm's renewed summary judgment

motion. Id., at 271. The district court further ordered the parties to attempt to

stipulate to an amount of judgment with regard to Jones' First and Second Claims

for Relief. Id.

Without any motion pending relating to Jones' Third and Fourth Claims for

Relief, the district court nevertheless dismissed those claims. Id. The district court

reasoned that State Farm "has made an arguable defense to the plaintiff’s claim."

Id. Because State Farm had not moved for summary judgment on Jones' Third and

Fourth Claims for Relief, Jones did not submit all evidence and arguments in

support of those claims. The district court's dismissal of Jones' Third and Fourth

Claims for Relief came as a surprise to Jones because: (1) State Farm

acknowledged in its Reply in Support of its Motion for Summary Judgment that it

was requesting entry of judgment against Jones only on Jones "Uninsured Motorist

('UM') Claim and Breach of Contract Claim;" [Aplt. App., at 225]; and (2) the

district court acknowledged that Jones had bad faith claims remaining, but

indicated those were "not before me right now." Id., at 260:4-9.

8. Final Judgment.


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When the district court denied State Farm's renewed summary judgment

motion, it ordered the parties to attempt to stipulate to an amount of judgment with

regard to Jones' First and Second Claims for Relief. Aplt. App., at 271. The parties

could not stipulate, so they tendered their respective positions on the appropriate

amount of a judgment. Id., at 272-73 (State Farm's position); Id., at 275-78 (Jones'

position). The district court concluded that the appropriate amount of the judgment

"should be the policy limit," so the district court entered an Order for Entry of

Final Judgment in Jones' favor for "$100,000, plus costs and post-judgment

interest." Id., at 283. The district court confirmed this Order in a Final Judgment.

Id., at 282.

9. This Appeal.

Jones timely filed her notice of appeal on January 9, 2015. [Doc. 60]. Jones

filed this appeal to challenge the district court's entry of summary judgment on her

bad faith claims and the district court's interest calculation.

V. SUMMARY OF THE ARGUMENT.

The district court erred in three prejudicial ways. First, the district court

erred when it dismissed Jones' bad faith claims in its SJ Order because State Farm

did not move for summary judgment on Jones' bad faith claims, because Jones did

not have an opportunity to submit evidence and argument in support of her bad

faith claims, and because there were genuine issues of material fact on Jones' bad


16

faith claims that precluded summary judgment. Indeed, there is admissible

evidence in the record that establishes a factual dispute regarding whether State

Farm’s delay or denial of the benefits was reasonable. Given this record, the

district court erred when it reached its sua sponte decision to dismiss Jones' bad

faith claims based only on State Farm's “arguable defense” to Jones' bad faith

claims. Jones therefore requests that this Court reverse the district court's order

dismissing Jones' Third and Fourth Claims for relief, and remand the case so that

Jones' entitlement to relief on those claims can be properly adjudicated.

Second, the district court erred when it excluded expert testimony from

Jones' retained expert, Chad Hemmat, Esq., without State Farm even moving for

such relief. Mr. Hemmat’s undisputed background, experience, and expertise

establish that his testimony was admissible to establish that a reasonable insured

should not be expected to know that the at fault driver did not have insurance

coverage until copies of the relevant insurance policies had been provided and a

necessary review and investigation had been performed. This Court should

therefore reverse the district court’s summary exclusion of Mr. Hemmat’s

testimony.

Finally, the district court erred when it calculated interest due to Jones from

the date of its Final Judgment rather than from the date that State Farm wrongfully

denied benefits to Jones. Under Colorado law, which applies to this diversity case,


17

prejudgment interest is recoverable for an insurer's failure to pay UM benefits

when due. USAA v. Parker, 200 P.3d 350, 359-60 (Colo. 2009). The district court

did not award prejudgment interest, but only post-judgment interest, in its Final

Judgment. The district court therefore erred. Jones respectfully requests this Court

reverse and remand for a correct calculation of prejudgment interest.

VI. LEGAL ARGUMENT.

1. The District Court Erred When It Dismissed Jones' Bad Faith Claims(Her Third and Fourth Claims).

A. Standard of Review.

This Court's review of the district court's entry of summary judgment is de

novo. Simms v. Okla. ex rel. Dep’t of Mental Health & Substance Abuse Servs.,

165 F.3d 1321, 1326 (10th Cir. 1999). This Court's review of a district court's

dismissal for failure to state a claim also is de novo. Sutton v. Utah State Sch. for

Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999). Regardless of the

characterization of the procedural posture associated with dismissal, a de novo

standard applies.

Summary judgment is only appropriate when “the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). This

Court examines the record to determine if any genuine issues of material fact were


18

in dispute and whether the substantive law was correctly applied. Simms, 165 F.3d

at 1326. “‘The question is ... whether there is evidence upon which a jury could

properly find for the nonmoving party.’” Century 21 Real Estate Corp. v. Meraj

Int’l Inv. Corp., 315 F.3d 1271, 1278 (10th Cir. 2003) (quoting Hurd v. Am. Hoist

and Derrick Co., 734 F.2d 495, 499 (10th Cir. 1984)) (emphasis supplied). Where

such evidence exists, summary judgment is inappropriate. Id.

In reviewing the facts and evidence, the court must take “the facts in the

light most favorable to the non-moving party.” R.W. Beck, Inc. v. E3 Consulting,

LLC, 577 F.3d 1133, 1142 (10th Cir. 2009); see also Pignanelli v. Pueblo Sch.

Dist. No. 60, 540 F.3d 1213, 1215 (10th Cir. 2008) (facts should be “[v]iewed in

the light most favorable to” appellant). Appellate courts review factual

determinations underlying summary judgment for clear error. Marathon v.

Ashland Pipe Line LLC v. Md. Cas. Co., 243 F.3d 1232, 1252 (10th Cir. 2001).

Whether an insurance company’s delay or denial of benefits was reasonable or

constituted bad faith are questions of fact. Id. at 1251.

B. The District Court Erred When it Dismissed Jones' Bad FaithClaims Without Giving Jones an Opportunity to Respond.

First, on its de novo review, this Court should conclude that the district court

erred when it dismissed Jones' bad faith claims on State Farm's renewed motion for

summary judgment because the district court did not give notice that it may grant

summary judgment to State Farm on Jones' bad faith claims, even when State Farm


19

did not move for summary judgment on those claims, and did not give Jones a

reasonable time to respond.

The 2010 amendments to the Federal Rules of Civil Procedure substantially

revised Rule 56. One of the important modifications was to Fed. R. Civ. P. 56 (f).

That rule provides:

(f) Judgment Independent of the Motion. After giving notice and areasonable time to respond, the court may:(1) grant summary judgment for a nonmovant;(2) grant the motion on grounds not raised by a party; or(3) consider summary judgment on its own after identifying for theparties material facts that may not be genuinely in dispute.

The advisory committee notes explain that Rule 56 was "revised to improve the

procedures for presenting and deciding summary-judgment motions and to make

the procedures more consistent with those already used in many courts." Id., at

adv. comm. notes. Subdivision (f) was revised to bring "into Rule 56 text a

number of related procedures that have grown up in practice." Id. Specifically,

"[a]fter giving notice and a reasonable time to respond the court may grant

summary judgment for the nonmoving party; grant a motion on legal or factual

grounds not raised by the parties; or consider summary judgment on its own." Id.

Even before the 2010 revisions to Rule 56, the rule implicitly required that

the party that would be adversely affected by the summary judgment order be

given notice and an opportunity to respond. See Celotex Corp. v. Catrett, 477 U.S.

317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (“[D]istrict courts are widely


20

acknowledged to possess the power to enter summary judgments sua sponte, so

long as the losing party was on notice that she had to come forward with all of her

evidence.”); Beaird v. Seagate Tech., Inc., 145 F.3d 1159, 1163-64 (10th Cir.

1998) ("Federal Rule of Civil Procedure 56 implicitly requires the district court to

allow the nonmoving party an opportunity to respond before summary judgment is

entered against it.") (cited authorities omitted); Hall v. Bellmon, 935 F.2d 1106,

1112 (10th Cir. 1991) (explaining that the opposing party must be afforded notice

and an opportunity to respond to a request for summary judgment under Rule 56);

Torres v. First State Bank of Sierra County, 550 F.2d 1255, 1257 (10th Cir. 1977)

(“The provisions of Rule 56(c) for notice to the opposing party and an opportunity

for him to serve opposing affidavits are mandatory. Noncompliance therewith

deprives the court of authority to grant summary judgment.”).

Here, the record demonstrates that the district court did not provide notice to

Jones that it was considering dismissing her Third and Fourth Claims for Relief.

The district court also did not give Jones an opportunity to respond and

demonstrate why dismissing her Third and Fourth Claims for Relief was legally

and factually improper.

Indeed, when it renewed its summary judgment motion, State Farm limited

its argument to the claim that Jones' First and Second Claims for Relief were

barred by the statute of limitations. Aplt. App., at 172-82. State Farm merely


21

suggested that "[a]t the Pretrial Conference on April 25, 2014, the Court dismissed

Plaintiff's bad faith and statutory violation claims and vacated the trial date." Id.,

at 165. This was not the case, however. No dismissal had previously occurred.

In her response, Jones disputed accrual under the statute of limitations

because that was the basis of State Farm's renewed summary judgment motion.

Id., at 198-222. Jones clarified that although “there was discussion regarding

Jones' bad faith claims…, the Court did not dismiss [Jones'] bad faith and statutory

violation claims.” Id., at 199. In its reply brief filed in support of its renewed

summary judgment motion, State Farm acknowledged that “only the accrual date

of the statute of limitations was being addressed in [its] Motion.” Id., at 225. State

Farm clarified that it was requesting entry of judgment against Jones' only on

Jones' First and Second Claims for Relief. Id.

Moreover, the district court itself acknowledged that State Farm had not

moved for summary judgment on Jones' bad faith claims and that those claims

were not before the court on State Farm's renewed summary judgment motion.

Aplt. App., at 260:4-9. The district court further recognized that due process would

require notice and an opportunity to respond. Id., at 262:23-264:8. The district

court nevertheless dismissed Jones' bad faith claims in its November 10, 2014 SJ

Order. Aplt. App., at 271. The district court reasoned that State Farm "has made

an arguable defense to the plaintiff’s claim." Id. But the district court did not


22

previously give Jones notice that it was considering dismissing her bad faith claims

on that basis. The district court also did not give Jones an opportunity to respond

and present legal arguments and facts that would show summary judgment was

improper on that basis.

This Court should reverse the district court's SJ Order as it relates to Jones'

bad faith claims because the district court did not comply with Fed. R. Civ. P. 56(f)

and did not give Jones notice and an opportunity to respond to the question of

whether State Farm was entitled to summary judgment on Jones' bad faith claims.

See Torres, 550 F.2d at 1257; Hall, 935 F.2d at 1108–09; see also Northington v.

Jackson, 973 F.2d 1518, 1522 (10th Cir. 1992) (it is error for a district court to

enter summary judgment without complying with Rule 56 summary judgment

procedures).

C. The District Court Erred When It Dismissed Jones' Bad FaithClaims Because There Was Factual Dispute as to WhetherDefendant State Farm’s Delay or Denial of Benefits wasReasonable Under the Circumstances.

Second, even if the Court does not reverse the district court because of its

failure to comply with Fed. R. Civ. P. 56(f), the Court should reverse the district

court's SJ Order insofar as it dismissed Jones' bad faith claims because there was

substantial evidence in the record to raise a genuine question of material fact as to

whether State Farm’s actions were consistent with the heightened standard of

conduct required in investigating and processing UM/UIM cases.


23

Jones' Third and Fourth Claims for Relief are premised on important public

policy concerns aimed at “protect[ing] the insured from being forced to traverse

undue procedural hurdles and re-litigate matters prior to a recovery under a UM

policy.” State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177, 189 (Colo.

2004); De Herrera v. Sentry Ins. Co., 30 P.3d 167, 174 (Colo. 2001) (citing the

General Assembly’s UM/UIM public policy “to assure the widespread availability

to the insuring public of insurance protection against financial loss caused by

negligent financially irresponsible motorists,” and “[b]ecause of the important

policy behind UM/UIM insurance to protect persons from the often-devastating

consequences of motor vehicle accidents, we have concluded that great weight

must be accorded this legislative intent”). To prevail on her claims, Jones is

required to establish that State Farm breached its duty of “good faith and fair

dealing” and its obligations to timely investigate and process her claim. See id.;

see also Riccatone v. Colorado Choice Health Plans, 2013 COA 133, ¶ 12, 315

P.3d 203, 206.

Notably, the burden on the insured pursing the claim is lower than in other

contexts. See Grund, et. al, West’s Colorado Practice Series: Personal Injury

Practice – Torts and Insurance, 8A Colo. Prac., Personal Injury Torts and

Insurance § 56 (3d ed.); Erin Krisofco, CRS §§ 10-3-1115 and -1116: Providing

Remedies to First-Party Claimants, 39 Colo. Law. 69 (2010) (explaining that the


24

“standard contained in § 1115 arguably is less onerous on the insured, and the

remedies contained in § 1116 are more financially threatening to the insurer than a

traditional common law bad faith claim”). Where a plaintiff has established a

factual dispute as to whether the insurer met those obligations, summary judgment

is inappropriate. Fed. R. Civ. P. 56(c).

Here, there is a factual dispute as to whether State Farm met its obligations

to act in good faith and to timely investigate and process Jones' claim. As an initial

matter, the district court made no factual findings in connection with its SJ Order.

It simply summarily stated that “defendant has made an arguable defense to the

plaintiff’s claim,” and then dismissed the claims. Aplt. App., at 271. As a result,

this Court must review the factual record here to determine whether there are

genuine issues of material fact. Simms, 165 F.3d at 1326; Fed. R. Civ. P. 56.

Jones set forth facts, which are undisputed, and which raise questions as to

whether State Farm unreasonably failed to meet its statutory and contractual

obligations. Specifically, the timeline of denial of payment in and of itself raises

questions as to the propriety of State Farm’s conduct. Jones was injured in an

accident on July 7, 2008. [Doc. 29]. Jones put State Farm on notice of her claim

and the circumstances of the accident – that the accident involved a 13 year-old

driver who was using a car with an unidentified owner – within the month. [Doc.


25

44, Exh. B]. Still, until the Final Judgment from the District Court, State Farm had

not made payments under the policy.3

Additionally, Jones, through counsel, immediately undertook an

investigation into the other individuals involved in the accident to determine

whether they may have coverage. [Doc. 43, Exh. E at 23-37] (describing the

efforts of Jones' first counsel to identify the parties involved in the accident and

ascertain insurance coverage). Jones' second attorney also testified that, although

he did not recall Jones' case specifically, his office would have “done some

investigation” related to the accident report and potentially negligent parties. [Doc.

43, Exh. M at 36-39, 40]. Additionally, Jones' current counsel undertook to

investigate the status of any adverse party’s insurance, and was ultimately to serve

several parties that could potentially have had insurance in the Adams County

Court action. [Doc. 50]. As more fully explained in the briefing on the motion for

summary judgment, all parties were investigating whether there was any applicable

coverage for several years. [Docs. 43, 44, 46-51]. Through that time, State Farm

also continued to investigate whether there was any applicable insurance on the

adverse vehicle. [Doc. 44, Exh. 3; Doc 45, at 7-9].

During the course of these internal and external investigations, State Farm

denied Jones any UM/UIM benefits, despite the fact that State Farm itself

3 Plaintiff notes that, due to the pending appeal, Defendant has not made anypayments to Plaintiff.


26

suspected that there would likely be insufficient coverage. [Doc. 43]. State Farm

initially maintained that it was still investigating whether any adverse party had

coverage, and therefore did not provide any policy benefits to Jones. See e.g.,

[Doc. 44, at Exh. 3, at 000180]. Then, after Jones had initiated the state court suit,

continuing to attempt to comply with her obligations to investigate whether there

was any other policy coverage available, State Farm abruptly switched tactics and

argued Jones' claim was barred by the statute of limitations. [Doc. 44 , at Exh. 3,

at 000034]. Through this approach, State Farm essentially required Jones to

continue to investigate adverse parties and, when the course of doing so took

substantial time, State Farm then argued that Jones had slept on her rights.

State Farm persisted in maintaining its refusal to pay after Mr. Rivera denied

having any applicable coverage, after this suit was launched, and after the district

court denied State Farm's first motion for summary judgment. This course of

conduct raises questions about whether State Farm acted reasonably in

investigating and processing Jones’ claim. Riccatone, 2013 COA 133, ¶ 12.

The record also raises questions regarding whether State Farm met its

obligations in investigating and processing the claim with regard to identifying

potential adverse parties. Specifically, Jones was able, through diligent pursuit of

counsel, to locate and serve Luis Rivera, Karen Barrios, and her parents. [Doc. 50].

Upon information and belief, State Farm was never able to contact any of those


27

parties. As a result, material questions of fact exist as to whether State Farm met

its investigation obligations.

Additionally, as described more fully below, Jones obtained and submitted

expert testimony that would have supported the fact that State Farm's actions were

not in good faith. [Doc. 39]. Specifically, Jones identified Mr. Hemmat, who is an

expert in pursuing UM/UIM claims and who was disclosed to provide testimony

regarding Jones’ claims. Although Mr. Hemmat was primarily disclosed to

address opinions regarding when it is reasonable for an insured to know that an at

fault driver should have insurance, his expertise, qualifications, and testimony also

provide factual support for the premise that State Farm failed to act in good faith in

evaluating Plaintiff’s UM/UIM claim.

Finally, State Farm’s own position in briefing the summary judgment

motion undermines any defense to the bad faith claims. Through its briefing, State

Farm maintained that Jones should have known of the lack of insurance from any

adverse party, and therefore, filed suit against State Farm earlier. [Doc. 43, 46]. If

State Farm seeks to charge Jones with certain knowledge – that there was

insufficient insurance coverage from the adverse driver/involved parties in July,

2011 – then State Farm must surely be held to have the same knowledge. Despite

seeking to impute such knowledge to Jones as early as the date of the accident,

State Farm refused to provide any benefits to Jones through the pendency of the


28

underlying district court lawsuit. [Docs. 29 (re: no payment) & 46 (re: charged

date of knowledge)]. State Farm cannot maintain that there was no coverage in

place and simultaneously submit that it was justified in denying the contractual

benefit, which only applies when there is no coverage in place. To permit State

Farm to avoid the illogical conclusion borne out by these inconsistent positions

would undermine the public policy principles central to Jones’ claims.

Jones has established genuine issues as to the material fact of whether State

Farm satisfied its statutory and contractual obligations. Fed. R. Civ. P. 56(c) . If

Jones had been provided notice by the district court that it was considering

dismissing her bad faith claims, she would have identified all these legal arguments

and facts for the district court. Regardless, because Jones has submitted “evidence

upon which a jury could properly find for” Jones, dismissal of her bad faith claims

at the summary judgment stage was inappropriate. Century 21, 315 F.3d at 1278.

Therefore, this Court should reverse the district court’s SJ Order and reinstate

Jones' Third and Fourth Claims for Relief.

D. The Finding that State Farm Set Forth an “Arguable Defense” toJones' Claims Does Not Establish a Lack of Factual Dispute.

The district court held that because State Farm had set forth an “arguable

defense” to Jones' Third and Fourth Claims for Relief, those claims should be

dismissed. [Doc 51]. This approach misapprehends the framework for evaluation

of bad faith claims.


29

In resolving claims for bad faith, the appropriate analysis must focus on

whether an insured has met the lowered burden of establishing that the insurer

failed to act in good faith and timely investigate and process her claims.

Riccatone, 2013 COA 133, ¶ 12.; Brekke, 105 P.3d at 189. The appropriate

analysis of such claims at the summary judgment stage should not be tied to

whether the defendant articulated an “arguable defense.” See id.; [Doc 51].

Instead, a court should only grant summary judgment where there is no “‘evidence

upon which a jury could properly find for the nonmoving party.’” Century 21, 315

F.3d at 1278. To permit dismissal of Jones' Third and Fourth Claim’s for Relief

based on the existence of an “arguable defense” confuses the ultimate resolution of

the claim with the appropriate inquiry: whether Jones has demonstrated some basis

upon which a jury could find in her favor. See id. Because the dismissal

erroneously evaluated the merit of the various parties’ positions rather than

assessing whether there was evidence that could support Jones' position, this Court

should reverse the district court’s SJ Order and reinstate Jones’ Third and Fourth

Claims for Relief.

2. The District Court Erred In Ruling That Plaintiff’s Expert TestimonyWas Inadmissible.


An appellate court reviews the admission or exclusion of expert testimony

for abuse of discretion. United States v. Arney, 248 F.3d 984, 990 (10th Cir.


30

2001). Trial courts abuse their discretion if an evidentiary ruling was “‘arbitrary,

capricious, whimsical or manifestly unreasonable’” or if the court “‘made a clear

error of judgment or exceeded the bounds of permissible choice in the

circumstances.’” Dodge, 328 F.3d at 1223 (quoting Atl. Richfield Co. v. Farm

Credit Bank of Wichita, 226 F.3d 1138, 1163-64 (10th Cir. 2000)).

The Daubert standard applies to all expert testimony. Kumho Tire Co. Ltd.

v. Carmichael, 526 U.S. 137, 147 (1999). Under Daubert, judges must act as a

“gatekeepers” by evaluating testimony and “ensur[ing] that the proffered evidence

is both ‘reliable’ and ‘relevant.’” Hollander v. Sandoz Pharm. Corp., 289 F.3d

1193 1204 (10th Cir. 2002) (quoting Daubert v. Merrell Dow Pharm. Inc., 509

U.S. 579, 589 (1993)). Relevance is evaluated based on “whether [the] reasoning

or methodology properly can be applied to the facts at issue.” Id. (quoting

Daubert, 509 U.S. at 593)). When weighing the reliability of an expert’s opinions,

the trial court considers whether the expert’s testimony is “based on sufficient facts

or data,” whether the expert used “reliable principles and methodologies,” and

whether the expert “reliably applied these principles and methods to the facts of the

case.” F.R.E. 702. The trial court “has discretion in how it conducts the gatekeeper

function” but “has no discretion to avoid performing the gatekeeper function.”

Dodge v. Cotter Corp., 326 F.3d 1212, 1223 (10th Cir. 2003) (citing Kumho Tire,

526 U.S. at 159-59)).


31

An appellate court reviews de novo whether the District Court performed its

“gatekeeper function.” Id. (citing Goebel v. Denver & Rio Grande W. R.R. Co.,

215 F.3d 1083, 1087 (10th Cir. 2000)). The trial court “must adequately

demonstrate by specific findings on the record that it has performed its duty as

gatekeeper.” Goebel, 215 F.3d at 1088. “Without specific findings or discussion on

the record, it is impossible on appeal to determine whether the district court

carefully and meticulously reviewed [the evidence] or simply made an off-the-cuff

decision.” Id. (citation omitted). The trial court must make “some kind of

gatekeeping reliability determination under Daubert with respect to all expert

testimony.” United States. v. Velarde, 214 F.3d 1204, 1208 (10th Cir. 2000), cert.

denied, 541 U.S. 1069 (2004) (emphasis added). Failing to make a reliability

determination on the record is an abuse of discretion. Id.; Goebel, 215 F.3d at

1088 (finding abuse of discretion where the district court excluded expert

testimony and there was “not a single explicit statement on the record to indicate

that the district court ever conducted any form of Daubert analysis whatsoever”).

B. Jones’ Expert Testimony Should Not Have Been PrecludedBecause It is Admissible to Show That a Reasonable InsuredShould Not Be Expected To Know That The At-Fault Driver DidNot Have Insurance Coverage Until Copies Of The RelevantInsurance Policies Were Provided And A Necessary Review CouldBe Performed.

Here, the district court failed in performing its “gatekeeper” function. The

evidence in the record demonstrates that Mr. Hemmat’s testimony should not have


32

been excluded because it was both relevant and reliable, based on sufficient facts

and data, and used reliable principles and methods which were applied to the facts

of this case. See F.R.E. 702.

In striking Mr. Hemmat, the district court made “no specific findings or

discussion on the record,” and therefore “it is impossible on appeal to determine

whether the district court carefully and meticulously reviewed [the evidence] or

simply made an off-the-cuff decision.” Goebel, 215 F.3d at 1088. Like in Goebel,

the district court’s ruling regarding Mr. Hemmat does not contain “a single explicit

statement on the record to indicate that the district court ever conducted any form

of Daubert analysis whatsoever.” Id. The district court’s failure to make “some

kind of gatekeeping reliability determination under Daubert with respect to [Mr.

Hemmat’s] expert testimony” represents an abuse of discretion. Velarde, 214 F.3d

at 1208; Goebel, 215 F.3d at 1088.

Had the district court engaged in the required analysis, it should have

determined that Mr. Hemmat’s testimony was both “reliable” and “relevant” and

should have been included. F.R.E. 702. Specifically, Mr. Hemmat was deposed

regarding his proposed testimony and opinions in connection with the underlying

matter. Aplt. App., at 284-361. At the deposition, Mr. Hemmat provided

testimony explaining his background, experience, and expertise with regard to the

issues that formed the basis of Plaintiff’s Complaint. Id. He testified regarding the


33

typical process of investigating and assess adverse parties’ potential coverage in

the context of determining whether there may be applicable UM/UIM coverage.

Id. He also provided specific opinions regarding the propriety of actions by both

Jones and State Farm. Id. This evidence is “reliable,” as required by Daubert,

because it was based on sufficient facts or data,” “reliable principles and

methodologies,” and Mr. Hemmat “reliably applied these principles and methods

to the facts of the case.” F.R.E. 702. Further, it is “relevant” because it has some

tendency to make a material fact of consequence more or less likely – specifically

it addresses the reasonableness of both Jones' and State Farm's actions. The district

court erred in excluding this testimony, particularly when State Farm did not move

for the exclusion of his testimony.

3. The District Court Erred in Ruling That Interest Should be Calculatedfrom the Date of the Judgment in the Trial Court Matter.


Interest questions in a suit on a contract brought in federal court are to be

determined by state law, whether jurisdiction is founded on a federal question or

diversity of citizenship. Rocky Mt. Tool & Mach. Co. v. Tecon Corp., 371 F.2d

589 (10th Cir. 1966). The district court erroneously concluded that Jones was not

entitled to prejudgment interest and calculated post judgment interest from the date


34

of the district court’s Final Order. Thus, the district court’s Final Judgment must

be reviewed as an abuse of discretion or clear error.

B. Prejudgment Interest Should Have Been Calculated from theDate of the Wrongful Withholding, which was the Date of theAdams County District Court Order on August 17, 2012.

The district court erred when it failed to include prejudgment interest and by

calculating only post judgment interest due to Jones from the date of its Final

Judgment. Under Colorado law, which applies to this diversity case, prejudgment

interest is recoverable for an insurer's failure to pay UIM benefits when due.

USAA v. Parker, 200 P.3d 350, 359-60 (Colo. 2009). Colo. Rev. Stat. § 5-12-

102(1)(a) specifies that where, as here, money or property is wrongfully withheld,

"interest shall be an amount which fully recognizes the gain or benefit realized by

the person withholding such money or property." This language, which allows for

a higher interest rate than otherwise statutorily authorized, codifies the common

law concept of "moratory interest." See Davis Cattle Co. v. Great W. Sugar

Co., 393 F.Supp. 1165, 1186-87 (D. Colo. 1975), aff'd, 544 F.2d 436 (10th Cir.

1976) (applying Colorado law). This section is intended to provide for award of

interest from the time plaintiffs were wronged. Combined Com. Corp. v. Pub. Serv.

Co., 865 P.2d 893, 901 (Colo. App. 1993); Porter Constr. Servs. v. Ehrhardt,

Keefe, Steiner, & Hottman, P.C., 131 P.3d 1115, 1117-1118 (Colo. App. 2005). A

purpose of statutory interest is to discourage delaying payment of a claim. Mesa


35

Sand & Gravel v. Landfill, Inc., 776 P.2d 362, 364 (Colo. 1989); Michaelson v.

Michaelson, 884 P.2d 695, 703 (Colo. 1994); Stansbury v. Comm'r of Internal

Rev., 102 F.3d 1088 (10th Cir. 1996); Scott v. Comm'r of Internal Rev., 236 F.3d

1239, 1242 (10th Cir. 2001); Ross v. Old Republic Ins. Co., 134 P.3d 505, 512

(Colo. App. 2006), aff'd on other grounds, 180 P.3d 427 (Colo. 2008).

Where money is wrongfully withheld, prejudgment interest begins to run

from the date of the wrongful withholding. Prejudgment interest is available under

the statute from the time a claim accrues, and the prevailing party is not required to

establish tortious conduct on the part of the losing party in order to recover. In an

action on a contract, the non-breaching party is entitled to recover interest from the

time of the breach. Mesa Sand, 776 P.2d at 364.

Under the policy at issue here, State Farm agreed to “pay damages for bodily

injury an insured is legally entitled to collect from the owner or driver of the

uninsured motor vehicle. The bodily injury must be sustained by an insured and

caused by the accident arising out of the operation, maintenance or use of an

uninsured motor vehicle.” Aplt. App., at 383.

A default damages hearing was held on June 25, 2012 to determine the

amount of damages owed to Jones and caused by the accident at issue in this case.

State Farm was an active participant in the damages hearing, challenging causation

as well as relatedness of the damaged alleged by Jones. See Aplt. App., at 15-18,


36

22-27, 34-45. After testimony by one of the tortfeasors, Luis Rivera, all parties

were informed that there was no insurance on the vehicle driven by the minor,

Karen Barrios. Furthermore, the state court issued its Order on August 17, 2012

awarding Jones $74,651.78 in damages related to the July 7, 2008 automobile

accident. Id., at 455. At that time, State Farm owed Jones UM/UIM benefits;

however, such payment was withheld.

The purpose of prejudgment interest in this situation is to compensate Jones

for the use of money to which the she is entitled. For a plaintiff to recover

moratory interest under § 5-12-102(1)(a), the plaintiff must demonstrate the

defendant's gain or benefit realized on the withheld funds by a preponderance of

the evidence. Patterson v. BP America Production Co., 2015 COA 28, ¶ 23

(Colo. App. March 12, 2015) (citing E.B. Jones Constr. Co. v. City & Cnty. of

Denver, 717 P.2d 1009, 1015 (Colo. App. 1986)). Here, State Farm accepted

insurance premiums for UM/UIM benefits, thereby obtaining a “gain or benefit” in

the breach of the contract. See Mesa Sand, 776 P.2d at 364; (citing C.R.S. § 5-12-

102). To date, Jones continues to pay monthly premiums for UM/UIM benefits to

State Farm.

The district court did not award prejudgment interest, only post-judgment

interest on its Final Judgment. The district court therefore erred.


37

VII. CONCLUSION.

Jones respectfully requests this Court reverse the district court's SJ Order

insofar as it dismissed Jones' Third and Fourth Claims for Relief, asserting

statutory and common law bad faith claims. Jones also respectfully requests this

Court reverse the district court's ruling precluding Jones' expert from testifying.

Finally, Jones respectfully requests this Court reverse and remand for a correct

calculation of prejudgment interest.

VIII. REQUEST FOR ORAL ARGUMENT.

This case presents important questions of law and procedure, particularly as

it relates to the district court's failure to give Jones notice and an opportunity to

respond when the district court was considering dismissing her Third and Fourth

Claims for Relief. Jones was deprived of an opportunity to respond to the district

court's consideration below. Jones respectfully requests oral argument in this case

so her counsel can elucidate important issues in the record and respond to

anticipated arguments from State Farm. Jones submit the decisional process would

be significantly aided by oral argument.

IX. CERTIFICATION OF COMPLIANCE.

The undersigned hereby certifies that this brief complies with the word count

page limitations set forth in Fed. R. App. P. 32(a)(7)(B) because it does not contain


38

more than 14,000 words as determined by the word or line count of the word-

processing system used to prepare the brief.

Respectfully submitted this 30th day of June, 2015.

/s Meredith A. QuinlivanMeredith A. QuinlivanGAIENNIE LAW OFFICE, LLC3801 East Florida Avenue, Suite 100Denver, Colorado 80210(303) 455-5030Attorney for Plaintiff-AppellantGladys Jones

/s Troy R. RackhamTroy R. RackhamFENNEMORE CRAIG, PC1700 Lincoln Street, Suite 2900Denver, CO 80203(303) 291-3200Attorney for Plaintiff-AppellantGladys Jones

Electronically signed pursuantto 10th Cir. R 25.3


39

CERTIFICATE OF SERVICE

I hereby certify that a copy of this OPENING BRIEF OF APPELLANTGLADYS JONES was served on June 30, 2015 via CM/ECF addressed to:

Franklin D. Patterson, Esq.5613 DTC Parkway, Suite 400Greenwood Village, CO [email protected]

(See Fed. R. App. P. 25(b))

s/Andrew McFaddenAndrew McFadden


1

Appeal Nos. 15-1006 and 1007

IN THE UNITED STATES COURT OF APPEALSFOR THE TENTH CIRCUIT

GLADYS JONESPlaintiff-Appellant

vs.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANYDefendant-Appellee

APPEAL FROM THE UNITED STATED DISTRICT COURTFOR THE DISTRICT OF COLORADO

HONORABLE RICHARD P. MATSCH, SENIOR DISTRICT JUDGEDISTRICT COURT CASE NO. 2013-CV-577-RPM

ERRATA SHEET TO OPENING BRIEF OF APPELLANTGLADYS JONES

ORAL ARGUMENT REQUESTED

Meredith A. Quinlivan, (#38016) Troy R. Rackham, (#32033)GAIENNIE LAW OFFICE, LLC FENNEMORE CRAIG, PC3801 East Florida Avenue, Suite 100 1700 Lincoln Street, Suite 2900Denver, Colorado 80210 Denver, Colorado 80203(303) 455-5030 (303) 291-3200Attorney for Plaintiff-Appellant Attorney for Plaintiff-AppellantGladys Jones Gladys Jones

Appellate Case: 15-1006 Document: 01019456255 Date Filed: 07/08/2015 Page: 1 Appellate Case: 15-1006 Document: 01019456352 Date Filed: 06/30/2015 Page: 1

2

CERTIFICATION OF ELECTRONIC SERVICE OF APPELLANT'SOPENING BRIEF

I hereby certify that Appellant's Opening Brief was filed with respect to the to thefollowing:

(1) All required privacy redactions have been made (see 10th Cir. R. 25.5);(2) Any required paper copies to be submitted to the court are exact copies of theversion electronically submitted (see ECF User Manual, Section II, Policies andProcedures for Filing via ECF, Part I (b), page 11-12); and(3) The electronic submission was scanned for viruses with the most recent versionof a commercial virus scanning program and is free of viruses (see ECF UserManual, Section II, Policies and Procedures for Filing via ECF, Part I (b), pages11-12).



3

CERTIFICATION OF ELECTRONIC SERVICE OF ERRATA TOAPPELLANT'S OPENING BRIEF

I hereby certify that the Errata to Appellant's Opening Brief was filed with respectto the following:

(1) All required privacy redactions have been made (see 10th Cir. R. 25.5);(2) Any required paper copies to be submitted to the court are exact copies of theversion electronically submitted (see ECF User Manual, Section II, Policies andProcedures for Filing via ECF, Part I (b), page 11-12); and(3) The electronic submission was scanned for viruses with the most recent versionof a commercial virus scanning program and is free of viruses (see ECF UserManual, Section II, Policies and Procedures for Filing via ECF, Part I (b), pages11-12).



4

CERTIFICATE OF SERVICE

I hereby certify that a copy of this ERRATA SHEET TO OPENING BRIEF OFAPPELLANT GLADYS JONES was served on July 8, 2015 via CM/ECFaddressed to:

Franklin D. Patterson, Esq.5613 DTC Parkway, Suite 400Greenwood Village, CO [email protected]

(See Fed. R. App. P. 25(b))



IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLORADO

Senior District Judge Richard P. Matsch

Civil Action No. 13-cv-00577-RPM

GLADYS JONES,

Plaintiff,

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

Defendant.____________________________________________________________________________

ORDER FOR ENTRY OF FINAL JUDGMENT____________________________________________________________________________

Pursuant to this Court’s order on summary judgment, entered November 10, 2014, [Doc.

51], the defendant’s position regarding the amount of judgment [Doc. 52] and the plaintiff’s

position regarding proposed amount of judgment [Doc. 56], and the final finding and conclusion

that the amount of judgment should be the policy limit, it is

ORDERED that final judgment shall enter for the plaintiff and against the defendant in

the amount of $100,000.00, plus costs and post-judgment interest.

Dated: December 12, 2014

BY THE COURT:

s/Richard P. Matsch

________________________________Richard P. Matsch, Senior District Judge


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