Opinion
Civil Action 1:21-cv-2523-CMA-SKC
03-01-2023
PACIFIC OCEAN ALAMEDA, LLC, Plaintiff, v. AMGUARD INSURANCE COMPANY AND WESTGUARD INSURANCE COMPANY, Defendants.
RECOMMENDATION RE: PLAINTIFF'S MOTION FOR LEAVE TO AMEND THE COMPLAINT TO ADD CLAIM
S. KATO CREWS UNITED STATES MAGISTRATE JUDGE
Upon referral and before the Court is Plaintiff's Motion seeking leave to amend the Complaint under Colo. Rev. Stat. § 13-21-102(1)(a), to add exemplary damages against both Defendants. [Dkt. 24.] Defendants filed a joint responsive brief opposing the Motion. [Dkt. 32.] As well, the Court holds jurisdiction over this matter under 28 U.S.C. § 1332(a). The Court has carefully reviewed the Motion, pertinent pleadings, docket, and applicable law to find a hearing is unnecessary. Therefore, the Court RECOMMENDS the Motion be DENIED for the reasons further discussed below.
I. Background
This case involves a first-party insurance claim after Plaintiff reported to Defendants that a hailstorm had damaged its commercial property's roofing system. [Dkt. 24 p. 1.] Consequently, Plaintiff sued Defendants for allegedly refusing payment owed under the applicable insurance policy by asserting claims for breach of contract, common law bad faith, and unreasonable delay and denial of payment under Colo. Rev. Stat. §§ 10-3-1115 and -1116. [Dkt. 1 pp. 11-12, 14.] Plaintiff now seeks leave to amend the Complaint by arguing it proffers prima facie evidence sufficiently demonstrating Defendants' actions were willful and wanton to support adding exemplary damages under Colo. Rev. Stat. § 13-21-102.
II. Discussion
A. Standard of Review and Applicable Law
When a party moves to amend a complaint to add exemplary damages under Colo. Rev. Stat. § 13-21-102, Colorado law provides, in pertinent part:
A claim for exemplary damages in an action governed by this section may not be included in any initial claim for relief. A claim for exemplary damages in an action governed by this section may be allowed by amendment to the pleadings only after . . . the plaintiff establishes prima facie proof of a triable issue.Colo. Rev. Stat. § 13-21-102(1.5)(a). To obtain exemplary damages, a plaintiff must demonstrate “the injury complained of is attended by circumstances of fraud, malice, or willful and wanton conduct.” Colo. Rev. Stat. § 13-21-102(1)(a). Colorado law defines “willful and wanton conduct” as “conduct purposefully committed which the actor must have realized as dangerous, done heedlessly and recklessly, without regard to consequences, or of the rights and safety of others.” Colo. Rev. Stat. § 13-21-102(1)(b). The Colorado Supreme Court has observed that “[w]here the defendant is conscious of his conduct and the existing conditions and knew or should have known that injury would result, the statutory requirements” are met. Coors v. Sec. Life of Denver Ins. Co., 112 P.3d 59, 66 (Colo. 2005). A plaintiff's prima facie proof of a triable issue, concerning whether a defendant's actions were willful and wanton, must show “a reasonable likelihood that the issue will ultimately be submitted to the jury for resolution.” See Graham v. State Farm Mut. Auto. Ins. Co., No. 19-CV-00920-REB-NYW, 2020 WL 9720368, at *3 (D. Colo. June 30, 2020), report and recommendation adopted, 2021 WL 2092813 (D. Colo. Mar. 31, 2021). At this stage of litigation, the court's task is to determine only whether the plaintiff provided prima facie evidence demonstrating a defendant acted willfully and wantonly, not whether the evidence would sufficiently overcome a motion for summary judgment. See Hendrickson v. Doyle, No. 14-cv-02013-WJM-KLM, 2015 WL 2106225, at *3 (D. Colo. May 4, 2015) (rejecting defendant's argument the plaintiff needed to show a jury could award exemplary damages against defendant beyond a reasonable doubt). In doing so, a court must view the evidence in the light most favorable to the moving party. Coors, 112 P.3d at 66.
B. Analysis
Plaintiff makes three arguments to claim it established prima facie evidence to show Defendants acted willfully and wantonly. First, Plaintiff argues Defendants intentionally concealed, from it, favorable information during claims adjustment. But the favorable information Plaintiff refers to, is Defendants' internal report from their own independent claims adjustor (Mr. Miller) who was assigned by AmGUARD's third-party administrator. And Plaintiff cited no authority, nor did the Court find any, to show AmGUARD was required to produce its internal engineer's report to Plaintiff during its claims adjustment period. See 2506 6th St., LLC v. WestGUARD Ins. Co., No. 21-CV-01673-WJM-MDB, 2022 WL 17335952, at *4 (D. Colo. Nov. 30, 2022) (“Plaintiff does not cite any case which suggests that an insurance company has a duty to share its engineer or adjuster reports with the insured as a matter of course. Likewise, the Court's independent research did not uncover such a case.”) And in doing so, Plaintiff argument fails to support its prima facie case for exemplary damages.
Second, Plaintiff argues Defendants willfully caused it direct and avoidable damage by intentionally failing to act upon information confirming insurance coverage applied. But the evidence Plaintiff presents is the same type of conduct which also supports its underlying common-law-bad-faith claim, and neither does Plaintiff explain the distinction (if any). [Cf. Dkt. 24 (Motion), pp.10-11 with Dkt. 1 (Complaint), ¶¶27-51.] See Graham, 2020 WL 9720368, at *6 (“But a prima facie case of willful and wanton conduct requires more than the same accumulation of bad acts that underlie the claim for common law bad faith.”).
Instead, the Motion appears to simply recast the allegations of common law bad faith, from the Complaint, with labels of “willful” and “intentional” conduct in conclusory fashion. Thus, Plaintiff's argument lacks sufficient facts demonstrating Defendants acted with “conduct purposefully committed which the actor must have realized as dangerous, done heedlessly and recklessly, without regard to consequences, or of the rights and safety of others.” Colo. Rev. Stat. § 13-21-102(1)(b).
In another example, Plaintiff's evidence includes references to its attorney's email to Defendant's (AmGUARD) claims team where the attorney expressed that “[t]he reasonable inference is that AmGUARD does not intend to properly pay this claim.” [Dkt. 24-6 p. 4.] But this evidence merely reveals Plaintiff's attorney's view and does nothing to evidence willful and wanton conduct by Defendants, even if they chose to ignore that view. Plaintiff further argued Defendants' willful and wanton conduct is not an isolated incident, citing (in a footnote) two minute orders from a judicial colleague in this district. But this argument is woefully underdeveloped, and therefore unpersuasive.
In addition, Plaintiff failed to file, as an exhibit, a proposed amended complaint with the Motion as required by the Local Rules of Practice. See D.C.COLO.LCivR 15.1(b). Had it done so, the Court could have further evaluated whether Plaintiff's conclusory allegations of willful and wanton conduct were indeed supported by sufficient factual allegations to satisfy its burden of proof for exemplary damages. Moreover, Plaintiff's failure to follow the Local Rules of Practice is sufficient, on its own, to recommend denying the Motion. See Cont'l Cas. Co. v. Arrowrock, LLC, 19-cv-3631-DDD-MDB, 2022 WL 17975484, at *3, *6 (D. Colo. Dec. 28, 2022) (denying plaintiff's motion to amend the complaint for failing to include a proposed second amended complaint with the motion); Waller v. City and Cnty. of Denver, 14-cv-02109-WYD-NYW, 2015 WL 18116371, at *4 (D. Colo. Apr. 20, 2015) (plaintiff's failure to comply with Local Rule 15.1 is sufficient grounds to strike the motion).
Finally, Plaintiff argues Defendants willfully misrepresented the amount of insurance coverage due to Plaintiff by allocating certain replacement costs to Code Coverage. The Court agrees with Defendants that this argument attempts to elevate a factual dispute into a claim for exemplary damages. But Plaintiff's argument is also a mere use of labels, of intentional and willful conduct, which lack sufficient facts to establish a prima facie case of exemplary damages. Indeed, Plaintiff's argument also describes Defendants' allocation of these costs under Code Coverage as a “mistake,” then making the inferential leap by saying “there is no option but to consider it a willful and reckless disregard of the overwhelming information[.]” [Dkt. 24, p.13.] But again, Plaintiff's Motion makes conclusory allegations of willful and wanton conduct which are unsupported by the facts (or a proposed amended complaint).
The Court recommends finding Plaintiff failed to establish Defendants' purposeful conduct, or intentional acts taken when Defendants must have realized their conduct was dangerous, or their conduct was done heedlessly or recklessly, without regard to consequences or Plaintiff's rights. See Colo. Rev. Stat. § 13-21-102(1)(b); cf. Cunningham v. Std. Fire Ins. Co., No. 07-cv-02538-REB-KLM, 2008 WL 4371929 at *2 (D. Colo. Sept. 23, 2008) (plaintiff's prima facie proof demonstrated defendant's “purposeful failure to drag out” plaintiff's claims by doing nothing, i.e., no investigation, neither paying or denying claims even to the date of the court's order, and disregarding plaintiff's rights even post litigation).
The Court, therefore, RECOMMENDS Plaintiff's Motion be DENIED.