American Family Mutual Insurance Company, Inc. v. Denver Haslam et al

Filing 357

ORDER. Plaintiff/Counter-Defendant American Familys Objection to Magistrate Judges Order Denying Motion for Leave to File Designation of Nonparties 320 is OVERRULED. Magistrate Judge Hegartys Order Denying Motion for Leave to File Designation of Nonparties 310 . Plaintiff/Counter-Defendant American Familys Motion to Consolidate Cases for Trial Pursuant to Fed. R. Civ. P. 42(a) 323 is DENIED. By Judge David M. Ebel on 8/12/2011.(sah, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 09-cv-00724-DME-MEH

AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation,
Plaintiff,
v.
DENVER HASLAM
COMMERCIAL CAPITAL, INC.
ONEWEST BANK, FSB
DEUTSCHE BANK NATIONAL TRUST COMPANY
Defendants;
DENVER HASLAM
Counter-Claimant,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation,
Counter-Defendant;
ONEWEST BANK, FSB
DEUTSCHE BANK NATIONAL TRUST COMPANY,
FALL RIVER VILLAGE COMMUNITIES, LLC,
Cross-Claimants,
v.
DENVER HASLAM,
Cross-Claim Defendant.

ORDER OVERRULING OBJECTION TO MAGISTRATE JUDGE’S ORDER
DENYING MOTION FOR LEAVE TO FILE DESIGNATION OF NONPARTIES AND
DENYING MOTION TO CONSOLIDATE CASES FOR TRIAL
This matter comes before the Court on Plaintiff/Counter-Defendant American Family’s
Objection to Magistrate Judge’s Order Denying Motion for Leave to File Designation of
Nonparties [Doc. 320] and the parties’ respective briefs addressing that order. Pursuant to
Colorado Revised Statute § 13-21-111.5(3)(b), American Family had sought leave to designate
Mikel Mewbourn as a nonparty. After fully considering the parties’ arguments and for the
reasons stated below, the Court OVERRULES the objection and AFFIRMS Magistrate Judge
Hegarty’s order.
Also at issue is Plaintiff/Counter-Defendant American Family’s Motion to Consolidate
Cases for Trial Pursuant to Fed. R. Civ. P. 42(a) [Doc. 323] and the parties’ respective briefs on
that issue. Pursuant to Federal Rule of Civil Procedure 42(a), American Family seeks to
consolidate for trial this case, American Family Mutual Insurance Company v. Haslam, No. 09cv-00724-DME-MEH, with American Family Mutual Insurance Company v. Mewbourn, 11-cv00522-MSK-KMT. For the reasons stated below, the Court DENIES this motion.
I. BACKGROUND
Plaintiff American Family Mutual Insurance Company, Inc. (American Family) initiated
this suit seeking a declaratory judgment that a homeowner’s insurance policy issued to Denver
Haslam should be void ab initio. The insurance policy covers a property destroyed by fire on
November 6, 2008. American Family alleges that Haslam, along with Commercial Capital, Inc.,
Michael Mewbourn, and M&B Development, Inc., concealed and misrepresented material facts

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in an effort to induce American Family to issue the insurance policy. Therefore, American
Family contends that the defendants’ conduct violated the fraud clause of the policy, which
releases American Family from its obligations. Finally, American Family argues that Haslam
failed to cooperate in the investigation of the fire, which is a breach of the policy and also
releases American Family from its obligations. Haslam filed counterclaims against American
Family based on its refusal to pay the fire claim.
The Court previously granted Mewbourn and M&B Development’s motion for summary
judgment concerning American Family’s claims against them. After that, American Family
moved for leave to designate Mewbourn as a nonparty pursuant to Colorado Revised Statute
§ 13-21-111.5(3)(b). American Family’s motion to add Mewbourn as a nonparty relates to the
counterclaim that Haslam filed against American Family for bad faith breach of insurance
contract. Magistrate Judge Hegarty denied the motion for leave, and American Family timely
objected.
Shortly after the Court granted Mewbourn’s motion for summary judgment, American
Family filed a new suit in the United States District Court for the District of Colorado against
Mewbourn based on similar allegations though requesting monetary damages instead of
declaratory relief. See American Family Mutual Insurance Co. v. Mewbourn, No. 11-cv-00522MSK-KMT [Doc. 1]. After filing this new suit against Mewbourn, American Family filed a
motion in this Court requesting that the two cases be consolidated. On August 3, 2011, the Court
heard arguments concerning both of these issues.
II. DISCUSSION
A. Designation of Nonparties

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A “district judge . . . must consider timely objections and modify or set aside any part of
[a magistrate judge’s pretrial order] that is clearly erroneous or is contrary to law.” Fed. R. Civ.
P .72(a). An order is clearly erroneous when the court reviews “the entire evidence [and] is left
with the definite and firm conviction that a mistake has been committed.” Ocelot Oil Corp. v.
Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir. 1998) (internal quotation marks omitted). Both
parties agree that this Court is reviewing a purely legal determination of the magistrate judge.
[Docs. 354, 355.] The Court reviews such a determination under the contrary to law prong of
Rule 72(a), which merits an independent review of the magistrate’s order.
The Court independently reviewed the magistrate’s order, all of the briefs submitted, and
the parties’ oral arguments. As an initial matter, the Court is not convinced that C.R.S. § 13-21111.5(3)(b) applies to contract claims in addition to torts. But even assuming C.R.S. § 13-21111.5(3)(b) applies to contract claims, the Court concludes that American Family failed to
establish a prima facie case that Mewbourn breached a legal duty for the injuries at issue in
Haslam’s counterclaim. Thus, for substantially the same reasons stated by the magistrate judge,
the Court overrules American Family’s objection.
B. Consolidation of Cases
Pursuant to Federal Rule of Civil Procedure 42(a), when “actions before the court involve
a common question of law or fact, the court may . . . (1) join for hearing or trial any or all matters
at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid
unnecessary cost or delay.” Fed. R. Civ. P. 42(a). The decision to grant or deny consolidation is
a matter within the trial court’s sound discretion. Shump v. Balka, 574 F.2d 1341, 1344 (10th
Cir. 1978). A motion to consolidate should be decided by the district judge in the oldest

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numbered case of the cases proposed for consolidation, which for this motion would be this
Court. D. Colo. L. Civ. R. 42.1.
American Family argues that consolidation is appropriate because both cases involve
common questions of law and fact. American Family points out that both suits arise from the
fire that destroyed the home at 5301 South University Boulevard, Greenwood Village, Colorado,
on November 6, 2008. Further, American Family points out that the attorneys are the same in
both cases, witnesses will overlap, and similar documents will be or have been produced.
All of the defendants in this case oppose the motion. The defendants argue that this
motion is “a blatant attempt by American Family to avoid the consequences of Judge
Blackburn’s summary judgment in Mewbourn’s favor.” [Doc. 341 at 3.] The defendants also
argue that consolidation would prejudice them because the two cases are at different procedural
stages, the simultaneous trial of both cases would create a risk of inconsistent judgments, and the
addition of Mewbourn, who would be a pro se defendant, would complicate and delay the trial of
this matter.
After considering all of the parties’ arguments, the Court determines that the motion
should be denied. Consolidating these cases would hinder judicial efficiency and prejudice the
defendants. This matter has now been pending for almost two and a half years. As soon as
practicable for Commercial Capital, Inc., 1 a trial will be expeditiously set and the Court will no

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The most recent delay in this case resulted from the parties informing the Court that Defendant
Commercial Capital, Inc. (CCI) filed for bankruptcy and, thus, the automatic stay prevented the
case from going to trial. On May 24, 2011, the bankruptcy court granted CCI conditional relief
from the automatic stay. Therefore, this case can once again move forward but can only proceed
to trial once CCI has had an opportunity to file responsive pleadings and conduct discovery.

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longer tolerate unnecessary delays. Thus, the Court denies American Family’s motion to
consolidate.
III. CONCLUSION
This Court ORDERS as follows:
1. Plaintiff/Counter-Defendant American Family’s Objection to Magistrate Judge’s Order
Denying Motion for Leave to File Designation of Nonparties [Doc. 320] is
OVERRULED;
2. Magistrate Judge Hegarty’s Order Denying Motion for Leave to File Designation of
Nonparties [Doc. 310]; and
3. Plaintiff/Counter-Defendant American Family’s Motion to Consolidate Cases for Trial
Pursuant to Fed. R. Civ. P. 42(a) [Doc. 323] is DENIED.
Dated this

12th

day of

August , 2011.
BY THE COURT:
s/ David M. Ebel
U. S. CIRCUIT COURT JUDGE
DISTRICT OF COLORADO

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