Continental Materials Corporation v. Affiliated FM Insurance Company

Filing 110

ORDER. ORDERED that the Motion 94 is GRANTED in part, DENIED in part, and DENIED WITHOUT PREJUDICE in part, by Magistrate Judge Kristen L. Mix on 9/26/12.(sgrim)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-cv-02900-JLK-KLM
CONTINENTAL MATERIALS CORPORATION,
Plaintiff,
v.
AFFILIATED FM INSURANCE COMPANY,
Defendant.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendant’s Motion to Strike Plaintiff’s
Evidence in Support of its Opposition to Affiliated FM’s Summary Judgment Motion
[Docket No. 94; Filed August 7, 2012] (the “Motion”). On August 31, 2012, Plaintiff filed a
Response [#101]. On September 17, 2012, Defendant filed a Reply [#106]. The Motion
is thus ripe for review. For the reasons set forth below, the Motion [#94] is granted in part,
denied in part, and denied without prejudice in part.
In the Motion, Defendant seeks: 1) to strike the Declaration of Rene Starry (“Starry”)
[#85-1] because it contains inadmissible hearsay; 2) to strike the Supplemental Declaration
of Joseph Sum (“Sum”) [#60-4] and the affidavit of Ronda Larson (“Larson”) [#60-10]
because they lack proper foundation and contain inadmissible conclusory allegations; 3)
to strike evidence submitted by Plaintiff in dispute of the Findings of Fact and Conclusions
of Law of the Mined Land Reclamation Board (“MLRB”) [#55-14] (the “Board Order”); 4) to

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strike documents titled Mining and Basic Metals—Requirement, 875-R-F (at AFM 001575001576) (“FM Global Mining Form”) [#66-12], Example of Land Exclusion Provision (“FM
Global Land Exclusion”) [#66-13], and Property Values Article [#66-9] because they
purportedly are not authentic, contain hearsay, and are irrelevant; and 5) to strike evidence
of other insurance claims based on lack of relevance. Motion [#94] at 2-11. The Court
addresses each argument in turn.1
A.

Declaration of Ms. Starry
Plaintiff filed Ms. Starry’s declaration [#85-1] in support of its Response [#85] in

opposition to Defendant’s pending Motion for Summary Judgment [#74]. Ms. Starry is a
paralegal with Perkins Coie LLP, one of the law firms representing Plaintiff. Decl. of Starry
[#85-1] ¶ 1. In her declaration, she states that on July 6, 2012, she spoke with Jeanine
Lewis (“Lewis”) of the Pikes Peak Regional Building Department in El Paso County,
Colorado, who informed Ms. Starry that “the address of 7350 Pikeview Quarry Road, El
Paso County, Colorado 80919, was issued pursuant to the Building Permit Number B52860
dated May 8, 1991, with a description of the Project being ‘Enclosed Cover at Truck
Garage.’” Id. ¶¶ 3-4.
Defendant seeks to strike the entire declaration because it purportedly contains
inadmissible hearsay. Motion [#94] at 2. However, Defendant only specifies one portion
of the declaration that it asserts is inadmissible hearsay, i.e., the quoted passage above
Id. Hearsay is a statement the declarant does not make while testifying which is offered
in evidence to prove the truth of the matter asserted in the statement. Fed. R. Evid. 801(c).

1

The Court notes that these rulings do not address the admissibility of the evidence at trial.

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Defendant argues that the statement quoted above is repetition of an out-of-court
statement by Ms. Lewis to Ms. Starry which is offered by Plaintiff to establish the truth of
the matter stated therein. Motion [#94] at 2.
Plaintiff responds that the principal purpose of the statement is to introduce the
building permit attached as Exhibit A. Response [#101] at 3. Plaintiff states that it does
not intend to rely on Ms. Lewis’s statement, and that Exhibit A is admissible on its own as
a public record pursuant to the hearsay exception of Fed. R. Evid. 803(8).2 Plaintiff does
not contest that the portion of Ms. Starry’s declaration repeating Ms. Lewis’s statement is
hearsay. The Court therefore finds that Plaintiff has conceded Defendant’s argument on
this point. See, e.g., Parker v. Bd. of County Comm’rs of Shawnee Cnty., Kan., No. 012533-CM, 2002 WL 31527763, at *1 (D. Kan. Nov. 5, 2002).
Accordingly, the Court grants Defendant’s Motion with respect to Ms. Starry’s
declaration and strikes the first sentence of paragraph 4 (“Ms. Lewis informed me that the
address of 7350 Pikeview Quarry Road, El Paso County, Colorado 80919, was issued
pursuant to the Building Permit Number B52860 dated May 8, 1991, with a description of
the Project being ‘Enclose Cover at Truck Garage.’”).
B.

Supplemental Declaration of Mr. Sum and Declaration of Ms. Larson
Plaintiff originally filed Mr. Sum’s supplemental declaration [#60-4] and Ms. Larson’s

declaration [#60-10] in support of its Response [#60] in opposition to Defendant’s Motion

2

The Response and the Reply both devolve into discussion of whether the Building Permit
attached to the declaration as Exhibit A is admissible. Response [#101] at 3-5; Reply [#106] at 2-3.
However, because the original Motion does not present any argument seeking to strike Exhibit A,
discussion by the parties of its admissibility is superfluous, and the Court declines to rule on that
subject.

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for Leave to File Amended Answer [#56]. However, Plaintiff also incorporated these
declarations in its opposition to Defendant’s pending Motion for Summary Judgment [#74].
See Response to MSJ [#85] at 19 & n.1.
1.

Mr. Sum

Mr. Sum is Plaintiff’s Chief Financial Officer, who has worked for the company since
1975. Supplemental Decl. of Sum [#60-4] ¶ 2. The statements presented by Mr. Sum were
purportedly asserted to demonstrate that the address of 7250 Allegheny Drive includes the
90-acre parcel of land with the address of 7350 Pikeview Quarry Road. Motion [#94] at 34. Without any specificity, Defendant argues that Mr. Sum’s declaration “provide[s] no
foundation for the statements and constitute[s] conclusory assertions, which do not
constitute competent evidence for summary judgment consideration.” Id. at 4. Plaintiff,
understandably confused by Defendant’s general statement as to the entire declaration,
speculated that Defendant was contending that paragraphs 4-8 and 10 should be stricken.
Response [#101] at 7. In the Reply, Defendant specified for the first time that it was
referring to paragraphs 5-10 of Mr. Sum’s supplemental declaration. Reply [#106] at 3.
Defendant’s broad, lackadaisical approach is unacceptable, in that it creates uncertainty
in the litigation as well as work for the opposing party and the Court which could easily be
avoided. Because Defendant did not raise objections to any specific paragraphs of Mr.
Sum’s declaration until filing its Reply, the Court considers only the arguments pertaining
to the paragraphs addressed by both parties, i.e., paragraphs 5-8 and 10.
Defendant argues that paragraph 5 is a conclusory statement. Reply [#106] at 3.
A conclusory statement is one based merely on conjecture, speculation, or subjective
belief. Bones v. Honeywell Int’l, Inc., 366 F.3d 869, 875 (10th Cir. 2004). Paragraph 5
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states: “The 7250 Allegheny Drive address properly references both the quarry itself and
the office building.” Supplemental Decl. of Sum [#60-4] ¶ 5. Plaintiff argues that this
statement is not conclusory because it is supported by the facts set forth in paragraphs 6-8
and 10. Response [#101] at 7. The statements in these paragraphs are as follows:
6.
Government agencies such as Mine Safety and Health Administration
and Colorado Division of Mining and Safety use the 7250 Allegheny address
to reference both the quarry and the office building.
7.
Continental, Transit Mix Co. and Castle Concrete Co. have always
used the address of 7250 Allegheny Drive and have never used 0 Pikeview
Quarry Road as the address for the quarry itself.
8.
On those occasions when it is necessary to give directions to an
independent trucker who needs to pick up material at the quarry, the Transit
Mix Co. dispatcher will use the 7250 Allegheny address. This address is also
the delivery address for any operating supplies, repair parts, etc. that are
delivered to the quarry. Also, the 7250 Allegheny address is used to
reference the entire site, including the quarry itself, in financial documents
and was most recently used for such a reference in a credit agreement with
a lender.
10.
The Pikeview Quarry is referenced as 7250 Allegheny Drive on [the
first-party property insurance policy between Defendant and Plaintiff] as a
covered location. I understood this reference to include the entire site,
including the quarry itself, and to my knowledge others at Continental shared
that understanding.
Supplemental Decl. of Sum [#60-4] ¶¶ 6-8, 10. Defendant argues that these paragraphs
contain generalized claims without establishing a foundation for such claims. Reply [#106]
at 3.
Mr. Sum asserts that, having worked for the company since 1975, most currently as
the Chief Financial Officer, he has personal knowledge of the facts stated in his declaration.
Supplemental Decl. of Sum [#60-4] ¶ 1. Although paragraph 5 on its own is conclusory and
contains a conclusion of fact, Mr. Sum appropriately supports his belief in this statement
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with the information provided in paragraphs 6-8 and 10. Defendant proffers no reason why
the asserted facts could not be within Mr. Sum’s personal knowledge as a long-term
employee and high-ranking officer of Continental, and indeed it is logical that he would
have such knowledge. Mr. Sum has provided more than a generalized, unsupported
conclusory set of statements. The Court therefore finds that Mr. Sum’s statements are not
“based merely on conjecture, speculation, or subjective belief.” See Bones, 366 F.3d at
875. Accordingly, the Court denies Defendant’s request to strike any portion of Mr. Sum’s
supplemental declaration [#60-4].
2.

Ms. Larson

Ms. Larson was the Safety Director for Transit Mix Concrete Company, a whollyowned subsidiary of Plaintiff, between August 2006 and January 2011. Decl. of Larson
[#60-10] ¶ 2. As with Mr. Sum, the statements presented by Ms. Larson were purportedly
asserted to demonstrate that the address of 7250 Allegheny Drive includes the 90-acre
parcel of land with the address of 7350 Pikeview Quarry Road. Motion [#94] at 3-4. Again
without supplying the least amount of specificity, Defendant argues that Ms. Larson’s
declaration “provide[s] no foundation for the statements and constitute[s] conclusory
assertions, which do not constitute competent evidence for summary judgment
consideration.” Id. at 4. Plaintiff again was left to guess which paragraphs Defendant was
seeking to strike, but based on Defendant’s general statement assumed that Defendant
was referring to paragraphs 4 and 9. Response [#101] at 5. In its Reply, Defendant
specified for the first time that it was referring to paragraphs 3 and 9 of Ms. Larson’s
declaration. Reply [#106] at 4-5. As previously noted, because Defendant did not object

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to any specific paragraphs of Ms. Larson’s declaration until it filed its Reply, the Court
considers only the argument pertaining to the paragraph addressed by both parties, i.e.,
paragraph 9.
Paragraph 9 states:
I filed numerous reports to state and federal agencies regarding the Pikeview
Quarry. All of these reports show the address as 7250 Allegheny Road,
which is the point where a locked gate to the access road to the quarry and
the buildings (“Pikeview Quarry Road”) intersects Allegheny Drive, the
nearest public street. All the government agencies with which I dealt
accepted 7250 Allegheny Road as the address for the Pikeview Quarry
buildings and quarry itself.
Decl. of Larson [#60-10] ¶ 9. Defendant argues that the last sentence of the paragraph is
an improper inference and not a statement of fact. Reply [#106] at 5. Plaintiff argues that
the sentence merely means that Ms. Larson and governmental agencies all “accepted and
used” the Allegheny address for both the quarry and its buildings. Response [#101] at 4.
Ms. Larson asserts that she has personal knowledge of the facts stated in her
declaration. Decl. of Larson [#60-10] ¶ 1. Although, as Plaintiff asserts, Ms. Larson may
know that government agencies “used” the Allegheny address, the assertion that
government agencies “accepted” the Allegheny address as the true address for both the
quarry and its buildings is speculation on the part of Ms. Larson. She may have good
reason to make this inference, but, in the absence of further evidence, the statement made
in her affidavit attributes to the government agencies a state of mind which is mere
conjecture on Ms. Larson’s part. The Court therefore finds that Ms. Larson has provided
a conclusory statement based on “conjecture, speculation, or subjective belief.” See
Bones, 366 F.3d at 875. Accordingly, the Court denies Defendant’s request to strike the
entirety of Ms. Larson’s declaration [#60-10] but grants the request with respect to the last
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sentence of paragraph 9. The Court therefore strikes the last sentence of paragraph 9
(“All the government agencies with which I dealt accepted 7250 Allegheny Road as the
address for the Pikeview Quarry buildings and quarry itself.”).
C.

Evidence Disputing MLRB’s Determination
On May 13, 2009, the MLRB held a formal hearing on whether Plaintiff’s mining

activities violated the reclamation plan that was in place prior to the accident at the quarry.
See Board Order [#55-14]. The MLRB subsequently issued the Board Order, which
Defendant now avers that Plaintiff is attempting to dispute. Motion [#94] at 5. Defendant
argues that Plaintiff is collaterally estopped from disputing the findings of fact and
conclusions of law made by the MLRB in the Board Order. Id. Plaintiff responds that it is
not estopped from disputing the Board Order but that, regardless, such a dispute is
irrelevant to the pending motions for summary judgment.

Response [#101] at 6.

Defendant seeks to have any evidence offered by Plaintiff which is contrary to the Board
Order stricken from the record.3 Motion [#94] at 4; Reply [#106] at 5.
Issue preclusion, or collateral estoppel, “bars ‘successive litigation of an issue of fact
or law actually litigated and resolved in a valid court determination essential to the prior
judgment,’ even if that issue recurs in the context of a different claim.” Taylor v. Sturgell,
553 U.S. 880, 892 (2008) (citation omitted). This doctrine minimizes the possibility of
inconsistent decisions. Id. Collateral estoppel is “the effect of a judgment in foreclosing
relitigation of a matter that has been litigated and decided.” Marrese v. Am. Acad. of

3

Defendant seeks to strike all or portions of Ex. 4, Wren Depo. [#85-4]; Ex. 5, Schnabel
Depo. [#85-5]; Ex. 8, Exponent Report [#85-8]; and Ex. 12, Mined Land Reclamation Board Meeting
[#85-10]. See Plaintiff’s Opposition to Defendant’s Motion for Summary Judgment [#85] at 8.

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Orthopaedic Surgeons, 470 U.S. 373, 376 n.1 (1985). “Under collateral estoppel, once a
court has decided an issue of fact or law necessary to its judgment, that decision may
preclude relitigation of the issue in a suit on a different cause of action involving a party to
the first case.” Allen v. McCurry, 449 U.S. 90, 94 (1980). In other words, “[w]hen an issue
of ultimate fact has once been determined by a valid and final judgment, that issue cannot
again be litigated between the same parties in any future lawsuit.” Ashe v. Swenson, 397
U.S. 436, 443 (1970).
“In considering collateral estoppel, we must first determine whether to apply federal
or state law.” Murdock v. Ute Indian Tribe of Uintah & Ouray Reservation, 975 F.2d 683,
687 (10th Cir. 1992). Here, Colorado state law controls because the ruling Defendant
seeks to have enforced was entered in a Colorado state administrative proceeding. See
id; see also Sunny Acres Villa, Inc. v. Cooper, 25 P.3d 44, 47 (2001) (“Although originally
developed in the context of judicial proceedings, issue preclusion is just as viable in
administrative proceedings and may bind parties to an administrative agency's findings of
fact or conclusions of law.”). In Colorado, collateral estoppel bars relitigation of an issue
if:
(1) the issue sought to be precluded is identical to an issue actually and
necessarily determined in a prior proceeding; (2) the party against whom
estoppel is asserted was a party to or is in privity with a party to the prior
proceeding; (3) there was a final judgment on the merits in the prior
proceeding; and (4) the party against whom the doctrine is asserted had a full
and fair opportunity to litigate the issue in the prior proceeding.
In re Tonko, 154 P.3d 397, 405 (Colo. 2007). The party asserting estoppel has the burden
of setting forth facts sufficient to satisfy the elements of collateral estoppel. Bebo Constr.
v. Mattox & O'Brien, P.C., 990 P.2d 78, 85 (Colo. 1999).
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With regard to the fourth element, Colorado law is well-settled that in order for a
party to have had a full and fair opportunity to litigate an issue, the “party against whom
collateral estoppel is asserted . . . [must have] had the same incentive to vigorously defend
itself in the previous action.” Sunny Acres Villa, 25 P.3d at 47. Where a party’s exposure
to liability is substantially less at a prior proceeding, either in terms of potential monetary
awards or differences in the finality of judgment, the party necessarily lacked the same
incentive to vigorously defend itself. Id. at 47-48 (collecting cases). The Colorado
Supreme Court has explicitly repudiated the idea that collateral estoppel should always be
used in connection with decisions made in administrative decisions: “Although the incentive
to vigorously defend might be artificially created by the operation of collateral estoppel
principles, augmenting a party’s incentive to litigate in the first instance would undermine
the very purpose behind permitting temporary orders or expedited and inexpensive
adjudication of smaller claims in a number of contexts.” Id. at 48.
These considerations apply equally to the adjudication of issues by the MLRB. In
such actions, civil penalties are limited to statutorily prescribed amounts and may only be
imposed based on the occurrence of certain statutorily prescribed events. See C.R.S. 3432.5-124(7) (“A person who violates any provision of a permit issued under this article shall
be subject to a civil penalty of not less than one hundred dollars per day nor more than one
thousand dollars per day for each day during which such violation occurs.”); C.R.S. § 3432.5-116 (listing the duties of mine operators). The application of collateral estoppel to
matters initially addressed in an MLRB hearing would likely compel companies to
vigorously contest initial determinations on small civil penalties and other beneficial

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corrective actions,4 thereby promoting litigation and unduly delaying resolution of these
matters. See Sunny Acres Villa, 25 P.3d at 48. If collateral estoppel were applicable to the
factual findings made during MLRB proceedings, the underlying policies of the MLRB,
which involve narrow issues of law and limited remedies, would be severely undermined.
See id. at 48-49.
In the MLRB proceeding at issue here, Plaintiff was subject to a maximum monetary
penalty of $42,000 pursuant to C.R.S. § 34-32.5-124(7). Board Order [#55-14] at 7. The
MLRB fined Plaintiff $4200, all but $1000 of which was suspended if Plaintiff complied with
various specified corrective actions. Id. at 8. Because Plaintiff risks a substantially greater
amount here than in the proceeding before the MLRB, Plaintiff did not have the same
incentive to vigorously litigate issues there as it does here. See Response [#101] at 9-10.
The Court therefore finds that Colorado law disfavors the application of collateral estoppel
to the MLRB’s findings of fact and conclusions of law under the limited circumstances of
this case. Accordingly, the Court denies Defendant’s request to strike Plaintiff’s exhibits
[#85-4, #85-5, #85-8, #85-10] submitted to dispute the Board Order.
D.

FM Global Documents and Property Values Article
Plaintiff originally filed the FM Global Mining Form [#66-12], the FM Global Land

Exclusion document [#66-13], and the Property Values Article [#66-9] in support of its Reply

4

For example, in the present matter, the MLRB ordered Plaintiff to “provide an amendment
to the permit to revise the mining and reclamation plan . . . [addressing] stabilization of the quarry
and [to] provide a detailed reclamation plan that will meet the performance standards of the
Construction Materials statutes and regulations.” Board Order [#55-14] at 8. These sorts of nonmonetary penalties help to enforce the Mined Land Reclamation Act’s intent of “foster[ing] the
extraction of minerals, the reclamation of mined land, and the protection of human health, welfare,
and the environment.” Colo. Min. Ass’n v. Bd. of Cnty. Com’rs of Summit Cnty., 199 P.3d 718, 726
(Colo. 2009) (citing C.R.S. § 34-32-102(1)).

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[#66] to its Motion for Summary Judgment [#49].5 However, Plaintiff incorporated these
documents in its opposition to Defendant’s pending Motion for Summary Judgment [#74].
See Response to MSJ [#85] at 35-40. In the present Motion, Defendant argues that these
three documents are not properly authenticated, contain hearsay, and are irrelevant.
Motion [#94] at 7.
With respect to authentication, Plaintiff notes in its Response that Defendant agreed
that the two FM Global documents were authentic. Response [#101] at 11. It is unclear
when Defendant made this alleged agreement, but, in its Reply, Defendant does not
dispute this and does not renew an authentication objection to any document. See Reply
[#106] at 7-12. The Court therefore finds that Defendant has conceded that these three
documents are authentic. Accordingly, the Court denies Defendant’s request to strike the
FM Global documents and the Property Values Article on that basis.
Turning to Defendant’s hearsay arguments, neither Plaintiff nor Defendant discusses
Defendant’s inadmissible hearsay arguments in the Response or Reply. In the Motion,
Defendant conclusorily states: “Additionally, as it stands the FM Global documents are
inadmissible hearsay under Fed. R. Evid. 801.” Motion [#94] at 8. Defendant does not
elaborate on this statement or provide any case authority in support of the argument.
Examining the FM Global Mining Form [#66-12] and the FM Global Land Exclusion [#6613], it is not immediately apparent to the Court that these two documents consist of or
contain clearly inadmissible hearsay. However, it is not the responsibility of the Court to
examine the documents for hearsay where Defendant has failed to provide any argument

5

The District Judge denied Plaintiff’s Motion for Summary Judgment [#49] on September
25, 2012. See Order [#109].

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or direct the Court’s attention to any specific portion of the record. See generally Stettler
v. United States, 994 F. Supp. 1364, 1366 (D. Utah 1996). The Court therefore finds that
Defendant’s hearsay argument with respect to the FM Global documents fails.
As for the Property Values Article [#66-9], Defendant is slightly more specific in that
it states: “Moreover, the Property Values Article includes an e-mail between Plaintiff and
its insurance broker and the e-mail constitutes inadmissible hearsay.” Motion [#94] at 9.
Defendant does not elaborate any further on its argument. As noted above, hearsay is a
statement not made by the declarant while testifying at a current trial or hearing which is
offered in evidence to prove the truth of the matter asserted in the statement. Fed. R. Evid.
801(c). Here, the statement meets the first prong of the analysis; the e-mail from Beth
Kellar (“Kellar”) is an out-of court statement. However, there is nothing in Defendant’s
sparse argument to show that the e-mail is offered to prove the truth of the matter asserted
in Ms. Kellar’s statement. Because Defendant does not demonstrate that the e-mail meets
the definition of hearsay contained in Fed. R. Evid. 801(c), Defendant’s argument fails.
Accordingly, the Court denies Defendant’s request to strike the FM Global documents and
the Property Values Article on the basis of inadmissible hearsay.
To the extent that Defendant seeks to have these documents stricken on the ground
of relevance, the undersigned finds that the District Judge is in a better position to address
the relevance issue in the context of the summary judgment ruling. The Court therefore
denies without prejudice Defendant’s argument with respect to the relevance of the FM
Global Mining Form [#66-12], the FM Global Land Exclusion [#66-13], and the Property
Values Article [#66-9].

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E.

Evidence of Other Insurance Claim
Plaintiff originally filed evidence of another insurance claim [#66-17]6 in support of

its Reply [#66] to its Motion for Summary Judgment [#49].7 However, Plaintiff incorporated
this document in its opposition to Defendant’s pending Motion for Summary Judgment
[#74]. See Response to MSJ [#85] at 38-39. In the present Motion, Defendant seeks to
strike evidence of this other insurance claim [#66-17] on the basis of relevance. See
Motion [#94] at 9-11; Reply [#106] at 12-14.
As noted above, to the extent that Defendant seeks to have this evidence stricken
on the ground of relevance, the undersigned finds that the District Judge is in a better
position to appropriately address that argument in the context of the summary judgment
ruling. The Court therefore denies without prejudice Defendant’s argument with respect
to the relevance of any other insurance claim [#66-10].
Accordingly, based on the foregoing,
IT IS HEREBY ORDERED that the Motion [#94] is GRANTED in part, DENIED in
part, and DENIED WITHOUT PREJUDICE in part, as outlined above.
Dated: September 26, 2012

6

Although the parties discuss this argument in the context of multiple “claims,” they only
point to one specific claim in the record, i.e., a claim “involving a retaining wall that was made out
of both non-earth and earth material.” Reply [#106] at 12; see Response [#101] at 17 (citing to
[#66-10]).
7

As previously noted, the District Judge denied Plaintiff’s Motion for Summary Judgment
[#49] on September 25, 2012. See Order [#109].

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