Larson v. OneBeacon Insurance Company

Filing 124

OPINION AND ORDER DISMISSING CLAIM and denying as moot 120 Motion to Strike re 117 Order on Motion for Summary Judgment, by Chief Judge Marcia S. Krieger on 10/7/15.(pglov)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Marcia S. Krieger
Civil Action No. 12-cv-03150-MSK-KLM
DOUGLAS LARSON, in his capacity as Bankruptcy Trustee for the Estate of Cynthia
Coreyn Tester-Lamar,
Plaintiff,
v.
ONE BEACON INSURANCE COMPANY,
Defendant.
OPINION AND ORDER GRANTING DISMISSING
CLAIM UNDER C.R.S. §§ 10-3-1115 and -1116 AND
DENYING AS MOOT MOTION TO STRIKE
THIS MATTER comes before the Court sua sponte following its March 31, 2015, Order
(#117) granting the Defendant’s motion for summary judgment and dismissing the Plaintiff’s
claim for common-law bad faith breach of insurance contract. After a hearing on the motion, the
Court found that the Plaintiff, the Trustee for the Bankruptcy Estate of Ms. Tester-Lamar, could
not assert the common-law bad faith claim on behalf of the bankruptcy estate because the claim
had not yet accrued at the time the bankruptcy petition was filed and therefore the claim was not
property of the estate.1 The Court indicated that the same analysis would apply equally to the
only remaining claim in the case, which is a claim for violation of Colo. Rev. Stat. §§ 10-3-1115
1

Whether the Trustee has standing to assert the claims in this case implicates the Constitution’s
case-or-controversy requirement, which must be met for this Court to exercise its subject-matter
jurisdiction. A federal court’s subject-matter jurisdiction cannot be forfeited or waived by the
parties, and the Court has an independent obligation to address it, no matter the stage of
litigation. See Gad v. Kansas State University, 787 F.3d 1032, 1035 (10th Cir. 2015); The
Wilderness Soc. v. Kane County, 32 F.3d 1162, 1168 & n.1 (10th Cir. 2011). Although the issue
was not raised by the parties in their briefing on the motion for summary judgment, the Court
alerted the parties to the issue when it set the hearing on the motion. See Docket #112. At the
hearing, both parties had an opportunity to, and did, present argument as to whether the claim
was property of the estate. See Transcript, Docket #123.
1

and -1116 (referred to as statutory bad faith). The Court therefore gave notice of its intent to
dismiss the statutory claim unless the “parties make a sufficient showing that the
Trustee/bankruptcy estate has a viable claim.”
In response to the Court’s Order, the Trustee filed a brief regarding the statutory claim
(#119).2 Essentially, the Trustee argues that he has standing to assert the statutory claim because
he believes the claim is property of the bankruptcy estate for the same reasons he believes that
the common-law bad faith claim is property of the estate. Specifically, the Trustee argues that
both claims accrued before Ms. Tester-Lamar filed for bankruptcy, or, alternatively, they are
sufficiently rooted in her pre-petition past so as to be part of the estate.
Both of these arguments were addressed in the March 31, 2015 Order regarding the
common-law bad faith claim. The Trustee has not presented any new argument or rationale as to
why or how the statutory claim should be analyzed differently than the common-law claim.
Instead, the Trustee simply iterates why the common-law bad faith claim should not have been
dismissed and argues that the same reasoning should apply to the statutory claim as well.
To the extent the Trustee seeks reconsideration of the dismissal of the common-law
claim, the Court finds that relief is not warranted. A motion for reconsideration is appropriate
where the court has misapprehended the facts, a party’s position, or the controlling law. It is not
appropriate to revisit issues already addressed or advance arguments that could have been raised
in prior briefing. See Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).
2

The Defendant also filed a brief (#118). As expected, the Defendant argues that the statutory
claim is not property of the bankruptcy estate. (The Defendant also contends that the Trustee
cannot establish that he is entitled to relief under C.R.S. §§ 10-3-1115 and -1116 because Ms.
Tester-Lamar was not a first-party claimant and that he cannot prove that the Defendant acted
unreasonably.) In addition to these arguments, the Defendant requests attorney fees with regard
to the statutory claim pursuant to C.R.S. § 10-1-1116. The Court declines to address the request
for fees at this time. Should the Defendant decide to pursue attorney fees, it may do so by
separate motion that complies with the requirements of D.C.COLO.LCivR 54.3.
2

None of the grounds warranting a motion to reconsider exist here. The Trustee was given an
opportunity to prepare and present his arguments regarding whether the claims were property of
the bankruptcy estate at the hearing on the motion for summary judgment. He advances those
same arguments here, albeit in significant more detail and couched in terms of the statutory
claim. The Court declines, however, to address the same arguments for a second time.
For the forgoing reasons, the Court therefore finds that there has not been a sufficient
showing that the Trustee of Ms. Tester-Lamar’s bankruptcy estate has a viable claim for
statutory bad faith under C.R.S. §§ 10-3-1115 and -1116.3 Accordingly, the claim is
DISMISSED for the same reasons articulated in the Court’s March 31, 2015 Order regarding the
common-law bad faith claim. Also before the Court is the Defendant’s Motion to Strike (#120)
portions of the Defendant’s submission in response to the Court’s March 31, 2015 Order. That
motion is DENIED AS MOOT. All claims in this matter having been resolved, the Clerk is
directed to close this case.
Dated this 7th day of October, 2015.
BY THE COURT:

Marcia S. Krieger
Chief United States District Judge

3

Even if the Trustee had established that the statutory claim was property of the estate, the Court
has grave doubts as to its viability for a second reason. Statutory bad faith under C.R.S. §§ 103-1115 and -1116 extends relief only to first-party claimants i.e. insureds to whom benefits were
owed directly. Here, it is quite clear that the claims are brought in the third-party context,
meaning that the benefits were to be paid under a liability policy on behalf of the insured to a
third-party, not to the insured herself.
3