Metropolitan Property and Casualty Insurance Company v. Cullen et al

Filing 70

ORDER granting 58 Motion for Leave to Amend Counterclaim to Add Exemplary Damages, by Magistrate Judge Michael J. Watanabe on 8/12/2014.(trlee, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 13-cv-03218-REB-MJW
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY,
Plaintiff(s),
v.
RAYMOND CULLEN, Individually and as Parent and Legal Guardian of B.C., a Minor,
and
SUSAN THOMPSON,
Defendant(s).

ORDER REGARDING
DEFENDANT RAYMOND CULLEN’S MOTION FOR LEAVE TO AMEND
COUNTERCLAIM TO ADD EXEMPLARY DAMAGES (DOCKET NO. 58)

Entered by Magistrate Judge Michael J. Watanabe

This matter is before the court on Defendant Raymond Cullen’s Motion for Leave
to Amend Counterclaim to Add Exemplary Damages (docket no. 58). The court has
reviewed the subject motion (docket no. 58) and the Plaintiff’s response (docket no. 64).
In addition, the court has taken judicial notice of the court’s file and has considered
applicable Federal Rules of Civil Procedure and case law. The court now being fully
informed makes the following findings of fact, conclusions of law, and order.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The court finds:
1.

That I have jurisdiction over the subject matter and over the parties
to this lawsuit;

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2.

That venue is proper in the state and District of Colorado;

3.

That each party has been given a fair and adequate opportunity to
be heard;

4.

That Defendant Raymond Cullen seeks to add a counterclaim for
Exemplary damages;

5.

That this case arises out of a personal injury lawsuit filed against
Defendant Raymond Cullen wherein it was alleged that Susan
Thompson was injured by a go kart driven by the minor eight year
old son of Mr. Cullen;

6.

That a claim of exemplary damage may be allowed by amendment
where the “plaintiff establishes prima facie proof of a triable issue.”
See §13-21-102(1.5)(a), C.R.S. Prima facie evidence is evidence
which is sufficient to establish a fact unless it is rebutted. Peiker
Acustic, Inc. v. Kennedy, 2011 WL 2550478, at *1 (D. Colo. June
27, 2011). “The question of whether the evidence is sufficient to
support an award of exemplary damages is one of law; whether
such damages are ultimately awarded is one for the tier of fact.”
Pizza v. Wolf Creek Ski Dev. Corp., 711 P.2d 671, 684 (Colo.
1985).

Exemplary damages require parties to establish the requisite
attendant circumstances beyond a reasonable doubt. Id.; §13-25127(2), C.R.S. The exemplary damages statute defines “willful and

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wanton” for purposes of determining exemplary damages as
“conduct purposefully committed which the actor must have
realized as dangerous, done heedlessly and recklessly, without
regard to the consequences, or of the rights and safety of others,
particularly the plaintiff.” § 13-21-102(1)(b), C.R.S. As defined by
the Court of Appeals, “[w]illful and wanton conduct is purposeful
conduct committed recklessly that exhibits an intent consciously to
disregard the safety of others. Such conduct extends beyond mere
unreasonableness.” U.S. Fire Ins. Co. v. Sonitrol Mgmt.
Corp., 192 P.3d 543, 549 (Colo. Ct. App. 2008). This standard has
been interpreted as justifying exemplary damages when the
act causing the injury was performed with an evil intent, and with
the purpose of injuring the Plaintiff, or with such a wanton and
reckless disregard of his rights as evidence of a wrongful motive.
Western Fire Truck, Inc. v. Emergency One, Inc., 134 P.3d 570,
578 (Colo. App. 2006). The sufficiency of the evidence to justify an
award of exemplary damages is a matter of law for the court’s
determination. Id.;
7.

That Plaintiff’s argument relies primarily upon the “Complaint Rule”
which provides that the duty to defend inquiry is made by looking to
the four corners of the underlying complaint and comparing the
complaint to the policy. Cyprus Amax Minerals Co. v. Lexington
Ins. Co., 74 P.3d 294, 299 (Colo. 2003). In essence, Plaintiff

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argues that it looked at the policy in question and compared it to the
four corners of the First Amended Complaint and Second Amended
Complaint and determined that there was no coverage based upon
Exclusions 8. B, C, and D in the subject policy since paragraph No.
15 in the First Amended Complaint and paragraph No. 16 in the
Second Amended Complaint alleged “Upon information and
belief, Defendants Raymond Cullen and Blaine Cullen owned
the kart.” Plaintiff also looked at the exceptions to the Exclusions
and determined there was still no coverage. Moreover, Plaintiff
argues that it checked to see if this go-kart accident would be
covered under Mr. Cullen’s Metropolitan homeowner’s policy or
under his umbrella policy that was in place at that time and
determined it was not covered under either of their polices.
Accordingly, Plaintiff denied a defense in the underlying personal
injury lawsuit listed above for over a year. Lastly, Plaintiff argues
that it was not until the Third Amended Complaint was filed in the
underlying personal injury lawsuit listed above that they become
aware that Raymond Cullen and Blaine Cullen were not the owners
of the go-kart. Thus, Plaintiff argues they never acted in bad faith
and that their actions doe not rise to the level of willful or wanton
conduct;
8.

That Defendant Cullen argues that this court should permit him to

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bring a claim for exemplary damages against Plaintiff under the
facts and circumstances of this case. In particular, Defendant
Cullen argues that the “Complaint Rule” that Plaintiff relies upon
was never intended to permit insurers to avoid their obligations to
their insureds, and it was never intended to shield an insurer to
avoid its duty to defend. See Cotter Corp. v. Am. Empire Surplus
Lines Ins. Co., 90 P.3d 814, 828 (Colo. 2004); Apartment Inv. &
Mgmt. Co., (AIMCO) v. Nutmeg Ins. Co., 593 F.3d 1188, 1194 (10th
Cir. 2010). In support of this position, Defendant Cullen relies upon
the interview conducted by Plaintiff’s investigator. It his interview,
Mr. Cullen told the investigator information about the ownership of
the go-kart. In particular, Mr. Cullen told the investigator that (1) he
had only made a down payment on the go-kart, (2) he did not have
possession of the go-kart, and (3) he did not complete the purchase
of the go-kart until a week after the accident. See exhibit E, pp. 4-7
attached to docket no. 58. Also, Mr. Cullen argues that his attorney
sent a letter to Plaintiff on December 3, 2012. In this letter Mr.
Cullen further laid out facts concerning the ownership of the gokart. Counsel informed Plaintiff in this letter that (1) Mr. Cullen had
not completed a purchase of the go-kart at the time of the accident,
(2) he had only made a partial payment towards the purchase price,
(3) IMI Motorsports was still modifying the go-kart to meet the
requirements for the purchase, (4) Mr. Cullen did not have the right

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to remove the go-kart from the track, and (5) the go-kart remained
in the physical possession of IMI Motorsports (the owner of the gokart). See exhibit F attached to docket no. 58. In a letter dated
December 5, 2012, Plaintiff acknowledged that Defendant Cullen
provided the details supporting his position that he did not own the
go-kart at the time of accident involving Susan Thompson. See
exhibit H attached to docket no. 58; and
9.

That Defendant Cullen has presented sufficient evidence in the
subject motion (docket no. 58) to meet the standard for a
counterclaim for exemplary damages against the Plaintiff as
outlined above.
ORDER

WHEREFORE, based upon these findings of fact and conclusions of law this
court ORDERS:
1.

That Defendant Raymond Cullen’s Motion for Leave to Amend
Counterclaim to Add Exemplary Damages (docket no. 58) is
GRANTED;

2.

That Defendant Raymond Cullen’s Answer and Amended
Counterclaims and Jury Demand (docket no. 58-9) is accepted for
filing as of the date of this Order; and

3.

That each party shall pay their own attorney fees and costs for this
motion.

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Done this 12th day of August 2014.
BY THE COURT

s/Michael J. Watanabe
MICHAEL J. WATANABE
U.S. MAGISTRATE JUDGE