Parkview Gardens Building Owners Association v. Owners Insurance Company

Filing 94

ORDER ADOPTING 76 RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE is approved and adopted as an order of this court; That the objections of the defendant 80 are overruled; That under Fed. R. Civ. P. 15, the Motion for Leave To File Secon d Amended Complaint and Jury Demand 53 is granted; That under 28 U.S.C. § 1447(e), this case is remanded to the District Court for Boulder County, Colorado (where it was filed initially as Case Number 14CV031519); That the combined Final P retrial Conference and Trial Preparation Conference set for January 8, 2016, and the trial set to begin January 25, 2016, are vacated; That all other pending motions, including those docketed as 81 , 84 , and 93 , are denied as moot; and That this case is closed, by Judge Robert E. Blackburn on 12/17/2015.(evana, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Action No. 15-cv-00004-REB-MEH
PARKVIEW GARDENS BUILDING OWNERS ASSOCIATION, a Colorado non-profit
corporation,also known as the PARK VIEW GARDENS BUILDING CONDO
ASSOCIATION,
Plaintiff,
v.
OWNERS INSURANCE COMPANY,
Defendant.

ORDER ADOPTING RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
Blackburn, J.
The matters before me are (1) the Motion for Leave To File Second Amended
Complaint and Jury Demand [#53]1 filed May 15, 2015; and (2) the corresponding
Recommendation of United States Magistrate Judge [#76] filed June 10, 2015. The
defendant filed objections [#80], the plaintiff filed a response [#88], and the defendant
filed a reply [#89]. I overrule the objections and approve and adopt the
recommendation.
As required by 28 U.S.C. § 636(b), I have reviewed de novo all portions of the
recommendation to which the defendant objects. I have considered carefully the
recommendation, the objections, the response, the reply, the other filings in this case,

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“[#53]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.

and the applicable law.
This case involves an insurance coverage dispute. Initially, the plaintiff, Parkview
Gardens Building Owners Association, filed this case in state court. The defendant,
Owners Insurance Company, removed the case to this court. On May 15, 2015, the
defendant filed a motion [#51] to amend its answer, which motion was granted. In the
amended answer, Owners asserts for the first time a theory that it is entitled to
rescission of the insurance policy at issue in this case. In reaction to the rescission
claim, the plaintiff sought permission to raise claims against the insurance broker used
by Parkview Gardens to obtain the insurance policy at issue. In the proposed amended
complaint [#53-1], Parkview Gardens asserts a claim of breach of contract against the
broker, Flood & Peterson Insurance, Inc. Parkview Gardens alleges that is contracted
with Flood & Peterson to procure suitable insurance for Parkview Gardens, including
specified types of coverage. Proposed amended complaint [#53-1], ¶ 122. Parkview
Gardens alleges that Owners issued a policy, the policy under which Parkview Gardens
now seeks coverage and on which Owners now seeks rescission. Allegedly, Flood &
Peterson breached its contract with Parkview Gardens by failing to obtain the insurance
coverages it promised to obtain for Parkview Gardens. Id., ¶¶ 123, 124. Both the
plaintiff and Flood and Peterson are citizens of Colorado. Permitting the plaintiff to add
Flood and Peterson as a defendant would destroy diversity and require that this case be
remanded to state court.
Noting the standard of Fed. R. Civ. P. 15 concerning leave to amend a complaint,
the magistrate judge concludes correctly that amendment of the complaint must be
permitted. The magistrate judge notes also that 28 U.S.C. § 1447(e) gives the court
discretion to deny joinder of a non-diverse defendant after removal from state court.
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The factors relevant to a § 1447 analysis include: (1) the intent of the plaintiff in adding
a non-diverse defendant; (2) whether the plaintiff has delayed the proposed addition of
a non-diverse defendant unduly; (3) prejudice to either party; (4) any risk of multiple
litigation and inconsistent outcomes.
According to Owners, the proposed claim against Flood and Peterson is not pled
adequately and is not legally viable. This proposed clam is futile, in the view of Owners,
and thus is not properly the basis for joinder of Flood and Peterson and a remand to
state court. In support of this contention, Owners cites my opinion in Estate of Hill v.
Allstate Ins. Co., 354 F.Supp.2d 1192 (D.Colo.,2004). In Hill, I noted:
Under Colorado law, an insurance broker or agent who agrees to obtain a
particular form of insurance coverage for the person seeking such
insurance has a legal duty to obtain such coverage or to notify the person
of his failure or inability to do so. An agent who fails to do so may be
liable either for breach of contract or negligence.
Id., 354 F.Supp.2d 1196-97 (internal quotations and citations omitted). However,
“(a)bsent a special relationship between the insured and the insurer's agent, an
insurer's agent has no duty to affirmatively advise or warn his or her customer of
provisions contained in an insurance policy.” Id. at 1197. In Hill, the plaintiffs alleged
that the insurance agent failed to advise them of the availability of certain enhanced
insurance coverages. The plaintiffs did not allege that they specifically requested such
coverages from the agent or that the agent told the plaintiffs she would procure a policy
with enhanced coverages and failed to do so. Id. at 1197.
Taking the allegations in the proposed amended complaint [#53-1] as true, as I
must, I find and conclude that Parkview Gardens has alleged a potentially viable breach
of contract claim against Flood and Peterson. Essentially, the claim is that Flood and
Peterson is an insurance broker or agent who agreed to obtain a particular form of
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insurance coverage for Parkview Gardens, but failed to obtain the coverage. The
magistrate judge concluded correctly that this claim is viable under Colorado law. The
arguments of Owners to the contrary are unavailing.
In addition, the magistrate judge analyzed correctly the factors applicable to an
analysis of the effort of Parkview Gardens to add a non-diverse defendant via its
proposed amended complaint. There is no evidence that a significant motivation of
Parkview Gardens is to obtain a remand via the addition of a non-diverse defendant.
There is no evidence of undue delay by Parkview Gardens. The parties will suffer some
prejudice, in the form of delay, as the result of a remand, but that prejudice will be
shared fairly equally and is not undue. A remand will permit all claims against all
defendants concerning the insurance policy in question to be resolved in one case;
thus, promoting judicial efficiency and minimizing the risk of multiple litigation and
inconsistent outcomes.
THEREFORE, IT IS ORDERED as follows:
1. That the Recommendation of United States Magistrate Judge [#76] is
approved and adopted as an order of this court;
2. That the objections of the defendant [#80] are overruled;
3. That under Fed. R. Civ. P. 15, the Motion for Leave To File Second
Amended Complaint and Jury Demand [#53] is granted;
4. That under 28 U.S.C. § 1447(e), this case is remanded to the District Court for
Boulder County, Colorado (where it was filed initially as Case Number 14CV031519);
5. That the combined Final Pretrial Conference and Trial Preparation
Conference set for January 8, 2016, and the trial set to begin January 25, 2016, are
vacated;
6. That all other pending motions, including those docketed as [#81], [#84], and
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[#93], are denied as moot; and
7. That this case is closed.
Dated December 17, 2015, at Denver, Colorado.
BY THE COURT:

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