Appeal Nos and 1007 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT. GLADYS JONES Plaintiff-Appellant. vs.

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1 Appellate Case: Document: Date Filed: 06/30/2015 Page: 1 Appeal Nos and 1007 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT GLADYS JONES Plaintiff-Appellant vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Defendant-Appellee APPEAL FROM THE UNITED STATED DISTRICT COURT FOR THE DISTRICT OF COLORADO HONORABLE RICHARD P. MATSCH, SENIOR DISTRICT JUDGE DISTRICT COURT CASE NO CV-577-RPM OPENING BRIEF OF APPELLANT GLADYS JONES ORAL ARGUMENT REQUESTED Meredith A. Quinlivan, (#38016) Troy R. Rackham, (#32033) GAIENNIE LAW OFFICE, LLC FENNEMORE CRAIG, PC 3801 East Florida Avenue, Suite Lincoln Street, Suite 2900 Denver, Colorado Denver, Colorado (303) (303) Attorney for Plaintiff-Appellant Attorney for Plaintiff-Appellant Gladys Jones Gladys Jones i

2 Appellate Case: Document: Date Filed: 06/30/2015 Page: 2 TABLE OF CONTENTS I. PRIOR OR RELATED APPEALS... 1 II. JURISDICTION... 1 III. ISSUES PRESENTED FOR REVIEW... 2 IV. STATEMENT OF THE CASE A. THE FACTS The Accident The State Court Personal Injury Case B. COURSE OF PROCEEDINGS State Farm's First Summary Judgment Motion Jones' Amendment of Her Complaint to Include Common Law and Statutory Bad Faith Claims Jones' Expert Disclosure April 25, 2014 Pretrial Conference State Farm's Second Motion for Summary Judgment Hearing on State Farm's Renewed Summary Judgment Motion District Court's Summary Judgment Order Final Judgment This Appeal V. SUMMARY OF THE ARGUMENT ii

3 Appellate Case: Document: Date Filed: 06/30/2015 Page: 3 VI. LEGAL ARGUMENT THE DISTRICT COURT ERRED WHEN IT DISMISSED JONES' BAD FAITH CLAIMS (HER THIRD AND FOURTHCLAIMS)...17 A. Standard of Review B. The District Court Erred When it Dismissed Jones' Bad Faith Claims Without Giving Jones an Opportunity to Respond...18 C. The District Court Erred When It Dismissed Jones' Bad Faith Claims Because There Were Factual Dispute as to Whether Defendant State Farm s Delay or Denial of Benefits was Reasonable Under the Circumstances...22 D. The Finding that State Farm Set Forth an Arguable Defense to Jones' Claims Does Not Establish a Lack of Factual Dispute THE DISTRICT COURT ERRED IN RULING THAT PLAINTIFF S EXPERT TESTIMONY WAS INADMISSIBLE A. Standard of Review B. Jones Expert Testimony Should Not Have Been Precluded Because It is Admissible to Show That a Reasonable Insured Should Not Be Expected To Know That The At-Fault Driver Did Not Have Insurance Coverage Until Copies Of The Relevant Insurance Policies Were Provided And A Necessary Review Could Be Performed THE DISTRICT COURT ERRED IN RULING THAT INTEREST SHOULD BE CALCULATED FROM THE DATE OF THE JUDGMENT IN THE TRIAL COURT MATTER A. Standard of Review B. Prejudgment Interest Should Have Been Calculated from the Date of the Wrongful Withholding, which was the Date of the Adams County District Court Order on August 17, VII. CONCLUSION...37 iii

4 Appellate Case: Document: Date Filed: 06/30/2015 Page: 4 VIII. REQUEST FOR ORAL ARGUMENT...37 IX. CERTIFICATION OF COMPLIANCE iv

5 Appellate Case: Document: Date Filed: 06/30/2015 Page: 5 TABLE OF AUTHORITIES Cases Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138 (10th Cir. 2000)...30 Beaird v. Seagate Tech., Inc., 145 F.3d 1159 (10th Cir. 1998)...20 Celotex Corp. v. Catrett, 477 U.S. 317 (1986)...19 Century 21 Real Estate Corp. v. Meraj Int l Inv. Corp., 315 F.3d 1271 (10th Cir. 2003)...18, 28, 29 Combined Com. Corp. v. Pub. Serv. Co., 865 P.2d 893 (Colo. App. 1993)...34 D & H Marketers, Inc. v. Freedom Oil & Gas, Inc., 744 F.2d 1443 (10th Cir. 1984)... 2 Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993)...30 Davis Cattle Co. v. Great W. Sugar Co., 393 F.Supp (D. Colo. 1975)...34 De Herrera v. Sentry Ins. Co., 30 P.3d 167 (Colo. 2001)...23 Dodge v. Cotter Corp., 328 F.3d 1212 (10th Cir. 2003)...2, 30 E.B. Jones Constr. Co. v. City & Cnty. of Denver, 717 P.2d 1009 (Colo. App. 1986)...36 Goebel v. Denver & Rio Grande W. R.R. Co., 215 F.3d 1083 (10th Cir. 2000)...31, 32 v

6 Appellate Case: Document: Date Filed: 06/30/2015 Page: 6 Hall v. Bellmon, 935 F.2d 1106 (10th Cir. 1991)...20, 22 Hollander v. Sandoz Pharm. Corp., 289 F.3d 1193 (10th Cir. 2002)...30 Hurd v. Am. Hoist and Derrick Co., 734 F.2d 495 (10th Cir. 1984)...18 Kumho-Tire Co. Ltd. v. Carmichael, 526 U.S. 137 (1999)...30, 31 Marathon v. Ashland Pipe Line LLC v. Md. Cas. Co., 243 F.3d 1232 (10th Cir. 2001)...18 Mesa Sand & Gravel v. Landfill, Inc., 776 P.2d 362 (Colo. 1989)...35, 36 Michaelson v. Michaelson, 884 P.2d 695 (Colo. 1994)...35 Northington v. Jackson, 973 F.2d 1518 (10th Cir. 1992)...22 Patterson v. BP America Production Co., 2015 COA 28 (Colo. App. March 12, 2015)...36 Pignanelli v. Pueblo Sch. Dist. No. 60, 540 F.3d 1213 (10th Cir. 2008)...18 Porter Constr. Servs. v. Ehrhardt, Keefe, Steiner, & Hottman, P.C., 131 P.3d 1115 (Colo. App. 2005)...34 R.W. Beck, Inc. v. E3 Consulting, LLC, 577 F.3d 1133 (10th Cir. 2009)...18 Riccatone v. Colorado Choice Health Plans, 315 P.3d 203 (Colo. 2013)...23, 29 Rocky Mt. Tool & Mach. Co. v. Tecon Corp., 371 F.2d 589 (10th Cir. 1966)...33 Ross v. Old Republic Ins. Co., 134 P.3d 505 (Colo. App. 2006)...35 vi

7 Appellate Case: Document: Date Filed: 06/30/2015 Page: 7 Scott v. Comm'r of Internal Rev., 236 F.3d 1239 (10th Cir. 2001)...35 Simms v. Okla. ex rel. Dep t of Mental Health & Substance Abuse Servs., 165 F.3d 1321 (10th Cir. 1999)...17, 18, 24 Stansbury v. Comm'r of Internal Rev., 102 F.3d 1088 (10th Cir. 1996)...35 State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177 (Colo. 2004)...23, 29 Sutton v. Utah State Sch. for Deaf & Blind, 173 F.3d 1226 (10th Cir. 1999)...17 Torres v. First State Bank of Sierra County, 550 F.2d 1255 (10th Cir. 1977)..20, 22 United States v. Arney, 248 F.3d 984 (10th Cir. 2001)...30 United States v. Velarde, 214 F.3d 1204 (10th Cir. 2000)...31, 32 USAA v. Parker, 200 P.3d 350 (Colo. 2009)...17, 34 Statutes 28 U.S.C U.S.C C.R.S C.R.S C.R.S , 36 Other Authorities vii

8 Appellate Case: Document: Date Filed: 06/30/2015 Page: 8 Erin Krisofco, CRS and -1116: Providing Remedies to First-Party Claimants, 39 Colo. Law. 69 (2010)...23 Grund, et. al, West s Colorado Practice Series: Personal Injury Practice Torts and Insurance, 8A Colo. Prac., Personal Injury Torts and Insurance 56 (3d ed.)...23 Rules 10th Circuit Rules Federal Rules of Appellate Procedure Federal Rules of Appellate Procedure Federal Rules of Civil Procedure , 19, 22, 24, 28 Federal Rules of Evidence , 32, 33 viii

9 Appellate Case: Document: Date Filed: 06/30/2015 Page: 9 I. PRIOR OR RELATED APPEALS. Pursuant to 10th Cir. R. 28.2(C)(1), undersigned counsel notifies the Court that no other appeal besides this consolidated case (Nos and ) was previously before this or any other appellate court under the same or similar title. Additionally, no cases are known to be pending in this or any other court that will directly affect this Court s decision in the pending appeal. II. JURISDICTION. This appeal arises from the final judgment of the district court in Gladys Jones v. State Farm Mutual Automobile Insurance Company, 2013-CV-577-RPM. The district court had jurisdiction over this case pursuant to 28 U.S.C. 1332(a) because Plaintiff ("Jones"), a Colorado citizen, asserted claims against Defendant ("State Farm"), an Illinois citizen. Aplt. App., at On November 10, 2014, the district court denied State Farm's summary judgment motion, but nevertheless dismissed Jones' Third and Fourth Claims for Relief. (Order on Summary Judgement, hereafter Order ). Id., at The district court further ordered the parties to "attempt to stipulate to the amount of a judgment to be entered for the plaintiff by December 1, 2014." Id. The parties could not stipulate, so they tendered their respective positions on the appropriate amount of a judgment. Id., at On December 12, 2014, the district court concluded that the appropriate amount of the judgment "should be the policy 1

10 Appellate Case: Document: Date Filed: 06/30/2015 Page: 10 limit," so the district court entered an Order for Entry of Final Judgment in Jones' favor for "$100,000, plus costs and post-judgment interest." Id., at 283. The district court confirmed this Order in a Final Judgment. Id., at 282. The district court's final judgment effectively ended the case in the trial court. Jones timely appealed pursuant to Fed. R. App. P. 3 and 4, so jurisdiction is appropriate pursuant to 28 U.S.C See Dodge v. Cotter Corp., 328 F.3d 1212, 1221 (10th Cir. 2003) (quoting D & H Marketers, Inc. v. Freedom Oil & Gas, Inc., 744 F.2d 1443, 1444 (10th Cir. 1984) (en banc)). III. ISSUES PRESENTED FOR REVIEW. 1. Did the district court err when it dismissed the Third and Fourth Claims for Relief in Jones' Amended Complaint, which asserted claims for common law bad faith and statutory bad faith under C.R.S (1)(A) and (1), when State Farm did not move for summary judgment on those claims and when there were genuine issues of disputed fact regarding whether State Farm s delay or denial of benefits was reasonable under the circumstances? 2. Did the district court erroneously conclude that Jones' proffered expert testimony was inadmissible to show that a reasonable insured should not be expected to know that an at-fault driver did not have insurance coverage until copies of the relevant insurance policies were provided and a necessary review could be performed? 2

11 Appellate Case: Document: Date Filed: 06/30/2015 Page: Whether the district court erred when it held that interest should be calculated from the date of the district court's judgment rather than the date that the insurance benefits should have been paid but were not? IV. STATEMENT OF THE CASE. A. The Facts. 1. The Accident. On July 7, 2008, Karen Barrios, who was 13 at the time, recklessly drove a vehicle to a strip mall in Aurora, Colorado. [Doc. 44, at 1]. The Plaintiff, Jones, was shopping at Walt's Meats, a store in the strip mall. Id., at 1-2. When Jones left the store, Barrios put the vehicle in drive and drove it forward into Walt s Meats. Id. The car crashed into Jones. Id. Jones was severely injured from the impact. Id. The Aurora Police Department was called to the scene. Id., at 2. The police investigation revealed that Barrios took the subject vehicle from the home of Karine Dazna Cordero-Gomez, where Barrios was staying. Id., at 1-2. Ms. Condero-Gomez identified Luis A. Rivera as the owner of the vehicle. Id. The police also discovered that Gilberto Garcia had previously been a registered owner of the vehicle. Id. Consequently, in its accident report, the police listed Garcia as an additional owner of the vehicle. Id. There was no proof of insurance in the vehicle at the time of the incident. Id. The police did not note, or discover, any other automobile insurance during its investigation. Id. 3

12 Appellate Case: Document: Date Filed: 06/30/2015 Page: 12 The police cited Barrios with careless driving and failure to provide proof of insurance. Id. The citation summoned Barrios to appear in municipal court on the traffic charges. Id. Barrios appeared in municipal court on August 7, 2008 and pled guilty to careless driving and failure to provide proof of insurance. Id. After the July 7, 2008 accident, Jones notified her own insurer, State Farm, that a possible claim for uninsured and/or underinsured motorist ("UIM") benefits existed. Id. State Farm opened a claim and began its own investigation regarding the at-fault driver, parents, and possible owners or other insurers of the vehicle. Id. at 2, 4-8; [Doc. 43, 2-8]. State Farm determined from its own investigation that no applicable liability insurance existed. [Doc. 44, at 2]. Yet, State Farm refused to provide uninsured motorist benefits to Jones to cover the substantial injuries she sustained in the July 7, 2008 accident. Id. 2. The State Court Personal Injury Case. On July 5, 2011, Jones sued in state court to recover damages for her significant injuries from the accident the 13-year old Barrios caused when she took the vehicle from Ms. Condero-Gomez's home and drove it into Walt's Meats. [Doc 43, at 7; Doc. 44-6]. Jones sued Barrios, the unknown parents or guardians of Barrios, Gilberto Garcia and Luis A. Rivera. [Doc 43, at 7; Doc. 44-6]. Jones did not sue State Farm in the case. Id. 4

13 Appellate Case: Document: Date Filed: 06/30/2015 Page: 13 State Farm apparently resumed its investigation into whether there was any insurance applicable to the adverse vehicle at the time of the accident. [Doc. 44, at 7-8]. State Farm also intervened in the state court action. [Doc. 44, at 7-8]. The state court eventually entered default against Barrios, her parents, and Luis Rivera, who all were served but never appeared. [Doc. 44, at 8]. Jones dismissed Mr. Garcia from the suit because he could not be located. [Doc. 44, at 8]. After entering default, the state court held a damages hearing. Id. The hearing was on June 25, 2011, which is an important date because that is when Jones and State Farm first became sure that there was no insurance coverage available from the tortfeasor or owner of the vehicle. Id. Specifically, Mr. Rivera appeared and testified for the first time. Id. At the hearing, he denied ownership of the vehicle Barrios drove and testified that he did not have automobile insurance on the vehicle. Id., at 8, 13. Until that date, despite diligent investigation, neither Jones nor State Farm actually knew whether there was any insurance on the vehicle in question. Id., at 13. The state court entered judgment in Jones' favor, and against Rivera and Barrios, for $74, Id., at 8. B. Course of Proceedings. On February 11, 2013, Jones initiated this action in state court. Aplt. App., at Jones asserted three claims for relief. Id., at They were: (1) 5

14 Appellate Case: Document: Date Filed: 06/30/2015 Page: 14 uninsured motorist claim; (2) breach of contract; and (3) violation of C.R.S (1)(A) and (1). Id., State Farm removed the matter to the district court based on removal and diversity jurisdiction. Aplt. App., at State Farm later answered Jones' complaint. Id., at Shortly thereafter, the parties stipulated to dismissal of the third claim from Jones' initial complaint, which alleged a claim for statutory bad faith under C.R.S (1)(A) and (1). Id., at 77. The district court granted this stipulation and dismissed Jones' third claim. Id., at State Farm's First Summary Judgment Motion. Two months later, before discovery was complete, State Farm filed its first Motion for Summary Judgment ( First Motion ). Id., at There, State Farm argued that Jones' claims should be dismissed under the applicable statute of limitations. Id.. Specifically, State Farm argued that Jones' UIM claim had accrued at some point more than three years before February 11, 2013, when she filed the action against State Farm. Id. Jones responded and maintained that her claim was timely. Id., at Jones specifically argued that there were disputed issues of fact and that, based on the facts she identified in her response, her claims did not accrue until June 25, Id., at Jones argued that her UIM claim did not start to accrue until 6

15 Appellate Case: Document: Date Filed: 06/30/2015 Page: 15 Mr. Rivera testified for the first time that he did not have insurance on the vehicle in question. Id. The district court heard oral argument on State Farm's First Motion on August 21, Aplt. App., at 114. After hearing argument by counsel, the district court denied State Farm's First Motion because there were outstanding issues of material fact with regard to when the statute accrued. Id. 2. Jones' Amendment of Her Complaint to Include Common Law and Statutory Bad Faith Claims. After the district court denied State Farm's summary judgment motion, the court held a scheduling conference. Aplt. App., at 115. At the scheduling conference, the district court stated that it would allow Jones to amend her complaint to add claims for bad faith. Id.; see also id., at 119:9-16. Specifically, the district court ruled: THE COURT: I'll let you amend the complaint for bad faith. I don t understand State Farm's position in this case. I really don't. I mean, as I said at the hearing on the motion for summary judgment, nobody knew who owned the vehicle and who might have insurance. And until that's established which even today we don't know. So I think you're in bad faith. I don't understand what you are doing in this case. Id., at 119:9-16. Thus, the district court allowed Jones to reassert her claims for bad faith against State Farm. Id. Jones did just that. She filed a Motion to Amend the Complaint, pursuant to the grounds discussed in the September 6, 2013 hearing. Id., at Jones 7

16 Appellate Case: Document: Date Filed: 06/30/2015 Page: 16 attached to her filing a proposed Amended Complaint. Id., at Jones' Amended Complaint alleged claims against State Farm for statutory bad faith under C.R.S (1)(A) and (1) (the Third Claim for Relief) and for common law bad faith (the Fourth Claim for Relief). Id., at , The district court granted Jones' motion to amend and accepted Jones' Amended Complaint, with the bad faith claims, as filed. Id., at State Farm answered Jones' Amended Complaint. Id., at The district court held another status conference on November 25, [Doc. 36, at 3]. There, the district court reaffirmed the viability of Plaintiff s Third and Fourth Claims for Relief. Id. 3. Jones' Expert Disclosure. Thereafter, the parties undertook additional discovery. On April 15, 2014, Jones filed her expert witness disclosures, identifying Chad Hemmat, Esq. as a retained expert. Aplt. App., at 160. Jones endorsed Hemmat to testify as "that Ms. Jones did not breach the statute of limitations in this area." Id. Jones also endorsed Hemmat to testify "that the attorney letters to State Farm Insurance were simply to put State Farm on notice of a potential claim and did not specifically reference whether a determination was made that this was a uninsured or 1 The Third Claim for Relief was reinstated and intended to cover actions by Defendant going forward based on Defendant s continued conduct. Aplt. App., at 120:13-121:5. The Fourth Claim for Relief was permitted for the first time. Id., at

17 Appellate Case: Document: Date Filed: 06/30/2015 Page: 17 underinsured matter." Id. Finally, Jones endorsed Hemmat to testify consistent with his deposition testimony, which had been taken in the case already. Id. In connection with his anticipated role as an expert, State Farm deposed Hemmat on January 9, Aplt. App., at Hemmat testified regarding his background and experience that he has been a licensed attorney in Colorado since 1999 and his experience. Id., at 4-5. Hemmat explained that he practices [e]xclusively plaintiff work and that 98 percent of his work is auto accident personal injury claims. Id., at 5. He specifically described his familiarity with UM/UIM claims. Id., at 5-6. Hemmat testified at length about how, when, and to what extent claimants must investigate other drivers and involved parties coverage, the availability of any UM/UIM coverage, and the general process of pursuing UM/UIM claims. See id. Hemmat also testified regarding the reasonableness of the actions here with regard to investigating liability and UM/UIM coverage here. See id. 4. April 25, 2014 Pretrial Conference. On April 25, 2014, the district court held a pretrial conference in anticipation of the upcoming May 27, 2014 trial. Aplt. App., at At the time of the hearing, there was no motion to preclude Hemmat s testimony. It did not appear the district court had reviewed Hemmat s deposition testimony and proposed trial testimony prior to the hearing. After limited discussion by the parties, and without 9

18 Appellate Case: Document: Date Filed: 06/30/2015 Page: 18 any motion pending, the district court ruled that Hemmat's testimony is not admissible and the court was not going to allow Hemmat to testify regarding the matters identified in his disclosure. Id., 187:23 188:5. The district court then turned to the outstanding claims for relief. Id., at 188:6-196:20. After brief discussion by counsel, and without any pending motion relating to Jones' Third and Fourth Claims for Relief, the district court stated: I don t see the bad faith claim anyway. Id., at 194:8-9. State Farm's counsel inquired as to whether the court wanted to receive argument on Jones' Third and Fourth Claims for Relief, and the court indicated that it would need to review factual evidence to evaluate the claims. Id., at 194:11-16 ( MR. PATTERSON: Do you want me to argue it right now? THE COURT: No, no. I need the transcripts I suppose. ) The parties then discussed the fact that all evidence regarding the accrual date for statute of limitations purposes had been preserved through deposition testimony and that there were no credibility disputes. Id., at 188:6-196:20. State Farm stipulated that if Jones' claim was timely filed it had no defense to nonpayment, so the parties agreed that resolution of the accrual question would resolve Jones First and Second Claims for Relief. Id. The parties agreed that the question regarding accrual could be resolved through dispositive briefing, as opposed to at trial. Id. The district court therefore vacated the trial and instructed 10

19 Appellate Case: Document: Date Filed: 06/30/2015 Page: 19 the parties to submit summary judgment briefing on the statute of limitations question. Id., at After the hearing, the district court entered a minute order confirming its order for summary judgment briefing and vacating the May trial. Id., at 163. No order was entered at the hearing or in the minute order regarding Plaintiff s Third and Fourth Claims for Relief. Id., at 163, State Farm's Second Motion for Summary Judgment. As discussed with the district court, State Farm filed a renewed Motion for Summary Judgment. Aplt. App., at State Farm again argued that Jones' First and Second Claims for Relief were barred by the statute of limitations. Id., at State Farm also suggested that "[a]t the Pretrial Conference on April 25, 2014, the Court dismissed Plaintiff's bad faith and statutory violation claims and vacated the trial date." Id., at 165. Jones responded, identifying facts showing that her UI claim could not have accrued prior to the time she learned that Mr. Rivera did not have an applicable policy to cover the automobile in question. Id., at Jones therefore argued that her claim was not time-barred and summary judgment should be denied. Id. Plaintiff also clarified that, at the April 25, 2014 conference, there was discussion regarding Plaintiff s bad faith claims; however, the Court did not dismiss Plaintiff s bad faith and statutory violation claims. Id., at 199. Moreover, Jones 11

20 Appellate Case: Document: Date Filed: 06/30/2015 Page: 20 sought summary judgment in her favor on her bad faith claims because of State Farm's failure to meet its contractual obligations, combined with its unreasonable conduct and its unreasonable delay or denial of benefits. Id., at In her prayer for relief, Jones urged the district court to deny State Farm's motion for summary judgment and "enter judgment against State Farm for it's [sic] breach of the insurance contract and violation of C.R.S and 1116." Id., at In its Reply in Support of its Motion for Summary Judgment, State Farm acknowledged the dispute regarding the status of Plaintiff s Third and Fourth Claims for Relief, specifically stating that only the accrual date of the statute of limitations was being addressed in this Motion. Id., at 225. State Farm therefore only sought relief on Jones' first two claims for relief on the basis of the statute of limitations. Id. State Farm clarified that it was requesting entry of judgment against Jones only on Jones " Uninsured Motorist ("UM") Claim and Breach of Contract Claim." Id. 6. Hearing on State Farm's Renewed Summary Judgment Motion. On October 23, 2014, after State Farm's renewed summary judgment motion was fully briefed, the district court held a hearing. Aplt. App., at At the hearing, the district court only discussed issues related to the First and Second Claims for Relief. Id. Jones' counsel specifically sought to clarify the status of the 12

21 Appellate Case: Document: Date Filed: 06/30/2015 Page: 21 Third and Fourth Claims for Relief, renewing the request for relief for State Farm's bad faith. Id., at 260:4-7. The district court acknowledged that Jones had bad faith claims remaining, but indicated those were "not before me right now." Id., at 260: The district court requested supplemental submissions from the parties to address various factual concerns and took State Farm's renewed summary judgment motion under advisement. Id., at 263. As noted in the minute order from the hearing, there was brief discussion regarding Jones Third and Fourth Claims for Relief. Id., at 239. Still, the district court never entered an order relating to those claims for relief. Id. After the October 23, 2014 hearing, both parties filed supplemental submissions in response to the district court's questions regarding the accrual date for Jones First and Second Claims for Relief. [Docs. 49 and 50]. 7. District Court's Summary Judgment Order. The district court entered its Order on Summary Judgment ( SJ Order ) on November 10, Aplt. App., at The vast majority of the district court's order focused on the question of whether the statute of limitations barred Jones' claim. Id., at The district court concluded that plaintiff s knowledge of 2 Ironically, in discussing an issue raised by the first time at the hearing between the district court and State Farm (whether estoppel applied to bar State Farm s denial of benefits), the district court recognized that it could not dispose of any such arguments without allowing the parties a chance to argue about it. Id., at 262:23-263:6. The district court noted that such a disposition would be unfair, stating that [w]e still have due process I think. Id., at 264:8. 13

22 Appellate Case: Document: Date Filed: 06/30/2015 Page: 22 lack of insurance was reflected in various submissions by her counsel, and agreed with Jones that her UM claim did not accrue until June 25, 2012, when Rivera denied ownership and possession of any applicable insurance policy. Id., at 270. The district court therefore denied State Farm's renewed summary judgment motion. Id., at 271. The district court further ordered the parties to attempt to stipulate to an amount of judgment with regard to Jones' First and Second Claims for Relief. Id. Without any motion pending relating to Jones' Third and Fourth Claims for Relief, the district court nevertheless dismissed those claims. Id. The district court reasoned that State Farm "has made an arguable defense to the plaintiff s claim." Id. Because State Farm had not moved for summary judgment on Jones' Third and Fourth Claims for Relief, Jones did not submit all evidence and arguments in support of those claims. The district court's dismissal of Jones' Third and Fourth Claims for Relief came as a surprise to Jones because: (1) State Farm acknowledged in its Reply in Support of its Motion for Summary Judgment that it was requesting entry of judgment against Jones only on Jones "Uninsured Motorist ('UM') Claim and Breach of Contract Claim;" [Aplt. App., at 225]; and (2) the district court acknowledged that Jones had bad faith claims remaining, but indicated those were "not before me right now." Id., at 260: Final Judgment. 14

23 Appellate Case: Document: Date Filed: 06/30/2015 Page: 23 When the district court denied State Farm's renewed summary judgment motion, it ordered the parties to attempt to stipulate to an amount of judgment with regard to Jones' First and Second Claims for Relief. Aplt. App., at 271. The parties could not stipulate, so they tendered their respective positions on the appropriate amount of a judgment. Id., at (State Farm's position); Id., at (Jones' position). The district court concluded that the appropriate amount of the judgment "should be the policy limit," so the district court entered an Order for Entry of Final Judgment in Jones' favor for "$100,000, plus costs and post-judgment interest." Id., at 283. The district court confirmed this Order in a Final Judgment. Id., at This Appeal. Jones timely filed her notice of appeal on January 9, [Doc. 60]. Jones filed this appeal to challenge the district court's entry of summary judgment on her bad faith claims and the district court's interest calculation. V. SUMMARY OF THE ARGUMENT. The district court erred in three prejudicial ways. First, the district court erred when it dismissed Jones' bad faith claims in its SJ Order because State Farm did not move for summary judgment on Jones' bad faith claims, because Jones did not have an opportunity to submit evidence and argument in support of her bad faith claims, and because there were genuine issues of material fact on Jones' bad 15

24 Appellate Case: Document: Date Filed: 06/30/2015 Page: 24 faith claims that precluded summary judgment. Indeed, there is admissible evidence in the record that establishes a factual dispute regarding whether State Farm s delay or denial of the benefits was reasonable. Given this record, the district court erred when it reached its sua sponte decision to dismiss Jones' bad faith claims based only on State Farm's arguable defense to Jones' bad faith claims. Jones therefore requests that this Court reverse the district court's order dismissing Jones' Third and Fourth Claims for relief, and remand the case so that Jones' entitlement to relief on those claims can be properly adjudicated. Second, the district court erred when it excluded expert testimony from Jones' retained expert, Chad Hemmat, Esq., without State Farm even moving for such relief. Mr. Hemmat s undisputed background, experience, and expertise establish that his testimony was admissible to establish that a reasonable insured should not be expected to know that the at fault driver did not have insurance coverage until copies of the relevant insurance policies had been provided and a necessary review and investigation had been performed. This Court should therefore reverse the district court s summary exclusion of Mr. Hemmat s testimony. Finally, the district court erred when it calculated interest due to Jones from the date of its Final Judgment rather than from the date that State Farm wrongfully denied benefits to Jones. Under Colorado law, which applies to this diversity case, 16

25 Appellate Case: Document: Date Filed: 06/30/2015 Page: 25 prejudgment interest is recoverable for an insurer's failure to pay UM benefits when due. USAA v. Parker, 200 P.3d 350, (Colo. 2009). The district court did not award prejudgment interest, but only post-judgment interest, in its Final Judgment. The district court therefore erred. Jones respectfully requests this Court reverse and remand for a correct calculation of prejudgment interest. VI. LEGAL ARGUMENT. 1. The District Court Erred When It Dismissed Jones' Bad Faith Claims (Her Third and Fourth Claims). A. Standard of Review. This Court's review of the district court's entry of summary judgment is de novo. Simms v. Okla. ex rel. Dep t of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999). This Court's review of a district court's dismissal for failure to state a claim also is de novo. Sutton v. Utah State Sch. for Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999). Regardless of the characterization of the procedural posture associated with dismissal, a de novo standard applies. Summary judgment is only appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). This Court examines the record to determine if any genuine issues of material fact were 17

26 Appellate Case: Document: Date Filed: 06/30/2015 Page: 26 in dispute and whether the substantive law was correctly applied. Simms, 165 F.3d at The question is... whether there is evidence upon which a jury could properly find for the nonmoving party. Century 21 Real Estate Corp. v. Meraj Int l Inv. Corp., 315 F.3d 1271, 1278 (10th Cir. 2003) (quoting Hurd v. Am. Hoist and Derrick Co., 734 F.2d 495, 499 (10th Cir. 1984)) (emphasis supplied). Where such evidence exists, summary judgment is inappropriate. Id. In reviewing the facts and evidence, the court must take the facts in the light most favorable to the non-moving party. R.W. Beck, Inc. v. E3 Consulting, LLC, 577 F.3d 1133, 1142 (10th Cir. 2009); see also Pignanelli v. Pueblo Sch. Dist. No. 60, 540 F.3d 1213, 1215 (10th Cir. 2008) (facts should be [v]iewed in the light most favorable to appellant). Appellate courts review factual determinations underlying summary judgment for clear error. Marathon v. Ashland Pipe Line LLC v. Md. Cas. Co., 243 F.3d 1232, 1252 (10th Cir. 2001). Whether an insurance company s delay or denial of benefits was reasonable or constituted bad faith are questions of fact. Id. at B. The District Court Erred When it Dismissed Jones' Bad Faith Claims Without Giving Jones an Opportunity to Respond. First, on its de novo review, this Court should conclude that the district court erred when it dismissed Jones' bad faith claims on State Farm's renewed motion for summary judgment because the district court did not give notice that it may grant summary judgment to State Farm on Jones' bad faith claims, even when State Farm 18

27 Appellate Case: Document: Date Filed: 06/30/2015 Page: 27 did not move for summary judgment on those claims, and did not give Jones a reasonable time to respond. The 2010 amendments to the Federal Rules of Civil Procedure substantially revised Rule 56. One of the important modifications was to Fed. R. Civ. P. 56 (f). That rule provides: (f) Judgment Independent of the Motion. After giving notice and a reasonable time to respond, the court may: (1) grant summary judgment for a nonmovant; (2) grant the motion on grounds not raised by a party; or (3) consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute. The advisory committee notes explain that Rule 56 was "revised to improve the procedures for presenting and deciding summary-judgment motions and to make the procedures more consistent with those already used in many courts." Id., at adv. comm. notes. Subdivision (f) was revised to bring "into Rule 56 text a number of related procedures that have grown up in practice." Id. Specifically, "[a]fter giving notice and a reasonable time to respond the court may grant summary judgment for the nonmoving party; grant a motion on legal or factual grounds not raised by the parties; or consider summary judgment on its own." Id. Even before the 2010 revisions to Rule 56, the rule implicitly required that the party that would be adversely affected by the summary judgment order be given notice and an opportunity to respond. See Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ( [D]istrict courts are widely 19

28 Appellate Case: Document: Date Filed: 06/30/2015 Page: 28 acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that she had to come forward with all of her evidence. ); Beaird v. Seagate Tech., Inc., 145 F.3d 1159, (10th Cir. 1998) ("Federal Rule of Civil Procedure 56 implicitly requires the district court to allow the nonmoving party an opportunity to respond before summary judgment is entered against it.") (cited authorities omitted); Hall v. Bellmon, 935 F.2d 1106, 1112 (10th Cir. 1991) (explaining that the opposing party must be afforded notice and an opportunity to respond to a request for summary judgment under Rule 56); Torres v. First State Bank of Sierra County, 550 F.2d 1255, 1257 (10th Cir. 1977) ( The provisions of Rule 56(c) for notice to the opposing party and an opportunity for him to serve opposing affidavits are mandatory. Noncompliance therewith deprives the court of authority to grant summary judgment. ). Here, the record demonstrates that the district court did not provide notice to Jones that it was considering dismissing her Third and Fourth Claims for Relief. The district court also did not give Jones an opportunity to respond and demonstrate why dismissing her Third and Fourth Claims for Relief was legally and factually improper. Indeed, when it renewed its summary judgment motion, State Farm limited its argument to the claim that Jones' First and Second Claims for Relief were barred by the statute of limitations. Aplt. App., at State Farm merely 20

29 Appellate Case: Document: Date Filed: 06/30/2015 Page: 29 suggested that "[a]t the Pretrial Conference on April 25, 2014, the Court dismissed Plaintiff's bad faith and statutory violation claims and vacated the trial date." Id., at 165. This was not the case, however. No dismissal had previously occurred. In her response, Jones disputed accrual under the statute of limitations because that was the basis of State Farm's renewed summary judgment motion. Id., at Jones clarified that although there was discussion regarding Jones' bad faith claims, the Court did not dismiss [Jones'] bad faith and statutory violation claims. Id., at 199. In its reply brief filed in support of its renewed summary judgment motion, State Farm acknowledged that only the accrual date of the statute of limitations was being addressed in [its] Motion. Id., at 225. State Farm clarified that it was requesting entry of judgment against Jones' only on Jones' First and Second Claims for Relief. Id. Moreover, the district court itself acknowledged that State Farm had not moved for summary judgment on Jones' bad faith claims and that those claims were not before the court on State Farm's renewed summary judgment motion. Aplt. App., at 260:4-9. The district court further recognized that due process would require notice and an opportunity to respond. Id., at 262:23-264:8. The district court nevertheless dismissed Jones' bad faith claims in its November 10, 2014 SJ Order. Aplt. App., at 271. The district court reasoned that State Farm "has made an arguable defense to the plaintiff s claim." Id. But the district court did not 21

30 Appellate Case: Document: Date Filed: 06/30/2015 Page: 30 previously give Jones notice that it was considering dismissing her bad faith claims on that basis. The district court also did not give Jones an opportunity to respond and present legal arguments and facts that would show summary judgment was improper on that basis. This Court should reverse the district court's SJ Order as it relates to Jones' bad faith claims because the district court did not comply with Fed. R. Civ. P. 56(f) and did not give Jones notice and an opportunity to respond to the question of whether State Farm was entitled to summary judgment on Jones' bad faith claims. See Torres, 550 F.2d at 1257; Hall, 935 F.2d at ; see also Northington v. Jackson, 973 F.2d 1518, 1522 (10th Cir. 1992) (it is error for a district court to enter summary judgment without complying with Rule 56 summary judgment procedures). C. The District Court Erred When It Dismissed Jones' Bad Faith Claims Because There Was Factual Dispute as to Whether Defendant State Farm s Delay or Denial of Benefits was Reasonable Under the Circumstances. Second, even if the Court does not reverse the district court because of its failure to comply with Fed. R. Civ. P. 56(f), the Court should reverse the district court's SJ Order insofar as it dismissed Jones' bad faith claims because there was substantial evidence in the record to raise a genuine question of material fact as to whether State Farm s actions were consistent with the heightened standard of conduct required in investigating and processing UM/UIM cases. 22

31 Appellate Case: Document: Date Filed: 06/30/2015 Page: 31 Jones' Third and Fourth Claims for Relief are premised on important public policy concerns aimed at protect[ing] the insured from being forced to traverse undue procedural hurdles and re-litigate matters prior to a recovery under a UM policy. State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177, 189 (Colo. 2004); De Herrera v. Sentry Ins. Co., 30 P.3d 167, 174 (Colo. 2001) (citing the General Assembly s UM/UIM public policy to assure the widespread availability to the insuring public of insurance protection against financial loss caused by negligent financially irresponsible motorists, and [b]ecause of the important policy behind UM/UIM insurance to protect persons from the often-devastating consequences of motor vehicle accidents, we have concluded that great weight must be accorded this legislative intent ). To prevail on her claims, Jones is required to establish that State Farm breached its duty of good faith and fair dealing and its obligations to timely investigate and process her claim. See id.; see also Riccatone v. Colorado Choice Health Plans, 2013 COA 133, 12, 315 P.3d 203, 206. Notably, the burden on the insured pursing the claim is lower than in other contexts. See Grund, et. al, West s Colorado Practice Series: Personal Injury Practice Torts and Insurance, 8A Colo. Prac., Personal Injury Torts and Insurance 56 (3d ed.); Erin Krisofco, CRS and -1116: Providing Remedies to First-Party Claimants, 39 Colo. Law. 69 (2010) (explaining that the 23

32 Appellate Case: Document: Date Filed: 06/30/2015 Page: 32 standard contained in 1115 arguably is less onerous on the insured, and the remedies contained in 1116 are more financially threatening to the insurer than a traditional common law bad faith claim ). Where a plaintiff has established a factual dispute as to whether the insurer met those obligations, summary judgment is inappropriate. Fed. R. Civ. P. 56(c). Here, there is a factual dispute as to whether State Farm met its obligations to act in good faith and to timely investigate and process Jones' claim. As an initial matter, the district court made no factual findings in connection with its SJ Order. It simply summarily stated that defendant has made an arguable defense to the plaintiff s claim, and then dismissed the claims. Aplt. App., at 271. As a result, this Court must review the factual record here to determine whether there are genuine issues of material fact. Simms, 165 F.3d at 1326; Fed. R. Civ. P. 56. Jones set forth facts, which are undisputed, and which raise questions as to whether State Farm unreasonably failed to meet its statutory and contractual obligations. Specifically, the timeline of denial of payment in and of itself raises questions as to the propriety of State Farm s conduct. Jones was injured in an accident on July 7, [Doc. 29]. Jones put State Farm on notice of her claim and the circumstances of the accident that the accident involved a 13 year-old driver who was using a car with an unidentified owner within the month. [Doc. 24

33 Appellate Case: Document: Date Filed: 06/30/2015 Page: 33 44, Exh. B]. Still, until the Final Judgment from the District Court, State Farm had not made payments under the policy. 3 Additionally, Jones, through counsel, immediately undertook an investigation into the other individuals involved in the accident to determine whether they may have coverage. [Doc. 43, Exh. E at 23-37] (describing the efforts of Jones' first counsel to identify the parties involved in the accident and ascertain insurance coverage). Jones' second attorney also testified that, although he did not recall Jones' case specifically, his office would have done some investigation related to the accident report and potentially negligent parties. [Doc. 43, Exh. M at 36-39, 40]. Additionally, Jones' current counsel undertook to investigate the status of any adverse party s insurance, and was ultimately to serve several parties that could potentially have had insurance in the Adams County Court action. [Doc. 50]. As more fully explained in the briefing on the motion for summary judgment, all parties were investigating whether there was any applicable coverage for several years. [Docs. 43, 44, 46-51]. Through that time, State Farm also continued to investigate whether there was any applicable insurance on the adverse vehicle. [Doc. 44, Exh. 3; Doc 45, at 7-9]. During the course of these internal and external investigations, State Farm denied Jones any UM/UIM benefits, despite the fact that State Farm itself 3 Plaintiff notes that, due to the pending appeal, Defendant has not made any payments to Plaintiff. 25

34 Appellate Case: Document: Date Filed: 06/30/2015 Page: 34 suspected that there would likely be insufficient coverage. [Doc. 43]. State Farm initially maintained that it was still investigating whether any adverse party had coverage, and therefore did not provide any policy benefits to Jones. See e.g., [Doc. 44, at Exh. 3, at ]. Then, after Jones had initiated the state court suit, continuing to attempt to comply with her obligations to investigate whether there was any other policy coverage available, State Farm abruptly switched tactics and argued Jones' claim was barred by the statute of limitations. [Doc. 44, at Exh. 3, at ]. Through this approach, State Farm essentially required Jones to continue to investigate adverse parties and, when the course of doing so took substantial time, State Farm then argued that Jones had slept on her rights. State Farm persisted in maintaining its refusal to pay after Mr. Rivera denied having any applicable coverage, after this suit was launched, and after the district court denied State Farm's first motion for summary judgment. This course of conduct raises questions about whether State Farm acted reasonably in investigating and processing Jones claim. Riccatone, 2013 COA 133, 12. The record also raises questions regarding whether State Farm met its obligations in investigating and processing the claim with regard to identifying potential adverse parties. Specifically, Jones was able, through diligent pursuit of counsel, to locate and serve Luis Rivera, Karen Barrios, and her parents. [Doc. 50]. Upon information and belief, State Farm was never able to contact any of those 26

35 Appellate Case: Document: Date Filed: 06/30/2015 Page: 35 parties. As a result, material questions of fact exist as to whether State Farm met its investigation obligations. Additionally, as described more fully below, Jones obtained and submitted expert testimony that would have supported the fact that State Farm's actions were not in good faith. [Doc. 39]. Specifically, Jones identified Mr. Hemmat, who is an expert in pursuing UM/UIM claims and who was disclosed to provide testimony regarding Jones claims. Although Mr. Hemmat was primarily disclosed to address opinions regarding when it is reasonable for an insured to know that an at fault driver should have insurance, his expertise, qualifications, and testimony also provide factual support for the premise that State Farm failed to act in good faith in evaluating Plaintiff s UM/UIM claim. Finally, State Farm s own position in briefing the summary judgment motion undermines any defense to the bad faith claims. Through its briefing, State Farm maintained that Jones should have known of the lack of insurance from any adverse party, and therefore, filed suit against State Farm earlier. [Doc. 43, 46]. If State Farm seeks to charge Jones with certain knowledge that there was insufficient insurance coverage from the adverse driver/involved parties in July, 2011 then State Farm must surely be held to have the same knowledge. Despite seeking to impute such knowledge to Jones as early as the date of the accident, State Farm refused to provide any benefits to Jones through the pendency of the 27

36 Appellate Case: Document: Date Filed: 06/30/2015 Page: 36 underlying district court lawsuit. [Docs. 29 (re: no payment) & 46 (re: charged date of knowledge)]. State Farm cannot maintain that there was no coverage in place and simultaneously submit that it was justified in denying the contractual benefit, which only applies when there is no coverage in place. To permit State Farm to avoid the illogical conclusion borne out by these inconsistent positions would undermine the public policy principles central to Jones claims. Jones has established genuine issues as to the material fact of whether State Farm satisfied its statutory and contractual obligations. Fed. R. Civ. P. 56(c). If Jones had been provided notice by the district court that it was considering dismissing her bad faith claims, she would have identified all these legal arguments and facts for the district court. Regardless, because Jones has submitted evidence upon which a jury could properly find for Jones, dismissal of her bad faith claims at the summary judgment stage was inappropriate. Century 21, 315 F.3d at Therefore, this Court should reverse the district court s SJ Order and reinstate Jones' Third and Fourth Claims for Relief. D. The Finding that State Farm Set Forth an Arguable Defense to Jones' Claims Does Not Establish a Lack of Factual Dispute. The district court held that because State Farm had set forth an arguable defense to Jones' Third and Fourth Claims for Relief, those claims should be dismissed. [Doc 51]. This approach misapprehends the framework for evaluation of bad faith claims. 28