Hubchik v. Owners Insurance Company

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 23-cv-01359-DDD-KAS
JOSEPHINE HUBCHIK, an Individual,
Plaintiff,
v.
OWNERS INSURANCE COMPANY, a Foreign Corporation,
Defendant.
_____________________________________________________________________
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KATHRYN A. STARNELLA
This matter is before the Court on Plaintiff’s Motion to Amend Complaint to Add
Allegations to Conform to the Evidence, a Common Law Bad Faith Claim, and a
Claim for Punitive Damages [#38] (the “Motion”). Defendant filed a Response [#47] in
opposition to the Motion [#38], and Plaintiff filed a Reply [#51]. The Court has reviewed
the briefs, the entire case file, and the applicable law. For the following reasons, the Court
RECOMMENDS that the Motion [#38] be GRANTED in part and DENIED in part.
I. Background
In the present Motion [#38], Plaintiff seeks to amend her Complaint [#5] to add (1)
a common law bad faith claim and (2) a claim for punitive damages, as well as supporting
allegations for each. Plaintiff asserts that the same factual predicate underlies both the
common law bad faith claim and the claim for punitive damages. Reply [#51] at 9 (“The
same facts and evidence will be involved in all of Plaintiff’s claims.”) (footnote omitted).
Because Defendant primarily objects to amendment on the basis of diligence, delay, and
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prejudice, see generally Response [#47], a precise timeline of events is critical, and the
Court begins there.
This matter arises from a motor vehicle accident which occurred in Broomfield,
Colorado, on October 31, 2019. Compl. [#5] ¶ 10. Plaintiff alleges that she “was stopped
behind two other vehicles . . . when she was struck from behind by a speeding 2003 Jeep
Liberty driven by Kelsi Shaw.” Id. Plaintiff alleges that she suffered serious injury from the
collision. Id. ¶¶ 17-36. At the time of the collision, Plaintiff was insured by Defendant under
a policy that included underinsured motorist coverage (“UIM”). Id. ¶ 37. On May 31, 2022,
Plaintiff sent Defendant a demand for payment of benefits, along with pre- and post-
accident medical records, medical bills, and damages information. Motion [#38] at 3.
At an unspecified time after it received Plaintiff’s demand, Defendant hired Dr.
Anant Kumar to provide opinions on the claim. Id. at 6. On November 3, 2022, Tanya
Churchwell (“Churchwell”), a claims specialist for Defendant, sent an email to Plaintiff’s
counsel stating: “We were just informed that Dr. Kumar had been out of the country and
has just returned. I have reached out again to request a status on the report and will
forward it to you as soon as I receive it.” Def.’s Ex. G [#47-6].
At another unspecified time after Plaintiff filed her claim, Defendant retained
Zupkus & Angell, an outside law firm, to coordinate the records review on the claim, and
Zupkus & Angell in turn subcontracted a firm named Contegrity to interface with Dr.
Kumar. Motion [#38] at 9-10. At some point, Dr. Kumar relayed that he might have a stale
conflict of interest in connection with the claim. Id. at 6; Response [#47] at 8 n.1; Pl.’s Ex.
11 [#38-11]. On November 14, 2022, Todd Johnson (“Johnson”) of Contegrity sent an
email to Alicia Salazar (“Salazar”) of Zupkus & Angell stating:
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In light of the REALLY old conflict with Dr. Kumar, I did check with the
various ortho spine docs and Dr. Sabin can review this one the quickest and
confirmed no conflict as far as he could tell from his system. He’s got a high
per hour rate, but he’s pretty efficient in his actual review time relative to
other doctors. He said he could get through this file in the next week or so
and have a call with Ms. Churchwell to discuss before the final report is
provided. Attached is his info, let me know if you want him to proceed with
the review or if you would like other options.
Pl.’s Ex. 13 [#38-13]. On November 30, 2022, Ms. Salazar emailed Mr. Johnson, stating
in relevant part: “Dr. Kumar said he performed surgery on Mr. Hubchik (Gordon) in 2005.
Our claimant is Josephine. I believe they are married (both are named on the policy). I
think this means Dr. Kumar is not conflicted out.” Pl.’s Ex. 11 [#38-11]. On December 4,
2022, Ms. Salazar confirmed that Defendant would continue with Dr. Kumar. Pl.’s Ex. 14
[#38-14].1
On March 28, 2023, Plaintiff filed this litigation, asserting two claims: (1) breach of
contract, and (2) violation of Colo. Rev. Stat. § 10-3-1115 for unreasonable delay/denial
of payment of benefits. Compl. [#5] ¶¶ 78-88. Shortly after, on or about April 4, 2023,
Defendant received Dr. Kumar’s final report. Pl.’s Ex. 3 [#38-3] at 157:2-14. On April 24,
2023, Plaintiff’s counsel sent an email to Defendant’s counsel, stating:
I wanted to let you know that after receiving and reviewing Dr. Kumar’s
report last week I have since been informed that he is one of Ms. Hubchik’s
treating physicians and performed her first neck surgery. This obviously
raises concerns about Dr. Kumar now being retained by Owners in adversity
to Ms. Hubchik’s UIM claim. This is an odd situation and I’m not sure what
to make of it, but I wanted to bring it to your attention before we venture
much further into the case. If you would like to discuss, please feel free to
reach out to me.
1 	It 	is 	unclear 	from 	the 	parties’ 	submissions 	when 	Plaintiff 	received 	copies 	of 	these
November/December 2022 emails, but the timing does not materially affect resolution of the
Motion [#38].
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Pl.’s Ex. 8 [#38-8].
On May 11, 2023, June 1, 2023, and July 17, 2023, Ms. Churchwell sent letters to
Plaintiff’s attorneys on behalf of Defendant. Pl.’s Exs. 4-6 [#38-4, #38-5, #38-6]. Plaintiff
characterizes these letters, which ask for documents relating to a prior accident and
settlement documents from a related lawsuit against another insurance company, as
“aggressive” and “insinuat[ing] that [Plaintiff] had concealed information” because they
mention potential failure to cooperate and fraud. Id.; Motion [#38] at 5.
On May 8, 2024, the day Plaintiff filed the present Motion [#38], Defendant, via Ms.
Churchwell, sent a letter to Plaintiff’s attorneys asking Plaintiff to submit to a psychological
examination pursuant to the insurance policy’s cooperation clause, invoking Colorado’s
failure-to-cooperate statute. Pl.’s Ex. 7 [#38-7] (citing Colo. Rev. Stat. § 10-3-1118).2
II. Analysis
Plaintiff’s proposed amendments fall into five factual predicates underpinning her
allegations of bad faith and punitive damages: (1) Defendant “knowingly delayed its
investigation 	for 	nearly 	a 	year”; 	(2) 	Defendant 	“manipulated 	that 	investigation 	by
knowingly or, at minimum, recklessly retaining a treating physician to perform a records
review”; 	(3) 	Defendant, 	“after 	being 	sued, 	began 	making 	false 	accusations 	of
‘noncooperation’ and ‘fraud’ related to ‘concealment’ of information about a 2011 accident
2 Colo. Rev. Stat. § 10-3-1118 took effect on September 14, 2020, and applies to cases filed on
or after that date. Wenzell v. United Servs. Auto. Ass’n, 552 P.3d 1121, 1127 (Colo. App. 2024).
The statute “requires insurers to take certain steps or forfeit any later-asserted noncooperation
litigation defense. Period.” Sanchez-Bell v. CSAA Gen. Ins. Co., No. 22-cv-01678-WJM-STV,
2024 WL 2817504, at *2 (D. Colo. June 3, 2024) (emphasis omitted). “When an insurer asserts a
noncooperation defense, the insurer effectively argues that the insured has failed to comply with
a contractual policy provision, thus preventing an insurer from investigating the claim.” Wenzell,
552 P.3d at 1126.
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that [Defendant] indisputably knew about, never previously asked for information about,
and was provided information about after asking during litigation”; (4) Defendant, “after
being sued, began making direct demands through its adjuster for information that it knew
was governed by discovery rules, and threatened ‘noncooperation’ if such information
was not provided outside the bounds of the discovery process”; and (5) Defendant
“continues to refuse [to acknowledge], contrary to radiology findings, that Plaintiff suffered
any spine injuries other than a ‘minor sprain/strain’.” Motion [#38] at 11-12.
The Court first considers Plaintiff’s proposed amendments under Fed. R. Civ. P.
16(b)(4) and 15(a)(2) before turning to the issue of punitive damages.
A. 	Fed. R. Civ. P. 16(b)(4)
1. 	Legal Standard
The Motion [#38] was filed on May 8, 2024, well after the October 19, 2023
deadline for joinder of parties and amendment of pleadings. Sched. Order [#22] § 9.a.
“After a scheduling order deadline, a party seeking leave to amend must demonstrate (1)
good cause for seeking modification under Fed. R. Civ. P. 16(b)(4) and (2) satisfaction of
the Rule 15(a) standard.” Gorsuch, Ltd., B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d
1230, 1240 (10th Cir. 2014) (citing Pumpco, Inc. v. Schenker Int’l, Inc., 204 F.R.D. 667,
668 (D. Colo. 2001)); see also Fed. R. Civ. P. 16(b)(4) (stating that a party seeking to
modify a Scheduling Order must show good cause and obtain the judge’s consent). If a
party fails to establish good cause under Rule 16, a court need not also consider whether
Rule 15 is satisfied. Gorsuch, Ltd., B.C., 771 F.3d at 1240; see also Birch v. Polaris Indus.,
Inc., 812 F.3d 1238, 1248-49 (10th Cir. 2015).
In practice, good cause under Rule 16(b)(4) “requires the movant to show the
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scheduling deadlines cannot be met despite . . . diligent efforts” and “may be satisfied, for
example, if a plaintiff learns new information through discovery or if the underlying law
has changed.” Birch, 812 F.3d at 1247 (quoting Gorsuch, Ltd., 771 F.3d at 1240);
Pumpco, Inc., 204 F.R.D. at 668-69 (finding good cause where “a party first learns,
through discovery or disclosures, information necessary for the assertion of a claim after
the deadline to amend”). However, if the party knew of the underlying conduct but simply
failed to raise a claim or affirmative defense, the claims will be barred. Gorsuch, Ltd., 771
F.3d at 1240 (citations omitted).
2. 	Application
Defendant argues that Plaintiff fails to demonstrate the required good cause under
Rule 16(b)(4) with respect to her request to add a common law bad faith claim. Response
[#47] at 13-14. As noted, if the party knew of the underlying conduct but simply failed to
raise a claim based on that conduct, the claim is barred. Gorsuch, Ltd., 771 F.3d at 1240
(citations omitted).
Plaintiff’s first asserted basis for amendment is that Defendant “knowingly delayed
its investigation for nearly a year.” Motion [#38] at 11. On May 31, 2022, Plaintiff sent her
demand for payment of benefits to Defendant. Id. at 3. The deadline for joinder of parties
and amendment of pleadings was October 19, 2023. Sched. Order [#22] § 9.a. The Court
finds that Plaintiff knew of the alleged conduct underlying this claim (i.e., nearly a year of
delay) well in advance of that deadline but failed to raise it. Therefore, her common law
bad faith claim is barred to the extent premised on the first basis.
The second asserted basis for amendment is that Defendant “manipulated [the]
investigation by knowingly or, at minimum, recklessly retaining a treating physician to
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perform a records review.” Motion [#38] at 11. However, Plaintiff was aware of Dr.
Kumar’s purported prior treatment of her no later than April 24, 2023, as evidenced by
Plaintiff’s counsel’s email that day to Defendant’s counsel. Def.’s Ex. G [#47-6]. The Court
finds that Plaintiff knew of the alleged conduct underlying this claim (i.e., Dr. Kumar’s
potential conflict of interest) approximately six months in advance of the October 19, 2023
deadline for joinder of parties and amendment of pleadings but failed to raise it. Therefore,
her common law bad faith claim is barred to the extent premised on the second basis.
The third basis for amendment is that Defendant, “after being sued, began making
false accusations of ‘noncooperation’ and ‘fraud’ related to ‘concealment’ of information
about a 2011 accident that [Defendant] indisputably knew about, never previously asked
for information about, and was provided information about after asking during litigation.”
Motion [#38] at 11-12. In support of this theory, Plaintiff points to three letters that Ms.
Churchwell sent, dated May 11, 2023, June 1, 2023, and July 17, 2023. Pl.’s Exs. 4-6
[#38-4, #38-5, #38-6]. These letters were sent between five and three months before the
October 19, 2023 deadline for joinder of parties and amendment of pleadings. To the
extent they allegedly demonstrate Defendant’s bad faith, Plaintiff could have but failed to
amend in a timely manner. Therefore, her common law bad faith claim is barred to the
extent premised on the third basis.
Plaintiff’s fourth asserted basis for amendment is that Defendant, “after being sued,
began making direct demands through its adjuster for information that it knew was
governed by discovery rules, and threatened ‘noncooperation’ if such information was not
provided outside the bounds of the discovery process.” Motion [#38] at 12. In support of
this theory, Plaintiff appears to reference the same May 11, 2023, June 1, 2023, and July
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17, 2023 letters just discussed, as well as the May 8, 2024 letter sent by Defendant.
Motion [#38] at 5-6; Pl.’s Ex. 7 [#38-7]. As discussed in connection with the third basis,
the common law bad faith claim here is barred as untimely to the extent premised on the
three 2023 letters. However, the claim is not barred as untimely to the extent premised
on the May 8, 2024 letter, given that the letter was received the day this Motion [#38] was
filed.
Finally, Plaintiff’s fifth asserted basis for amendment is that Defendant “continues
to refuse [to acknowledge], contrary to radiology findings, that Plaintiff suffered any spine
injuries other than a ‘minor sprain/strain’.” Motion [#38] at 12; see generally Depo. of
Churchwell [#38-3] at 63:7-68:24. However, Defendant produced its claim 	file on
September 1, 2023, which contained a note by Ms. Churchwell that “[t]here does not
appear to be any acute or traumatic injuries to the cervical, thoracic, or lumbar spines.”
Response [#47] at 14; Depo. of Churchwell [#38-3] at 63:17-24. Plaintiff received this
claim note, which showed that Defendant was not considering significant spinal injuries,
nearly seven weeks in advance of the October 19, 2023 deadline for amendment of
pleadings. Plaintiff does not argue that she did not have enough time to review the claim
file before the deadline and, even if she did not, she did not move to extend the deadline
so she could complete her review. The Court finds that Plaintiff could have but failed to
raise this basis in a timely manner. Therefore, the common law bad faith claim is barred
to the extent premised on the fifth basis.3
3 Plaintiff’s arguments and proposed allegations heavily lean on information learned during
depositions taken in the three months prior to the filing of the Motion [#38], including (1) Ms.
Churchwell’s deposition, taken February 2, 2024, see Pl.’s Ex. 3 [#38-3]; (2) Dr. Kumar’s
deposition, taken March 15, 2024, see Pl.’s Ex. 10 [#38-10]; (3) Defendant’s Rule 30(b)(6)
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Accordingly, the Court recommends that the Motion [#38] be denied to the extent
Plaintiff seeks leave to add a common law bad faith claim except to the extent Plaintiff’s
fourth basis is premised on the sending of and the contents of the May 8, 2024 letter.
B. 	Fed. R. Civ. P. 15(a)(2)
1. 	Legal Standard
Federal Rule of Civil Procedure 15(a)(2) states that “[t]he court should freely give
leave [to amend] when justice so requires.” “[T]his mandate is to be heeded.” Foman v.
Davis, 371 U.S. 178, 182 (1962). In other words, “[i]f the underlying facts or circumstances
relied upon by a [litigant] may be a proper subject of relief, [s]he ought to be afforded an
opportunity to test [her] claim on the merits.” Id. This is consistent with the purpose of
Rule 15, which is “to provide the maximum opportunity for each claim to be decided on
its merits rather than on procedural niceties.” Hardin v. Manitowoc-Forsythe Corp., 691
F.2d 449, 456 (10th Cir. 1982). Whether to grant or deny leave to amend a complaint is
within a court’s discretion. Foman, 371 U.S. at 182. Refusing leave to amend is generally
justified only on “a showing of undue delay, undue prejudice to the opposing party, bad
faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or
futility of amendment.” Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).
Regarding 	undue 	delay, 	“[l]ateness 	does 	not 	of 	itself 	justify 	the 	denial 	of
deposition, taken March 22, 2024, see Pl.’s Ex. 9 [#38-9]; and (4) Ms. Salazar’s deposition, taken
April 22, 2024, see Pl.’s Ex. 12 [#38-12] (mislabeled on the electronic docket as “dated
04/22/2022”). However, although Plaintiff may have learned some additional details about her
proposed bad faith claim during those depositions, for the reasons stated above, Plaintiff knew
about the core conduct in which Defendant allegedly engaged long before the deadline for
amendment of pleadings, with the one obvious exception of the May 8, 2024 letter. Thus, the
depositions do not change the Court’s determination that Plaintiff failed to raise most aspects of
this claim in a timely manner.
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amendment.” R.E.B., Inc. v. Ralston Purina Co., 525 F.2d 749, 751 (10th Cir. 1975). In
this Circuit, the undue delay analysis “focuses primarily on the reasons for the delay” and
denial of leave is appropriate where a party has no adequate explanation for the delay.
Minter v. Prime Equip. Co., 451 F.3d 1196, 1206 (10th Cir. 2006) (collecting cases).
Undue prejudice is the most important factor, but “[c]ourts typically find prejudice
only when the amendment unfairly affects the [non-movants] ‘in terms of preparing their
defense to the amendment,’” such as where the amended claims arise from a different
subject matter from that previously set forth in the prior pleading. Id. at 1208 (citing Patton
v. Guyer, 443 F.2d 79, 86 (10th Cir. 1971)); Hirt v. Unified Sch. Dist. No. 287, 308 F.
Supp. 3d 1157, 1168 (D. Kan. 2018) (acknowledging that “any amendment invariably
causes some ‘practical prejudice’” but noting that “undue prejudice means that the
amendment would ‘work an injustice to the [opposing party]’”) (quoting Carefusion 213,
LLC v. Pro. Disposables, Inc., No. 09-2616-KHV-DJW, 2010 WL 4004874, at *4 (D. Kan.
Oct. 12, 2010)).
2. 	Application
Given the Court’s finding’s under Fed. R. Civ. P. 16(b)(4) as to four of Plaintiff’s
five proposed bases for amendment, the Court need only consider Rule 15(a)(2) as to
Plaintiff’s theory that Defendant, “after being sued, began making direct demands through
its adjuster for information that it knew was governed by discovery rules, and threatened
‘noncooperation’ if such information was not provided outside the bounds of the discovery
process,” to the extent based on the May 8, 2024 letter. Motion [#38] at 11-12; see
Gorsuch, Ltd., 771 F.3d at 1240 (stating that, if a party fails to establish good cause, the
court need not also consider whether Rule 15 is satisfied).
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“An insurer has a legal obligation to deal with an insured fairly and in good faith,”
and this duty “continues as long as the insurer-insured relationship exists.” Parsons ex
rel. Parsons v. Allstate Ins. Co., 165 P.3d 809, 815 (Colo. App. 2006). The duty
“permeates all of the dealings between the parties.” Travelers Ins. Co. v. Savio, 706 P.2d
1258, 1268 (Colo.1985). “For an insured to prevail on a bad faith breach of contract claim
against an insurer, the insured must establish the insurer acted unreasonably and with
knowledge or reckless disregard of its unreasonableness.” Parsons, 165 P.3d at 814-15.
The question of the insurer’s “reasonableness under the circumstances” is measured
based on industry standards. Id. at 815; Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333,
343 (Colo. 2004). “[W]hat 	constitutes reasonableness under 	the 	circumstances is
ordinarily a question of fact for the jury.” Bankr. Estate of Morris v. COPIC Ins. Co., 192
P.3d 519, 524 (Colo. App. 2008).
Defendant argues under Rule 15(a) that the Motion [#38] should be denied
because of undue delay and undue prejudice. Response [#47] at 2-5. To the extent that
Plaintiff points to the May 8, 2024 letter as evidence of bad faith, she received it the same
day she filed the Motion [#38], so there is clearly no delay, not to mention undue delay,
in seeking amendment based on that letter.4
Further, the Court finds that Defendant has not incurred any undue prejudice. The
Motion [#38] was filed more than two months before the close of discovery, as set at that
time. Minute Order [#37] (issued May 1, 2024, extending the discovery cutoff to July 22,
4 The Court notes that, even if the other portions of Plaintiff’s claim were not barred under Rule
16(b)(4), see § II.A.2., the Court would find, in the alternative, that these other portions would be
barred as unduly delayed under Rule 15(a)(2).
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2024). The May 8, 2024 letter could not have been raised earlier, given the date on which
the conduct occurred. Thus, there was no opportunity for either side to conduct any
potentially necessary discovery into this claim before Plaintiff filed this Motion [#38]. In
other words, this part of the claim was new to both Plaintiff and Defendant and could not
have previously been addressed by either side through either fact discovery or expert
discovery. To the extent either side believes that limited additional discovery is required
based on this claim, the parties may individually or jointly make a prompt request to the
Court by way of a written motion, which, if good cause is shown, will cure any possible
prejudice.
Accordingly, the Court recommends that the Motion [#38] be granted to the
extent Plaintiff seeks to add a common law bad faith claim relating to Defendant’s May 8,
2024 letter.
C. 	Colo. Rev. Stat. § 13-21-102(1.5)(a)
1. 	Legal Standard
At the outset, the Court notes that “[t]he Tenth Circuit has not addressed whether
[Colo. Rev. Stat.] § 13 -21-102(1.5)(a), which is procedural in nature, is applicable to a
motion to amend in a federal diversity case applying Colorado law, or whether the inquiry
is governed, solely, by Rule 15(a).”5 Argo v. State Farm Mut. Auto Ins. Co., No. 18-cv-
02059-RM-KMT, 2019 WL 4192110, at *2 n.3 (D. Colo. Sept. 4, 2019). However, because
other courts in this District have applied the Colorado statute and no party in this case
5 Because the parties’ briefing assumes that Colorado law applies with respect to the punitive
damages claim, the Court proceeds under the same assumption. See Grynberg v. Total S.A., 538
F.3d 1336, 1346 (10th Cir. 2008) (citing St. Anthony Hosp. v. U.S. Dep’t of Health & Hum. Servs.,
309 F.3d 680, 703 (10th Cir. 2002)).
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disputes its applicability, the Court here applies Colo. Rev. Stat. § 13-21-102(1.5)(a). Id.;
see, e.g., Espinoza v. Am. Fam. Mut. Ins. Co., No. 08-cv-00709-REB-MEH, 2008 WL
4059851, at *2 (D. Colo. Aug. 29, 2008); Am. Econ. Ins. Co. v. William Schoolcraft, M.D.,
No. 05-cv-01870-LTB-BNB, 2007 WL 160951, at *1-2 (D. Colo. Jan. 17, 2007).
Colorado courts use the terms “punitive damages” and “exemplary damages”
interchangeably. See RCHFU, LLC v. Marriott Vacations Worldwide Corp., 445 F. Supp.
3d 1327, 1340 n.7 (D. Colo. 2020) (“‘Punitive damages’ and ‘exemplary damages’ have
the same meaning.”) (citing White v. Hansen, 837 P.2d 1229, 1231 n.1 (Colo. 1992)
(noting that “exemplary damages” and “punitive damages” have the same meaning in
common usage)). Under Colorado law, such damages are available only by statute.
Gruntmeir v. Mayrath Indus., Inc., 841 F.2d 1037, 1040 (10th Cir. 1988) (citing Kaitz v.
Dist. Court, 650 P.2d 553 (Colo. 1982)). Colo. Rev. Stat. § 13-21-102(1)(a) allows the jury
to award “reasonable exemplary damages” in any civil action “in which damages are
assessed by a jury for a wrong done to the person . . . and the injury complained of is
attended by circumstances of fraud, malice, or willful and wanton conduct[.]” However,
“[a] claim for exemplary damages in an action governed by this section may not be
included in any initial claim for relief. A claim for exemplary damages . . . may be allowed
by amendment to the pleadings only after the exchange of initial disclosures . . . and the
plaintiff establishes prima facie proof of a triable issue.” Colo. Rev. Stat. § 13-21-
102(1.5)(a). “The existence of a triable issue on punitive damages may be established
through discovery, by evidentiary means, or by an offer of proof.” Leidholt v. Dist. Court,
619 P.2d 768, 771 (Colo. 1980). The submitted evidence must establish “a reasonable
likelihood that the issue will ultimately be submitted to the jury for resolution.” Stamp v.
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Vail Corp., 172 P.3d 437, 449 (Colo. 2007) (quoting Leidholt, 619 P.2d at 771 n.3). “Prima
facie evidence is evidence that, unless rebutted, is sufficient to establish a fact.” Id.
(citation omitted).
“Willful 	and 	wanton conduct” 	is 	conduct which 	“an 	actor 	realizes 	is 	highly
hazardous and poses a strong probability of injury to another but nevertheless knowingly
and voluntarily chooses to engage in.” Lahey v. Covington, 964 F. Supp. 1440, 1446 (D.
Colo. 1996) (citing Steeves v. Smiley, 354 P.2d 1011, 1013-14 (Colo. 1960); Hodges v.
Ladd, 352 P.2d 660, 663 (Colo. 1960)). However, “mere negligence cannot support an
award of exemplary damages[.]” Jacobs v. Commonwealth Highland Theatres, Inc., 738
P.2d 6, 10 (Colo. App. 1986) (citing Tri-Aspen Constr. Co. v. Johnson, 714 P.2d 484
(Colo. 1986)).
2. 	Application
As noted above, Plaintiff asserts that the same factual predicate underlies both her
common law bad faith claim and her request for punitive damages. See Reply [#51] at 9.
Because the rest of the amendments are independently barred as untimely and lacking
good cause, the Court only addresses Plaintiff’s punitive damages request to the extent
based on the May 8, 2024 letter.
At a discovery hearing held on August 23, 2024, the Court and counsel discussed
at length the appropriateness of allowing Defendant to seek information outside of the
Federal Rules of Civil Procedure and the Scheduling Order, via a “parallel track” of
requesting information pursuant to the applicable insurance policy. The parties did not
present, and the Court was unable to find, any legal authority, including in the statutory
language of Colo. Rev. Stat. § 10-3-1118, clearly demonstrating that Defendant’s post-
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litigation 	conduct 	in 	seeking 	discovery 	pursuant 	to 	the 	policy 	was 	impermissible.
Additionally, the parties’ briefs here do not provide any such legal authority. Although the
Court makes no comment regarding whether Defendant’s conduct may constitute bad
faith, the Court cannot find that Plaintiff has shown prima facie evidence that such conduct
rises to the level of willful and wanton. Cf. Stamp, 172 P.3d at 449 (Colo. 2007) (defining
prima facie evidence as “evidence that, unless rebutted, is sufficient to establish a fact”).
Under the circumstances presented here, Plaintiff has not shown sufficient evidence that
Defendant should have known that sending the May 8, 2024 letter, and suggesting that it
may invoke the noncooperation defense if Plaintiff failed to comply, was “highly hazardous
and pose[d] a strong probability of injury” to Plaintiff. See Lahey, 964 F. Supp. at 1446.
Although Plaintiff clearly disagrees with Defendant’s conduct and believes it to be
impermissible, and even assuming the conduct may form the basis of an arguable
common law bad faith claim, the conduct does not warrant the potential imposition of
punitive damages under Colorado law.
Accordingly, the Court recommends that the Motion [#38] be denied to the extent
Plaintiff seeks punitive damages.
IV. Conclusion
Based on the foregoing,
IT IS HEREBY RECOMMENDED that the Motion [#38] be GRANTED in part and
DENIED in part. The Court recommends that the Motion be granted to the extent that
Plaintiff be permitted to add a common law bad faith claim premised on Defendant’s
conduct relating to the May 8, 2024 letter. The Court recommends that the Motion be
otherwise denied.
Case No. 1:23-cv-01359-RBJ-KAS Document 119 filed 10/31/24 USDC Colorado
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IT IS FURTHER ORDERED that any party may file objections within 14 days of
service of this Recommendation. In relevant part, Fed. R. Civ. P. 72(b)(2) provides that,
“within 14 days after being served with a copy of the recommended disposition, a party
may 	serve 	and 	file 	specific 	written 	objections 	to 	the 	proposed 	findings 	and
recommendations. A party may respond to another party’s objections within 14 days after
being served with a copy.” “[A] party’s objections to the magistrate judge’s report and
recommendation must be both timely and specific to preserve an issue for de novo review
by the district court or for appellate review.” United States v. 2121 E. 30th St., 73 F.3d
1057, 1060 (10th Cir. 1996). The objection must be “sufficiently specific to focus the
district court’s attention on the factual and legal issues that are truly in dispute.” Id. “[A]
party who fails to make a timely objection to the magistrate judge’s findings and
recommendations waives appellate review of both factual and legal questions.” Morales-
Fernandez v. I.N.S., 418 F.3d 1116, 1119 (10th Cir. 2005).
Dated: 	October 31, 2024 	BY THE COURT:
Kathryn A. Starnella
United States Magistrate Judge
Case No. 1:23-cv-01359-RBJ-KAS Document 119 filed 10/31/24 USDC Colorado
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