SUMMARY

August 1, 2019

2019COA121

No. 18CA1201, Bolt Factory v. Auto-Owners Ins. — Insurance —

Settlement and Release Agreements; Civil Procedure —

Intervention of Right

A division of the court of appeals considers a common but 

novel issue not decided by a previous Colorado case: whether an 

insurer’s interest is contingent, for purposes of a C.R.C.P. 24(a)(2) 

motion to intervene as a matter of right, where the insurer reserves 

the right to deny coverage. Because the insurer’s interest here was 

contingent, the division concludes that the trial court properly 

denied the motion to intervene as a matter of right. 

The summaries of the Colorado Court of Appeals published opinions 

constitute no part of the opinion of the division but have been prepared by 

the division for the convenience of the reader. The summaries may not be 

cited or relied upon as they are not the official language of the division. 

Any discrepancy between the language in the summary and in the opinion 

should be resolved in favor of the language in the opinion.
COLORADO COURT OF APPEALS 2019COA121

Court of Appeals No. 18CA1201

City and County of Denver District Court No. 16CV33608

Honorable J. Eric Elliff, Judge

Bolt Factory Lofts Owners Association Inc., a Colorado nonprofit corporation,

Plaintiff-Appellee,

v.

Auto-Owners Insurance Company,

Intervenor-Appellant.

ORDER AFFIRMED

Division VI

Opinion by JUDGE FOX

Freyre and Welling, JJ., concur

Announced August 1, 2019

Burg Simpson Eldredge Hersh & Jardine, P.C., Mari K. Perczak, Thomas W. 

Henderson, Joseph F. Smith, Nelson Boyle, Englewood, Colorado, for PlaintiffAppellee

The Hustead Law Firm, A Professional Corporation, Patrick Q. Hustead, 

Connor L. Cantrell, Denver, Colorado, for Intervenor-Appellant
1

¶ 1 Insurer, Auto-Owners Insurance Company (AOIC), appeals the 

trial court’s order denying its motion to intervene following a 

settlement agreement reached by its insured, Sierra Glass Co., Inc. 

(Sierra Glass), and plaintiff, Bolt Factory Loft Owners Association

Inc. (the Association). We affirm the trial court’s order. 

I. Background

¶ 2 This insurance dispute originated from a construction defects

case in which the Association sued six contractors for alleged 

construction defects at one of its Denver condominium projects. 

Two of those contractors then asserted negligence and breach of 

contract third-party claims against several subcontractors, 

including Sierra Glass, on November 7, 2016. Following a series of 

settlement agreements, the only remaining claims were those the 

Association, as assignee of the two contractors, asserted against 

Sierra Glass. 

¶ 3 AOIC had issued insurance policies to Sierra Glass and 

defended Sierra Glass under a reservation of rights. AOIC refused 

to pay a $1.9 million settlement demand the Association presented 

to Sierra Glass on or about May 2, 2018. As a result, Sierra Glass 

entered into an agreement with the Association under which, 
2

according to AOIC, Sierra Glass would refrain from offering a 

defense at trial (and the scheduled fifteen-day jury trial was 

reduced to a two-day bench trial) in exchange for the Association’s 

promise that it would not pursue recovery against Sierra Glass. 

Sierra Glass also agreed to assign any bad faith claims it had 

against AOIC to the Association. AOIC learned of this agreement 

the day before the jury trial was scheduled to start on May 4, 2018. 

¶ 4 On May 9, 2018, when the bench trial actually started, AOIC 

filed a motion to intervene, continue the trial, contest the settlement 

agreement, and protect its rights under the insurance policies. 

Following a hearing,1 the trial court determined that the settlement 

agreement was valid under Nunn v. Mid-Century Insurance Co., 244 

P.3d 116 (Colo. 2010).2 The court denied AOIC’s motion to 

 1 The hearing was held on May 9, 2018, before a different judge 

than the one assigned to try the case. 

2 In Nunn v. Mid-Century Insurance Co., our supreme court 

sanctioned an agreement between a plaintiff and a defendantinsured under the following circumstances:

[W]hen it appears that the insurer — who has 

exclusive control over the defense and 

settlement of claims pursuant to the insurance 

contract — has acted unreasonably by refusing 

to defend its insured or refusing a settlement 
3

intervene, concluding that AOIC’s claims were contingent on the 

outcome of trial and that AOIC could test coverage issues in a

subsequent declaratory judgment action. 

¶ 5 During the bench trial, the Association called four witnesses 

and delivered opening and closing statements. Sierra Glass did not 

present a defense. The trial court found in favor of the Association 

and entered a judgment for $2,489,021.91.

¶ 6 The Association then obtained a writ of garnishment against 

AOIC, and AOIC removed that action to federal district court. On 

June 11, 2019, the district court stayed the motion for garnishment 

 

offer that would avoid any possibility of excess 

liability for its insured, the insured may take 

steps to protect itself from potential exposure 

to such liability. One way for an insured to 

protect itself is through the use of an 

agreement whereby the insured assigns its bad 

faith claims to the third party, and in exchange 

the third party agrees to pursue the insurer 

directly for payment of the excess judgment 

rather than the insured.

244 P.3d 116, 119 (Colo. 2010) (first citing Old Republic Ins. Co. v. 

Ross, 180 P.3d 427, 433-34 (Colo. 2008); and then citing Northland 

Ins. Co. v. Bashor, 177 Colo. 463, 466, 494 P.2d 1291, 1294 

(1972)). A Nunn agreement thus allows an insured to “take 

affirmative steps to avoid the potentially disastrous effects of its 

insurer’s bad faith.” Id. at 122. 
4

pending the resolution of this appeal challenging the trial court’s 

denial of its motion to intervene. AOIC also filed a declaratory 

judgment action in federal district court against Sierra Glass 

seeking a declaration that (1) it did not owe obligations or payments 

under the insurance policies; (2) Sierra Glass breached the policy 

by failing to cooperate with AOIC; and (3) the state court judgment 

is not enforceable. The Association and Sierra Glass asserted 

counterclaims for breach of contract and third-party statutory and 

common law bad faith claims. Because of this pending appeal, the 

federal district court dismissed the declaratory relief claim and the 

counterclaims without prejudice. 

II. Jurisdiction

¶ 7 We first conclude that our jurisdiction over this appeal is 

proper. While there was a question if the removal of the 

garnishment action to federal district court constituted a removal of 

the entire case, see 28 U.S.C. § 1446(d) (2018) (after filing a notice 

of removal of a civil action, the state court shall proceed no further),

the garnishment action is a separate proceeding and the federal 

district court has stayed the proceeding. Therefore, we have 

jurisdiction over the appeal of this proceeding. See Mascarenas 
5

Enters., Inc. v. City of Albuquerque, 494 F. App’x 846, 850 (10th Cir.

2012) (“Removal of a state court case to federal court takes that

case out of the state court’s reach unless and until it is returned to 

the state court.” (citing 28 U.S.C. § 1446(d))).

III. Procedural Defect 

¶ 8 We now turn to whether AOIC’s motion to intervene was 

procedurally defective. C.R.C.P. 24(c) provides that a motion to 

intervene “shall be accompanied by a pleading setting forth the 

claim or defense for which intervention is sought.” But, where a 

party’s motion states the grounds and facts upon which 

intervention is sought and the opposing party is given a fair 

opportunity to respond, a failure to comply precisely with the rule is 

not detrimental to the opposing party’s substantial rights. Weston

v. T & T, LLC, 271 P.3d 552, 555-56 (Colo. App. 2011) (concluding 

that a trial court has discretion to determine whether a would-be

intervenor has satisfied the procedural requirements of Rule 24(c), 

and whether to permit intervention on a procedurally defective 

motion). While it is undisputed that AOIC’s motion was not 

accompanied by a pleading and so did not comply with Rule 24(c), 

AOIC’s motion to intervene detailed the basis for the requested
6

intervention, and the Association was able to respond at the 

hearing. Thus, the trial court did not abuse its discretion in 

considering the procedurally defective motion. Id. at 556.

IV. Motion to Intervene

¶ 9 AOIC contends that the trial court erred in denying its motion 

to intervene because it met all three requirements for intervention 

as a matter of right.3 We disagree. 

A. Standard of Review and Applicable Law

¶ 10 We review de novo the denial of a motion to intervene as of 

right under C.R.C.P. 24(a). Feigin v. Alexa Grp., Ltd., 19 P.3d 23, 28 

(Colo. 2001). 

¶ 11 Rule 24(a)(2) provides for intervention as a matter of right 

where (1) the applicant claims an interest in the subject matter of 

the litigation; (2) disposition of the action may impair or impede the 

applicant’s ability to protect that interest; and (3) the applicant’s 

 3 Though AOIC’s briefs attack the validity of the Nunn agreement, 

they do not argue that we should decide its validity, and so we do 

not address the issue. See C.A.R. 28(a)(4) (appellant’s brief must 

contain statement of the issues presented for review). And to the 

extent the parties challenge certain attachments as not being part 

of the record, there is no dispute that AOIC issued a reservation of 

rights letter, and the record contains ample references thereto.
7

interest is not adequately represented by existing parties. Id. at 

26.4 While “Rule 24 should be liberally interpreted to allow, 

whenever possible and compatible with efficiency and due process, 

issues related to the same transaction to be resolved in the same 

lawsuit and at the trial court level,” Feigin, 19 P.3d at 26, every 

element must be satisfied, and the failure to satisfy one element of 

Rule 24(a)(2) precludes a motion to intervene as of right, see

Diamond Lumber, Inc. v. H.C.M.C., Ltd., 746 P.2d 76, 78 (Colo. App. 

1987). 

B. Interest in the Litigation

¶ 12 In determining whether one has an interest in intervening 

under Rule 24(a)(2), Colorado courts take a “flexible approach.” 

Feigin, 19 P.3d at 29. “The existence of an interest ‘should be 

determined in a liberal manner.’ The interest prong ‘is primarily a 

practical guide to disposing of lawsuits by involving as many 

apparently concerned persons as is compatible with efficiency and 

 4 Timeliness is a threshold question in considering a motion to 

intervene. Law Offices of Andrew L. Quiat, P.C. v. Ellithorpe, 917 

P.2d 300, 303 (Colo. App. 1995). Because timeliness is not 

challenged on appeal, and because the intervention was denied on 

other grounds, we consider the merits of AOIC’s claim. 
8

due process.’” Cherokee Metro. Dist. v. Meridian Serv. Metro. Dist., 

266 P.3d 401, 404 (Colo. 2011) (citations omitted). 

¶ 13 But, if the interest is contingent, it may be insufficient to 

warrant intervention. See J.E.S. v. F.F., 762 P.2d 703, 706 (Colo. 

App. 1988) (concluding that a department of social services’ interest 

in support obligations owed to a child was contingent on the 

paternity action); Restor-A-Dent Dental Labs., Inc. v. Certified Alloy 

Prods., Inc., 725 F.2d 871, 875 (2d Cir. 1984) (affirming denial of 

motion to intervene where insurer’s interest depended on two 

contingencies). 

¶ 14 Where an insurer reserves the right to deny coverage, “the 

insurer’s interest in the liability phase of the proceeding is 

contingent on the resolution of the coverage issue.” Travelers 

Indem. Co. v. Dingwell, 884 F.2d 629, 638 (1st Cir. 1989);5 see also 

 5 AOIC argues that Colorado’s duty to defend scheme and 

regulatory framework for bad faith necessarily conflicts with 

Travelers Indemnity Co. v. Dingwell, 884 F.2d 629, 638 (1st Cir. 

1989), but we agree with the Association’s position that this 

interpretation runs contrary to Nunn, which specifically allows an 

insured to protect itself when an insurer balks at its duty to settle. 

See also Arline v. Am. Family Mut. Ins. Co., 2018 COA 82, ¶ 19

(“Colorado public policy favors the settlement of disputes when the 

settlement is fairly reached.”). 
9

Restor-A-Dent Dental Labs., 725 F.2d at 874-76. But see Design 

Basics, LLC v. Estate of Aus, No. 12-2437-JPO, 2014 WL 65754, at 

*3 (D. Kan. Jan. 8, 2014) (granting insurers’ motions to intervene 

following City of Stilwell v. Ozarks Rural Electric Cooperative 

Corp., 79 F.3d 1038 (10th Cir. 1996), and rejecting other circuits’ 

strict views to conclude that not every contingent interest fails to 

satisfy Fed. R. Civ. P. 24(a)(2), and noting that, while the insurers 

are affected only if there were coverage for the injured party’s 

claims, denying intervention would increase the likelihood of an 

adverse impact on the insurers). A reservation of rights is typically 

considered to be a contingent interest because “an insurer who 

reserves the right to deny coverage cannot control the defense of a 

lawsuit brought against its insured by an injured party.” Dingwell, 

884 F.2d at 639 (“Allowing the insurer to intervene to protect its 

contingent interest would allow it to interfere with and in effect 

control the defense. Such intervention would unfairly restrict the 

insured, who faces the very real risk of an uninsured liability, and 

grant the insurer ‘a double bite at escaping liability.’”) (citation 

omitted). 
10

¶ 15 Here, it is undisputed that AOIC reserved the right to deny 

coverage. Thus, its interest in the litigation was contingent on the 

liability phase of the proceedings and so it failed to satisfy prong 

one of Rule 24(a)(2). See Dingwell, 884 F.2d at 638; J.E.S., 762 

P.2d at 706. While AOIC asserts that the Nunn agreement negated 

the liability phase, such agreements are allowed in Colorado, and 

Sierra Glass was entitled to protect itself in the face of AOIC’s

potential denial of coverage and refusal to settle. See Nunn, 244 

P.3d at 119. Because AOIC failed to meet the first prong of Rule 

24(a)(2), the court properly denied its motion to intervene. See 

Diamond Lumber, 746 P.2d at 78.6 

 6 We also agree with the trial court’s conclusion that AOIC can

sufficiently protect its interests in a subsequent declaratory 

judgment action regarding coverage. AOIC’s initial filing was 

dismissed without prejudice thus it can reassert the claims once 

these state court appellate proceedings have concluded. Cf. Mauro 

v. State Farm Mut. Auto. Ins. Co., 2013 COA 117, ¶ 17 (concluding 

that insurer had no other alternative to challenge a protective order 

than to request intervention). Moreover, if AOIC believes the 

settlement between Sierra Glass and the Association was collusive, 

it can challenge that in the coverage case. See Sidman v. Travelers 

Cas. & Sur., 841 F.3d 1197, 1203-04 (11th Cir. 2016) (concluding 

that insurer was not bound by settlement agreement between 

insured and injured party where the agreement was produced 

through fraud or collusion); see also Nunn, 244 P.3d at 123. 
11

V. Conclusion

¶ 16 We affirm the trial court’s order denying AOIC’s motion to 

intervene. 

JUDGE FREYRE and JUDGE WELLING concur.