Opinion ID: 162279
Heading Depth: 2
Heading Rank: 2

Heading: Haller applies retroactively

Text: The district court determined that Haller has only prospective application and therefore does not control this case. We review de novo the district court’s state law determinations, including those regarding the retroactivity of a judicial decision. See Mid-America Pipeline Co. v. Lario Enter., Inc., 942 F.2d 1519, 1524 (10th Cir. 1991). Colorado law adheres to the generally accepted presumption that judicial decisions will have retroactive application. Martin Marietta Corp. v. Lorenz, 823 P.2d 100, 111 (Colo. 1992), but “[u]nder certain circumstances” a judicial decision will receive prospective effect only. Id. Whether a judicial decision will have retroactive effect is evaluated under the three-part test enunciated by the United States Supreme Court in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), and adopted by the Colorado Supreme Court in People in Interest of C.A.K., 652 P.2d 603, 607 (Colo. 1982). First, the decision, if it is not to be applied retroactively, must establish a new rule of law. Second, the merits of each case must be weighed by looking to the purpose and effect of - 11 - the rule in question and whether retroactive application will further or retard its operation. Third, the inequity imposed by retroactive application must be weighed to avoid injustice or hardship. C.A.K., 652 P.2d at 607. A new rule is created “either by overruling clear past precedent on which litigants may have relied...or by deciding an issue of first impression whose resolution was not clearly foreshadowed.” Chevron, 404 U.S. at 106-07. Consideration of whether Haller created a new rule overlaps with our analysis above regarding whether Haller represents Colorado law. We determined that Haller did not break with precedent, but instead continued Colorado’s longstanding practice of construing insurance contracts according to the general rules for construction of contracts, Marez, 638 P.2d at 289, and giving the words of the contract their “reasonable and natural construction.” Hansen, 779 P.2d at 1362. Indeed, this court identified the Haller rule in Colorado law even before Haller was decided. Leadville, 55 F.3d 537. Metro has not met the required threshold showing that Haller is a new rule. We therefore have no need to consider the remaining Chevron factors as a decision is presumed to have retroactive effect when it does not establish a new rule of law. Marinez v. Industrial Comm’n, 746 P.2d 552, 556-57 (Colo. 1987). Haller applies to this case and it was therefore error for the district court to instruct the jury that it could excuse Metro’s failure to give timely notice of a - 12 - claim or suit if Metro reasonably believed it was not liable for the damages. Our determination that Metro’s untimely notice cannot be excused because of a belief in nonliability does not resolve the issue of whether the late notice was substantially justified by other extenuating circumstances. Hansen, 779 P.2d at 1362; Graton, 740 P.2d at 534. Having decided that the improper jury instructions warrant reversal, we need not reach the issue regarding the district court’s improper interpretation of the insurance policies’ pollution exclusion clause. REVERSED and REMANDED. Entered for the Court Paul J. Kelly, Jr.