Court Opinion

ID: 9885742
Source: CourtListenerOpinion
Date Created: 2023-10-06 13:13:26.460006+00
Date Added: 2024-06-11T07:48:56.654561
License: Public Domain

Judge WEBB
specially concurring.
While agreeing with the result, I write separately because in my view the majority has not adequately addressed the dilemma faced by personal injury claimants who — like plaintiffs, Macario Camus and Kristen Camus — commence a routine personal injury action, when (1) their insurer — like defendant, State Farm Mutual Automobile Insurance Company — intervenes, and (2) before the deadline for amending pleadings has lapsed, they learn of bad faith conduct by the insurer.
Under these circumstances, such claimants must either seek leave to supplement their complaint under C.R.C.P. 15(d) and add bad faith claims against the insurer or risk claim preclusion should they later bring a separate bad faith case. If they do not amend and the insurer successfully invokes the principle that claim preclusion “bars relitigation not only of all claims actually decided, but of all claims that might have been decided if the claims are tied by the same injury,” Argus Real Estate, Inc. v. E-470 Pub. Highway Auth., 109 P.3d 604, 609 (Colo.2005), the bad faith claim will be forever lost. But if they amend, then they must litigate their bad faith claim that may not be fully developed and may complicate trial of the personal injury action.
For the reasons discussed below, I would resolve this issue by adopting the uniform rule among the federal Circuit Courts of Appeal that a plaintiff need not amend to avoid claim preclusion because claim preclusion is limited to claims that had accrued at the time the underlying action was commenced, and thus could have been set forth in the initial complaint.
I. Background
Here, in entering summary judgment for State Farm, the trial court observed:
This Court concludes based on a review of the [underlying personal injury] file that the plaintiff was aware of the potential for a bad faith claim and at any number of times during the course of this litigation that began in 2001 and was not finally concluded until January of 2004. [sic] The plaintiff could have amended their complaint to include bad faith. This Court is puzzled as to why in July of 2003, when the plaintiff objected to State Farm’s second request for continuance and specifically complained about the delay in payment being prejudicial that they did not at that time ask to amend their complaint to include bad faith damages.
(Emphasis added.)
Similarly, in Salazar v. State Farm Mut. Auto. Ins. Co., 148 P.3d 278 (Colo.App. 2006), the division pointed to manifestations of bad faith that had arisen during the underlying personal injury action, and on this basis concluded “it was reasonable to expect [the insured] to amend her UIM benefits claim to include any bad faith claims.” Salazar, supra, 148 P.3d at 282 (emphasis added).
Nevertheless, the majority does not address the Camus’ purported duty to amend, instead distinguishing Salazar on the basis that the plaintiff-insured pleaded a claim for UIM benefits against the insurer after the insurer had intervened, while here the underlying personal injury action did not place in issue either “the terms of the policy” or “State Farm’s refusal to pay the UIM claim.” Therefore, the majority concludes, the earlier action was not related “in time, space, origin, or motivation” to this bad faith action. I agree with that distinction, but for three reasons do not believe that it puts to rest the specter of the duty to amend suggested in Salazar. .
First, in allowing the insurer to intervene, “the trial court directed Salazar to notify State Farm of its alleged [UIM] liability. Pursuant to this order, Salazar added claims against State Farm, for policy benefits under the UIM provisions.” Salazar, supra, 148 *683P.3d at 279. The division then based the transactional analysis mandated by Argus on similarities between Salazar’s “UIM benefits action” and her later bad faith action. But this analysis assumes the propriety of apparently ordering Salazar to add a UIM benefits claim against her insurer, merely because the insurer has intervened.
Second, under Argus, supra, claim preclusion encompasses claims that could have been decided, based on “all or any part of the transaction, or series of connected transactions, out of which the action arose.” Argus, supra, 109 P.3d at 609 (quoting Restatement (Second) of Judgments § 24 (1982)). In concluding that the bad faith action arose from the same transaction, the Salazar division made observations that could apply to underlying personal injury actions even if the insureds in such actions did not amend to plead a UIM benefits claim. For example:
The facts of the accident would also be probative of [the insurer's reasonableness in tendering a settlement offer of only $100 [after it had agreed to a settlement of $25,000 with the underinsured motorist at fault].
[[Image here]]
When Salazar was informed that State Farm refused to arbitrate the UIM benefits claim, she knew the facts necessary for bringing bad faith claims.
Salazar, supra, 148 P.3d at 281, 282.
Third, an insurer “may participate in the tort litigation against the uninsured motorist only to the extent necessary to protect its interest in a fair hearing on its legitimate defenses.” State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177, 192 (Colo.2005). But the particulars of that role are determined on a ease-by-case basis by balancing the parties’ interests. Clementi v. Nationwide Mut. Fire Ins. Co., 16 P.3d 223 (Colo.2001). Hence, I discern no categorical limitation on an intervenor-insurer’s role that would per se preclude the insurer from later arguing that bad faith might have been decided in the underlying personal injury action.
Accordingly, I examine the interplay between claim preclusion and claims that accrue after the initial pleading in the underlying action has been filed.
II. Law
Other than Salazar, no reported Colorado appellate case, in the insurance context or otherwise, addresses whether the bar against claims that “might have been decided” in an earlier case extends to claims which arose after the original pleading was filed in that case but were not pleaded. Such after-arising claims could have been included in the earlier ease only by seeking leave to file a supplemental pleading under C.R.C.P. 15(d) (upon motion, court may permit service of a supplemental pleading “setting forth transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented”).
According to all federal Circuit Courts of Appeal that have addressed this issue, the bar does not extend this far because claim preclusion is measured by claims that had accrued by the time of the original pleading in the earlier action. See 18 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4409 (2d ed.2002) (“an action need include only the portions of the claim due at the time of commencing that action”); see, e.g., Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521, 530 (6th Cir.2006) (“res judicata does not apply to claims that were not ripe at the time of the first suit”); Mitchell v. City of Moore, 218 F.3d 1190, 1202 (10th Cir.2000) (“claim preclusion does not necessarily bar plaintiffs from litigating claims based on conduct that occurred after the initial complaint was filed”); Baker Group, L.C. v. Burlington N. & Santa Fe Ry. Co., 228 F.3d 883, 886 (8th Cir.2000) (“It is well settled that claim preclusion does not apply to claims that did not arise until after the first suit was filed.”) (emphasis in original) (applying Kansas law); Florida Power & Light Co. v. United States, 198 F.3d 1358 (Fed.Cir.1999) (same); Pleming v. Universal-Rundle Corp., 142 F.3d 1354 (11th Cir.1998) (same); Computer Assocs. Int’l, Inc. v. Altai, Inc., 126 F.3d 365 (2d Cir.1997) (same); S.E.C. v. First Jersey Sec., Inc., 101 F.3d 1450 (2d Cir.1996) (same); Manning v. City of Auburn, 953 F.2d 1355 *684(11th Cir.1992) (same) (applying Alabama law); Los Angeles Branch NAACP v. Los Angeles Unified Sch. Dist., 750 F.2d 731, 739 (9th Cir.1984) (same) (applying California law).
The language of C.R.C.P. 15(d) is identical to the language of Fed.R.Civ.P. 15(d). Where the Colorado and Federal Rules of Civil Procedure are “essentially identical, case law interpreting the federal rule is persuasive in analysis of the Colorado rule.” Forbes v. Goldenhersh, 899 P.2d 246, 249 (Colo.App.1994). And Colorado courts view federal claim preclusion jurisprudence as “essentially the same” as Colorado’s approach to the issue. Dalai v. Alliant Techsystems, Inc., 934 P.2d 830, 831 (Colo.App.1996).
Hence, I would adopt the reasoning of these cases and similarly hold that claim preclusion does not bar a plaintiffs cause of action based on events occurring after the initial complaint is filed, even though the plaintiff “could have amended her complaint to include ... ongoing alleged wrongdoings.” Rawe, supra, 462 F.3d at 530; see also Manning, supra, 953 F.2d at 1360 (“Because res judicata creates no absolute duty to supplement a complaint, ... [plaintiff] had the choice of bringing her own independent action ....”); Florida Power & Light Co., supra; Computer Assocs. Int’l, supra; First Jersey Securities, Inc., supra.
This limitation recognizes that although a plaintiff may seek leave to file a supplemental pleading asserting a new claim based on events occurring after a lawsuit is commenced, the plaintiff is not required to do so. Under Fed.R.Civ.P. 15(d), “Upon motion ... the court may ... permit the party to serve a supplemental pleading setting forth transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented.” See Pleming, supra, 142 F.3d at 1357 (Fed.R.Civ.P. 15(d) makes a supplemental pleading optional and “the doctrine of res judicata does not punish a plaintiff for exercising the option not to supplement the pleadings with an after-acquired claim”); see also Florida Power & Light Co., supra; Baker Group, L.C., supra.
These principles have been applied to distinguish between bad faith claims arising precomplaint and postcomplaint in the underlying action. In Rawe, the Sixth Circuit held that the plaintiffs bad faith claims which had arisen before the complaint in the underlying action against the insurer for UIM benefits were barred by claim preclusion, but such claims that arose during the pendency of the underlying action were not.
Porn v. National Grange Mut. Ins. Co., 93 F.3d 31 (1st Cir.1996), relied on by the division in Salazar, is not to the contrary. The court in Porn did not refer to a duty of the insured to amend in the underlying action. Rather, the court explained that even if Pom could not have foreseen National Grange’s bad faith conduct during the underlying case when he brought that action, “we nevertheless conclude that Porn was aware of other conduct by National Grange sufficient to support a bad faith claim. Indeed, of the ten factual allegations supporting Porn’s bad faith complaint, nine were known to Porn at the time he instituted the first action.” Porn, supra, 93 F.3d at 38.
In my view, this issue was adequately preserved. While plaintiffs failed to assert that claim preclusion creates no duty to amend their original complaint in the personal injury action, they challenged claim preclusion both below and on appeal because State Farm’s alleged bad faith occurred during, and even after, the personal injury action. They also raised the differences between State Farm’s status as an intervenor in the personal injury action and as the defendant in this action, citing Brekke, supra, and arguing that State Farm had essentially sought only a declaratory judgment in the personal injury action.
Moreover, during oral argument State Farm asserted that C.R.C.P. 15 requires an insured to amend and plead bad faith in the underlying personal injury action or face claim preclusion in a later bad faith action, where the insurer’s conduct during the personal injury action puts the insured on notice of a potential bad faith claim.
Accordingly, I would adopt the unanimous federal Circuit Court rule — a party need not file a supplemental pleading to reflect claims that arise after the first action has been filed *685to avoid preclusion of such claims in later litigation.
III. Application
State Farm argues that its alleged bad faith conduct was known to the Camus before they brought the personal injury action. But they could not have pleaded a bad faith claim in their complaint in the personal injury action against the other driver because he was not in privity with State Farm. While the Camus could have named State Farm as a codefendant under C.R.C.P. 20(a), subject to a possible misjoinder motion under C.R.C.P. 21, State Farm does not present, nor have I found, any authority obligating them to do so or risk claim preclusion.
The complaint alleges bad faith actions of State Farm during the personal injury action, such as delaying consent to settlement with the other driver and improperly obtaining continuances. But the Camus could have raised a bad faith claim only by seeking leave to file a supplemental complaint under C.R.C.P. 15(d) after State Farm had intervened. Nevertheless, I recognize that if the Camus were required to amend them complaint in the personal injury action after State Farm intervened, their failure to add a bad faith claim might expose them to claim preclusion in this bad faith action.
To the extent that Salazar requires a plaintiff in a personal injury action whose insurer has intervened to seek leave to amend and plead bad faith claims or risk preclusion of such claims in a later action, I would not follow it. See In re Estate of Becker, 32 P.3d 557 (Colo.App.2000) (one division of the court of appeals is not bound by the decision of another division in a different case), aff’d sub nom. In re Estate of DeWitt, 54 P.3d 849 (Colo.2002). Instead, I would follow the federal Circuit Court decisions discussed above holding that the scope of claim preclusion is determined by the claims which had accrued as of the filing of the initial complaint, and that a plaintiff has no obligation to raise new claims arising thereafter by a supplemental pleading.
Accordingly, I would conclude that claim preclusion cannot bar this bad faith action on the basis that plaintiffs could have filed a action asserting State Farm’s bad faith.