Goldsworthy v. American Family Mut. in. Co.

• Decision Date: 13 November 2008
• Docket Number: No. 07CA0772.,07CA0772.
• Citation: 209 P.3d 1108
• Parties: Eva GOLDSWORTHY, Brad Chambers, Merye-Beth Heath, Richard McDougall, and Catherine Thompson, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, and American Standard Insurance Company of Wisconsin, a Wisconsin corporation, Defendants-Appellees.
• Court: Colorado Court of Appeals

209 P.3d 1108

Eva GOLDSWORTHY, Brad Chambers, Merye-Beth Heath, Richard McDougall, and Catherine Thompson, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, and American Standard Insurance Company of Wisconsin, a Wisconsin corporation, Defendants-Appellees.

No. 07CA0772.

Colorado Court of Appeals, Div. IV.

November 13, 2008.

Rehearing Denied January 8, 2009.

Certiorari Denied June 08, 2009.

The Carey Law Firm, Robert B. Carey, Leif Garrison, Colorado Springs, Colorado, for Plaintiffs-Appellants.

Harris, Karstaedt, Jamison & Powers, P.C., Robert W. Harris, A. Peter Gregory, Englewood, Colorado, for Defendants-Appellee.

Opinion by Judge CARPARELLI.

In this case under the former Colorado Auto Accident Reparations Act (No-Fault Act), plaintiffs, Eva Goldsworthy, Brad Chambers, Merye-Beth Heath, Richard McDougall, and Catherine Thompson (collectively policyholders), appeal the order dismissing their class action claims against defendants, American Family Mutual Automobile Insurance Company and American Standard Insurance Company of Wisconsin (collectively American Family), on the ground that the policyholders were prohibited from seeking class certification because of issue preclusion. We affirm.

I. Background

This is at least the third lawsuit in which various plaintiffs have filed a class action complaint against American Family based on its failure to offer optional personal injury protection (PIP) coverage consistent with the requirements of the No-Fault Act, ch. 94, section 13-25-1, et seq., 1973 Colo. Sess. Laws 334, (formerly codified as amended at section 10-4-701, et seq.; repealed effective July 1, 2003, ch. 189, section 10-4-726, 2002 Colo. Sess. Laws 649).

A. French v. American Family

In November 2000, a class action complaint was filed in El Paso County District Court against American Family. French v. Amer. Family Mutual Ins. Co., No. 00CV3162. The plaintiffs sought damages and the reformation of American Family's policies to include the optional PIP coverage that was not offered. They asserted claims for reformation, statutory breach of contract under the No-Fault Act, bad faith breach of contract, statutory willful and wanton breach of contract, and violation of the Colorado Consumer Protection Act.

The trial court denied the plaintiffs' motion for class certification, finding that the commonality and typicality requirements of C.R.C.P. 23(a)(2) and (a)(3) had not been met because the claims required highly individualized inquiries. In addition, the court noted that the named plaintiffs may not have been adequate representatives because their claims were possibly subject to statute of limitations defenses.

The court also rejected the propriety of class certification under C.R.C.P. 23(b)(1), (b)(2), and (b)(3). It determined that there was not a risk that inconsistent or varying adjudications would establish incompatible standards of conduct for American Family under C.R.C.P. 23(b)(1)(A) nor was there a risk that adjudication as to individual members of the class would be dispositive of the other members under C.R.C.P. 23(b)(1)(B). The court found certification under C.R.C.P. 23(b)(2) would be inappropriate because the plaintiffs primarily sought money damages. Finally, it found that the same individualized inquiries concerning the claims that precluded commonality and typicality findings also prohibited a finding of predominance and superiority as required by C.R.C.P. 23(b)(3).

The named plaintiffs appealed the denial of class certification to this court, but the appeal was voluntarily dismissed without prejudice. The case was eventually settled.

B. Marshall v. American Family

In April 2003, a second class action complaint was filed against American Family in Adams County District Court. Marshall v. American Family Mutual Ins. Co., No. 03CV 1081. The allegations and claims in Marshall largely mirrored those asserted in French. The named plaintiffs sought class certification only under C.R.C.P. 23(b)(2).

There, the trial court agreed with the analysis in French and found that the class claims did not meet the typicality requirement of C.R.C.P. 23(a)(3) because of the highly individualized nature of the claims asserted. Similarly, certification under C.R.C.P. 23(b)(2) was not appropriate because the plaintiffs primarily sought money damages.

C. The Policyholders' Suit

In July 2004, Eva Goldsworthy instituted this action in Boulder County District Court on behalf of herself and those similarly situated. The complaint was later amended to include the other named plaintiffs. Once again, the complaint largely mirrored those in French and Marshall and asserted claims for reformation, statutory breach of contract, willful and wanton breach of contract, and breach of the implied covenant of good faith and fair dealing.

American Family moved to dismiss the class action allegations under C.R.C.P. 12(b)(5), asserting that the denials of class certification in French and Marshall precluded the policyholders from relitigating the class certification issue in this case. The trial court found that the issues presented in the complaint were identical to those in the earlier cases and there were final judgments on the merits. However, the trial court denied the motion, finding that Goldsworthy was not a party or in privity with a party to the earlier proceedings.

The policyholders then moved for class certification. In its response to that motion, American Family urged the trial court to reconsider its earlier denial of its motion to dismiss under C.R.C.P. 12(b)(5). The trial court did so and stated once again that the issues were identical and there had been a final judgment on the merits in the previous cases. The court then concluded that the policyholders were in privity with the named plaintiffs in the prior actions because there was a functional relationship, and the same attorneys represented the named plaintiffs in all three cases. It explained that a contrary finding would lead to an absurd result which would allow plaintiffs' counsel to repeatedly file the same case with a new named plaintiff in the hope of eventually gaining class certification despite the prior failed attempts. The court also found that there had been a full and fair opportunity to litigate the class certification issue in the prior cases. Accordingly, the trial court granted American Family's motion to dismiss the class action claims on the ground that the policyholders were precluded from seeking class certification. Only the policyholders' individual claims remained, C.R.C.P. 54(b) certification was obtained, and this appeal followed.

II. Standard of Review

We review de novo an order of dismissal pursuant to C.R.C.P. 12(b)(5), accepting as true all allegations of material fact in the complaint. Negron v. Golder, 111 P.3d 538, 542 (Colo.App.2004). A motion to dismiss is properly granted when the plaintiff's factual allegations cannot support a claim as a matter of law. Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095, 1099 (Colo. 1995). When evaluating such a motion, courts may consider only those matters stated in the complaint. Coors Brewing Co. v. Floyd, 978 P.2d 663, 665 (Colo.1999).

III. Class Action Certification

Certification of a class action is governed by C.R.C.P. 23, and the plaintiff has the burden of proving compliance with the rule. Benzing v. Farmers Ins. Exchange, 179 P.3d 103, 107 (Colo.App.2007) (cert. granted Feb. 19, 2008). Under C.R.C.P. 23(a), one or more members of the class may sue as representative parties only if (1) the class is so numerous that joinder of all members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and (4) the representative parties will fairly and adequately protect the interests of the class (adequacy).

If the requirements of C.R.C.P. 23(a) are satisfied, the class action may only be maintained if it also meets the conditions stated in one of the subsections of C.R.C.P. 23(b). See Benzing, 179 P.3d at 107. C.R.C.P. 23(b) provides in pertinent part:

Any action may be maintained as a class action if the prerequisites of section (a) are satisfied, and in addition:

(1) The prosecution of separate actions by or against individual members of the class would create a risk of:

(A) Inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class; or

(B) Adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interest; or

(2) The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(3) The court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

IV. Issue Preclusion

The policyholders contend that the trial court erred in dismissing their class action claims on the basis that issue preclusion prohibited them from seeking class certification. We disagree.

Consistent with current usage, we refer to "issue preclusion" rather than "collateral estoppel." See Argus Real Estate, Inc. v. E-470 Pub. Highway Auth., 109 P.3d 604, 608 (Colo.2005).

A. Law

The doctrine of issue preclusion bars relitigation of an issue that...