Med. Lien Mgmt., Inc. v. Allstate Ins. Co.

• Decision Date: 06 June 2013
• Docket Number: Court of Appeals No. 12CA0691
• Citation: 354 P.3d 167,2013 COA 88
• Parties: MEDICAL LIEN MANAGEMENT, INC., a Colorado corporation, Plaintiff–Appellant and Cross–Appellee, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellee and Cross–Appellant.
• Court: Colorado Court of Appeals

354 P.3d 167

2013 COA 88

MEDICAL LIEN MANAGEMENT, INC., a Colorado corporation, Plaintiff–Appellant and Cross–Appellee

v.ALLSTATE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellee and Cross–Appellant.

Court of Appeals No. 12CA0691

Colorado Court of Appeals, Div. II.

Announced June 6, 2013

Robinson, Waters & O'Dorisio, P.C., Otto K. Hilbert, II, Zachary P. Mugge, Michael W. Davis, Denver, Colorado, for Plaintiff–Appellant and Cross–Appellee.

Wheeler Trigg O'Donnell, LLP, Terence M. Ridley, Evan Stephenson, Elizabeth Johnston, Denver, Colorado, for Defendant–Appellee and Cross–Appellant.

Opinion

Opinion by JUDGE CASEBOLT

¶ 1 In this breach of assignment action, plaintiff, Medical Lien Management, Inc. (MLM), appeals the judgment dismissing its complaint against defendant, Allstate Insurance Co. (Allstate), under C.R.C.P. 12(b)(5) for failure to state a claim upon which relief can be granted. Allstate cross-appeals, contending that the court erred when, in its order granting the motion to dismiss, it failed to apply the heightened pleading standard of Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). We conclude that the court erred in dismissing MLM's complaint and that the heightened pleading standard employed in Twombly does not apply. Accordingly, we reverse and remand for further proceedings.

I. Background

¶ 2 The following facts either are set forth in MLM's complaint, which we must accept as true and view in the light most favorable to MLM, see Hemmann Mgmt. Servs. v. Mediacell, Inc., 176 P.3d 856, 857 (Colo.App.2007), or are contained in documents to which the complaint refers, see Yadon v. Lowry, 126 P.3d 332, 335 (Colo.App.2005) (in ruling on a C.R.C.P. 12(b)(5) motion to dismiss, a court is permitted to consider a document that is referred to in, but not attached to, the complaint without converting the motion to dismiss into a motion for summary judgment).

¶ 3 In October 2005, Fred Martinez was injured in an automobile accident caused by a tortfeasor insured by Allstate. Martinez did not have health or other insurance to pay for medical treatment. Martinez commenced an action against the tortfeasor.

¶ 4 In March 2007, in consideration for payment by MLM of his medical bills, Martinez executed a written agreement (agreement) granting MLM a lien on, and assigning his rights to, any and all proceeds derived from his personal injury claim in an amount equal to the fees and costs of the medical treatment paid by MLM. MLM eventually paid $9,938 for such treatment.

¶ 5 In April 2007, MLM sent, and Allstate, Martinez, and Martinez's attorney received, a document entitled “Notice of Lien or Assignment of Proceeds” (notice of assignment). The notice of assignment listed Martinez's name and address and the date of the accident, identified Allstate as the insurance carrier for the tortfeasor, provided MLM's contact information, and contained instructions to issue payment for the medical expenses to MLM. The notice of assignment also stated that MLM had retained or been assigned a lien or assignment of proceeds from Martinez's personal injury claim based on its payment of Martinez's medical bills. Attached to the notice of assignment was a copy of the agreement and an account statement listing Martinez's medical providers and the amounts they had charged.

¶ 6 In October 2008, Martinez settled his personal injury claim against the tortfeasor insured by Allstate. Allstate issued payment to Martinez without paying MLM.

II. Procedural History

¶ 7 MLM commenced this action against Martinez and Allstate, asserting claims against Martinez for breach of contract, unjust enrichment, and account stated. MLM also asserted a claim against Allstate for breach of assignment. MLM later obtained a default judgment against Martinez, which has not been paid.

¶ 8 Allstate moved to dismiss under C.R.C.P. 12(b)(5), asserting that the complaint failed to state a claim upon which relief could be granted. It attached the agreement to its motion. It asserted that language in the agreement (discussed below) merely authorized, but did not instruct or direct, any insurer for the tortfeasor to pay MLM. After MLM submitted its response, which included the notice of assignment and account statement, and Allstate submitted its reply, the trial court granted Allstate's motion. The court noted the following provisions of the agreement:

[Martinez] instructs and directs [his] attorney to issue payment directly to MLM immediately after receipt of funds for such sums outstanding to MLM. [Martinez] instructs and directs attorney to withhold upon receipt of any funds and place in a trust account such sums as may be due and owing to MLM. [Martinez] authorizes the liable party or parties of the insurance carriers indemnifying such liable party or parties to issue payment directly to MLM to satisfy sums due under this Lien and Security Agreement. [Martinez] hereby assigns to MLM all causes of action to the extent of the sums due under this Lien and Security Agreement that [Martinez] might have or that may exist in [Martinez's] favor.

¶ 9 In its analysis, the court observed that Allstate was not a signatory to the agreement, and stated:

“Instruct and direct” does not equal “authorize.” It would be contrary to the generally accepted meaning of these words to find otherwise. Moreover, since MLM authored the [a]greement, it could have used the same language of instruct and direct; but it did not. Therefore the notice of assignment was a request and Allstate chose for whatever reason to pay Martinez instead. It was then Martinez's (or his attorney's) duty to pay the amount due to [MLM].

¶ 10 The court also concluded that there was no underlying debt obligation between Allstate and Martinez; that MLM stood in the shoes of Martinez as an assignee; and that MLM did not possess rights beyond what Martinez would have against Allstate. It held that, because Martinez was not asserting a personal injury claim against Allstate, MLM had no claim against Allstate. It therefore dismissed MLM's complaint, and this appeal followed.

III. Breach of Assignment Claim

¶ 11 MLM asserts that the court erred in granting Allstate's C.R.C.P. 12(b)(5) dismissal motion for failure to state a claim. We agree.

A. Standard of Review

¶ 12 A motion to dismiss pursuant to C.R.C.P. 12(b)(5) tests the sufficiency of the complaint to determine whether the plaintiff has asserted a claim or claims upon which relief can be granted. Hemmann Mgmt. Servs., 176 P.3d at 858. Motions to dismiss under C.R.C.P. 12(b)(5) are “viewed with disfavor and are rarely granted under our ‘notice pleadings.’ ” Dunlap v. Colo. Springs Cablevision, Inc., 829 P.2d 1286, 1291 (Colo.1992) (quoting Davidson v. Dill, 180 Colo. 123, 131, 503 P.2d 157, 162 (1972) ). Because it presents a question of law, we review de novo a dismissal of a complaint for failure to state a claim. Dotson v. Bernstein, 207 P.3d 911, 912 (Colo.App.2009).

¶ 13 “A complaint need not express a complete recitation of all facts that support the claim, but need only serve notice of the claim asserted.” Story v. Bly, 217 P.3d 872, 876 (Colo.App.2008), aff'd, 241 P.3d 529 (Colo.2010). Like the trial court, in considering whether a complaint fails to state a claim, we must accept as true all averments of material fact and must view the allegations of the complaint in the light most favorable to the plaintiff. Hemmann Mgmt. Servs., 176 P.3d at 858. We will uphold a trial court's grant of such a motion only if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief. Dunlap, 829 P.2d at 1291.

B. Law

¶ 14 An assignment is a voluntary transfer of some right or interest to another person. State Farm Fire & Cas. Co. v. Weiss, 194 P.3d 1063, 1067 (Colo.App.2008). No particular formalities are required to effect a valid assignment. People v. Adams, 243 P.3d 256, 263 (Colo.2010) (citing Lookout Mountain Paradise Hills Homeowners' Ass'n v. Viewpoint Assocs., 867 P.2d 70, 73–74 (Colo.App.1993) ). “However, the intent to make the assignment must be apparent.” Lookout Mountain Paradise Hills Homeowners' Ass'n, 867 P.2d at 73. That intent may be evidenced by the written instruments executed by the parties or inferred from the acts and conduct of the assignor. Phoenix Capital, Inc. v. Dowell, 176 P.3d 835, 845 (Colo.App.2007) (citing Lookout Mountain Paradise Hills Homeowners' Ass'n, 867 P.2d at 73 ). In addition, “[t]o be sufficient, a description of the matter to be assigned must identify with certainty the property,” but “such description may be aided by competent extraneous evidence.” Ford v. Summertree Lane Ltd. Liab. Co., 56 P.3d 1206, 1209 (Colo.App.2002).

¶ 15 “After notice of a valid assignment, payment to the assignor or any person other than the assignee is at the debtor's peril and does not discharge him from liability to the assignee.” Trevino v. HHL Fin. Servs., Inc., 928 P.2d 766, 768–69 (Colo.App.1996) (citing Mid – States Sales Co. v. Mountain Empire Dairymen's Ass'n, 741 P.2d 342, 347 (Colo.App.1987) ), aff'd, 945 P.2d 1345 (Colo.1997) ; cf. § 4–9–406(a), C.R.S.2012 (Uniform Commercial Code—Secured Transactions: “After receipt of the notification [stating the amount due has been assigned and that payment is to be made to the assignee], the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.”). No particular form of notice is required, but the notice to the account debtor must be sufficiently specific and direct to inform it that an assignment has been made. 29 Williston on Contracts § 74:56 (4th ed.2012).

¶ 16 If there is a valid assignment, an assignee may maintain an action upon the assigned claim. See U.S. Fax Law Ctr., Inc. v. T2 Technologies, Inc., 183 P.3d 642, 644 (Colo.App.2007) ; Gunnison Cnty. v. Bd. of Assessment Appeals, 693 P.2d 400, 403 (Colo.App.1984). However,...