Reyher v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 12 April 2012
• Docket Number: No. 09CA1890.,09CA1890.
• Citation: 280 P.3d 64,2012 COA 58
• Parties: Pauline REYHER and Dr. Wallace Brucker, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellee.
• Court: Colorado Court of Appeals

280 P.3d 64

2012 COA 58

Pauline REYHER and Dr. Wallace Brucker, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellee.

No. 09CA1890.

Colorado Court of Appeals, Div. V.

April 12, 2012.

The Carey Law Firm, Robert B. Carey, Leif Garrison, Craig Valentine, Colorado Springs, Colorado; Hagens Berman LLP, Steve W. Berman, Seattle, Washington; Todd A. Travis, P.C., Todd A. Travis, Englewood, Colorado; Law Office of John Gehlhausen, John Gehlhausen, Lamar, Colorado, for Plaintiffs–Appellants.

Faegre Baker Daniels LLP, Michael S. McCarthy, Todd P. Walker, Sarah Mastalir Kellner, Denver, Colorado; Mendenhall & Malouff, H. Barton Mendenhall, II, Rocky Ford, Colorado, for Defendant–Appellee.

Opinion by Judge BOORAS.

¶ 1 Plaintiffs, Pauline Reyher and Dr. Wallace Brucker, appeal the trial court's order awarding costs and attorney fees to defendant, State Farm Mutual Automobile Insurance Company (State Farm), following the trial court's dismissal of Reyher's claims and denial of plaintiffs' class certification motion. We reverse the order and remand with directions.

I. Background

¶ 2 This is the third appeal arising from a dispute between the parties over the payment of medical bills under the Colorado Automobile Accident Reparations Act (No–Fault Act). The salient facts are set forth in two earlier opinions of this court and the recent decision of the Colorado Supreme Court. See Reyher v. State Farm Mut. Auto. Ins. Co., 171 P.3d 1263 (Colo.App.2007)( Reyher I );Reyher v. State Farm Mut. Auto. Ins. Co., 230 P.3d 1244 (Colo.App.2009)( Reyher II ),rev'd,266 P.3d 383 (Colo.2011)( Reyher III ). We will repeat only those facts necessary to resolve the issues presented here, which are limited to the trial court's award of costs and fees to State Farm following the dismissal of Reyher's claims and the denial of plaintiffs' class certification motion.

¶ 3 Plaintiffs filed suit against State Farm alleging that it failed to pay the full, reasonable amount of medical expenses in violation of the No–Fault Act and its contracts.¹ Their complaint included allegations on behalf of a class of persons similarly situated. Plaintiffs subsequently moved for certification of two classes that included all insureds and all providers, respectively, who submitted a medical bill to State Farm and were reimbursed less than the full amount.

¶ 4 While the parties were briefing the certification issue, State Farm filed a motion to dismiss Reyher's individual claims because she lacked standing and a motion for sanctions against Dr. Brucker for spoliating evidence (based on his failure to preserve various documents when he sold his practice). The trial court granted both motions. The trial court thus dismissed Reyher's claims, granted all adverse inferences requested by State Farm in its spoliation motion, and determined that Dr. Brucker was liable for State Farm's attorney fees pursuant to C.R.C.P. 37(a)(4).

¶ 5 Several months later, the trial court denied the motion for class certification, concluding that no class certification requirement under C.R.C.P. 23 had been satisfied.

¶ 6 The court certified the class certification order and the dismissal order as final orders pursuant to C.R.C.P. 54(b). Plaintiffs appealed those orders. See Reyher II, 230 P.3d at 1249.

¶ 7 While the appeal in Reyher II was pending, State Farm filed two bills of costs, requesting an award of costs as the prevailing party with respect to the dismissal of Reyher's claims and the denial of class certification. As part of its request for costs, State Farm sought its attorney fees pursuant to section 13–17–201, C.R.S.2011, based on the dismissal of Reyher's claims under C.R.C.P. 12(b), and its attorney fees relating to the trial court's discovery sanctions order against Dr. Brucker. Plaintiffs filed objections to the bills of costs.

¶ 8 On July 24, 2009, the trial court entered the subject order awarding costs and fees to State Farm. The trial court determined that State Farm was the prevailing party with respect to the dismissal of Reyher's claims and the denial of class certification and thus awarded it costs under C.R.C.P. 54(d). The trial court rejected Dr. Brucker's argument that an award of costs based on the denial of class certification was inappropriate at this time because the case had not been finally resolved, and instead, agreed with State Farm's argument that it was the prevailing party and that an award of costs was “mandatory” under C.R.C.P. 54(d)(1).

¶ 9 As part of its award of costs to State Farm, the court included an award of attorney fees related to the dismissal of Reyher's tort claims pursuant to sections 13–17–201 and 13–16–122(1)(h), C.R.S.2011, and as sanctions against Dr. Brucker for spoliation of evidence during the discovery phase of the class certification pursuant to C.R.C.P. 37(a)(4)(A) and section 13–16–122(1)(h).

¶ 10 Plaintiffs filed the instant appeal of the cost and fee order on September 4, 2009. During the briefing of this appeal, Reyher II was announced, reversing the dismissal of Reyher's claims and the denial of class certification. Reyher II, 230 P.3d at 1250–58. The division did not address the spoliation order because of its reversal of the class certification denial. Id. at 1258–59.

¶ 11 State Farm then sought certiorari review of the Reyher II division's determination that common issues predominated over individual issues for purposes of class certification under C.R.C.P. 23(b)(3). Reyher III, 266 P.3d at 384. State Farm did not seek certiorari review of the Reyher II division's determination that Reyher had standing. During the briefing of this appeal, the supreme court reversed the Reyher II division's class certification determination, concluding that the trial court did not abuse its discretion when it denied class certification. Id. at 388–90.

¶ 12 We note that, at the time of this appeal, there are no class action claims pending in the trial court; however, the individual claims of Reyher and Dr. Brucker remain pending and unresolved.

II. Appellate Court Jurisdiction

¶ 13 As an initial matter, we address and reject State Farm's assertion that we lack jurisdiction over this appeal because the order awarding costs and fees is not a final, appealable order.

¶ 14 Under section 13–4–102(1), C.R.S.2011, this court has “jurisdiction over appeals from final judgments.” Generally, to qualify as a final judgment, “an entire case must be resolved”: “A final judgment ‘ends the particular action in which it is entered, leaving nothing further for the court pronouncing it to do in order to completely determine the rights of the parties involved in the proceeding.’ ” Pham v. State Farm Mut. Auto. Ins. Co., 70 P.3d 567, 571 (Colo.App.2003) (quoting D.H. v. People, 192 Colo. 542, 544, 561 P.2d 5, 6 (1977)).

¶ 15 C.R.C.P. 54(b), however, creates an exception to the general rule that an entire case must be resolved by a final judgment before an appeal is brought. C.R.C.P. 54(b) provides, in pertinent part:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.

¶ 16 Absent certification under C.R.C.P. 54(b), “litigation involving multiple claims or multiple parties is treated as a single action which is not final and appealable until all of the issues in the litigation are adjudicated.” Kempter v. Hurd, 713 P.2d 1274, 1278 (Colo.1986).

¶ 17 Here, the trial court certified the class certification order and the dismissal order as final judgments pursuant to C.R.C.P. 54(b).² Thereafter, the trial court entered an order fixing the fees and costs with respect to those judgments, including, as costs, an award of attorney fees incurred as a result of motions practice relating to Dr. Brucker's discovery violations during the discovery phase of the class action certification. Because the fees and costs were based solely on final judgments, we must decide whether the order fixing such fees and costs likewise became final. This is an issue of first impression in Colorado.

¶ 18 Plaintiffs contend that the cost and fee order was a final judgment for appeal purposes because the order was “ancillary to judgments certified as final.” State Farm counters that final judgments with respect to Reyher's individual claims and class certification did not render the subsequent cost and fee order final, because, at the time the order was entered, Dr. Brucker's individual claims remained outstanding.

¶ 19 Because federal appellate jurisdiction also ordinarily depends on finality, and because Fed.R.Civ.P. 54(b) is substantially similar to C.R.C.P. 54(b), we turn to federal authority to assist us in resolving the issue now before us. See Harding Glass Co. v. Jones, 640 P.2d 1123, 1125 n. 3 (Colo.1982) (because C.R.C.P. 54(b) is nearly identical to Fed.R.Civ.P. 54(b), case law interpreting the federal rule is persuasive in analysis of the Colorado rule); State ex rel. Salazar v. Gen. Steel Domestic Sales, LLC, 129 P.3d 1047, 1049 (Colo.App.2005) (“Because Fed.R.Civ.P. 54(b) is substantially similar to C.R.C.P. 54(b), authority interpreting the federal rule is persuasive.”).

¶ 20 “Generally speaking, an order unconditionally fixing fees, docketed after the docketing of the final merits judgment, is a separate final judgment, at least where the merits judgment resolved all of the claims before the district court.” Johnson v. Orr, 897 F.2d 128, 130 (3d Cir.1990) (citing White v. New Hampshire Dep't of Emp't Sec., 455 U.S. 445, 451–52 & n. 14, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982)); see...