AMCO Insurance Co. v. Sills

166 P.3d 274, 2007 Colo. App. LEXIS 1025, 2007 WL 1558503
CourtColorado Court of Appeals
DecidedMay 31, 2007
Docket05CA2683
StatusPublished
Cited by4 cases

This text of 166 P.3d 274 (AMCO Insurance Co. v. Sills) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AMCO Insurance Co. v. Sills, 166 P.3d 274, 2007 Colo. App. LEXIS 1025, 2007 WL 1558503 (Colo. Ct. App. 2007).

Opinions

Opinion by

Judge CARPARELLL

In this declaratory judgment action regarding insurance coverage, Jimmy Sills, who was not a party in the district court, appeals the court's entry of default and declaratory judgment holding that plaintiff, AMCO Insurance Company, owed no duty to defend or indemnify defendants, Black Jack Construction, Inc., and Sills Investments, Ine. (the policyholders), in a construction defect action. We dismiss the appeal.

I.

Michael and Lara Fergen (the buyers) purchased a tract of land from Sills Investments. Black Jack designed and built a house on the land. Buyers gave Black Jack a notice of construction defect claim under § C.R.S.2006. Black Jack submitted a claim to AMCO for defense and indemnity benefits under its general lability policy. AMCO filed a declaratory judgment action against the policyholders to determine its obligations under the general liability policy. Jimmy Sills (employee), who is Jack Sillsg' father and an employee of Black Jack, was not a party to the declaratory judgment action.

Buyers subsequently filed suit against Black Jack, and, later, added Sills Investments and Jack Sills, who is the president and sole shareholder of both Black Jack and Sills Investments. They also added the appellant, Jimmy Sills (employee), who is Jack Sills father and was an employee of Black Jack.

After the policyholders failed to respond to the amended complaint in AMCO's declaratory judgment action, the district court entered default judgment in favor of AMCO and granted AMCO declaratory relief, holding that AMCO owed no duty to defend or indemnify the policyholders. AMCO then notified employee that it would no longer provide him with legal representation in the buyers' construction defects action, and employee brought this appeal.

IL.

AMCO contends that employee lacks standing to appeal the district court's entry of default and declaratory judgment. Employee argues that he has standing to appeal the judgment because the judgment denied him his "'right' to a legal defense" under Black Jack's insurance policy and "imposed the burden of forcing him to defend against [buyers]." We agree with AMCO.

A.

To have standing to appeal a district court judgment, a nonparty must "be a person substantially aggrieved by the disposition of the case" in the district court. Miller v. Clark, 144 Colo. 431, 432, 356 P.2d 965, 966 (1960). "The word 'aggrieved' refers to a substantial grievance; the denial to the party of some claim of right, either of property or of person, or the imposition upon him of some burden or obligation." Wilson v. Bd. of Regents (In re Estate of Macky), 46 Colo. 100, 100, 102 P. 1088, 1089 (1909) (Wilson ).

B.

We first reject employee's assertion that the default judgment imposed the burden of forcing him to defend against the buyers.

1.

A nonparty who is adversely affected by a judgment or order is not necessarily substantially aggrieved, and, thus, does not necessarily have standing to appeal. For [276]*276example, when a judgment adversely affects a nonparty's circumstances and, thereby, exposes the nonparty to obligations, claims, or liabilities not created by the judgment, the nonparty does not have standing to appeal the judgment. Colo. Permanente Med. Group, P.C. v. Evans, 926 P.2d 1218, 1224 (Colo.1996) (Evans ).

In Evans, the decedent's surviving spouse brought a medical malpractice and wrongful death suit against the treating physician, the physician's practice group, the health maintenance organization (HMO) whose enrollees the practice group served, and employees of the HMO. Evans, supra, 926 P.2d at 1220. The HMO and employees moved to stay the proceedings and to compel arbitration based on a contractual agreement, but the court denied the motion. Evans, supra, 926 P.2d at 1222. The court later granted summary judgment for the HMO and dismissed it from the suit. Evans, supra, 926 P.2d at 1222. The claims against the physician, the practice group, and the employees were tried, and judgment entered against them, but, under the collateral source statute, § 13-21-111.6, C.R.S.2006, the court reduced the award for past medical expenses previously paid by the HMO. Evans, supra, 926 P.2d at 1222.

The surviving spouse appealed the grant of summary judgment for the HMO and the reduction of the damages award. The employees appealed the denial of arbitration. Evans, supra, 926 P.2d at 1222. A division of this court affirmed the summary judgment for the HMO, reversed the reduction of the damages award, and affirmed the ruling that the arbitration clause was unenforceable. Evans v. Colo. Permanente Med. Group, P.C., 902 P.2d 867 (Colo.App.1995); see Evans, supra, 926 P.2d at 1222.

Although the HMO was not a party to the appeal, it petitioned the supreme court for a writ of certiorari. Evans, supra, 926 P.2d at 1223. The supreme court ruled that the HMO was not substantially aggrieved by the court of appeals decision through the denial of a legal right or imposition of a burden. Evans, supra, 926 P.2d at 1223.

The supreme court first held that although the court of appeals decided that the arbitration clause was not enforceable by the employees, it did not address whether it was enforceable by the HMO in other actions. Consequently, the HMO was not substantially aggrieved by that determination. Evans, supra, 926 P.2d at 1224.

The supreme court then held that although the district court judgment against the HMO's employees constituted an injury or burden for the HMO, that Hability arose from the HMO's employment relationship with the employees, not from the court's order. The court also held that the HMO's liability to its employees was only indirectly affected by the court of appeals decision. Thus, the supreme court ruled that there was not a sufficiently direct causal connection between the court of appeals decision and the HMO's asserted injury to warrant the conclusion that the HMO was directly and substantially aggrieved by the appellate decision. Evans, supra, 926 P.2d at 1224.

In addition, the court noted that the HMO did not seek a rehearing of the court of appeals decision, or seek to intervene as a party to the certiorari proceedings. Instead, it merely reconfigured the caption of the case to indicate that it was a petitioner and attempted to join the action without giving notice or seeking leave to do so. Accordingly, the supreme court denied the HMO standing to appeal by petition for a writ of certiorari. Evans, supra, 926 P.2d at 1224.

2.

In contrast, a nonparty may be substantially aggrieved when a judgment creates for the nonparty an enforceable lability that did not otherwise exist. Evans, supra, 926 P.2d at 1224; Bush v. Winker, 907 P.2d 79, 81-82 (Colo.1995).

In Bush v. Winker, supra, 907 P.2d at 80, Bush and others sued Winker and, among others, two partnerships in which he was a general partner.

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AMCO Insurance Co. v. Sills
166 P.3d 274 (Colorado Court of Appeals, 2007)

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Bluebook (online)
166 P.3d 274, 2007 Colo. App. LEXIS 1025, 2007 WL 1558503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/amco-insurance-co-v-sills-coloctapp-2007.