Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-M-2018 (MJW) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation, Plaintiff v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, a Pennsylvania corporation, et al. Defendants. - and ­ RELATED CASES.

THIRD-PARTY DEFENDANT LOCKTON'S REPLY TO DEFENDANT/THIRD-PARTY PLAINTIFF FIRST CAPITAL GROUP'S BRIEF IN OPPOSITION TO LOCKTON'S MOTION FOR SUMMARY JUDGMENT Although it appears at first glance that First Capital disputes many of the facts included by Lockton in its Motion for Summary Judgment, virtually all of those "disputes" relate to two issues: (1) where the underwriting information First Capital received from Metzger originated; and (2) whether Lockton participated in discussions about removing certain loss information from the AIMCO property insurance submission. Neither of these facts have anything to do with the primary argument Lockton makes in its Motion for Summary Judgment - that Lockton's settlement with AIMCO and the application of Colo. Rev. Stat. §13-50.5-105 bar First Capital's claims. Nor do these issues have anything to do with the second argument Lockton makes in its Motion ­ that it owed no duty to First Capital upon which a negligence claim can be based. These "disputed" facts (which, as set forth below are not really in dispute) are only relevant to Lockton's Motion if the Court finds that First Capital's claims are not barred by Colo. Rev. Stat. § 13-50.5-105 and that Lockton owed First Capital a legal duty upon which a negligence claim can be based; both of which Lockton believes would be contrary to Colorado (or New York) law. Lockton addresses these "disputed" facts below.

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1.

First Capital alleges that the underwriting information it ultimately received from

Roger Metzger Associates ("Metzger") originated with Lockton. As set forth in Lockton's original Motion for Summary Judgment, Lockton prepared a submission to be used in connection with the placement of AIMCO's 2000-2001 property insurance. Lockton Statement of Fact at ¶ 2. Lockton sent that submission to Swain & Baldwin Insurance, Inc. ("SBI") and National Program Services ("NPS"). Lockton Statement of Fact at ¶ 4. NPS thereafter sent a submission to Roger Metzger Associates ("Metzger") and Metzger sent that submission to First Capital. Lockton Statement of Fact at ¶¶ 8 and 9. There is no dispute that the information Lockton sent to SBI and NPS was altered (falsified) before it was sent by NPS to Metzger. Lockton Statement of Fact at ¶¶ 11 and 12. Accordingly, while Lockton did originally prepare a submission for the placement of AIMCO's property insurance, that submission did not contain the same information that ultimately ended up in the hands of First Capital. 2. First Capital alleges that Lockton participated in discussions wherein the subject

of removing certain loss information from the AIMCO property insurance submission was discussed. As support for this "fact," First Capital cites to the notes of a telephone conversation taken by Julie Eckman in January, 2000. (Ms. Eckman is an employee of Lockton). In her notes, Ms. Eckman wrote: "78 locations ­ losses over $50K separate display & pull out of all

other losses. 78 locations out of loc. schedule & separate." What First Capital does not cite in its statement of facts is the uncontradicted deposition testimony of Ms. Eckman about these notes. First Capital would have the Court believe that this note means that losses for these seventy-eight locations over $50,000 were pulled out and not included in the submission Lockton sent to SBI and NPS. Rather, Ms. Eckman testified that those large losses were pulled out and put on their own separate schedule so that anyone reading the submission could easily view AIMCO's large losses. See, Julie Eckman Depo. at p. 113, ln. 12 to p. 114, ln. 9 attached hereto as Exhibit A-12; Exhibit A-4 to First Capital's Motion for Summary Judgment. Not including

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the deposition testimony of Ms. Eckman in its "statement of facts" was an obvious attempt by First Capital to mislead the Court. Colo. Rev. Stat. § 13-50.5-105(1)(b) applies even if joint and several liability is alleged by the Plaintiff First Capital contends that Colo. Rev. Stat. § 13-50.5-105 does not apply to its claims for contribution against Lockton because one of AIMCO's claims against First Capital (and the other Defendants in this action) is for joint liability pursuant to Colo. Rev. Stat. § 13-21111.5(4). Colo. Rev. Stat. § 13-21-111.5(4) provides: "Joint liability shall be imposed on two or more persons who consciously conspire and deliberately pursue a common plan or design to commit a tortious act. Any person held jointly liable under this subsection (4) shall have a right of contribution from its fellow defendants acting in concert. A defendant shall be held responsible under this subsection (4) only for the degree or percentage of fault assessed to both persons who are held jointly liable pursuant to this subsection (4)." This statute is simply an exception to the Colorado pro rata proportionate fault statute. In other words, when joint tortfeasors are found to have conspired to commit tortious conduct, each of the tortfeasors is individually liable to the plaintiff for the actions of their co-conspirators. Furthermore, this statute codifies what is already the case at common law in almost every state that a defendant who pays more than his or her proportionate share of the damages to a plaintiff is entitled to contribution from his or her co-defendants. This statute works in conjunction with Colo. Rev. Stat. § 13-50.5-105(1)(b) to allow one of two or more joint tortfeasors/coconspirators to enter into a good faith settlement with the plaintiff in order to "buy its peace" in a matter and free itself from litigation. First Capital's assertion that Colo. Rev. Stat. § 13-50.5-105 does not apply at all when joint liability is alleged by a plaintiff is simply not correct. First Capital relies upon Pierce v. Wiglesworth, 903 P.2d 656, 658 (Colo. Ct. App. 1994) and Toothman v. Freeborn & Peters, 80 P.3d 804, 815 (Colo.Ct. App. 2002) for this proposition. That is not what Pierce and Toothman stand for. The applicability of Colo. Rev. Stat. § 1350.5-105(1)(b) was not at issue in either of these cases.

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Both Toothman and Pierce stand for the same proposition: when joint liability is alleged and proven, the risk associated with settling with less than all joint tortfeasors/co-conspirators (which is typically placed upon the plaintiff) is shifted from the plaintiff to the remaining defendants/co-conspirators. Pursuant to Colo. Rev. Stat. § 13-50.5-105 (the pro rata

proportionate fault statute ­ i.e., the "general rule"), the plaintiff bears the risk that the trier of fact will ultimately allocate more fault to the settling defendant than the plaintiff received from that defendant in settlement of its claim. In other words, if a plaintiff is found to have incurred $100,000 in damages for which defendant A is 10% at fault and defendant B 90% at fault; and the plaintiff has previously settled with the defendant B for $10,000; the plaintiff can only collect $10,000 from defendant A. This is the "general rule" ­ the rule when joint liability is not proven. In this situation, the plaintiff accepted that risk when he settled with defendant B prior to trial. On the other hand, when a plaintiff alleges and proves joint liability pursuant to Colo. Rev. Stat. § 13-21-111.5(4), the risk associated with such a settlement is shifted to the remaining defendants (presumably because of their actions in furtherance of the conspiracy). In the above example, if the trier of fact were to find that defendants A and B conspired to commit a tortious act, the plaintiff can collect $80,000 from defendant A despite a finding that defendant A was only 10% at fault ($80,000 = defendant A's liability ($10,000) plus defendant B's liability ($90,000) minus defendant B's settlement ($10,000)). This is precisely what both Toothman and Pierce stand for. These cases do not stand for the proposition that Colo. Rev. Stat. 13-50.510-5(1)(b) is wholly inapplicable to joint liability situations. If this were the case, then under no circumstances could a joint tortfeasor, when joint liability is alleged, "buy its peace" from litigation. Regardless of the settlement it were to make with the plaintiff, the settling joint tortfeasor would always be subject to third-party contribution/indemnity claims from its joint tortfeasors. That cannot be the case. As set forth by Lockton in its original Motion, the purpose of Colo. Rev. Stat. § 13-50.5-105(1)(b) is to allow a defendant to "buy its peace" - to settle with

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a claimant when other tortfeasors are unwilling to do so. It does not matter (and the statute makes no distinction) whether the claims asserted against the defendants are for joint liability or not. Colo. Rev. Stat. § 13-50.5-105(1)(b) is clear ­ when a tortfeasor settles with a claimant all third-party claims for contribution and indemnity by other joint tortfeasors are barred.1 As a matter of law Lockton owed no duty to First Capital upon which a negligence claim can be based In its second argument, First Capital contends that Lockton is not entitled to judgment as a matter of law on the issue of whether a duty was owed by Lockton to First Capital upon which a negligence claim could be based. In its Response, First Capital states that "Lockton failed to provide any analysis of the factors considered by Colorado courts in their determination of whether or not a duty exists." Obviously, that is not the case. At pages 15-17 of its original Motion, Lockton sets forth the factors to be considered by Colorado courts in determining whether a legal duty exists and then goes on to analyze the relevant facts and caselaw. As set forth in its original brief, the Colorado Supreme Court has stated that "the question of whether a duty should be imposed in a particular case is essentially one of fairness under contemporary standards ­ whether reasonable people would recognize a duty and agree that it exists." HealthOne v. Rodriquez, 50 P.3d 879, 888 (Colo. 2000). In support of its position, Lockton cites the Court to the deposition testimony of two experts ­ Mr. Wells and Mr. Castellini (expert witnesses for First Capital and Metzger, respectively). Mr. Wells and Mr. Castellini, each of whom have decades of experience in the insurance industry, are indisputably qualified to opine and give guidance to the Court as to what contemporary standards are for insurance brokers in today's marketplace. Thus, Lockton submits that the opinions of Mr. Wells and Mr. Castellini are relevant to this Court's legal determination of whether a duty is owed by Lockton to First
1

It should be noted that it is Colo. Rev. Stat. § 13-50.5-105(1)(a) that provides for a setoff from judgment of settlement proceeds received by a plaintiff from other tortfeasors. If Colo.Rev. Stat. § 13-50.5-105 did not apply in joint liability situations as First Capital contends, then there would be no right to setoff in joint liability situations and the plaintiff would receive a windfall. Certainly, First Capital does not contend that the Defendants are not entitled to setoff the $3 million Lockton paid to AIMCO in settlement of AIMCO's claims. Not only would this result be illogical, but it would be contrary to the holding of the court in Toothman.

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Capital. The opinions of Mr. Wells and Mr. Castellini are of particular significance here because Mr. Wells and Mr. Castellini are the experts retained by First Capital and Metzger to support their claims against Lockton. It is certainly relevant to the Court's ruling that First Capital's own expert ­ a gentlemen who has spent decades as an insurance broker - does not believe that Lockton owed a duty to First Capital in this case. Lockton submits that the case law cited by it in its original Motion together with the uncontradicted testimony of Mr. Wells and Mr. Castellini warrant a finding that Lockton owed no legal duty to First Capital and summary judgment is therefore properly entered in Lockton's favor an First Capital's claims.2. There is no evidence that Lockton converted any funds from any party Even though First Capital has asserted a conversion claim against Lockton, it does not allege that Lockton converted any of AIMCO's funds. This does not make sense. Moreover, there is no evidence that Lockton converted any funds from any party. As set forth in Lockton's original Motion for Summary Judgment, if Lockton had converted funds from AIMCO ­ which AIMCO does not even contend - then that is an issue that can only properly be raised by AIMCO and for which Lockton has already been released. Like First Capital's other claims, summary judgment is properly entered on its claim for conversion. Conclusion For all the reasons set forth above, and for those reasons included in Lockton's original Motion for Summary Judgment, summary judgment should be entered in favor of Lockton on First Capital's third-party claims.

Again, this analysis is only necessary if the Court finds ­ contrary to the admissions made by First Capital in its interrogatory responses ­ that First Capital's third-party claims against Lockton are not claims for contribution/indemnity but actually direct independent negligence claims.

2

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Respectfully submitted, LATHROP & GAGE L.C. By: /s/ Stephen J. Horace ­ CO#32961 4845 Pearl East Circle, Ste. 300 Boulder, CO 80301 Telephone: 720-931-3000 Fax: 720-931-3001 and Leonard Rose Jed D. Reeg 2345 Grand Blvd., Suite 2800 Kansas City, MO 64108 Telephone: 816-292-2000 Fax: 816-292-2001

ATTORNEYS FOR THIRD-PARTY DEFENDANTS LOCKTON COMPANIES, INC. AND LOCKTON COMPANIES OF COLORADO, INC.

CERTIFICATE OF SERVICE This is to certify that on this 24th day of June, 2005, a true and correct copy of the foregoing was sent via electronic mail filing, addressed to the following: Karma Giulianelli Bartlit Beck Herman Palenchar & Scott 1899 Wynkoop St., 8th Floor Denver, CO 80202 Thomas L. Roberts, Esq. Roberts Levin & Patterson, P.C.. 1660 Wynkoop Street, Suite 800 Denver, Colorado 80202 Jeffrey A. Hall Elizabeth A. Thompson Bartlit Beck Herman Palenchar & Scott 54 West Hubbard St.,. Ste. 300 Chicago, IL 60610 Jeffrey A. Chase Barry A. Schwartz Jacobs Chase Frick Kleinkopf & Kelley 1050 ­ 17th St., Ste. 1500 Denver, CO 80265

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John Wolak Gibbons Del Deo Dolan Griffinger & Vecchione One Riverfront Plaza Newark, NJ 07102 James Miletich McConnell Siderius Fleischner Houghtaling & Craigmile 4700 South Syracuse St., Ste. 200 Englewood, CO 80237 William Jeffress, Jr. Baker Botts LLP 1299 Pennsylvania Ave., N.W. Washington, DC 20004 Paul E. Collins, Esq. Robert Zavaglia Treece, Alfrey, Musat & Bosworth, P.C. 999 18th Street, Suite 1600 Denver, Colorado 80202 John Martin Oster & Martin LLC 717 17th St., Ste. 1475 Denver, CO 80202 Jack Trigg Melissa Collins Julie Walker Wheeler Trigg & Kennedy, P.C. 1801 California St., Ste. 3600 Denver, CO 80202 Charles Tuffley Rozana Widlicka Grotefeld & Denenberg, LLC 30800 Telegraph Rd., Ste. 3858 Bingham Farms, MI 48025 John P. Mitzner Allman & Mitzner LLC 535 16th Street, Suite 727 Denver, CO 80202 Jeffrey Lorell Marc Singer Saiber Schlesinger Satz & Goldstein One Gateway Center 13th Floor Newark, NJ 07102 /s/

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