Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-00761-WDM-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-WM-0761 (BNB)

DEAN COLBY, Plaintiff, v. PROGRESSIVE CASUALTY INSURANCE COMPANY, an Ohio Corporation Defendant.

DEFENDANT=S RESPONSE TO PLAINTIFF=S MOTION TO DISMISS COMPLAINT WITHOUT PREJUDICE

Defendant, Progressive Casualty Insurance Company (hereinafter referred to as AProgressive Casualty@), by and through its attorneys, Seaman, Giometti & Murphy, P.C., hereby submits its Response to Plaintiff=s Motion to Dismiss Complaint Without Prejudice, as follows: Statement Re: Compliance with D.C.Colo.L.Civ.R. 7.1: As an initial matter, counsel for Progressive Casualty disputes plaintiff=s counsel=s contention that plaintiff=s counsel Ahas attempted to contact Defendant=s counsel with regard to this motion, and despite several contacts and discussions they have not responded.@ Prior to filing this motion, plaintiff=s counsel neither contacted nor attempted to contact undersigned counsel for Progressive Casualty regarding the filing of this specific motion. As shown by the emails attached as Exhibit AA@, plaintiff=s counsel on two occasions directly contacted Progressive=s Litigation Manager, Louise Klubert, Esq., to raise the possibility of staying this

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action. However, the subject of dismissal without prejudice was never raised with Ms. Klubert, just the possibility of staying the action. The subject of staying this action may also have been broached at a settlement conference in the case of Miller v. Progressive, Eagle County District Court, Case No. 04CV608, held on May 9, 2006, at which both Ms. Klubert and the undersigned were present with plaintiff=s counsel, Mr. Carey. The undersigned has no further records of any communications with members of The Carey Law Firm regarding the issue of staying this action, and the subject of this particular motion B dismissal without prejudice -- was never raised by any means of communication. In any case, Progressive Casualty opposes the present Motion to Dismiss Complaint Without Prejudice, unless the Court imposes conditions upon dismissal, including the condition that the dismissal be with prejudice. I. INTRODUCTION This case is already very old, if not completely stale. The case arises out of a March 27, 1993 motor vehicle accident, in which the plaintiff (AColby@) was very seriously injured when a vehicle driven by Thomas Carmody Sumners, Jr. (ASumners@) went off Interstate 70 and rolled. The vehicle was insured by Progressive Mountain Insurance Company (AProgressive Mountain@), which paid Colby the maximum amount of PIP benefits available under the policy. Because of the serious nature of his injuries, Colby sought to obtain more PIP benefits than those available under the terms of the Progressive Mountain policy. Colby asserted that former C.R.S. ' 10-4-706(1)(c) only created a rebuttable presumption that an insurer=s obligation to pay rehabilitation benefits had been satisfied if the insurer paid $50,000 in rehabilitation benefits within five years of the accident. Colby argued that since he could establish that more than $50,000 in rehabilitation benefits were necessary in his case, Progressive Mountain was

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statutorily obligated to pay him more benefits. To raise these issues, Colby filed an action against Progressive Casualty. See Exhibit A-2 to Progressive Casualty=s Motion for Summary Judgment. This case ultimately resulted in a judgment in Progressive Casualty=s favor after the Colorado Supreme Court=s decision in Colby v. Progressive Cas. Ins. Co., 928 P.2d 1298 (Colo. 1996). See Exhibit A-7 to Motion for Summary Judgment. In the original action, Colby never raised the issue of Progressive=s alleged failure to offer enhanced PIP benefits under former C.R.S. ' 10-4-710(2), which is the subject matter of the present action. On April 13, 2004, Colby then filed this action against Progressive Casualty. Progressive Casualty answered the complaint, asserting various defenses, including the statutes of limitations and res judicata. In addition, Progressive Casualty pointed out in its answer that Colby had designated the wrong defendant and that the correct defendant would be Progressive Mountain. Progressive Casualty assumed that Colby would simply move to amend his complaint to name the correct defendant, but Colby has never requested leave of the Court to amend his pleadings. Recently (i.e., within approximately the last month), it has come to the attention of the undersigned that, were such a motion to amend to occur, there probably would be a loss of subject matter jurisdiction, which here is based upon diversity of citizenship. While Progressive Casualty is an Ohio corporation, and Progressive Mountain has recently become an Ohio corporation, at the time this action was filed, Progressive Mountain was a Colorado corporation. See Statement of Conversion dated January 10, 2006, attached hereto as Exhibit AB@. On August 16, 2004, Progressive Casualty filed a Motion for Summary Judgment, seeking dismissal of Colby=s claims on the ground that they were barred by res judicata and the statutes of limitations. This motion remains pending. On March 18, 2005, Progressive Casualty

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filed a Second Motion for Summary Judgment. Among other issues raised in this Motion, Progressive Casualty asserted that Colby=s complaint should be dismissed on the ground that his claims arising under the former Colorado No-Fault Act, C.R.S. ' 10-4-701 et seq., were barred by its repeal on July 1, 2003. This motion also remains pending. A significant amount of discovery has occurred in this case. On November 18 and19, 2004, Progressive Casualty took the depositions of Sumners and Colby. On March 15 and 29, 2005, Progressive Casualty conducted the deposition of Colby=s Abad faith@ expert, Richard M. Hodges, Esq. On March 31, 2005, Progressive Casualty took the deposition of Ralph Ogden, Esq., Colby=s former counsel. On April 12 and 19, 2005, Colby took the deposition of Garth Allen, Esq., Progressive Casualty=s expert on insurance industry standards. On June 9, 2006, Colby filed the present Motion to Dismiss Complaint Without Prejudice. Colby asserts that he is putative member of the class in Soto v. Progressive Mountain Insurance Company, Montrose County District Court Case No. 2002CV47. Colby asserts that it would be in the interest of judicial economy to dismiss the present action without prejudice pending the outcome of an appeal in Soto. The undersigned does not represent Progressive Mountain in the Soto matter and does not have enough knowledge about that case to comment whether Colby is or is not a putative member of the class. However, as discussed below, it does not appear that judicial economy would be served by Colby=s request for dismissal without prejudice. As presently postured, the present action will not be affected by the class action, since the defendant here is Progressive Casualty, not Progressive Mountain. Until or unless the pleadings were to be amended to correct this error, there is no interrelationship between this action and Soto. Further, Colby=s request for a dismissal without prejudice will only result in

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further delay of a case that began 13 years ago. As Progressive Casualty has already pointed out in its Motion for Summary Judgment, the two witnesses who have most knowledge about the transaction that resulted in the sale of the policy B Sumner=s father and the agent who sold the policy B are dead. Further delay poses the risk that more witnesses will become unavailable and that already faded memories will grow even weaker. With these considerations in mind, Progressive Casualty does not object to dismissal of this action, but believes that any dismissal of this action should be with prejudice. Alternatively, if the Court determines it would be proper to dismiss the action without prejudice, Progressive Casualty requests the Court to protect Progressive Casualty from prejudice by imposing appropriate conditions, including payment of Progressive Casualty=s litigation expenses. II. ARGUMENT The right to a voluntary dismissal without prejudice is not absolute, but within the sound discretion of the trial court. Powers v. Prof=l Rodeo Cowboys Ass=n., 832 P.2d 1099 (Colo.App. 1992), citing Zagano v. Fordham Univ., 900 F.2d 12 (2d. Cir. 1990). The purpose of F.R.C.P. 41(a)(2) in giving the district court discretion to dismiss Ais primarily to prevent voluntary dismissals which unfairly affect the other side, and to permit the imposition of curative conditions.@ 9 C. Wright & A. Miller, Federal Practice & Procedure ' 2364 (1971). Generally, a dismissal without prejudice is not granted if Athe result would be to legally harm the defendant.@ See 5 Moore=s Federal Practice ' 41.05(1)(1991). If the granting of a motion to dismiss Awould unfairly prejudice the defendant, then it should be denied.@ Kramer v. Butler, 845 F.2d 1291 (5th Cir. 1988). Courts enumerating the various factors to be considered in determining whether to grant

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a motion to dismiss without prejudice have found the following factors significant: (1) (2) the duplicative expense of a second litigation; the extent to which the current suit has progressed, including the effort and

expenses incurred by defendant in preparing for trial; (3) (4) (5) the adequacy of plaintiff=s explanation for the need to dismiss; the plaintiff=s diligence in bringing the motion to dismiss; any Aundue vexatiousness@ on plaintiff=s part.

9 C. Wright & A. Miller, Federal Practice & Procedure ' 2364 (1971); Zagano v. Fordham Univ., supra. The present case is set for trial on July 10, 2006. Currently, there are two pending motions for summary judgment before the Court, filed by Progressive Casualty. In addition, Colby failed to name the proper defendant, Progressive Mountain Insurance Company, in the present case. Rather, Plaintiff incorrectly named Progressive Casualty as the defendant. This issue was first raised by Progressive Casualty in its Answer on June 2, 2004. Nevertheless, Colby never amended his Complaint to name the proper defendant. This failure to amend is significant because Progressive Mountain was a Colorado corporation from 1987 until January 10, 2006. Thus, had Colby properly amended his Complaint, diversity jurisdiction probably would have been destroyed and the case would have been required to be remanded to state court. Instead, Colby chose not to amend. At this stage of the litigation process, allowing Colby to voluntarily dismiss without prejudice would result in Colby being able to re-litigate this matter in state court at a later date. This possibility should be foreclosed based upon the factors enumerated by prior federal courts

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addressing voluntary dismissal under F.R.C.P. 41(a)(2), including the extent to which the current suit has progressed, the effort and expenses incurred by defendant in preparing for trial, and the plaintiff=s diligence in bringing the motion to dismiss. The plaintiff should not be entitled to a dismissal without prejudice when the defendant, as in this case, has incurred significant costs in preparing for this impending trial. Copious amounts of discovery, including five depositions, have taken place during this litigation. Colby=s failure to diligently bring his motion to dismiss until the eleventh hour assured the defendant of incurring significant costs in preparing for a trial which is less than one month away. These costs are recoverable at the discretion of the district court. See 9 Fed. Prac. & Proc. Civ. 2d ' 2366 (AThe terms and conditions imposed by the district court upon the granting of a motion for a voluntary dismissal under Rule 41(a)(2) generally are for the protection of the defendant; . . . .@). In addition, A[i]n imposing conditions the trial court is not limited to ordering the payment of taxable costs, but may require the plaintiff to compensate for all of the expenses to which the defendant has been put.@ Id. Generally, however, recovery of attorney fees by the defendant following dismissal by the Court is limited to dismissal without prejudice. See id. If the dismissal is with prejudice, Athe court lacks the power to require the payment of attorney=s fees, unless the case is of a kind in which attorney=s fees otherwise might be ordered after the termination on the merits.@ Id. III. CONCLUSION For the reasons listed above, a motion to dismiss without prejudice will be highly prejudicial to the defendant. Trial is scheduled to commence in less than four weeks. Progressive Casualty has filed two motions for summary judgment that are pending before the Court. In addition, Colby has sued an improper defendant and failed to amend his Complaint to

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reflect the proper defendant. Should the Complaint be amended by the Colby to reflect the proper defendant, diversity jurisdiction would likely be destroyed. Finally, defendant has incurred significant costs in preparing for this trial and Colby=s attempt to now dismiss the case without prejudice is untimely and highly prejudicial to the defendant. WHEREFORE, Progressive Casualty respectfully requests that the Court deny Plaintiff=s Motion to Dismiss Complaint Without Prejudice, unless conditions are imposed. Defendant is not opposed to dismissal of this case, but respectfully requests that any dismissal be with prejudice and that it recover any costs associated with the litigation. Alternatively, should the Court find that dismissal without prejudice is proper, Defendant requests its costs and attorney fees associated with the litigation. Respectfully submitted this 16th day of June, 2006.

/S/ Gregory R. Giometti _______________________________ Gregory R. Giometti, Esq. Seaman, Giometti & Murphy, P.C. 7730 E. Belleview Avenue, Suite 102 Greenwood Village, CO 80111 Telephone: (303) 771-2111 Fax: (303) 796-0899 E-mail: [email protected] Attorney for Defendant Progressive Mountain Insurance Company

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CERTIFICATE OF MAILING I hereby certify that on this 16th day of June, 2006, a true and correct copy of the above and foregoing DEFENDANT=S RESPONSE TO PLAINTIFF=S MOTION TO DISMISS COMPLAINT WITHOUT PREJUDICE was electronically transmitted the Clerk of the Court using the ECF System for filing and addressed to:

nue 09 s/Robin Moreno

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