Colorado Special Districts Property & Liability Pool v. Lyons
2012 WL 310795
Colo. Ct. App.2012Background
- Lyonses, as district and developer directors, faced underlying bank claims relating to Lincoln Creek Village bonds.
- Lyonses sought defense/indemnity from the Pool under a District insurance policy; Pool initially defended reserving rights.
- Pool sued for declaratory judgment arguing Lyonses were not covered because sued as developers, not as District directors.
- Lyonses counterclaimed for bad faith breach of insurance contract against the Pool and named CTSI as third-party defendant; CGIA immunity asserted.
- District court held CGIA applicable; both Pool and CTSI public entities; Lyonses failed to provide required notice.
- Court granted 12(b)(1) dismissal of Lyonses' bad faith claim; then addressed discovery, fees, and remand for fees as to CTSI.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does CGIA immunize bad faith claim? | Lyonses argued not a tort; CGIA inapplicable. | Pool/CTSI: bad faith is tort; CGIA applies. | CGIA applies; bad faith claim treated as tort and barred. |
| Is CTSI a public entity under CGIA? | CTSI not a public entity/instrumentality. | CTSI is a public entity as instrumentality of Pool; immune. | CTSI is a public entity; immune under CGIA. |
| Is Pool a public entity under CGIA? | Pool status as public entity undisputed; treatment as separate intergovernmental entity unclear. | Pool is a public entity formed by intergovernmental cooperation. | Pool is a public entity; immune under CGIA. |
| Was discovery properly allowed on waiver of immunity? | Lyonses should be allowed discovery on §24-10-104 waiver. | Immunity denial ends discovery; waiver not shown. | Court did not abuse discretion; no waiver found; discovery not needed for outcome. |
Key Cases Cited
- Jordan v. City of Aurora, 876 P.2d 38 (Colo. App. 1993) (bad faith is a tort; sovereign immunity applies absent exceptions)
- Farmers Group, Inc. v. Trimble, 691 P.2d 1138 (Colo. 1984) (basis for liability in tort for bad faith breach)
- Zolman v. Pinnacol Assurance, 261 P.3d 490 (Colo. App. 2011) (bad faith breach arises in tort)
- Pham v. State Farm Mut. Auto. Ins. Co., 70 P.3d 567 (Colo. App. 2003) (bad faith breach sounds in tort)
- Public Employees v. Board of Regents of University of Colorado, 804 P.2d 138 (Colo. 1990) (distinguishes public vs private corporations in CGIA context)
- Robinson v. Colorado State Lottery Division, 155 P.3d 409 (Colo. App. 2006) (instrumentality analysis; governmental vs private)
- Moran v. Standard Insurance Co., 187 P.3d 1162 (Colo. App. 2008) (private insurer not instrumentality of public entity)
- City of Arvada v. Colorado Intergovernmental Risk Sharing Agency, 19 P.3d 10 (Colo. 2001) (CGIA pool formation; intergovernmental cooperation)