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Sanchez v. Miller

United States District Court, D. Colorado

February 19, 2016

JOAN M. MILLER, Defendants.


Robert E. Blackburn United States District Judge

The matters before me are (1) the Recommendation of United States Magistrate Judge [#19], [1] filed December 9, 2015; (2) and plaintiff’s Objection to Magistrate Recommendation Re Dismissal [#26], filed January 11, 2016. I overrule the objection in part and sustain it in part, and, concomitantly, adopt in part and reject in part the recommendation to which the objection pertains. Substantively, I grant defendant’s motion insofar as it objects to venue in this district and transfer this case to a district in which venue is proper.

As required by 28 U.S.C. § 636(b), I have reviewed de novo all portions of the recommendation to which objections have been filed, and have considered carefully the recommendation; plaintiff’s objections; the arguments presented in the underlying motion, response, and reply; and all applicable caselaw. Although I agree with the magistrate judge’s conclusion that plaintiff has failed to sustain her burden to demonstrate proper service of process on defendant, I respectfully must reject his suggestion that this case be dismissed with prejudice on the ground that any attempt to cure the insufficiency would be futile because plaintiff’s claim is barred by res judicata.[2]Nevertheless, I find merit in defendant’s alternative argument that venue is improper in this district, and thus grant the motion on that basis and transfer the case to a district in which venue is proper.

In 2011, plaintiff filed an action in the District Court of Weld County, Colorado, (Maricruz Sanchez v. American Family Insurance Co., et al., 2011CV368) against American Family Mutual Insurance Company (“American Family”) and others in which she alleged, inter alia, that American Family engaged in a pattern of manipulating the terms and conditions of insurance policies to defeat coverage, in violation of the Colorado Organized Crime Control Act (“COCCA”), § 18-17-103, C.R.S. (See Def. Resp. App., Exh. 1 ¶¶ 50-58 at 8-10.) That case was dismissed on summary judgment, and plaintiff’s subsequent appeal (see Def. Motion App., Exh. 2) and petitions for writ of certiorari were denied (Sanchez v. American Family Insurance Co., 2015 WL 9269439 (Colo. Dec. 21, 2015), and 2015 WL 9269448 (Colo. Dec. 21, 2015). Plaintiff now brings a COCCA claim against defendant - an employee of American Family who certified various copies of relevant insurance policies - individually, attempting to overcome the infirmity in her prior suit against American Family.[3]

By the instant motion, defendant moved to dismiss on the bases of insufficient service of process and lack of personal jurisdiction over defendant in this forum. The magistrate judge agreed that plaintiff’s attempted service on defendant was improper and thus ineffectual, but considered further whether such insufficiency was curable. See Pell v. Azar Nut Co., 711 F.2d 949, 950 n.2 (10th Cir. 1983).[4] He concluded that ultimately it was not because plaintiff’s COCCA claim was barred by res judicata, making any attempt at proper service in this matter futile. See Pounds v. Department of the Interior, 9 Fed.Appx. 820, 821 n.2 (10th Cir. 2001).

With respect, I must reject that conclusion. As the magistrate judge noted, where, as here, the defendant was not a party to the prior action, application of res judicata requires, inter alia, privity between the defendant and a party to the prior adjudication. See Manka v. Martin, 614 P.2d 875, 879 (Colo. 1980). “The determination of identity between litigants for the purpose of establishing privity is a factual question.” Lowell Staats Mining Co. v. Philadelphia Electric Co., 878 F.2d 1271, 1276 (10th Cir. 1989) (citation and internal quotation marks omitted). The magistrate judge’s positive assertion that defendant was in privity with her employer, however, is not supported by any analysis of the plausible factual allegations of the complaint, which in the present procedural posture of this case, must be accepted as true. See Robbins v. Oklahoma, 519 F.3d 1242, 1248 (10th Cir. 2008).

Examining those allegations, I note that plaintiff claims, relevantly, that defendant is personally liable for certifying or otherwise verifying the insurance policies as true and correct when they were inaccurate and incomplete. (See, e.g., Complaint 138 at 26.) Indeed, plaintiff’s entire purpose in naming defendant individually appears to have been to overcome the state court’s determination that American Family itself could not be both the racketeering “enterprise” and a “person” who conspired with that enterprise. (See supra n.3.) Such allegations are both plausible and sufficient, if true, to negate an inference of privity between defendant and her employer. See Lowell Staats Mining, 878 F.2d at 1276; Morgan v. City of Rawlins, 792 F.2d 975, 980 (10th Cir. 1986). See also Gonzales v. Hernandez, 175 F.3d 1202, 1206 (10th Cir. 1999) (applying similar principle to government entities and their officers when sued in their personal capacities).[5] I thus respectfully reject the magistrate judge’s recommendation to dismiss plaintiff’s COCCA claim with prejudice on the basis of res judicata.

Nevertheless, defendant’s motion also raised the issue of the court’s putative lack of personal jurisdiction over defendant in this forum, as well as an argument that under 28 U.S.C. § 1391(b), venue was improper in this district. Although the magistrate judge did not consider these aspects of the motion, as the person to whom “the ultimate adjudicatory determination [is] reserved, ” I may. United States v. Raddatz, 447 U.S. 667, 676, 100 S.Ct. 2406, 2412-13, 65 L.Ed.2d 424 (1980). Having considered these alternative arguments, I conclude that, even assuming arguendo the assumption of personal jurisdiction over defendant in this forum were warranted, venue in this district nevertheless is improper.

The federal venue statute provides:

A civil action may be brought in -
(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

28 U.S.C. § 1391(b). The burden of proof rests with plaintiff to establish that venue is proper in this district. Wempe v. Sunrise Medical HHG, Inc., ...

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