United States District Court, D. Colorado
JENNY M. RAMOS, as assignee of Mario Benavides, Plaintiff,
THE HERTZ CORPORATION a/k/a Hertz Rent A Car a/k/a/ Hertz Car Sales a/k/a Hertz Claim Management Corporation, Defendant.
ORDER ON PLAINTIFF'S MOTION TO STRIKE AFFIRMATIVE
DEFENSES [Dkt. #38]
REID NEUREITER UNITED STATE MAGISTRATE JUDGE
matter comes before the Court on Plaintiff's Motion to
Strike Defendant's Affirmative Defenses. The Court has
reviewed the Motion and all responsive papers. On September
12, 2018, the Court heard extensive argument by counsel on
the Motion. For the reasons outlined below, the Motion is
insurance bad-faith case arises out of a head-on automobile
collision that occurred in Adams County in 2014. The
Plaintiff, Jenny M. Ramos (“Plaintiff”), was
injured in the crash. Per the Complaint, the at-fault vehicle
was a rental car, owned by Defendant The Hertz Corporation
(“Hertz”). At the time of the accident, the
rental vehicle was not being driven by the renter, Mr. Allen
George (“Mr. George”). Mr. George, apparently,
had given the rented car to Mr. Mario Benavides (“Mr.
Benavides”) to drive. According to Hertz's Amended
Answer to the Complaint (Dkt. #36), Mr. Benavides was under
the influence of drugs at the time he was driving the
borrowed rental vehicle. In fact, per Hertz's Amended
Answer, the reason Mr. George had rented the car from Hertz
was because Mr. Benavides had crashed Mr. George's
Pontiac Grand Prix only a few days earlier. Mr.
Benavides' Colorado driver's license had also been
revoked (under the habitual traffic offender statute) prior
to his asking Mr. George to borrow the rented car, allegedly
making Mr. Benavides' operation of Hertz's car a
felony offense. Mr. Benavides allegedly had numerous prior
intoxication and driving under the influence convictions.
Mr. George rented the vehicle from Hertz, he expressly
declined any insurance coverage in the rental agreement.
August 3, 2014, Plaintiff requested that Hertz tender the
alleged policy limit of $25, 000, based on Plaintiff's
assertion that Hertz was obligated by law to insure its
rental vehicle, regardless of whether the renter (Mr. George)
issue in this case is whether Hertz, as owner of the vehicle,
was required by Colorado law to insure the car, despite the
fact that the renter had declined insurance. Another issue
is, assuming without deciding that the renter who declined
insurance (Mr. George) was nevertheless insured by operation
of law, whether that insurance would have transferred to an
arguably permissive user (Mr. Benavides), who was barred by
Colorado law from driving because he lacked a valid
Amended Answer, Hertz disputes that it was mandated by law to
provide insurance to Mr. George, since Mr. George had
declined insurance on the rental agreement. Hertz also
disputes that Mr. Benavides was a permissive user. Hertz
alleges in its Amended Answer that Mr. Benavides was instead
a “converter, ” in part because Mr. Benavides
likely failed to disclose his lack of a valid driver's
license to Mr. George when borrowing the car.
case gets even more complicated. Hertz refused to tender $25,
000 to Plaintiff within the deadline set for a response and,
just over a month later, the injured Plaintiff sued Mr.
Benavides in state court in Adams County for her injuries.
The state court case was then resolved in part by the
execution of a Nunn agreement between Plaintiff and
Mr. Benavides. See Nunn v. Mid-Century Insurance
Company, 244 P.3d 116 (Colo. 2010). Per the
Nunn agreement, Mr. Benavides assigned his claims
against Hertz (for breach of contract and for insurance bad
faith) to Plaintiff in exchange for Plaintiff's agreement
not to execute any judgment beyond available insurance policy
limits against Mr. Benavides' personal assets. In that
agreement, Mr. Benavides and Plaintiff also purportedly
agreed to proceed to an arbitration to determine the amount
of damages to which Plaintiff would be entitled.
arbitration was scheduled. Plaintiff alleges Hertz was
invited to participate and appear to present a defense on
behalf of Mr. Benavides. Hertz did not appear at the
arbitration. Neither did Mr. Benavides. As a result, the
arbitrator was presented with only evidence from Plaintiff,
Plaintiff's witnesses, and Plaintiff's experts. That
arbitration resulted in a $3.426 million judgment against Mr.
Benavides and in favor of Plaintiff.
Complaint, Plaintiff purports to step into the shoes of Mr.
Benavides (having been assigned his claims against Hertz) and
insists that “as a consequence of the misconduct by
Hertz - including its failure to resolve the [case against
Mr. Benavides] within the policy limits without delay - Mr.
Benavides was deprived of the opportunity to put the matters
at issue behind him and has now been exposed to a high
adverse judgment against him.” (Dkt. #1 at ¶12.)
Plaintiff asserts that having been assigned Mr.
Benavides' rights to any claims against Hertz for
collection of the judgment entered after the state court
arbitration, she has the right to prosecute those claims in a
civil action against Hertz, and retain the proceeds of such
action. (Dkt #1 ¶13.) In the Scheduling Order entered by
the Court, Plaintiff states that she is seeking $3.426
million in damages from Hertz plus interest which continues
to accrue, plus non-economic damages for Hertz's alleged
bad faith. (Dkt. #33 at 7-8.) Thus, a demand for $25, 000 in
alleged insurance policy limits has transmogrified into a
claim for nearly $3.5 million-plus in damages (and
potentially multiples of that, given the bad faith claims in
Defenses and Affirmative Defenses
in its Amended Answer, recites multiple reasons why it is not
liable to Plaintiff for anything, much less the $3.5 million
being sought. Some of these reasons constitute straight
denials of Plaintiff's assertions. For example, at
Paragraph 7 of the Complaint, Plaintiff asserts that at the
time of the collision, the vehicle operated by Mr. Benavides
“was insured by Hertz.” Hertz denies that
allegation. (See Dkt. #36 ¶7.) This is not an
affirmative defense. Plaintiff will have to prove at trial
(or via a motion pre-trial) that the vehicle was insured by
Hertz. Similarly, Hertz denies that it has somehow
“exposed” Mr. Benavides to a high adverse
judgment against him. See Complaint (Dkt. #1 at
¶12); Amended Answer (Dkt. #36 ¶12). This, again,
is not an affirmative defense, but merely a denial of
something Plaintiff will have to affirmatively prove.
Hertz defenses do appear to be classic affirmative defenses
that will require proof of facts (or legal argument) by the
Defendant at trial or on motion that, if proven, would negate
Plaintiff's claims. See Black's Law
Dictionary, 6th ed. (1990) (defining
“affirmative defense” as a matter asserted by a
defendant in a pleading which, “assuming the complaint
to be true, constitutes a defense to it”). Rule 8(c)(1)
requires a defendant in responding to a pleading to
affirmatively state any affirmative defense, including, ...