United States District Court, D. Colorado
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO STEVEN P. MARES, JR., MARES & ARMSTRONG, LLC, and MARES IMMIGRATION BONDS, LLC, Plaintiffs,
COLORADO DIVISION OF INSURANCE, MICHAEL CONWAY, as Commissioner of Insurance, BETH HAM, and VONSHAY D. MCCARTHER, Defendants.
ORDER OF DISMISSAL
D. DOMENICO UNITED STATES DISTRICT JUDGE.
two bail bond companies and their principle, bring this
action against the Colorado Division of Insurance, its
Commissioner, and an investigator-who they assert violated
the United States Constitution by failing to promptly
investigate them or process their application for a license
to produce insurance in Colorado. Plaintiffs further assert
state law tort claims against an ex-employee-turned
competitor who complained of their conduct to the Division.
Before the Court are motions to dismiss for lack of subject
matter jurisdiction and for failure to state claims upon
which relief may be granted. (Docs. 23, 26.)
stage, the Court must take all well-pleaded allegations as
true and construe them in the light most favorable to the
plaintiffs. Doing so here, the Amended Complaint paints a
picture of a bureaucratic system that creates burdensome and
potentially arbitrary barriers more useful for competitors
seeking to disadvantage one another than for the protection
of potential consumers. The question now before the Court
though is not whether such treatment is appropriate or even
whether it violates Plaintiffs' rights. The question is
whether Plaintiffs' efforts to vindicate those rights are
properly in federal court at this time. For the reasons
explained below, the Court concludes they are not, so the
motions are GRANTED.
Colorado Administrative Procedure Act and Insurance Licensing
case involves several procedural rules and regulations
governing licensure to produce insurance in Colorado. The
Court begins with a brief overview of the state provisions
cited in the pleadings.
and licensing procedures by Colorado agencies are governed by
the Colorado Administrative Procedure Act
(“CAPA”). Colo. Rev. Stat. § 24-4-101.
Relevant here, every insurance producer in Colorado must be
duly licensed. Colo. Rev. Stat. § 10-2-401(1).
Applicants for licenses, be they individuals or business
entities, must be verified as “competent, trustworthy,
and of good moral character and good business
reputation.” Colo. Rev. Stat. § 10-2-404(1)(h) and
(2)(b). “An application for a license shall be acted
upon promptly, ” and “[e]very agency decision
respecting . . . denial . . . of a license shall be based
solely upon the stated criteria, terms, and purposes of the
statute [governing insurance pro- ducers], or regulations
promulgated thereunder, and case law interpreting such
statutes and regulations.” Colo. Rev. Stat. §
24-4-104(1), (2), and (8).
Colorado Insurance Commissioner may refuse to issue or renew
a license if he or she finds any violations by a licensee or
applicant- including making misrepresentations on an
application, engaging in prohibited bail bond transaction
activities, misappropriating property, being convicted of a
felony, or engaging in other fraudulent, coercive, or
dishonest practices. Colo. Rev. Stat. §§
10-2-801(1), 18-13-130. No. license revocation or denial is
lawful unless the agency gives the applicant written notice
of objective facts or conduct, established upon a full
investigation, that may warrant such action. Colo. Rev. Stat.
§ 24-4-104(3)(a). If an application for a new license is
denied without a hearing, the applicant, within sixty days
after the giving of notice of such action, may request a
hearing before the agency, and the action of the agency after
any hearing is subject to judicial review. Colo. Rev. Stat.
§ 24-4-104(9); see also Id. §§
24-4-105, 24-4-106 (outlining hearing and appeal procedures).
following allegations are taken from the Plaintiffs'
Amended Complaint (Doc. 20) and are treated as true for
purposes of assessing the motions to dismiss. See Wilson
v. Montano, 715 F.3d 847, 850 n.1 (10th Cir. 2013).
Steven Patrick Mares, Jr. is a resident of Colorado and the
owner of Plaintiffs Mares & Armstrong, LLC
(“M&A”) and Mares Immigration Bonds, LLC
(“MIB”). M&A is one of the largest bail bond
companies in Colorado and has been in the industry for more
than twenty years. Mr. Mares and M&A are licensed
resident insurance producers in Colorado and authorized to
write bonds, which are backed by the country's largest
bail bonds insurer, Bankers Insurance Company
(“Bankers”). M&A's posting agents are
employees, rather than independent contractors, and are
themselves licensed by the Division to produce insurance.
efficiency purposes, M&A obtains its employees'
authorization to use their stamped signatures on documents
required by the courts after original bonds are posted. These
documents, “consents of surety, ” are necessary
to continue bonds and are often needed in a time-sensitive
manner. M&A handles requests for consents in its central
office, and-pursuant to its authorization from the employee
who posted the original bond-stamps employees' signatures
on them before filing them with the relevant courts.
Consumers are thus able to avoid jail if certain posting
agents are unavailable or not working that day. Plaintiffs
allege that this practice is legal, and that many current and
former employees authorized it.
Colorado Division of Insurance (“Division”) is a
branch of the Department of Regulatory Authorities and is
responsible for regulating the insurance industry in the
state. Colo. Rev. Stat. § 10-1-103. Defendant Michael
Conway, the Insurance Commissioner, is the chief executive of
the Division, see Colo. Rev. Stat. §
10-1-104(1), and is sued only in his official capacity.
Defendant Beth Ham is a senior investigator with the Division
and is sued only in her individual capacity.
Vonshay D. McCarther, a former employee of M&A, had also
authorized M&A to use his stamped signature on consents.
But on January 10, 2018, days before starting a competing
bail bond business, he filed a complaint with the Division
accusing M&A of using his signature without
authorization. He used the complaint to undermine, and
interfere with the business of, his former employer (and new
of Mr. McCarther's accusation, the Division investigated
M&A. Ms. Ham, who was responsible for the investigation,
sent four inquiries each to Bankers and M&A over the next
year. To each
request, the companies “responded timely with complete
and accurate information.” Despite M&A's
responsiveness to these inquiries, Plaintiffs allege that the
investigation was “secret, ” they never had the
opportunity to “meet with the Division and hear or
respond to any concerns, ” and the “Division [ ]
refused to provide any complaint to” M&A or Mr.
Mares. This investigation lasted approximately fifteen
on June 20, 2018, Mr. Mares filed an application for a
license to produce insurance on behalf of MIB. Ms. Ham
responded on October 2 with requests for information about
MIB's personnel. She then sent three inquires to Bankers
concerning MIB's application, to which Bankers promptly
responded. The Division did not request any further
information from MIB, Mr. Mares, or Bankers after November 2,
2018. It did not respond to Mr. Mares's multiple
subsequent inquiries, except to say on November 21, 2018 and
March 28, 2019 that the application was “in
process” and under review. The Division did not act on
the application for nearly a year.
22, 2019, Plaintiffs filed this action to recover for the
governmental Defendants' alleged “unreasonable and
arbitrary delays in [their] investigations of existing
licenses and pending applications for new licenses” and
Mr. McCarther's alleged attempt to “intentionally
harm a competitor in the bail bond business.” On June
14, the Division filed a notice of grounds for denial of
MIB's application with the state office of administrative
same document contains a notice of charges against Mr. Mares,
M&A, MIB, and another of Mr. Mares's entities. It
alleges ninety-five counts of fraud, forgery, dishonest and
coercive practices, incompetence, lack of trustworthiness and
good moral character. The charges seek to affirm the denial
of MIB's application, ...