Colorado Business Litigation Lawyer Blog

As another year draws to an end, we would like to extend our wishes for a healthy and prosperous new year to those who visit our website, either intentionally or by sheer accident, and to past, present and future clients.

This past year has been marked by economic distress experienced by far too many individuals and families, often due to unemployment and underemployment. A large percentage of our citizens are living at or below the poverty level, mostly because of conditions totally beyond their control.

Many small businesses have closed their doors, thus losing their hard-earned incomes and often their entire investment. Numerous large corporations have been forced to reorganize in order to help recover from or prevent huge economic loss and additional massive unemployment.

The causes of the severe downturn in our economy have been debated and analyzed to death and will no doubt continue to be disputed for years to come. At this point, do the political and other causes of the recession really matter to all those unfortunate persons who have been so adversely affected by the downward-spiraling economy?

This we know: our good countrymen and countrywomen have proven time and time again over our history that we have the resiliency and the determination to confront and to overcome adversity of all sorts. Economic conditions will improve. Jobs will be created. In the meantime, government and healthy industries must use their best efforts to ensure adequate assistance to those in immediate need. And those of us who are able should give generously to charity.

Hope is on the horizon; help is on the way; our great country will endure.

GJSentinel.com reports that Mesa County in Western Colorado announced on December 2, 2010, that thousands of official computer records were mistakenly made available on the internet from April until November 24.

The records included such information as the names of confidential informants in drug cases, home addresses and family members’ names and other personal information of employees of the county sheriff’s office, emails between sheriff’s office employees about crime victims and homicide and other investigations, some of which included names, telephone numbers and addresses of involved persons.

An investigation has revealed that the information was first accessed from the internet on October 24. It was accessed “numerous” times after that by personal computers in the U.S. and Europe, and perhaps across the world. Nobody knows how many times, if at all, the information was downloaded for storage on a computer.

The sheriff has asked the FBI to assist in determining computer users who may have downloaded the highly sensitive information.

The person who released the information was working in the Mesa County Information Technology Department. Apparently, he mistakenly believed the website where the sheriff’s department information was stored was password-protected and encrypted. The unnamed person is no longer employed by the county.

As readers might expect, the potential civil liability of the county is mind-boggling. Informants’ very lives may be jeopardized. The sheriffs’ employees and their family members are exposed to identity theft and other criminal activity. This unfortunate event will likely have a long-lasting effect on every person whose name or other identifying information was released.

In an earlier post (Part I - 11/30/2010), I introduced the background of this case. It involves a nonresident passenger severely injured in an auto accident who was omitted in the settlement by the driver's insurance company. Claiming that the insurance company refused in bad faith to settle with her for the $100,000 in remaining insurance coverage, the nonresident passenger then sued the driver. The insurance company undertook defense of the case.

While the case was pending, the plaintiff and the driver entered into an agreement whereby an agreed judgment in the amount of $4 million was entered against the driver and the driver assigned (transferred) to the passenger any bad faith claim he had against his insurance company. The agreement provided that the passenger would not attempt to enforce the judgment against the driver. The insurance company, which had internally evaluated the passenger’s damages at between $2 million and $5 million, authorized its insured driver to enter into the agreement.

The passenger then sued the driver’s insurance company for an alleged bad faith refusal to settle her claim within the insurance policy limits. One of the insurance company’s defenses was that even assuming there was any bad faith on its part, the passenger could not prove that the insured driver suffered any monetary damage-- a fundamental requirement for a successful bad faith claim-- since the passenger had agreed that she would not enforce the $4 million judgment against the driver. On that basis, the trial court dismissed the passenger’s claim and the Colorado Court of Appeals affirmed the judgment.

The Colorado Supreme Court overturned the court of appeals decision by a 4-3 vote, saying that the pretrial assignment of the alleged bad faith insurance claim and the entry of the agreed judgment, with an agreement not to enforce the judgment, were recognized as valid in Colorado, assuming the judgment amount was reasonable and not collusive. The mere entry of the agreed judgment was sufficient to satisfy the requirement of proof that the driver was damaged, assuming that the other elements of bad faith refusal to settle within policy limits can be proved. And even if the amount was not reasonable, the injured plaintiff still has the right to prove the actual amount of damages in a trial.

The case will be returned to the trial court for further proceedings, which may result in a settlement or a trial before a jury.