Larson v. American Family Mutual Ins. Co.

2007 U.S. Dist Lexis 41864 (D. Colo. 2007)

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Nature of the Case

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Facts

Ps filed a lawsuit against American (D), their homeowner's insurance company, for alleged breach of contract and bad faith resulting from the wrongful denial and delayed payment of an insurance claim arising from a house fire. Ps retained Ross-Shannon to represent them in connection with their claim against D for non-payment of the insurance policy. P learned that the law firm and D had begun discussions with D to provide defense representation to D. D then encouraged the law firm to 'resolve' any case in which the law firm represented a client against the insurer before work could be assigned to it. The law firm advised Ps that it could no longer represent them in their claim against Dr, presented its bill for services rendered through that time, and terminated its representation. As of that date, no lawsuit had been filed on P's behalf against the insurer. P retained their present counsel and filed their complaint against D in Denver District Court in April 2006. Ps aver in their proposed amended complaint that the above-described conduct of D, coupled with its refusal and delay in paying their claims, constitutes a bad faith breach of the insurance contract by the insurer. They aver that the described conduct by the law firm and its principal constitutes breach of their fiduciary duties to Ps as clients and negligence. They allege a civil conspiracy to injure plaintiffs by diminishing and delaying prosecution of their insurance claims. A magistrate recommended denial of the CCPA motion but approval of the claim to add the attorney at law as a defendant, a claim for malpractice, breach of fiduciary duty and civil conspiracy. D contends that P's motion to amend was not timely filed and that the civil conspiracy claim is unsupportable and therefore arguably futile, and 2) the joinder of the new parties should not be allowed under F.R.Civ.P. 20(a) because if the civil conspiracy claim is not allowed, the new claims do not arise out of the same transactions or occurrences as the other claims.