FILED
United States Court of Appeals
Tenth Circuit
April 7, 2010
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
HOWARD MYERS individually and as
father and next best friend of ETHAN
MYERS and LUKAS MYERS, minors,
Plaintiffs - Appellants,
v. No. 08-1354
(D. Ct. No. 1:04-CV-00396-LTB)
ALLIANCE FOR AFFORDABLE (D. Colo.)
SERVICES, a/k/a or d/b/a or separately
Alliance for Affordable Health Care
Association; KENN KOCHAN, a/k/a
KENNETH KOCHAN; MID-WEST
NATIONAL LIFE INSURANCE
COMPANY, a/k/a or d/b/a or
separately Mid-West National Life
Insurance Company of Tennessee,
Defendants - Appellees.
ORDER AND JUDGMENT *
Before HENRY, TACHA, and HARTZ, Circuit Judges.
Plaintiffs-appellants Howard Myers and his minor sons Ethan and Lukas
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Myers (“plaintiffs”) brought claims against Alliance for Affordable Services
(“Alliance”), Mid-West National Life Insurance Company (“Mid-West”), and
Kenneth Kochan after plaintiffs were denied insurance coverage of medical bills
incurred by Ethan and Lukas. The district court dismissed all of plaintiffs’ claims
on pre-trial motions, and plaintiffs now appeal. We take jurisdiction pursuant to
28 U.S.C. § 1291 and AFFIRM.
I. BACKGROUND
In January 2002, plaintiffs did not have health insurance. That month, Mr.
Myers contacted Mr. Kochan, an insurance agent for Mid-West who was working
through Alliance. On Tuesday, January 15, Mr. Kochan came to Mr. Myers’s
home and assisted him in completing an application for health insurance, which
sought coverage for Mr. Myers, Ethan, and Lukas. The application, which Mr.
Myers signed, listed Dr. Kurt Wever as Mr. Myers’s physician. The application
also indicated that he had a kidney removed eight years prior, a procedure known
as a nephrectomy.
In addition, the application contained various declarations, agreements,
confirmations, and releases that Mr. Myers acknowledged through his signature.
Under the heading “Declarations and Agreements,” the application provided that
“the agent does not have the authority on behalf of [Mid-West] to accept the
risks, or to make, alter, or amend the coverage” and “no insurance will take effect
unless and until the Application is approved by [Mid-West] and the policy is
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delivered to the Applicant while the conditions affecting the insurability are and
have remained as described herein . . . .” Similarly, Mr. Myers signed a
“Confirmation of Presentation and Conditional Receipt” acknowledging that the
payment of an initial premium did not create insurance coverage. 1 The
Confirmation of Presentation also provided that the insurance for which Mr.
Myers applied would “not become effective until the policy is delivered by [Mid-
West]” and that “neither [Mr. Kochan] or [Mid-West] is bound by any knowledge
or statements made by [Mr. Kochan] . . . unless set forth in writing in the
application and this receipt.” Furthermore, at the same January 15 meeting, Mr.
Myers signed a medical records release which provided, “I understand that
coverage is not effective unless and until approved by [Mid-West].”
Mr. Kochan returned to the Myers’s home the following evening,
Wednesday, January 16, to obtain additional information regarding Mr. Myers’s
nephrectomy. Mr. Kochan turned in the application, the additional information,
and an initial premium payment check written by Mr. Myers in the amount of
1
The Confirmation of Presentation provided, in pertinent part:
I authorize the check tendered with the application to be cashed
immediately upon receipt by the home office. The Representative
has explained to me that [Mid-West]’s cashing of my check does not
create coverage with [Mid-West] and should [Mid-West] fail to
approve my application for coverage, I will receive a full refund of
all monies given to the Representative for the insurance I have
applied for.
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$376.11 on Friday, January 18 at Alliance’s weekly “turn-in” meeting. Alliance,
in turn, mailed the application to Mid-West that Friday or the following Monday.
Mid-West received the application and began the underwriting process on
Tuesday, January 22.
Tragically, the same day that Mid-West received the application, Ethan and
Lukas were involved in an automobile collision with a drunk driver. Medical
bills for the two boys exceeded $1,000,000.
On January 31, Mid-West wrote a letter to Mr. Myers indicating that it
would be unable to consider his application until it received medical records
relating to his nephrectomy, and that it had requested a third party obtain the
records from Dr. Wever. Two months later, on March 21, Mid-West notified Mr.
Myers that it was suspending the processing of the application because it never
received the necessary medical records. On March 22, Mid-West issued three
“refund” checks to Mr. Myers and refused to issue him an insurance policy. Mid-
West later refused to pay for the medical bills incurred by Ethan and Lukas.
Plaintiffs filed a complaint (the “amended complaint”) against Mid-West,
Alliance, and Mr. Kochan (collectively, “defendants”) in El Paso County District
Court in January 2004. The amended complaint raised claims for breach of
contract, bad faith breach of an insurance contract, breach of fiduciary duty,
fraudulent and negligent misrepresentation, negligence, and outrageous conduct.
Defendants removed the action to federal court, contending that Mr. Kochan, the
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only non-diverse party, was not subject to suit because he had filed for
bankruptcy one month prior to the filing of the amended complaint and was
protected by the automatic stay. The district court agreed that the claims against
Mr. Kochan violated the automatic stay in the bankruptcy case, dismissed the
claims against Mr. Kochan as void ab initio, and denied plaintiffs’ motion to
remand.
In March 2004, Alliance filed a motion to dismiss all of the claims against
it pursuant to Fed. R. Civ. P. 12(b)(6). The district court granted Alliance’s
motion and dismissed plaintiffs’ claims. Plaintiffs subsequently filed a Motion to
Amend Judgment, and in the Alternative, Motion to Reinstate and Amend Their
Amended Complaint, which the district court denied.
In March 2008, plaintiffs sought to amend the amended complaint to add a
new claim against Mid-West, the only remaining defendant. The district court
also denied this motion to amend. Finally, following Mid-West’s motion, the
district court granted summary judgment in favor of Mid-West on all claims and,
in doing so, also struck portions of plaintiffs’ expert testimony.
Plaintiffs now appeal the dismissal of their claims against Alliance pursuant
to Rule 12(b)(6) and against Mid-West on summary judgment. They also contend
that the district court erred in denying their Motion to Amend Judgment, and in
the Alternative, Motion to Reinstate and Amend Their Amended Complaint, as
well as their March 2008 motion to amend the amended complaint. Finally,
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plaintiffs contest the dismissal of Mr. Kochan from this action and argue that the
district court improperly struck portions of their expert testimony in support of
their opposition to summary judgment.
II. DISCUSSION
A. Plaintiffs’ Claims Against Alliance and Mid-West
1. Standards of Review
The district court dismissed the claims against Alliance pursuant to Fed. R.
Civ. P. 12(b)(6); therefore, we review the decision to dismiss de novo. Ridge at
Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). “[W]e
assume the truth of the plaintiff’s well-pleaded factual allegations and view them
in the light most favorable to the plaintiff.” Id. To survive a motion to dismiss, a
plaintiff must “‘nudge his claims across the line from conceivable to plausible.’”
Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007))
(alterations omitted). “If the plaintiff fails to allege an essential element of his
claim, the complaint is appropriately dismissed pursuant to Rule 12(b)(6).” Ellis
ex rel. Estate of Ellis v. Ogden City, 589 F.3d 1099, 1102 (10th Cir. 2009).
Likewise, we review de novo the district court’s dismissal of the claims
against Mid-West in the summary judgment order, applying the same standard as
the district court. Hill v. Allstate Ins. Co., 479 F.3d 735, 739–40 (10th Cir. 2007).
“Summary judgment is appropriate if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show
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that there is no genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.” Id. at 740 (quotations omitted).
2. Breach of Contract
Plaintiffs brought breach of contract claims against both Alliance and Mid-
West. Under Colorado law, a plaintiff must plead the following elements to state
a claim for breach of contract: (1) the existence of a contract; (2) plaintiff’s
performance or some justification for nonperformance; (3) defendant’s failure to
perform; and (4) resulting damages to the plaintiff. W. Distrib. Co. v. Diodosio,
841 P.2d 1053, 1058 (Colo. 1992).
The district court dismissed plaintiffs’ breach of contract claim against
Alliance because they failed to allege the existence of a contract with Alliance in
their amended complaint. On appeal, plaintiffs argue that Mr. Myers had an oral
contract with Alliance requiring Alliance to “procure insurance” for him.
Plaintiffs did not, however, plead any facts in their amended complaint suggesting
the formation or existence of such a contract. Thus, the district court properly
dismissed plaintiffs’ breach of contract claim against Alliance.
Similarly, plaintiffs concede that Mid-West never issued a health insurance
policy to Mr. Myers under which Mid-West was contractually bound to provide
coverage to them. Nevertheless, they argue that representations by Mr. Kochan as
an agent of Mid-West created binding coverage from Mid-West on the date that
Mr. Myers completed his application and tendered the first premium payment.
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The district court ruled that there was no contract between the parties and
dismissed the claim. We agree.
Under Colorado law, an agent can bind a principal to a contract if he is
acting within the scope of his actual or apparent authority. Life Investors Ins. Co.
of Am. v. Smith, 833 P.2d 864, 868 (Colo. Ct. App. 1992). “Actual authority” is
the authority which the principal has in fact given to the agent. Id. “Apparent
authority exists only to the extent that it is reasonable for the third person dealing
with the agent to believe that the agent is authorized.” Nat’l Cash Register Co. v.
Lightner, 388 P.2d 781, 787–88 (Colo. 1964) (quoting Restatement (Second) of
Agency, § 8 cmt. c (1958)). “[I]f the limitation of an agent’s authority is known
to the person with whom he deals, the principal is not bound if the agent exceeds
his authority.” Id. at 788.
Assuming that Mr. Kochan’s oral statements could be construed as
sufficient to create an agreement between Mid-West and plaintiffs, the evidence
clearly establishes that Mr. Kochan did not have actual authority to bind Mid-
West to any such contract. In Life Investors, the court looked to the agency
agreement between the agent and insurance company to determine the scope of
the agent’s actual authority. 833 P.2d at 868. Here, Mr. Kochan’s agency
agreement with Mid-West authorized him “to solicit applications for POLICIES
offered by Mid-West” and required him to “submit every insurance application
subject to acceptance or rejection at the SOLE DISCRETION of . . . MID-
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WEST.” 2 These express provisions show that Mid-West did not give Mr. Kochan
the authority to bind it to insurance coverage and that Mr. Kochan was informed
of his limited authority.
Additionally, Mr. Kochan did not have apparent authority to bind Mid-West
to coverage. The insurance application Mr. Myers signed provided that Mr.
Kochan did not have authority “to make, alter, or amend coverage,” and that “no
insurance will take effect unless and until the Application is approved by [Mid-
West].” Similar disclaimers appeared in other documents signed by Mr. Myers.
Given Mr. Myers’s acknowledgment, through his signature, of these clear
restrictions on Mr. Kochan’s authority, Mr. Myers’s belief that Mr. Kochan could
issue insurance or bind Mid-West to coverage was objectively unreasonable. See
Bayless v. Christie, Manson & Woods Int’l, Inc., 2 F.3d 347, 353 (10th Cir. 1993)
(“‘[I]f a person has means of knowledge reasonably open to him as to the limits
of the agent’s authority, he cannot hold the principal unless he uses ordinary
diligence to ascertain them . . . . [A person] has means of knowledge if he knows
or has reason to know that the authority is evidenced by a document open to and
intended for his inspection.’”) (quoting Restatement (Second) of Agency, § 167
cmt. a (1958)).
Finally, plaintiffs argue that Mr. Kochan was a “general agent” of Mid-
2
The agency agreement between Mr. Kochan and Mid-West is not part of
the record on appeal; the district court, however, relied on it and the parties do
not contest the court’s recitation of this language in the agreement.
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West and thus able to issue binding health insurance on its behalf. A general
agent’s misrepresentations as to policy coverage are indeed binding upon the
agent’s principal. Cadez v. Gen. Cas. Co. of Am., 298 F.2d 535, 537 (10th Cir.
1961). Nevertheless, an agent who is limited to receiving and accepting proposals
for insurance is not a general agent and has no power to bind an insurance
company or write insurance. See id. Mr. Kochan was only given authority to
solicit applications; therefore, he was not a general agent of Mid-West and was
unable to bind it to coverage. Accordingly, the district court properly dismissed
plaintiffs’ breach of contract claim against Mid-West.
3. Bad Faith Breach of an Insurance Contract
Plaintiffs also brought claims for bad faith breach of an insurance contract
against both Alliance and Mid-West. “The basis for liability in tort for the breach
of an insurer’s implied duty of good faith and fair dealing is grounded upon the
special nature of the insurance contract and the relationship which exists between
the insurer and the insured.” Farmers Group, Inc. v. Trimble, 691 P.2d 1138,
1141 (Colo. 1984). A claim for bad faith breach of an insurance contract requires
the existence of a contract. See id.; Parsons ex rel. Parsons v. Allstate Ins. Co.,
165 P.3d 809, 814–15 (Colo. Ct. App. 2006). As we just held, however, plaintiffs
did not allege in their amended complaint the existence of a contract between
themselves and Alliance, and the undisputed evidence demonstrates that there was
no contract between themselves and Mid-West. Accordingly, the district court
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properly dismissed plaintiffs’ claim for bad faith breach of an insurance contract
against Alliance under Rule 12(b)(6) and against Mid-West on summary
judgment.
4. Breach of Fiduciary Duty
The district court properly dismissed plaintiffs’ breach of fiduciary duty
claims against Alliance and Mid-West. Under Colorado law, a plaintiff must
plead the following elements to state a claim for breach of fiduciary duty: (1) the
defendant was acting as a fiduciary of the plaintiff; (2) the defendant breached a
fiduciary duty to the plaintiff; (3) the plaintiff incurred damages; and (4) the
defendant’s breach of fiduciary duty was a cause of the plaintiff’s damages.
Graphic Directions, Inc. v. Bush, 862 P.2d 1020, 1022 (Colo. Ct. App. 1993).
Furthermore, a claim for breach of fiduciary duty is improper unless “the
confidential relationship giving rise to the duty [was] established prior to the date
of the transaction that gives rise to the claim.” Nicholson v. Ash, 800 P.2d 1352,
1355 (Colo. Ct. App. 1990).
Plaintiffs do not allege that their relationship with Alliance or Midwest
existed prior to the date Mr. Myers attempted to purchase insurance from Mid-
West through Alliance. The amended complaint states only that Alliance
provided Mr. Myers with “a benefit summary for the health insurance he applied
for,” “accepted and cashed a check for that insurance,” and submitted the
“application for insurance to Mid-West.” Plaintiffs allege that Mid-West
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accepted the application and the initial premium check written by Mr. Myers.
Plaintiffs do not contend, however, that their relationship with either Alliance or
Mid-West predated the transaction giving rise to this claim. Because Colorado
law requires a pre-existing confidential relationship, the district court correctly
dismissed plaintiffs’ breach of fiduciary duty claims.
5. Fraudulent Misrepresentation
Plaintiffs asserted fraudulent misrepresentation claims against Alliance and
Mid-West based on statements by Mr. Kochan. To state a claim for fraudulent
misrepresentation, a plaintiff must allege: (1) a knowing misrepresentation of
material fact; (2) reliance on the material misrepresentation; (3) the right or
justification in relying on the misrepresentation; and (4) reliance resulting in
damages. Williams v. Boyle, 72 P.3d 392, 399 (Colo. Ct. App. 2003). The
alleged misrepresentation must be of a material fact which either exists in the
present or has existed in the past. Bell Press, Inc. v. Phillips, 364 P.2d 398, 400
(Colo. 1961). “[A] mere expression of an opinion in the nature of a prophecy as
to the happening or non-happening of a future event is not actionable.” Id.
In the amended complaint, plaintiffs allege that Mr. Kochan told them that
“everything was being handled in an expeditious fashion, that everything was in
order, and that the policy for which they had applied would be issued.” The
district court held that Mr. Kochan’s statements were not statements of material
fact and thus could not support a claim of fraudulent misrepresentation. We
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agree. Mr. Kochan’s statements concerning the handling of the insurance
application were mere expressions of his opinion. Furthermore, the
representation that the policy “would be issued” related to the happening or non-
happening of a future event. Therefore, the district court properly dismissed this
claim against Alliance.
Plaintiffs’ claim against Mid-West is more developed. In their response to
Mid-West’s motion for summary judgment, plaintiffs asserted that Mr. Kochan
told them that they were insured beginning January 15, 2002, upon Mr. Myers’s
completion of the application and payment of the first premium. They further
alleged that Mr. Kochan fraudulently misrepresented that: (1) he and his wife
were insured by a similar Mid-West health insurance plan; (2) the policy was for
“100% coverage, up to [one] million dollars, and with a $5,000 deductible”;
(3)“Mr. Myers was bound and had the insurance, and the only way the policy
would be cancelled [was] if there was something wrong on the application with
Mr. Myers’ medical”; and (4) the written policy would be sent to Mr. Myers
within a week or two. The district court held, and we agree, that plaintiffs raised
a triable issue of fact whether Mr. Kochan made material misrepresentations
regarding coverage. Nevertheless, plaintiffs must also establish a triable issue
regarding their justifiable reliance upon such statements. This they have not
done.
The application and other forms which Mr. Myers signed contained clear
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and unambiguous disclaimers of immediate coverage and express limitations on
Mr. Kochan’s authority to bind Mid-West. Plaintiffs’ reliance on any
contradictory statement by Mr. Kochan concerning immediate coverage is
therefore unreasonable as a matter of law. See Balkind v. Telluride Mountain
Title Co., 8 P.3d 581, 587 (Colo. Ct. App. 2000) (“If the plaintiff has access to
information that was equally available to both parties and would have led to
discovery of the true facts, the plaintiff has no right to rely upon the
misrepresentation.”). Accordingly, the district court properly granted Mid-West
summary judgment on plaintiffs’ fraudulent misrepresentation claim.
6. Negligent Misrepresentation
Plaintiffs also allege that they incurred damages due to negligent
misrepresentations by Mr. Kochan and Alliance. Under Colorado law, negligent
misrepresentation only applies when there has been a misrepresentation of an
existing fact; a party is not liable for “negligently failing to perform.” High
Country Movin’, Inc. v. U.S. West Direct Co., 839 P.2d 469, 471 (Colo. Ct. App.
1992). A plaintiff must also allege that it relied on the misrepresentation when
entering into a transaction with a third party. See Snoey v. Advanced Forming
Tech., Inc., 844 F. Supp. 1394, 1400 (D. Colo. 1994).
Plaintiffs base their negligent misrepresentation claim upon Mr. Kochan’s
assurances that “everything was being handled in an expeditious fashion, that
everything was in order, and that the policy for which they had applied would be
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issued.” As discussed above, these were representations of Mr. Kochan’s
opinion, not of fact, and related to the occurrence or non-occurrence of a future
event. See Bedard v. Martin, 100 P.3d 584, 592 (Colo. Ct. App. 2004) (“The
misrepresentation must be of a material past or present fact.”). Moreover,
plaintiffs did not allege that they entered into the transaction with Mid-West
because of the misrepresentations, nor could they as the assurances came after
Mr. Myers had already completed and submitted his application. The district
court thus properly dismissed plaintiffs’ negligent misrepresentation claim.
7. Negligence
Plaintiffs allege that both Alliance and Mid-West negligently caused them
harm. “To state a claim sounding in negligence upon which relief may be
granted, a complaint must identify (1) a legal duty the defendant owes to the
plaintiff, (2) the defendant’s breach of that duty, and (3) an injury to the plaintiff
that is (4) proximately caused by the defendant’s breach.” Dotson v. Bernstein,
207 P.3d 911, 913 (Colo. Ct. App. 2009).
In their amended complaint, plaintiffs allege that Alliance was negligent
“in the processing of Plaintiff’s application, including but not limited to their
failure to promptly submit the application and in the processing of requests for
further information, and Plaintiffs incurred damages as a result of such
negligence.” Plaintiffs did not, however, plead the existence of any facts giving
rise to a duty on the part of Alliance to submit or process the application any
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earlier than it did. Plaintiffs also alleged but failed to identify how any delay in
submitting Mr. Myers’s application caused them harm—in other words, how
submitting the application to Mid-West earlier would have resulted in an
insurance policy being in effect and providing them coverage on the day Ethan
and Lukas were injured. “Conclusory allegations without supporting factual
averments are insufficient to state a claim on which relief can be based.” See
Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009) (alterations and
quotation omitted). Therefore, the district court properly dismissed the
negligence claim against Alliance.
Additionally, plaintiffs maintain on appeal that Mid-West was negligent by
“having an untrained agent that had never seen its policy, who was unsupervised
on his first sale, making misrepresentations to the Plaintiff in order to secure a
policy application” and who “did not deliver the application disclosure to the
applicant.” In their response to Mid-West’s motion for summary judgment,
however, plaintiffs argued only that Mid-West was “negligent in the processing of
Plaintiff’s application” and that “Mid-West should have reviewed the application
and approved the application no later than January 22, which was the day of the
children’s accident.” It is well-settled law in this circuit that “a party may not
lose in the district court on one theory of the case, and then prevail on appeal on a
different theory.” Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 721 (10th Cir.
1993). “This rule is particularly apt when dealing with an appeal from a grant of
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summary judgment” and applies even when a party raises a different but related
legal theory. Tele-Communications, Inc. v. Comm’r, 104 F.3d 1229, 1232, 1233
(10th Cir. 1997). Because plaintiffs are attempting to raise an argument that was
not before the district court, we do not address it.
8. Outrageous Conduct
Finally, plaintiffs contend that the district court erred in dismissing their
outrageous conduct claims against Alliance and Mid-West. They fail, however, to
provide any meaningful analysis or legal argument on the issue. Plaintiffs merely
discuss the legal standard they believe applicable without any attempt to cite
allegations or facts supporting their claim or challenging the district court’s
dismissal. Because of their inadequate briefing, plaintiffs have waived appellate
consideration of this issue. See Utahns for Better Transp. v. U.S. Dep’t of
Transp., 305 F.3d 1152, 1175 (10th Cir. 2002) (“[I]ssues will be deemed waived
if they are not adequately briefed.”); Am. Airlines v. Christensen, 967 F.2d 410,
415 n.8 (10th Cir. 1992) (“It is insufficient merely to state in one’s brief that one
is appealing an adverse ruling below without advancing reasoned argument as to
the grounds for the appeal.”).
B. Motion to Amend the Judgment, and in the Alternative, Motion to Reinstate
and Amend Their Amended Complaint
Plaintiffs also appeal the denial of their Motion to Amend Judgment, and in
the Alternative, Motion to Reinstate and Amend Their Amended Complaint
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pursuant to Fed. R. Civ. P. 59(e), which asked the district court to reconsider its
dismissal of plaintiffs’ claims against Alliance or to permit plaintiffs to correct
the deficiencies identified in the order of dismissal. We review the district
court’s denial of a motion under Rule 59(e) for abuse of discretion. Ogden v. San
Juan County, 32 F.3d 452, 455 (10th Cir. 1994).
A motion under Rule 59(e) is warranted when: (1) there has been an
intervening change in the controlling law; (2) there is newly discovered evidence
which was previously unavailable; or (3) it is necessary to correct clear error or
prevent manifest injustice. Servants of Paraclete v. Does, 204 F.3d 1005, 1012
(10th Cir. 2000). Furthermore, after a motion to dismiss has been granted, a court
may only consider a motion to amend a complaint if the case is reopened pursuant
to a motion under Rule 59(e) or Rule 60(b). Glenn v. First Nat’l Bank in Grand
Junction, 868 F.2d 368, 371 (10th Cir. 1989).
In their motion, plaintiffs did not allege any new facts, present any new
evidence, or claim that there had been any intervening change in the law. Instead,
plaintiffs reasserted the arguments they made in opposition to Alliance’s motion
to dismiss. It was therefore not an abuse of discretion for the district court to
deny plaintiffs’ motion to amend judgment, and to accordingly deny plaintiffs’
request to reinstate and amend their amended complaint.
C. Motion to Amend the Amended Complaint
After obtaining an exemplar of the insurance policy for which Mr. Myers
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had applied and which provided only minimal coverage, plaintiffs filed a motion
in March 2008 to further amend the amended complaint to add a claim of fraud
against Mid-West. The district court denied the motion to amend, concluding that
there had been undue delay in bringing the motion and the proposed amendment
would result in prejudice to Mid-West. “The grant of leave to amend the
pleadings pursuant to Rule 15(a) is within the discretion of the trial court.”
Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (alteration
omitted). Therefore, we review the denial of a motion to amend for abuse of
discretion. Id.
Because Mid-West had filed a responsive pleading, plaintiffs could only
amend their amended complaint “by leave of the court or by written consent of
the adverse party.” Fed. R. Civ. P. 15(a). Leave to amend is freely given unless
there is a showing of: (1) undue delay; (2) bad faith or dilatory motive; (3)
repeated failure to cure deficiencies by amendments previously allowed; (4)
undue prejudice to the opposing party; or (5) futility of the amendment. Foman v.
Davis, 371 U.S. 178, 182 (1962).
Plaintiffs filed their motion to amend the amended complaint on March 10,
2008, four years after the initial complaint had been filed and one year after the
deadline for amendment of the pleadings had expired. They argued that the
proposed amendment was timely because they were unaware of Mid-West’s intent
to present a defense based on the terms of the policy—that is, that even if Mid-
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West had issued the policy, its terms would not have covered the medical bills of
Ethan and Lukas—until Mid-West provided an exemplar of the policy in
September 2007. As the district court noted, however, Mid-West gave notice of
such a defense in its answer to plaintiffs’ amended complaint in March 2004, and
plaintiffs received a copy of the exemplar six months before moving to amend the
amended complaint.
Moreover, plaintiffs filed their motion to amend approximately three weeks
before the deadline for non-expert discovery and six months before trial. The
amendment sought to introduce an entirely new theory into the case based on an
alleged fraudulent and deceptive scheme to sell “junk” insurance policies. The
addition of the new claim would have required significant additional discovery
relating to the alleged scheme, which involved Mid-West’s parent company and
other affiliated companies. With the discovery deadline about to expire, Mid-
West would certainly have been prejudiced by the proposed amendment. See
Minter, 451 F.3d at 1208 (“Courts typically find prejudice only when the
amendment unfairly affects the defendants in terms of preparing their defense to
the amendment.”) (quotations omitted). Based on these facts, we cannot say that
the district court abused its discretion in denying plaintiffs’ motion to amend.
D. Claims Against Mr. Kochan
The district court determined that plaintiffs’ claims against Mr. Kochan
were void ab initio as violative of the automatic stay in bankruptcy. Later, the
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bankruptcy court closed the bankruptcy proceeding without ruling on some of
plaintiffs’ claims, stating that the bankruptcy case would be reopened once the
claims before the district court had been determined. In this appeal, plaintiffs
argue (without citation to any authority) that they have “preserved” their claims
against Mr. Kochan and request that we allow them to proceed with such claims
on remand if we reverse the district court’s dismissal of the claims against
Alliance and Mid-West. Because we affirm the district court’s dismissal of
claims against both Alliance and Mid-West, however, we do not address
plaintiffs’ contention.
E. Expert Affidavits
Finally, plaintiffs contend that the district court erred in striking portions of
affidavits filed by plaintiffs’ insurance experts Mark Anderson and Burt
Bernstein. We review the district court’s decision to strike portions of the
affidavits for abuse of discretion. Lighton v. Univ. of Utah, 209 F.3d 1213, 1227
(10th Cir. 2000).
The district court struck paragraph 3 of Mr. Anderson’s affidavit and a
portion of paragraph 4 of Mr. Bernstein’s affidavit because they included
improper legal conclusions. “Generally, an expert may not state his or her
opinion as to legal standards nor may he or she state legal conclusions drawn by
applying the law to the facts.” Okland Oil Co. v. Conoco Inc., 144 F.3d 1308,
1328 (10th Cir. 1998). Paragraph 3 of Mr. Anderson’s affidavit concluded that
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Mr. Kochan was a “general or captive agent” of Mid-West “with the authority to
bind [Mid-West] to the health insurance Mr. Kochan represented they were
purchasing.” It further concluded that “the payment from the Myers of monies
related to insurance further indicates that Mid-West was bound to the insurance in
question on January 15, 2002.” Likewise, paragraph 4 of Mr. Bernstein’s
affidavit concluded that “when Mr. Kochan accepted a premium check . . . Mid-
West became bound to that health insurance which Mr. Kochan had represented
would be issued.” We agree with the district court that these are improper legal
conclusions and were properly struck.
Plaintiffs also maintain that the district court erred when it deemed a
portion of Mr. Bernstein’s affidavit unreliable because it was “contradicted by a
large number of authorities cited in Mid-West’s reply brief.” That portion of Mr.
Bernstein’s affidavit provided:
[B]ased on industry standards, the insurance policy that Mr. Kochan
represented to the Myers would issue, was effective the date that the
application and the funds were received by Mr. Kochan, which was
January 15, 2002, and at the very latest, January 21, 2002, when the
funds and the application arrived at [] Mid-West’s offices.
We agree that the district judge invaded the province of the jury when it opined
on the reliability of such evidence. Nevertheless, that portion of Mr. Bernstein’s
affidavit was a conclusory allegation and of no probative value. See Nichols v.
Hurley, 921 F.2d 1101, 1113 (10th Cir. 1990) (“Whether plaintiffs’ affidavits
were sufficient to create a genuine issue of material fact must be evaluated in
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light of the principle that conclusory allegations without specific supporting facts
have no probative value.” (quotations omitted)). Therefore, it would not have
affected the district court’s grant of summary judgment and any error was
harmless.
III. CONCLUSION
For the foregoing reasons, we AFFIRM. Plaintiffs’ motion to take judicial
notice is DENIED, but we GRANT their motion to file a supplemental appendix.
ENTERED FOR THE COURT,
Deanell Reece Tacha
Circuit Judge
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