Free Third Party Complaint - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 04-cv- 0865- REB- CBS
ESTATE OF APRil Hill

SCOTT Hill , personal representative; SCOTT Hill , as Conservator of the Estate of Katelyn Hill; and SCOTT Hill , individually
Plaintiffs

AllSTATE INSURANCE COMPANY; MERASTAR INSURANCE COMPANY; and PRUDENTIAL INSURANCE COMPANY OF AMERICA

Defendants.

AllSTATE INSURANCE COMPANY

Third- Party Plaintiff

JOHN PAUL
Third- Party Defendant.
THIRD- PARTY COMPLAINT AGAINST JOHN PAUL

Defendant/Third- Party Plaintiff Allstate Insurance Company ("Allstate ), through

its undersigned counsel , hereby states as its Third- Party Complaint against John Paul
as follows:

JURISDICTION AND PARTIES
Allstate is an organization existing under the laws of the State of Illinois.

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Third Party Defendant John Paul ("John Paul" ) is a natural person

currently residing in Pagosa Springs , Colorado. Jurisdiction over this Third- Party Complaint is based on the supplemental

jurisdiction of this Court pursuant to 28 U.

C.

1367. On March 15 , 2004 , Plaintiffs

initiated this action by filing a Complaint in Archuleta County District Court , seeking
additional personal injury protection benefits ("APIP" ) under a policy of automobile

insurance that Allstate had sold to John Paul and April Paul on August 17 , 2000 (the

Allstate Policy

). Allstate later

removed the case to this Court based on the fraudulent

joinder of an individual Allstate agent , Liz Marchand. See Order dated December 13

2004 , dismissing Ms. Marchand.
This Third- Party

Complaint is based on John Paul' s misrepresentations

and concealments in the process of applying for , and renewing, the Allstate Policy.

As relief , this Third- Party Complaint asks this Court to void the Allstate
Policy ab initio

on the basis of John Paul' s misrepresentations , concealments , and

breach of the Allstate Policy. This Third- Party Complaint also seeks the return to
Allstate of benefits that it has already paid under the Allstate Policy as a result of the
accident that occurred on July 25 , 2002 in Utah , the same accident that is the subject of

Plaintiffs ' claims in their Complaint (the " Accident"

GENERAL ALLEGATIONS
On August 17 , 2000 , John Paul visited an Allstate agency in Pagosa

Springs , Colorado with the intent to secure a policy of automobile insurance from
Allstate. During this visit , John Paul provided certain information to the Allstate agent

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Christine Clifford (now Christine Pitcher). John Paul subsequently completed

application for automobile insurance. Allstate , through its agents , including Christine

Pitcher , thereupon sold to John Paul the Allstate Policy. The Allstate Policy, No.

064624124 , was issued naming John Paul and April Paul as named insureds.
At the time of the application , August 17 , 2000 , John Paul was temporarily
residing at the Super 8 Motel in Pagosa Springs , Colorado.

John Paul ceased to reside at the Super 8 Motel shortly after securing the

Allstate Policy, at which point he returned to California for several weeks.
At the time that he applied for the Allstate Policy in Pagosa Springs , John
Paul was divorcing April Paul.
10.

At the time that he applied for the Allstate Policy, John Paul knew that he

had no intention of residing with April Paul.
11.

At the time he applied for the Allstate Policy, John Paul falsely

represented that he was gainfully employed as a manager.
12.

John Paul' s material representations and omissions were false , and

known by him to be false , at the time they were made. John Paul owed a duty to tell the

truth to Allstate in connection with his purchase of the Allstate Policy. John Paul owed a
duty to provide complete and truthful information in his application form and to ensure

that the information appearing in it was complete and truthful. John Paul knew that the facts he represented to Allstate were false and incomplete. John Paul knew that the
facts he represented to Allstate would create a false impression concerning his

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residence and plans unless other facts were disclosed , including the fact that John Paul
did not intend to reside with April Paul , and that they in fact were soon to be divorced.
13.

In reasonable reliance on the false representations and concealment of

John Paul in the application process , Allstate issued a single policy of automobile
insurance to John Paul and April Paul , based on the actuarial risk associated with a

one- household policy.
14.

The policy insured a Nissan Sentra and a Dodge Stratus. The Dodge

Stratus was involved in the July 25 , 2002 Accident.
15.

Allstate continued to renew the Allstate Policy because John Paul failed to

disclose that he had divorced April and that they were residing in separate households.
In fact , unbeknownst to Allstate , April Paul was living in a separate household , with at

least one additional resident relative purportedly entitled to coverage under the policy,

her undisclosed new husband , Scott Hill (the Plaintiff and Conservator for Katelyn
Hill in this action).
16.

On several occasions after procuring the Allstate Policy, John Paul

changed addresses without notifying Allstate.
17.

Despite ample opportunity, at no time prior to the Accident , did John Paul

or April Paul ever inform Allstate that they had changed addresses , that they were
separated and residing in separate households , that they had actually divorced shortly

after procuring the Allstate policy, or that April Paul had remarried and had a child
(Katelyn Hill) with her new husband , Scott Hill.

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18.

John Paul' s false and fraudulent statements , misrepresentations , and

concealments , and failures to disclose information , were material to Allstate
acceptance of the risk or the hazard undertaken by Allstate in issuing the Allstate Policy.

Allstate would not have issued a single- household policy to John Paul and April Paul if it
had known that they were separated and intended to reside in separate households
thereby presenting additional risk to Allstate.
19.

Allstate was ignorant of the falsity of John Paul' s representations and

concealments and believed them to be true. Allstate did not discover the falsity of John
Paul' s representations and concealments until approximately June 2005.

20.

John Paul' s misrepresentations and concealments were undertaken with

the intent that Allstate would sell him the Allstate Policy and continue to renew it.

Allstate s sale of the Allstate Policy was made in justifiable reliance on John Paul' s false
statements and concealments , to Allstate s detriment. If Allstate had known the true

facts , it would not have acted as it did in selling and renewing the Allstate Policy.
21.
As a consequence of the false representations and fraudulent

concealments , Allstate issued the Allstate Policy, and thereafter paid benefits totaling

and incurred losses , including, but not limited to:
Allstate paid $59 166 in UM/UIM benefits on behalf of John Paul'

daughter , Hope Paul , as a result of the Accident.
Allstate paid $59 167 in UM/UIM benefits on behalf of Dennis

Scoggins , a minor and a passenger in the Dodge Stratus at the time of the Accident.

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Allstate paid $59 167 in UM/UIM benefits on behalf of Katelyn Hill
a minor and a passenger in the Dodge Stratus at the time of the Accident.

Allstate paid $92 500 in UM/UIM benefits on behalf of April Hill , the
driver of the Dodge Stratus at the time of the Accident.

Allstate paid $100 000 in basic PIP benefits in connection with the
injuries sustained by Katelyn Hill in the accident.

22.

Allstate is prepared to tender back to John Paul any benefit it received

from him pursuant to the contract for sale of the Allstate Policy.

FIRST CLAIM FOR RELIEF (Declaratory Relief)
23.
Allstate incorporates paragraphs 1- 22 of this Third- Party Complaint as if

fully set forth herein.
24.
A controversy presently exists between Allstate on the one hand and John

Paul on the other hand concerning the ongoing validity and enforceability of the Allstate

Policy. Allstate believes that the fraud and concealments as described herein render
the Allstate Policy subject to rescission and void ab initio.

On information and belief
ab initio.

John Paul does not presently admit that the contract is void

25.

A declaration of Allstate s rights is necessary to terminate the controversy,

prevent needless litigation , and settle the dispute concerning whether the Allstate Policy
is void.

26.

Allstate is entitled to a declaration that the Allstate Policy is void

ab initio

that Allstate has no further liability or obligation under the Allstate Policy, and that all
benefits paid thereunder shall be returned to Allstate.

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SECOND CLAIM FOR RELIEF (Fraud , Misrepresentation , and Concealment)

27.

Allstate incorporates paragraphs 1- 26 of this Third- Party Complaint as if

fully set forth herein.
28.

As described above , John Paul' s conduct , including false , material

statements and concealments , constituted a fraud on Allstate. Allstate reasonably

relied on the misrepresentations and concealments described above in issuing and
renewing the Allstate Policy.

29.

Allstate has suffered damages as a direct result of the fraud and

concealment described herein.

PRAYER FOR RELIEF

WHEREFORE , Defendant/Third- Party Plaintiff , Allstate Insurance Company,
respectfully prays for the following relief:

That the Court enter judgment in favor of Allstate on its Third- Party
Complaint and against Third- Party Defendant , John Paul;

That the Court enter a declaratory judgment , declaring:

(a)
(b)

That the Allstate Policy is rescinded and is void

ab initio;

That Allstate has no further duties or obligations pursuant to said
void contract; and

(c)

That Allstate is entitled to the return of all benefits paid , net of
premiums paid by the insureds , under the Allstate Policy.

For attorneys ' fees and costs of suit; and

For such other and further relief as the Court may deem to be proper.

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DEFENDANT/THIRD- PARTY PLAINTIFF DEMANDS A JURY TRIAL ON ALL

CLAIMS AND ISSUES SO TRIABLE.

Respectfully submitted this 21 st day of July, 2005.

s/ Michael D. Alper John M. Vaught Terence M. Ridley Michael D. Alper
Wheeler Trigg Kennedy

LLP

1801 California Street , Suite 3600

Denver , CO 80202
Telephone: (303) 292-2525
Facsimile: (303) 294- 1879

Mail: vaught wtklaw. com
ridley
wtklaw. com

alper wtklaw. com
Attorneys for Defendant/Third- Party Plaintiff Allstate Insurance Company

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