author: Justice COATS Justice KOURLIS

text:
    Judy LAZAR, Plaintiff, v. Patrick RIGGS, Defendant.
    No. 03SA030.
    Supreme Court of Colorado, En Banc.
    Nov. 10, 2003.
    Mark A. Simon, Denver, Colorado, Attorney for Plaintiff.
    Levy, Morse & Wheeler, P.C., Marce R. Levy, Joshua R. Proctor, Englewood, Colorado, Attorneys for Defendant.

      Johnson & Ayd, P.C., Denver, Colorado, Attorneys for Amicus Curiae, Colorado Defense Lawyers Association.
    Grant Marylander, Denver, Colorado, Attorney for Amicus Curiae, Colorado Trial Lawyers Association.
   Justice COATS

delivered the opinion of the court.

Judy Lazar, the plaintiff in the underlying personal injury action, petitioned for exercise of our original jurisdiction, pursuant to C.A.R. 21. She seeks pretrial disclosure of statements made by the defendant, Patrick Riggs, to his insurance company's claims adjusters. The district court denied her motion to compel disclosure, on the grounds that the statements were taken in anticipation of litigation. We issued a rule to show cause, and because the district court's order is not supported by the record, we now make the rule absolute.

I.

The lawsuit arises from an automobile accident that occurred on September 18, 2001. Lazar alleges that the failure of Riggs to exercise reasonable care caused the collision and her injuries A police accident report indicated that officers cited Riggs at the scene for driving under the influence of alcohol, driving with exeessive alcohol content, and careless driving.

More than nine months later, Lazar filed her lawsuit. In his Rule 26 disclosures, Riggs disclosed the existence of a resume of a recorded statement by him in his insurance company's claim file, but he objected to production of the document on the grounds that it was protected as work product. He responded to Lazar's motion to compel disclosure with authorities supporting the proposition that investigations by insurance companies in defense of claims against their insureds are shielded from discovery as work product. Without hearing the matter or making particularized findings of fact, the district court denied the motion, indicating merely that the recorded statement given to Riggs' insurer following the accident, as well as a written statement by Riggs prepared in response to a subrogation specialist for the insurance company, was made in anticipation of litigation.

Lazar petitioned for review of that order.

IL

Exercise of the supreme court's original jurisdiction is entirely within its discretion. In re: People v. Lee, 18 P.3d 192, 194 (Colo.2001). Relief pursuant to C.A.R. 21 is appropriate to remedy a lower court's abuse of discretion where appellate review would be inadequate. Id. Although interlocutory in nature, discovery orders have been reviewed by original proceedings in a number of cireumstances, including where the ruling's impact will be substantial and incurable and where it raises significant questions about the administration of pretrial discovery generally that call for immediate resolution. See Sanchez v. Dist. Ct., 624 P.2d 1314, 1317 (Colo.1981); In re Attorney D., 57 P.3d 395, 398 (Colo.2002).

While the applicability of the work product doctrine to insurance claim files is not a matter of first impression in this jurisdiction, related developments in this and other jurisdictions have brought into question the continued vitality of some of our prior pronouncements. As the argument and ruling below indicate, distinctions between claims by an insured and claims by third parties against an insured, which we have recognized in related contexts and other jurisdictions have applied to the work-product context, have made unclear the discoverability of third-party insurance claim files in this jurisdiction as well. Because these discovery issues appear to be of increasing significance in the jurisdiction and yet remain resistant to review through the normal appellate process, we consider it appropriate to exercise our original jurisdiction.

TIL

Rule 26 limits the otherwise broad discovery permitted by the Colorado Rules of Civil Procedure of documents and tangible things, to the extent that they were obtained by or for another party or his representative in anticipation of litigation. See C.R.C.P. 26(b)(8). The general contours of the phrase, "in anticipation of litigation," as it appears in the rule, and the test for determining when documents fall within the protections of the rule, have been well-established in this jurisdiction for more than twenty years. In Hawkins v. Dist. Ct., 638 P.2d 1372, 1377 (Colo.1982), we made clear that the rule was not intended to protect materials prepared in the ordinary course of business, whether litigation had already commenced or not, id. at 1378; and that "the general standard to be applied is whether, in light of the nature of the document and the factual situation in the particular case, the party resisting discovery demonstrates that the document was prepared or obtained in contemplation of specific litigation." Id. at 1879; see also Nat'l Farmers Union Prop. and Cas. Co. v. Dist. Ct., 718 P.2d 1044, 1047 (Colo.1986); see generally 8 C. Wright, A. Miller & R. Marcus Federal Practice and Procedure § 2024 (2nd ed. 1994 & Supp.2003).

In Hawkins, we also expressly rejected the notion that Rule 26(b)(8) insulates insurance company investigations merely because they always deal with potential claims. Hawkins, 688 P.2d at 1378. Instead, we drew almost the opposite conclusion. Because a substantial part of an insurance company's business is to investigate claims made by an insured against the company or by some other party against the insured, it must be presumed that such investigations are part of the normal business activity of the company and that reports and witness' statements compiled by or on behalf of the insurer in the course of such investigations are ordinary business records as distinguished from trial preparation materials. Id. (relying on Thomas Organ Co. v. Jadranska Slobodna Plovidba, 54 F.R.D. 367, 373 (N.D.Ill.1972)).

Therefore, "in the case of an insurance company defending a claim and asserting that its reports and witness' statements are trial preparation materials under C.R.C.P. 26(b)(8), the insurance company has the burden of demonstrating that the document was prepared or obtained in order to defend the specific claim which already had arisen and when the documents were prepared or obtained, there was a substantial probability of imminent litigation over the claim or a lawsuit had already been filed." Hawkins, 638 P.2d at 1379. At the same time, we also noted that a showing that a claims adjuster, or even a lawyer not acting as a legal counselor for the insurer, conducted an investigation of a claim, during which he compiled various reports and statements, would not be sufficient by itself to overcome the presumption of an ordinary business activity. Id.

An insurance company owes a duty to its insured (but not to a third-party with a claim against its insured) to adjust a claim in good faith. Farmers Group, Inc. v. Trimble, 691 P.2d 1138 (Colo.1984). As a result, we have noted that insurance information may be relevant or may lead to relevant evidence in an action by an insured against its insurer for a bad faith breach of its insurance contract, even though the same information might not be relevant in a personal injury claim by a third-party against the insured; and that the seope of discovery of insurance information should therefore be correspondingly broader in the former case. Silva v. Basin Western, Inc., 47 P.3d 1184, 1192 (Colo.2002). We have nowhere suggested, however, that an insurance company owes any less of a duty to investigate and settle claims of third parties against its insureds arising under their insurance policies, or that the results of such investigations are somehow entitled to greater protection from discovery.

Quite the contrary, in Kay Labs. v. Dist. Ct., 653 P.2d 721 (Colo.1982), we expressly rejected such an attempt to limit Hawkins, reiterating the conclusion that "it is as much a part of an insurance company's normal business activity to investigate potential claims by third parties against its insureds as it is to investigate potential claims by its insureds against itself." Kay Labs., 653 P.2d at 722-23. While Kay Labs. involved claims against a self-insured hospital for actions by its employee, we extended the rationale of Hawkins in that case to deny protection under Rule 26 for the hospital's investigation, as if it were an insurance company.

In Silva, we relied on the opinion of a federal magistrate for the proposition that "Iwlhen a liability insurer investigates a third-party personal injury claim, the investigation is made in anticipation of claims which, if denied, will likely lead to litigation." Silva, 47 P.3d at 1191. Unlike the federal district court, however, we did not infer from this proposition that it is the possibility of litigation that "provides the insurer the impetus" to investigate the claim, and therefore we did not similarly infer that insurance investigations of third-party claims are always conducted in anticipation of litigation. See Weitzman v. Blazing Pedals, Inc., 151 F.R.D. 125, 126 (D.Colo.1993).

Silva involved the disclosure of insurance company reserves and settlement authority rather than the investigation of a third-party claim. Not only does our opinion in that case fail to imply any rejection of the Hawkins/Kay Labs. rationale concerning the investigation of third-party claims; our other holdings distinguishing first from third-party claims strongly support that rationale. With respect to actions by insureds for bad faith breach of insurance contracts, we have actually imposed a higher duty of care on insurance companies in denying or delaying the approval of claims by third parties against insureds than in denying claims by insureds themselves. See Travelers Ins. Co. v. Savio, 706 P.2d 1258, 1275 (Colo.1985); Trimble, 691 P.2d at 1142. Because of the quasi-fiduciary duty typically created by insurance contracts, both to investigate and settle claims arising from the policies and to defend actions brought against insured parties, an insurer must exercise reasonable care with respect to third-party claims but merely avoid recklessly rejecting claims by an insured party himself. Id.

An insurer therefore clearly has a contractual duty to determine whether third-party claims are within an insured's coverage and, if so, to resolve them. Both by contract and statute, see § 10-3-1104(1)(h)(III), 8 C.R.S. (2003), § 10-3-1104(1)(h)(VI), 3 C.R.S.(2003), it has an obligation to investigate third-party claims in the ordinary course of its business. Whether or not denied third-party claims are actually more likely to result in litigation, even a virtual certainty of litigation after denial could not alter the insurer's obligation to assess the claim and determine coverage in the first instance. To the extent that the third-party nature of a claim indicates less about anticipation of litigation than about the insurer and insured's commonality of interests in defending against such claims, it implicates the work product doctrine less than the degree of confidentiality that should be accorded insurance relationships. No insurer/insured privilege has been recognized by this court or the General Assembly. Cf. CRE 501; § 183-90-107, 5 C.R.S. (2003).

Where an insurance contract includes a right and duty to defend (as it typically does), in addition to an obligation to investigate and settle claims arising under the policy, an insurance company's investigation of third-party claims may very well "shift from an ordinary business activity to conduct in anticipation of litigation." See Hawkins, 638 P.2d at 1378. Because there is no bright line between these two activities in all cases, however, the nature of the document in question and the factual situation in the individual case must always be considered. As we held in Hawkins, it is the burden of the insurance company resisting disclosure to demonstrate that the documents in question were prepared in order to defend against a specific claim and that a lawsuit over that claim had already been filed or was imminent. Merely demonstrating that a claims adjuster conducted an investigation to determine whether a claim falls within its insured's coverage is no more sufficient to demonstrate preparation in anticipation of litigation when the claim is made by a third party than when it is the claim of an insured himself. See id. at 1379.

IV.

The recorded statements of the defendant that are at issue in this case appear to have been taken at the direction of his insurance company well before the initiation of this lawsuit. Without further explanation or findings, the district court denied disclosure on the grounds that the documents were prepared in anticipation of litigation. In light of the arguments and authorities advanced by the parties, it appears that the district court may have felt that the third-party nature of the claim was dispositive of the question and, in itself, was sufficient to justify protection under Rule 26(b)8). In any event, as in Hawkins, there is nothing in the pleadings and documents filed with this court demonstrating that the statements enjoyed the qualified immunity from discovery provided by the rule for documents prepared in anticipation of litigation.

v.

The rule is therefore made absolute and the matter is remanded to the district court for further proceedings consistent with this opinion.

Justice KOURLIS dissents.

Justice KOURLIS

dissenting:

Because I agree with the trial court's determination that Riggs' statements to his insurance company were made in anticipation of litigation and are therefore protected from discovery pursuant to C.R.C.P. 26(b)(8), and because I believe that Riggs' statements also fall within the attorney-client privilege and are protected pursuant to C.R.C.P. 26(b)(1), I respectfully dissent. In summary, in my view, when an insured makes a statement to his own insurance company about the cireum-stances of an accident, the insured is not only complying with the contractual mandate that he cooperate with his insurance company in the investigation, but he is also expecting that the insurance company will use the information in providing a defense should litigation ensue.

I. Introduction

Under our cases, as well as those of other states around the nation, this factual seenario presents two issues: whether the document is protected either by the work product doe-trine or by the attorney-client privilege. The majority concludes that the materials containing Riggs' statements are not work product because they were not prepared in anticipation of litigation and the statements are therefore discoverable by Lazar pursuant to C.RC.P. 26(b)(8). The majority does not address questions of attorney-client privilege other than in a footnote. Although the work product protection and the attorney-client privilege provide independent grounds for contesting discovery, they often accompany one another in cases similar to the one at bar. See e.g., A v. Dist. Court, 191 Colo. 10, 550 P.2d 315 (1976); Nat'l Farmers Union Prop. and Cas. Co. v. Dist. Court, 718 P.2d 1044 (Colo.1986). In my view, both doctrines must be analyzed in the context of this case.

II. Background

The attorney-client privilege and the work product exemption are distinct but related theories, arising out of similar policy interests. A v. Dist. Court, 550 P.2d at 327 (citing to Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947)). Generally, the attorney-client privilege protects communications between the attorney and the client, and the promotion of such confidences exists for the benefit of the client. Id.; see also 17 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 250:4 (8d ed.2000, updated 2003) ("Evidentiary privileges have typically focused on relationships in which the public interest is served by encouraging openness: marital relationships, attorney-client relationships, doctor-patient relationships, clergy-confessor relationships, and so on."). On the other hand, the work product doctrine generally applies to documents and tangible things prepared in anticipation of litigation or for trial, and its goal is to ensure the privacy of the attorney's trial preparation work from opposing parties and counsel. A, 550 P.2d at 327; see also Denver Post Corp. v. Univ. of Colorado, 739 P.2d 874, 881 (Colo.App.1987) ("The work product privilege exists not to protect a confidential relationship, but to promote fairness in the adversary system by safeguarding the fruits of an attorney's trial preparations, which have been paid for by his client, from being used without cost by his opponent.").

A. The Work Product Doctrine

First, it is important to recognize what materials may be characterized as work product. Normally, materials entitled to protection contain an attorney's mental processes reflected in interviews, statements, memoranda, correspondence, briefs, mental impressions, and personal beliefs. People v. Martinez, 910 P.2d 469, 475 (Colo.1998) (quoting Hickman, 329 U.S. at 511, 67 S.Ct. 385). This court has recognized, however, that the work product doctrine includes the work of investigators and other agents of counsel. Id. at 474 n. 11 (citing to United States v. Nobles, 422 U.S. 225, 238-239, 95 S.Ct. 2160, 45 L.Ed.2d 141 (1975)). Furthermore, although statements by witnesses do not contain an attorney's mental impressions or strategies, they may constitute work product by virtue of their compilation by an attorney. Id. at 475. Thus, the mere fact that Riggs made this statement to a non-attorney insurance adjuster, or the fact that his statement does not contain the mental impressions of an attorney, does not per se preclude the statements from qualifying as work product.

After determining what materials may constitute work product, the next step is determining whether the materials were prepared in anticipation of litigation. C.R.C.P. 26(b)(8) protects from discovery materials prepared in anticipation of litigation unless the party seeking discovery establishes a substantial need for the materials and an inability to obtain the materials from other sources without undue hardship. Unlike materials prepared in anticipation of litigation, materials prepared in the ordinary course of business are discoverable. Hawkins v. Dist. Court, 638 P.2d 1372, 1377 (Colo.1982). It is the burden of the party contesting discovery to establish that the document was prepared in anticipation of litigation. See id. at 1375. However, once the party contesting discovery establishes that the document was indeed prepared in anticipation of litigation, the burden shifts to the party seeking discovery to show substantial need and undue hardship. Id. at 1876.

In Hawkins, we set forth a standard for determining whether materials are prepared in anticipation of litigation. This court stated that "[the general standard to be applied is whether, in light of the nature of the doeument and the factual situation in the particular case, the party resisting discovery demonstrates that the document was prepared or obtained in contemplation of specific litigation." Hawkins, 638 P.2d at 1379; see also Farmers, 718 P.2d at 1047-1048. This court went on to say that

[blecause a substantial part of an insurance company's business is to investigate claims made by an insured against the company or by some other party against the insured, it must be presumed that such investigations are part of the normal business activity of the company and that reports and witness' statements compiled by or on behalf of the insurer in the course of such investigations are ordinary business records as distinguished from trial preparation materials.

Id. at 18378. However, Hawkins also clarified that "under appropriate cireumstances," an insurance company's investigation of a claim may shift from an ordinary business activity to conduct in anticipation of litigation. Id. For several reasons, I think that the appropriate cireumstances alluded to in Hawkins exist in this case and support the trial court's determination that the materials containing Riggs' statements were prepared in anticipation of litigation.

Applying the standard in Hawkins requires a court to analyze both the "nature of the document" and the "factual situation in the particular case" to determine whether the materials were prepared in "contemplation of specific litigation." In Hawkins, both the nature of the document sought to be discovered and the factual situation surrounding the discovery request were markedly different from the facts of this case. First, the document in Hawkins comprised statements of a non-party witness as opposed to the insured's own statements. Second, the factual situation in Hawkins involved an investigation by the insurance company that was initiated to adjust the insured's own loss by a fire, with no litigation contemplated. In contrast, the factual situation in this case involves an investigation by a liability insurer relating to a prospective third-party personal injury claim. Hence, I do not view Hawkins as controlling.

Three years later, in Kay Labs., Inc. v. Dist. Court, 653 P.2d 721 (1982), this court rejected the argument that materials prepared in the investigation of third-party claims deserve greater protection from discovery than materials prepared during the investigation of first-party claims. We observed that the party contesting discovery in that case offered "no rationale for holding that the former [third-party claims] should be entitled to greater protection from discovery under C.R.C.P. 26 than the latter [first-party claims], and we do not discern one." Id. at 723. We repeated the language from Hawkins relative to the burden of the party opposing discovery to demonstrate that the document was prepared to defend against a specific claim, and concluded that the hospital had not met that burden. Id. at 722. However, again, the nature of the document and the particular factual situation in Kay are markedly different from the case at bar.

In Kay, a patient sued a hospital and a product manufacturer seeking damages she alleged occurred when a chemical ice pack administered by the hospital leaked. The document at issue was a pre-printed form filled out by a nurse in triplicate within 6 to 8 hours of the time of the incident. Such forms were routinely filled out by hospital personnel when any incident occurred which "could possibly result in litigation against the hospital." Id. This incident report, like incident reports generally, was prepared in accordance with hospital routine. Id. The hospital admitted that the reports were prepared both for purposes of statistical analysis for loss prevention as well as to defend against possible lawsuits. Id. The hospital was self-insured. Ultimately, this court viewed the incident report as a document prepared in the ordinary course of business rather than a document prepared in anticipation of particular litigation. Id. at 722 n. 1.

To the contrary, I suggest that Riggs statement to his insurer was indeed taken in anticipation of a specific claim that, if denied, would likely lead to litigation. I further suggest that Riggs had a responsibility under his insurance contract to cooperate with his insurance company in investigating the accident-a responsibility that finds no parallel in Kay.

More broadly, I note that since our decision in Kay, we have indeed adopted a rationale that was lacking in Kay for treating third-party claims differently than first-party claims in the context of pretrial discovery.

In Silva v. Basin Western, Inc., 47 P.3d 1184 (Colo.2002), this court addressed the issue of whether insurance reserves and settlement authority fall within the seope of discovery. We noted that "[the relationship between a plaintiff and the defendant's insurer in third-party personal injury tort claims such as this one differs significantly from the relationship between an insured party and his insurer in a first-party dispute between them." Id. at 1191 (citing to Weitzman v. Blazing Pedals, Inc., 151 F.R.D. 125, 126 (D.Colo.1993)). We stated:

Third-party personal injury tort claims involve liability investigations. When a liability insurer investigates a third-party personal injury claim, the investigation is made in anticipation of claims which, if denied, will likely lead to litigation. Although a claim may be settled short of legal action, there is always the possibility that a claim will end in litigation. In contrast, when a first-party claim between an insured and his or her insurer is at issue, the insured is asking for payment under the terms of the insurance contract between him and the insurance company. The insurance company owes the insured a duty to adjust his claim in good faith. The seope of discovery of insurance information should therefore be broader in a first-party claim between an insured party and his insurer than in a third-party personal injury claim.

Id. at 1191-1192 (internal citations omitted).

The Washington Supreme Court has also opined on the reasons for treating the insured-insurer relationship differently. In Heidebrink v. Moriwaki, 104 Wash.2d 392, 706 P.2d 212 (1985), that court examined the issue of whether the statement of an insured to his or her insurance company is protected by the work product doctrine. In terms of the standard enunciated in Hawkins, both the nature of the document and the factual situation in Moriwaki are virtually identical to the facts of this case. In Moriwaki, the materials at issue consisted of tape-recorded statements made by the insured to his insurance company shortly after an automobile accident. An individual initiated a third-party personal injury claim arising out of injuries she sustained in that accident. In holding that statements made by an insured to an insurer were protected from discovery under Washington's version of Rule 26(b)(8), the Supreme Court of Washington noted that the insured was contractually obligated to cooperate with his insurance company in the investigation, and that such obligation created a reasonable expectation by the insured that the insurance company would not use his statement against him. Id. at 216-217. On the other hand, the court also noted that the insurer has a contractual obligation to defend the insured, and can be expected to transmit the statement to the attorney. That court stated:

In essence, the insurance company has been retained to provide an attorney and the expectation is that statements made by the insured will be held in confidence. ...If the statement were made directly to the selected attorney, it would obviously have been made in anticipation of litigation. The contractual obligation between the insured and insurer mandates extension of this protection to statements made by an insured to his insurance company.

Moriwaki, 706 P.2d at 217.

With both our language in Silva and the Washington Supreme Court's analysis in Moriwaki in mind, it is easy to see the distinction between Kay and the case before the court today. The document at issue in Kay was prepared in the ordinary course of business by a self-insured hospital. In contrast, Riggs made his statement at the direction of his insurance company after an automobile accident involving personal injury. The statement had no use other than to investigate and potentially defend against claims. I agree with the reasoning articulated in Moriwaki to the effect that Riggs had a contractual duty to cooperate, in exchange for which the insurance company had a contractual duty to defend him. Under those cireumstances, neither the holding of Hawkins nor of Kay prevents this court from protecting the insured's statements to his insurance company from discovery.

Since I view the materials containing Riggs' statements as having been prepared in anticipation of litigation, the trial court must address the issue of whether the plaintiff has a substantial need for the documents and cannot otherwise obtain the information. At the present stage of the litigation, Lazar has not conducted a deposition of Riggs. Rather, Lazar seeks to compel the disclosure of Riggs' statements without such particularized need. I would remand the case to the trial court to consider whether Lazar can make the requisite showing of need.

B. Attorney-Client Privilege

Furthermore, although I would certainly not adopt a per se rule of privilege for insured-insurer communications, in my opinion, the communications between Riggs and his insurer may fall within the attorney-client privilege and are non-discoverable pursuant to C.R.C.P. 26(b)(1).

For this proposition, I need look no further than Bellmann v. Dist. Court, 187 Colo. 350, 531 P.2d 632 (1975). In Belimanmn, this court addressed the same issue presented in this case: whether statements regarding an automobile accident, made by an insured to his insurer, were subject to discovery by an adverse party. The discovery was sought in connection with a criminal DUI prosecution. The party opposing discovery reasoned that because his insurance company was contractually obligated to defend him with counsel of their choosing against any civil action arising out of the accident, and because he was obligated under the terms of his insurance policy to cooperate fully with the insurer, the statements to the insurance adjustor were, in effect, given to the attorney retained by the insurer for the purpose of defending him. Id. at 633. This court agreed and concluded that the communications between the insured and the insurer fell within the attorney-client privilege. Id. at 684. This court relied heavily on the reasoning in People v. Ryan, 30 Ill.2d 456, 197 N.E.2d 15 (1964), to support its holding.

In Ryan, the Tlinois Supreme Court addressed whether an insured's statements made to an insurance company were privileged. A primary factor in making this determination was the character of the communication. Id. at 17. The Illinois Supreme Court analyzed a number of analogous cases from other jurisdictions and concluded that under the insurance contract,

the insured effectively delegates to the insurer the selection of an attorney and the conduct of the defense of any civil litigation. The insured is ordinarily not represented by counsel of his own choosing either at the time of making the communication or during the course of litigation. Under such cireumstances we believe that the insured may properly assume that the communication is made to the insurer as an agent for the dominant purpose of transmitting it to an attorney for the protection of the interests of the insured.

Id.

Another court has suggested that the appropriate inquiry is whether the "dominant purpose" of the communication was for the defense of the insured and whether the insured had a "reasonable expectation of confidentiality." Cutchin v. State of Maryland, 143 Md.App. 81, 792 A.2d 359, 366 (2002).

In Kay, we limited the holding of Bell-mann to documents prepared once the attorney-client relationship already exists. However, the language in Kay arises out of the context of the facts of that case: namely, a situation in which the hospital was the self-insured defendant in a later lawsuit We wrote that the attorney-client relationship between the hospital and its attorney must exist at the time of document creation for the privilege to apply. Here, presumably the question would be whether the insurance company had retained counsel to represent Riggs at the time of the statement. Our language in Silva belies such a simple dividing point. Again, in Silva, we recognized that third-party liability investigations are made "in anticipation of litigation" just by the nature of the system. Silva, 47 P.3d at 1191-1192. If our holding in Kay intended to preclude any attorney-client privilege claim as to a document prepared prior to actual retention of an attorney, it eut a broad swath indeed. I would not read it so expansively, but would rather limit it to its facts and would proceed with the analysis of the character of the communication at issue here. Among the facts I would consider would be: when the statement was made in relation to the lawsuit; whether criminal charges had then been filed against Riggs; whether La-zar had already made claims against Riggs insurance company; and the cireumstances of the communication to whom it was made, in what setting and upon what prompting.

For these reasons, in order to determine the propriety of affording attorney-client privilege protection to this document, I would remand to the trial court for particularized findings in this arena as well.

III. Conclusion

The majority's decision today puts the insured in a potentially precarious situation. On one hand, if he fulfills his contractual duty to cooperate and provides a candid and open narrative of the events surrounding the claim, he risks exposing incriminating facts or mental impressions. On the other hand, if he declines to provide the insurance company with all the information, he could risk an effective defense or even coverage. Although I do not advocate a blanket discovery exclusion for communications between insured and insurer, I do support a case-by-case analysis. In that analysis, a trial court should determine whether the purposes and requirements of either the work product doe-trine or the attorney-client privilege would protect the document. For these reasons, I respectfully dissent from the majority opinion, and would remand the case to the trial court for findings of fact and conclusions of law in accordance with this opinion.

      . There is no suggestion here of a right or duty of the insurance company to defend against the criminal charges brought against its insured.

      . Riggs also asserts that his statements are protected by the attorney-client privilege. Because this was not the basis of the district court's order denying disclosure, we do not address it, noting only that the attorney-client privilege is entirely statutory, see § 13-90-107, 5 C.R.S. (2003), and cannot apply to documents created before the existence of an attorney-client relationship between the insurance company and its lawyer. See Kay Labs., 653 P.2d at 723 n. 3 (expressly rejecting any suggestion to the contrary in Belmann v. Dist. Ct., 187 Colo. 350, 531 P.2d 632 (1975)).

      . In fact, C.R.C.P. 26(b)(3) explicitly protects materials prepared in anticipation of litigation by a party's representative including attorneys, consultants, sureties, indemnitors, insurers, and agents.

      . We stated:
      Documents made for an insurance company acting as the agent of an attorney are also covered by the privilege, but, as we make clear in text, the attorney-client relationship between the insurance company and its lawyer must exist at the time the documents are created for the privilege to apply. To the extent that Bel/-mann brought preexisting documents within the scope of the attorney-client privilege, we hold that that case is no longer good law.
      Kay, 653 P.2d at 723 n. 3 (internal citations omitted).


source: Caselaw Access Project

author: Judge MARQUEZ.

license: Public Domain

text:
    Donald C. HAAN and Sandra K. Haan, Plaintiffs-Appellees and Cross-Appellants, v. Eric TRAYLOR, Defendant-Appellant and Cross-Appellee.
    No. 02CA0098.
    Colorado Court of Appeals, Div. III.
    Aug. 28, 2003.

      Stayton & Associates, P.C., Rowe P. Stay-ton, Aurora, Colorado, for Plaintiffs-Appel-lees and Cross-Appellants.
    Paul A. Frederiksen, Parker, Colorado, for Defendant-Appellant and Cross-Appellee.
   Opinion by

Judge MARQUEZ.

Defendant, Eric Traylor (seller), appeals the trial court's judgment finding that a see-ond installment land contract executed between himself and plaintiffs, Donald C. and Sandra K. Haan (buyers), had not been terminated. Buyers eross-appeal the trial court's order finding that the first installment land contract between the parties had been terminated, cutting off their right to rescind that contract. We affirm.

When buyers became delinquent on the mortgage payments on their home, they entered into an agreement with seller to purchase their home and cure the existing ar-rearage. Seller then sold the home back to buyers using an installment land contract.

After buyers defaulted on this contract, seller commenced an unlawful detainer action in county court. Buyers cured the default and entered into a second installment land contract for the same property. The second contract was essentially the same as the first, except that the interest rate was increased.

Because of further deficiencies in payment, seller filed second and third unlawful detain-er actions. The third action resulted in a judgment for seller, and buyers vacated the property.

Buyers then filed a motion for a new trial, claiming that they were entitled under $ 38-35-126, C.R.S$.2002, to void the installment land contract and to receive a return of all payments made on the contract plus attorney fees, costs, and interest. The county court granted the motion, found that the counterclaim would exceed its jurisdictional limit, and dismissed the action without prefudice with leave to file in district court. Buyers filed this action in district court alleging claims for rescission and restitution under § 38-35-126 and breach of contract. This case proceeded to trial, resulting in the judgment and order on appeal here.

I.

Seller contends the trial court erred in not finding that both installment land contracts had been terminated as a result of buyers defaults. Conversely, buyers contend on cross-appeal that the trial court erred in rejecting their claim for rescission and restitution on the first installment land contract because it was defective under $ 88-35-126. We disagree with both contentions.

A. First Contract

In reviewing a breach of contract case, we defer to the trial court's findings of fact if the record supports them, and we review its conclusions of law de novo. Albright v. McDermond, 14 P.3d 318 (Colo.2000).

The extinguishment of an old contract by the substitution of a new contract or obligation is an original promise known as a novation. A contract of novation has four requisites: a previous valid obligation, an agreement between the parties to abide by the new contract, a valid new contract, and the extinguishment of the old obligation by the substitution of the new one. The intention to accomplish a novation need not be expressed in the agreement, but may be inferred from the facts, cireumstances, and conduct of the parties. Whether there has been a novation is ordinarily a question of fact, and proof of a novation may be established by evidence of an express understanding to this effect or by cireumstances showing such assent. Moffat County State Bank v. Told, 800 P.2d 1320 (Colo.1990); see Phoenix Power Partners, L.P. v. Colo. Pub. Utils. Comm'n, 952 P.2d 359 (Colo.1998); H & K Automotive Supply Co. v. Moore & Co., 657 P.2d 986 (Colo.App.1982)(determination whether the termination of a contract was intended to operate as a complete cancellation involves questions of fact).

Rescission is an equitable termination of a contract whereby all rights, both past and present, arising under the contract are voided. The party seeking restitution must return the opposite party to the position it occupied prior to entering into the contract. However, when a contract has been cancelled, it cannot be rescinded. See Robinson v. Lynmar Racquet Club, Inc., 851 P.2d 274 (Colo.App.1993).

While equity abhors forfeiture, this equitable maxim applies only where the buyer has substantially performed his or her duties under the contract. Woods v. Monticello Dev. Co., 656 P.2d 1324 (Colo.App.1982).

Here, the trial court found, with ree-ord support, that the execution of the second contract terminated the first contract and that rescission was not proper as to the earlier agreement. The court also found that in light of their repeated late payments, buyers had not substantially performed. Thus, buyers were not entitled to reseind the first contract.

B. Second Contract

Seller contends that the trial court should have analyzed the undisputed facts under the provisions of the second installment land contract to determine whether it had been terminated. According to seller, the court should have concluded that the second contract was terminated when buyers failed to make payments when due and seller exercised his rights. However, we disagree because there is no language in the contract indicating that the actions taken would result in termination of the contract.

1.

While seller refers to paragraph 10 of the contract to support his argument, that paragraph speaks of default for nonpayment. If default is not corrected after written notice, seller is to provide a written affidavit, which would entitle seller to immediate possession and buyers' forfeiture of all interests. However, seller provided only a notice of default and did not otherwise notify buyers that he had elected to terminate the contract.

Based on the absence of any record of compliance with paragraph 10, we reject seller's contention.

2.

We also conclude that under § 38-85-126, buyers were entitled to rescind the second contract because it was defective.

When interpreting a statute, appellate courts attempt to implement the intent of the General Assembly. To discern that intent, we look first to the plain language of the statute and interpret statutory terms in accordance with their commonly accepted meanings. Paraguay Place-View Trust v. Gray, 981 P.2d 681 (Colo.App.1999).

Section 38-85-126(1)(a), C.R.S.2002, requires in pertinent part that parties entering into a contract for deed to real property "designate the public trustee of the county wherein such real property is located to act as escrow agent for moneys paid or to be paid by the purchaser to meet the property tax obligations." The statute states that contracts for deed to real property include installment land contracts. Section 88-35-126(1)(b), C.R.S8.2002. The statute further provides that the "buyer shall have the option of voiding any contract for deed to real property which fails to designate the public trustee as escrow agent for deposit of property tax moneys," and upon voiding the contract, the "buyer shall be entitled to the return of all payments made on the contract, with statutory interest as defined in § 5-12-102, C.R.S. [2002], and reasonable attorney fees and costs." Section 38-85-126(8), C.R.S.2002. While § 38-25-126(4), CRS. 2002, allows for certain exceptions, there is no indication in the record that seller asserted they applied.

Here, neither of the installment land contracts between the parties included the required provision designating the public trustee as escrow agent. The trial court found that because of the deficiency, the second installment land contract violated the mandate of § 38-85-126. Therefore, it concluded that buyers were entitled to void it.

We agree with this reading and application of the statute. See 2 Cathy Stricklin Krendl, Colorado Methods of Practice § 61.8 (1998).

Because of our disposition, we also reject seller's contention that the trial court erred in awarding attorney fees and costs because rescission should not have been allowed. Under § 38-85-126(8), upon voidance of the installment land contract, buyers were "entitled" to reasonable attorney fees and costs.

IL

Buyers contend on cross-appeal that the trial court erred in awarding seller an offset for the reasonable rental value of the property for the period of buyers' possession. We are not persuaded.

Because buyers raise the equitable defense of unclean hands for the first time on appeal, we decline to address it. See Christensen v. Hoover, 643 P.2d 525 (Colo.1982); Robinson v. Lynmar Racquet Club, Inc., supra. However, we conclude seller was entitled to reasonable rental value pursuant to his claim in the nature of unjust enrichment.

Unjust enrichment is a form of quasi-contract or a contract implied in law.

It is a judicially created remedy designed to avoid benefit to one to the unfair detriment of another. See Salzman v. Bachrach, 996 P.2d 1263 (Colo.2000).

To recover restitution in a claim of unjust enrichment, a claimant must prove that (1) at the claimant's expense (2) the other party received a benefit (8) under such circumstances that would make it unjust for the other party to retain the benefit without payment. See Salzman v. Bachrach, supra; Am. Family Mut. Ins. Co. v. Centura Health-St. Anthony Cent. Hosp., 46 P.3d 490 (Colo.App.2002).

Here, although the trial court applied an earlier version of the unjust enrichment test, we discern no error. It found, with record support, that buyers had the use and benefit of residing in the house, they appreciated or realized the benefit of residing there, and they accepted the benefit under such cireum-stances that it would be inequitable for them to retain this benefit without payment for its value. Thus, the offset was proper. See Martines v. Cont'l Enters., 730 P.2d 308 (Colo.1986)(recognizing offset for reasonable rental value during time of possession).

IIL

We are also not persuaded by seller's contention that the trial court erred in caleulat-ing prejudgment interest.

On appeal, seller argues that the trial court should have awarded prejudgment interest on the net award of $7.44. Seller

offers no authority or other explanation for his contention that the interest should have been calculated on the amount of the judgment in favor of buyers less his recovery for rent, rather than the full amount of payments made in conjunction with the second contract.

Buyers' motion for approval of interest on the judgment asserted that a certified public accountant had computed the interest. Seller's objection related only to attorney fees and costs. The trial court noted that seller did not provide any information to dispute the computation.

In the trial court, seller did not argue that prejudgment interest was available only with respect to the net amount of the judgment in favor of plaintiff. Rather he asked only for prejudgment interest on the rental value owed to him from plaintiffs' use of the house. However, seller's argument does not take into account the house payments he received in lieu of rent.

Therefore, we perceive no reversible error here.

The judgment and order are affirmed.

Judge ROY and Judge DAILEY concur.


author: STRUBHAR, Judge:

text:
    2003 OK CR 24
    Veronica CORONADO, Appellant, v. STATE of Oklahoma, Appellee.
    No. F-2002-718.
    Court of Criminal Appeals of Oklahoma.
    Aug. 22, 2003.
    Publication Ordered Nov. 10, 2003.
    Jeffrey Fischer, Tulsa, OK, attorney for appellant at trial.
    Russell Anderson, Tulsa, OK, attorney for the state at trial.
    Stuart Southerland, Tulsa, OK, attorney for appellant on appeal.
    W.A. Drew Edmondson, Attorney General of Oklahoma, William R. Holmes, Assistant Attorney General, Oklahoma City, OK, attorneys for appellee on appeal.
   SUMMARY OPINION

STRUBHAR, Judge:

1 1 Appellant, Veronica Coronado, was con-viected of Trafficking in Illegal Drugs in the District Court of Tulsa County, Case No. CF-2001-4981. The jury trial was held before the Honorable Jefferson D. Sellers. The jury assessed punishment at ten years imprisonment and imposed a fine of $25,000.00. The trial court sentenced Appellant accordingly.

12 After thorough consideration of the entire record before us on appeal, including the original record, transcripts, and briefs of the parties, we reverse. In reaching our decision, we considered the following proposition of error and determined this result to be required under the law and the evidence:

1. The search of Appellant's person was in violation of the Fourth and Fourteenth Amendments of the United States Constitution, as well as Article II, § 30 of the Oklahoma Constitution. The contraband seized as a result of the search and seizure must be suppressed.

DECISION

13 The Fourth Amendment to the United States Constitution prohibits unreasonable searches and seizures. The Supreme Court, in Terry v. Ohio, 392 U.S. 1, 24, 88 S.Ct. 1868, 1881, 20 L.Ed.2d 889 (1968), held that if an officer is justified in believing that an individual whose suspicious behavior he is investigating at close range is armed and presently dangerous to the officer or to others, the officer may take necessary measures to determine whether the person is in fact carrying a weapon and to neutralize the threat of physical harm. However, before the officer can legally conduct a self-protective search for weapons, he must be able to point to particular facts from which he reasonably inferred that the individual was armed and dangerous. Id. 392 U.S. at 27, 88 S.Ct. at 1883. See also Loman v. State, 1991 OK CR 24, ¶ 17, 806 P.2d 663, 667. It is only when an officer is justified in believing that the individual whose behavior he is investigating at close range may be armed and dangerous that he may conduct a limited protective search for concealed weapons. Terry, 392 U.S. at 30, 88 S.Ct. at 1884. The requirements articulated in Terry are not limited to pat-down searches for weapons but have also been applied to situations such as the one presented here where the officer asked the individual to lift her shirt. See United States v. Baker, 78 F.3d 135, 137-38 (4th Cir.1996).

¶4 In the present case, Trooper Humdy articulated no particular facts from which he reasonably inferred that Appellant was armed and dangerous. Rather, the record indicates that Trooper Humdy conducted a weapons search of Appellant merely as a matter of course. This is an overt violation of the Fourth Amendment's protection from unreasonable searches.

¶5 Appellant also asserts that once Trooper Humdy had completed his visual search and assured himself that she was not armed, he had no authority to seize the package. Appellant is correct. According to the record before this Court, the only thing the trooper was sure of after he saw the brick shaped object was that it was not a weapon. The record makes clear that the identity of the contents of the package was not immediately apparent to this trooper. Thus, even if he had viewed it legally, he had no authority to seize it without a warrant. Minnesota v. Dickerson, 508 U.S. 366, 375-76, 113 S.Ct. 2130, 2137, 124 L.Ed.2d 334 (1993).

T6 Under the facts of this case, Appellant was subjected to a search and seizure that violated her rights under the Fourth Amendment and the evidence obtained therefrom should have been suppressed.

17 The Judgment and Sentence of the trial court is REVERSED with instructions to DISMISS.

JOHNSON, P.J. and CHAPEL, J.; concur.

LILE, V.P.J. and LUMPKIN, J. concur in result.


author: BILLINGS, Associate Presiding Judge:

text:
    2002 UT App 431
    STATE of Utah, Plaintiff and Appellee, v. Richard A. JOHNSON, Defendant and Appellant.
    No. 20010709-CA.
    Court of Appeals of Utah.
    Dec. 19, 2002.
    Joan C. Watt and Stephen W. Howard, Salt Lake Legal Defender Ass'n, Salt Lake City, for Appellant.
    Mark L. Shurtleff, Atty. Gen., and J. Frederic Voros Jr., Salt Lake City, for Appellee.
    Before JACKSON, P.J., BILLINGS, Associate Presiding Judge and DAVIS, J.
   AMENDED OPINION

BILLINGS, Associate Presiding Judge:

1 Defendant Richard A. Johnson appeals from a district court order denying his Motion to Dismiss for Lack of Jurisdiction. This case is before the court on interlocutory review. We affirm.

BACKGROUND

T2 The State of Utah charged Defendant with one count of eriminal nonsupport, a third degree felony, in violation of Utah Code Ann. § 76-7-201(1), (8)(e) (1999) (the Criminal Nonsupport Statute). The amended information alleges that between March 1, 1996 and July 20, 2001, Defendant failed to pay child support, as ordered by an Alaska divoree decree, for his children who would have been in needy cireumstances but for support from other sources.

T3 Defendant moved to dismiss the information for lack of jurisdiction under Utah Code Ann. § 76-1-201 (1999) (the Criminal Jurisdiction Statute). Following a hearing, the district court denied Defendant's motion to dismiss, The court concluded Utah has jurisdiction to prosecute Defendant under the plain language of the Criminal Jurisdiction and Criminal Nonsupport Statutes. Thereafter, Defendant filed a petition for interlocutory review of the denial of his motion. This court granted the petition.

ANALYSIS

T4 Defendant argues the district court erred in concluding Utah has jurisdiction to prosecute him, a Utah resident, for criminal nonsupport for failure to pay child support under an Alaska court order for children who have never resided in nor visited Utah. Whether the district court erred in concluding that Utah has jurisdiction is a question of law that we review for correctness. See State v. Amoroso, 1999 UT App 60,¶¶ 6, 18, 975 P.2d 505.

T5 The Criminal Jurisdiction Statute provides in relevant part:

(1) A person is subject to prosecution in this state for an offense which he commits, while either within or outside the state, by his own conduct ... if;
(a) the offense is committed either wholly or partly within the state[.]
(2) An offense is committed partly within this state if either the conduct which is any element of the offense, or the result which is such an element, occurs within this state.
(4) An offense which is based on an omission to perform a duty imposed by the law of this state is committed within the state regardless of the location of the offender at the time of the omission.

Utah Code Ann. § 76-1-201. Under this statute, which is based upon the Model Penal Code, Utah has jurisdiction to prosecute an offense that is committed wholly or partly within Utah.

16 Defendant maintains that by failing to pay child support to his children in Alaska, he committed an offense wholly in Alaska, not partly in Utah. Under the plain language of the Criminal Jurisdiction Statute, a crime is committed partly within Utah if conduct that is any element of an offense or a result that is an element of an offense occurs within Utah. See id. The Model Penal Code defines "conduct" as "an action or omission and its accompanying state of mind, or, where relevant, a series of acts and omissions." Model Penal Code § 1.18(5), 10A U.L.A. 91 (2001). "Omission" is defined as "a failure to act." Id. § 1.13(4). At issue in the present case is whether Defendant's alleged failure to act-his failure to pay child support, is "conduct" that is "any element" of criminal nonsupport that occurred within Utah.

T7 Defendant was charged with violating the Criminal Nonsupport Statute, which provides that a person may be convicted of criminal nonsupport if

having ... a child, or children under the age of 18 years, he knowingly fails to provide for the support of the ... child, or children when any one of them:
(a) is in needy cireumstances; or
(b) would be in needy cireumstances but for support received from a source other than the defendant or paid on the defendant's behalf.

Utah Code Ann. $ 76-7-201(1).

T8 Thus, to be convicted of criminal nonsupport in Utah, a person must (1) be the parent of a child under 18 and (2) knowingly fail to provide for the support of that child when (8) the child is in needy cireumstances or would be in needy cireumstances but for support received from other sources. See id.

T9 Utah appellate courts have not addressed whether a Utah resident who fails to provide support for nonresident children commits eriminal nonsupport partly in Utah. Defendant relies upon Osborn v. Harris, 115 Utah 204, 203 P.2d 917 (1949) and Boudreaux v. State, 1999 UT App 310, 989 P.2d 1103, as supporting the proposition that the failure to provide support occurs wholly where the children reside. We disagree.

¶10 In Osborn, the Utah Supreme Court interpreted a prior version of the Criminal Nonsupport Statute in holding that Utah had jurisdiction to prosecute a nonresident parent for failure to provide support "in the state in which he has permitted his wife or children to live, or in which his misconduct has induced them to seek refuge." 208 P.2d at 921. In so holding, the court recognized that eriminal nonsupport statutes are " 'for the benefit of the child{ren and] ... for the purpose of enforcing the natural duties of parents to their children.'" Id. at 920 (quoting In re Poage, 87 Ohio St. 72, 100 N.E. 125, 128 (1912)). The court then stressed, " 'citizens of another state cannot permit their children to become objects of charity in this state and defend against a prosecution under our laws to compel parents to provide for their minor children by the plea that they are not citizens of this state."" Id. Although it was therefore "reasonable to say that ... [the] duty to support [the children] lies in the state where they are so located," the court did not "express any opinion as to whether or not [the parent who failed to provide support was] guilty of a crime in both" Utah and the state of his residence. Id. at 920-21. Further, Osborn was decided before the Criminal Jurisdiction Statute was enacted, and thus it does not address whether, in failing to provide support for nonresident children, a Utah resident defendant commits an offense partly in Utah.

111 In Boudreaux, the defendant was charged with criminal flagrant nonsupport under Kentucky's criminal nonsupport statute for "having committed acts in Utah which resulted in a crime being committed in Kentucky." 1999 UT App 810 at 18, 989 P.2d 1103. The defendant challenged his extradition to Kentucky as a nonfugitive, arguing Utah, rather than Kentucky, had jurisdiction over the collection of support arrearages and arguing he had paid child support. See id. at 122, 989 P.2d 1108. Because the defendant was charged with eriminal nonsupport under the Kentucky statute and the civil collection of support was not at issue, this court rejected the defendant's argument that Utah had "jurisdiction over him{, a Utah resident,] in [the] Kentucky eriminal nonsupport matter." Id. However, in so holding, this court did not address whether the defendant committed an offense partly in Utah and thus whether Utah had concurrent jurisdiction to bring charges under Utah's Criminal Nonsupport Statute. Thus, Boudreaux does not control our analysis.

112 To support his argument that his "conduct" occurred wholly in Alaska, Defendant also relies upon generally recognized principles of eriminal law that the failure to provide support for a child is a crime of omission; a crime of omission is committed where the duty to act lies; the duty to act in a eriminal nonsupport case is where support is owed and the child resides; thus, criminal nonsupport is committed where the child resides. However, almost all of the cases Defendant cites fail to address whether a state may prosecute a resident parent for failure to provide support for a nonresident child under statutes similar to Utah's statutes.

113 Nor does it necessarily follow from the general rule-that a state may prosecute a nonresident parent for failure to support a resident child, that a state may not prosecute a resident parent for failure to support a nonresident child. See State v. Gantt, 201 Wis.2d 206, 548 N.W.2d 134, 186 (Ct.App.1996) (emphasizing that although Wisconsin cases holding Wisconsin has jurisdiction to prosecute nonresident parents for failing to support Wisconsin resident children are consistent with general criminal law rule, such cases do not hold that "nonsupport statutes may be enforced only in the place where the child[ren] reside[ 1"); see also United States v. Lombardo, 241 U.S. 78, 77-78, 36 S.Ct. 508, 510, 60 L.Ed. 897 (1916) (recognizing in dicta that "where there is a general duty it may be considered as insistent both where the 'actor' is and the 'subject' is ... as in the case of the duty of a father to support his children; and if the duty hals] criminal sanetion it may be enforced in either place"). In fact, there is authority generally recognizing that because criminal nonsupport is a continuing offense, jurisdiction is proper where either the parent or child resides. See Virgin Islands v. Audain, 366 F.Supp. 710, 713 (V.I.1973) (concluding under eriminal nonsupport statute jurisdiction was proper where parent or child resided because the duty to provide support is continuing and because the criminal nonsupport statute "[did] not require the child to be a resident of the state"); State v. Echavarria, 101 N.H. 458, 146 A.2d 256, 256 (1958) ("[I]t is also generally held that nonsupport is a continuing offense which can occur at the place where the wife or children live, at the father's residence or at both.").

14 We conclude Utah and Alaska have concurrent jurisdiction. We are persuaded by the reasoning of the Ohio and Missouri courts. In State v. Rosenstock, No. 95APA05-517, 1995 WL 723535, 1995 Ohio App. LEXIS 5888 (Dec. 7, 1995), an Ohio resident parent was ordered to pay child support by an Ohio court. See id. at *1, at *2. Following the divorce, the custodial parent and child moved to Maryland. See id. at *1, at *1. Thereafter, Ohio charged the resident parent with failing to provide adequate support. See id. at *1, at *2. The resident parent maintained that Ohio lacked jurisdiction to prosecute him, contending that jurisdiction was proper only in the state where the child resided. See id. at *2, at *4. The state maintained that Ohio had jurisdiction because the resident parent was required to pay child support under an Ohio court order. See id. at *2, at *5. The Ohio Court of Appeals agreed that Ohio had jurisdiction, see id. at *2-3, at "6, but not because of the resident parent's failure to comply with the Ohio support order, see Ohio Rev.Code Ann. § 2919.21(B) (Anderson 2002), as the resident parent had been charged with failing to provide adequate support, see id. § 2919.21(A)(2), and the failure to pay child support under an order was not an element of the offense of failing to provide adequate support. See Rosenstock, 1995 WL 728585 at *2, 1995 Ohio App. LEXIS 5388 at *5. The court held Ohio had jurisdiction to prosecute the resident parent because "an element of the offense with which [the resident parent] was charged took place in [Ohio." Id. at *2, at "6. "[Fjailing to provide adequate support takes place where the [parent] resides because that is where [the parent's] failure to perform the required act fairly can be said to occur." Id. at *2, at "5-6.

15 In State v. Johnson, 782 SW 827 (Mo.Ct.App.W.D.1990), the Missouri Court of Appeals held that Missouri had jurisdiction under Missouri's eriminal jurisdiction statute, which is similar to Utah's jurisdiction statute, to prosecute a Missouri resident parent for nonsupport of his nonresident child under a criminal nonsupport statute, which was somewhat similar to Utah's nonsupport statute. See id. at 828. The Missouri resident parent was obligated to pay child support under a Florida court order, which was registered in Missouri. See id. at 827. Following registration of the order, Missouri charged the resident parent with eriminal nonsupport. See id. On appeal, the resident parent contended Missouri lacked jurisdiction because the child, a Florida resident, did not have substantial contacts with Missouri and the Uniform Reciprocal Enforcement of Support Act (URESA) granted exclusive jurisdiction to Florida. See id. at 827-28. Missouri contended it had jurisdiction because "conduct constituting the crime of non-support occurred in [the] state." Id. at 828. The court summarily concluded that Missouri's exercise of jurisdiction was consistent with Missouri's criminal jurisdiction statute and was not inconsistent with URESA. See id. Thus, the court concluded Missouri properly exercised jurisdiction over the resident parent. See id.

{ 16 We conclude that Defendant could be convicted of criminal nonsupport if he is found to have "knowingly" failed to provide support for his Alaska resident children-a negative act, that was "any element" of criminal nonsupport, an offense in Utah. Although Defendant makes much of the fact that an Alaska court entered the support order, a Utah support order is not an element of criminal nonsupport under Utah Code Ann. § 76-7-201(1) or (8)(c). We are unpersuaded by Defendant's argument that Utah does not have an interest in prosecuting resident parents who fail to support their nonresident children.

{ 17 We therefore affirm.

18 WE CONCUR: NORMAN H. JACKSON, Presiding Judge and JAMES Z. DAVIS, Judge.

      . This Amended Opinion replaces the Court's original Opinion in this case, Case No. 20010709-CA, 2002 UT App 413, 2002 WL 31769495, issued December 12, 2002.

      . Additionally, in this case, Defendant is charged with a third degree felony for committing "the crime of nonsupport in each of 18 individual months within any 24-month period" or because "the total arrearage is in excess of $10,000." Utah Code Ann. § 76-7-201(3)(c) (1999).

      . The statute at that date was similar to the present statute. It provided, " 'Any person who, . without just excuse, deserts or willfully neglects or refuses to provide for the support and maintenance of his or her minor child or children, under the age of sixteen years, in destitute or necessitous circumstances is guilty of a felony.'" Osborn v. Harris, 115 Utah 204, 203 P.2d 917, 920 (1949) (quoting Utah Code Ann. § 103-13-1 (1943)).

      . Defendant cites cases that involve similar statutory schemes, but are distinguishable because they do not address whether jurisdiction is proper over resident parents for failure to support nonresident children in holding that jurisdiction is proper over nonresident parents. See State v. Sokolaski, 26 Kan.App.2d 333, 987 P.2d 1130, 1131 (1999) (holding Kansas could prosecute nonresident parent for failure to support Kansas resident child because the "criminal nonsupport occurred partly in Kansas and the proximate result of [the defendant's] actions (the failure to provide support for [the child]) occurred within [Kansas]"); State v. Taylor, 625 N.E.2d 1334, 1336 (Ind.Ct.App.1993) (noting "nonsupport is an omission which also occurs ... where the child{ren] reside" in holding Indiana had jurisdiction to prosecute nonresident parent who failed to support Indiana resident children).
      Other cases are distinguishable because they involve dissimilar provisions and do not address whether jurisdiction is proper over resident parents who fail to support nonresident children. See, e.g., State v. Shaw, 96 Idaho 897, 539 P.2d 250, 252-53 (1975) (concluding Idaho had jurisdiction to prosecute nonresident parent for criminal ' nonsupport under statute providing, "'[wlhen the commission of a public offense, commenced without the state is consummated within its boundaries, the defendant is liable to punishment therefor in this state, though he was out of the state at the time of the commission of the offense charged'" (emphasis and citation omitted)).

      . It provides that Missouri "has jurisdiction over an offense that a person commits by his own conduct if conduct constituting any element of the offense occurs within [the] state." State v. Johnson, 782 S.W.2d 827, 827 (Mo.Ct.App.W.D. 1990) (citing Mo.Rev.Stat. § 541.191(1) (Supp. 1989)).

      . At that time the statute provided, "'A parent commits the crime of nonsupport if such parent knowingly fails to provide, without good cause, adequate support which such parent is legally obligated to provide for his minor child.'" State v. Davis, 675 S.W.2d 410, 413-14 (Mo.Ct.App.1984) (quoting Mo.Rev.Stat. § 568.040 (1978)). Unlike Utah's statute, Missouri's statute also provided, " '[slupport' means food, clothing, lodging, and medical or surgical attention." Id. at 414.

      . Our conclusion is consistent with the Model Penal Code's rejection of "the old common law doctrines of strict territoriality and of assigning exclusive jurisdiction to the state where the last element occurred." Model Penal Code § 1.03 explanatory note, 10A U.L.A. 26 (2001).

      . We are persuaded by a number of policy reasons to hold that Utah has jurisdiction to prosecute Defendant for criminal nonsupport under the facts of this case. First, the law should make it more difficult, rather than easier, to avoid child support obligations. Second, Utah has no interest in becoming a haven for those who seek to avoid support obligations. Third, in cases such as the present, it is more convenient for defendants to be prosecuted where they reside, especially given that. their financial and employment records are more likely to be where they reside. Additionally, in this case, Defendant is indigent and is represented by appointed counsel. Fourth, Utah is in a better position to extract support from residents who fail to support their children than other states are to extract support from nonresidents. Fifth, Utah has an interest in ensuring that residents comply with Utah laws. Sixth, in cases where children are scattered across several states, judicial economy favors prosecution in one state. Finally, less public funds may be required for prosecution here than for extradition to another state.


author: GREENWOOD, Judge:

text:
    2003 UT App 319
    Tom RAMSEY, Plaintiff and Appellant, v. Bruce HANCOCK; First Security Bank, N.A., nka Wells Fargo Bank; and John Does 1 through 10, Defendants and Appellees.
    No. 20020530-CA.
    Court of Appeals of Utah.
    Sept. 25, 2003.

      Bernard L. Allen, Richards Caine & Allen PC, Ogden, for Appellant.
    Stephen C. Tingey and Melissa H. Bailey, Ray Quinney & Nebeker, Salt Lake City, for Appellees.
    Before Judges JACKSON, BILLINGS, and GREENWOOD.
   OPINION

GREENWOOD, Judge:

T1 Tom Ramsey (Plaintiff) appeals the trial court's grant of First Security Bank's (First Security) Motion to Dismiss under Utah Rule of Civil Procedure 12(b)(6). We affirm.

BACKGROUND

1 2 Plaintiff sold livestock through the Ogden Livestock Auction (the Auction) in Farr West, Utah, from approximately January 1, 1997 through October 1, 1997. During this time, Bruce Hancock was an employee of the Auction. The Auction and Plaintiff agreed that Hancock would deliver to Plaintiff checks for proceeds from the sale of Plaintiff's livestock. The checks were written on the Auction's accounts at Zions First National Bank, naming Plaintiff as payee.

13 While Hancock delivered some of the checks to Plaintiff, twenty-three of the checks, totaling more than $194,000, were deposited in Hancock's First Security accounts. In at least one instance, the check bore no endorsement. Most of the checks, however, bore Plaintiff's forged endorsement.

14 Plaintiff did not endorse any of the checks or authorize the deposits; he was not a customer of First Security and did not have a contractual agreement with First Security. When Plaintiff discovered the missing funds, he notified the Auction and First Security and later initiated this lawsuit. Plaintiffs complaint alleges that Hancock forged Plaintiff's endorsement and deposited the checks, and that First Security was negligent in depositing checks with a forged endorsement or without endorsement.

15 First Security filed a Motion to Dismiss under Utah Rule of Civil Procedure 12(b)(6). The trial court granted the motion, holding that First Security did not owe Plaintiff, a noncustomer of First Security, a duty. Plaintiff appeals.

ISSUE AND STANDARD OF REVIEW

T 6 The issue before this court is whether a non-payor depository bank owes a duty of care to a noncustomer payee of a check deposited by a customer of the depository bank. " 'Because the propriety of a 12(b)[ (6) ] dismissal is a question of law, we give the trial court's ruling no deference and review it under a correctness standard." " Ho v. Jim's Enters., Inc., 2001 UT 63,¶ 6, 29 P.3d 633 (quoting St Benedict's Dev. Co. v. St. Benedict's Hosp., 811 P.2d 194, 196 (Utah 1991)). In its review, this court "must accept the material allegations of the complaint as true, and the trial court's ruling should be affirmed only if it clearly appears the complainant can prove no set of facts in support of his or her claims." Hansen v. Department of Fin. Insts., 858 P.2d 184, 186 (Utah Ct.App.1993).

ANALYSIS

7 Plaintiff maintains the trial court erred when it granted First Security's Motion to Dismiss under Utah Rule of Civil Procedure 12(b)(6). Plaintiff alleges that First Security breached its duty of care, and was thereby negligent in depositing checks without endorsement or with forged endorsements, and in failing to follow reasonable commercial banking procedures and standards when it failed to verify the endorsements.

T8 On appeal from the grant of this motion to dismiss, this court must determine whether the allegations in the complaint are sufficient to support Plaintiff's negligence claim. "To prevail on a negligence claim, a plaintiff must establish that the defendant owed a duty of reasonable care to him or her. 'Absent a showing of duty, [the plaintiff] cannot recover." " Jackson v. Mateus, 2003 UT 18,¶ 7, 70 P.3d 78 (alteration in original) (quoting Slisze v. Stanley-Bostitch, 1999 UT 20,¶ 9, 979 P.2d 317). "The question of whether a duty exists is a question of law and is reviewed for correctness." Sse, 1999 UT 20 at ¶ 9, 979 P.2d 817 (quotations and citations omitted).

T 9 Utah has not addressed whether a non-payor depository bank owes a noneustomer a duty of care However, courts in other jurisdictions have held that a bank does not have a duty to a noneustomer. In the three cases discussed below, Miller-Rogaska, Inc. v. Bank One, 931 S.W.2d 655 (Tex.App.1996), Volpe v. Fleet National Bank, 710 A.2d 661 (R.I.1998), and Anschutz v. Central National Bank of Columbus, 173 Neb. 60, 112 N.W.2d 545 (1961), the courts considered the issue before this court: whether a depository bank owes a duty to a noncustomer payee. In each case, the courts held that the banks do not have a duty to the nonecustomer payee.

[ 10 In Miller, the plaintiff payee claimed defendant depository bank, Bank One, and defendant payor bank, Citibank, were negligent. See id., 931 SW.2d at 657. A check payable to the payee was accidentally mailed to the wrong company, which stamped a "For Deposit" endorsement on the check and deposited it at Bank One. See id. When the mistake was realized, the amount deposited was returned to the drawer of the check. See id. at 657-58. However, because the payee never received the check as payment he was owed, and because the drawer declared bankruptey during the relevant time, the payee sued the depository bank for, inter alia, negligence. See id. at 658-59.

[11 The appellate court upheld the grant of summary judgment in favor of the banks, holding that the payee "was not a customer of either bank, nor did it have a relationship with either bank." Id. at 664. Because the payee "failed to produce any evidence establishing a legal duty owed to [the payee] by the banks," the negligence action failed. Id. Plaintiff in the case before this court and the payee in Miller are similarly situated in that neither had a relationship with the defendant depository bank.

T 12 In Volpe v. Fleet National Bank, 710 A.2d 661 (R.I.1998), the payee's endorsement was forged by her attorney, without her knowledge or authority, on a check payable to both of them. See id. at 662. The attorney was a customer at the depository bank; the payee was not. See id. In the payee's negligence action against the depository bank, the appellate court upheld the award of summary judgment in favor of the bank, holding that the depository bank owed the payee no duty. See id. at 661. The payee argued, as does Plaintiff in this case, that the depository bank had a duty to inspect the endorsement signatures and that it was a breach of that duty to accept the check for deposit. See id. at 663. However, the court in Volpe held that

the bank owes no duty of care to a noneus-tomer with whom it has no relationship. This rule is based on the legal principle that there is no privity between the parties and that therefore the bank owes a stranger no duty of vigilance. Simply stated, absent extraordinary cireumstances a bank is not liable in negligence to a noneustomer payee for having failed to ascertain whether a check paid by it bears the payee's genuine indorsement but is liable to its customer for the mishandling of that customer's account.

Id. at 664 (footnote omitted).

{13 Plaintiff argues that the number of checks the depository bank accepted-one in Volpe and twenty-three in this case-distinguishes the two cases. Plaintiff maintains the twenty-three checks constitute an "extraordinary cireumstance[ ]," id., and that therefore the bank's duty of care is different. However, Plaintiff fails to cite any authority to support this argument. We are not persuaded that the number of checks deposited is sufficient to create a duty where one does not exist. Thus, Plaintiffs argument is unavailing.

T14 Although the claims in Anschutz v. Central National Bank of Columbus, 173 Neb. 60, 112 N.W.2d 545 (1961) were not for negligence, the court's reasoning applies to this case. In Anschutz, the appellate court affirmed the lower court's demurrer, holding that "a drawee bank which unwittingly pays a check to a subsequent endorser where the endorsement of the payee was previously forged is not liable in an action by the payee either on contract or for money had and received or for conversion." Id. at 551. It was alleged that the plaintiff’é signature as both payee and endorser was forged on two checks. See id. at 546. The court considered the implications of allowing a payee, rather than the drawer, to bring an action against the drawee bank. See id. at 550. Holding that the payee could not bring the action, the court wrote,

[iIn many instances the drawee bank has no means of verifying the authenticity of endorsements made by those who are not their customers ... and whose signatures are wholly unknown to it. In such case it would appear that there is a reasonable basis for restricting the bank's liability to the customer with whom it deals. This leaves the question relating to the proof of the matters with respect to the forgery and the negligence, if any, of the maker and payee to be determined in an action between them.

Id.; see also IBP, Inc. v. Mercantile Bank of Topeka, 6 F.Supp.2d 1258, 1265 (D.Kan.1998) (addressing whether non-payor depository bank owes duty of care to drawer of check to examine instrument before accepting it, stating "nearly every court has reasoned that a bank owes no duty of care to a non-customer with whom it has no relationship"); Bank Polska Kasa Opieki v. Pamrapo Sav. Bank, 909 F.Supp. 948, 956 (D.N.J.1995) (dismissing action against defendant depository bank stating, "[Defendant depository] Pamrapo cannot be liable to [plaintiff drawer] Bank Polska in negligence because, as a depositary bank, it had no direct dealings with Bank Polska and therefore owed it no duty."); Roy Supply Inc. v. Wells Fargo Bank, 89 Cal.App.4th 1051, 46 Cal.Rptr.2d 309, 812 (1995) (affirming lower court's dismissal of the defendant's individual negligence claim because the bank "did not owe a duty of care to [the plaintiff] individually as he was not a customer of the Bank"); Weil v. First Nat'l Bank of Castle Rock, 983 P.2d 812, 814 (Colo.Ct.App.1999) (holding bank generally has no duty to noncustomer with whom it has no relationship); Pennsylvania Nat'l Turf Club, Inc. v. Bank of West Jersey, 158 N.J.Super. 196, 385 A.2d 982, 936 (1978) (holding no duty owed by drawee bank to holder of checks absent "agreement, undertaking or contact between plaintiff and defendant from which any special duty can be derived").

115 In Anschutz, Volpe, and Miller, the courts held that a depository bank does not owe a duty to a noncustomer payee. Still other courts have considered whether a duty is owed to a noneustomer when the parties are not necessarily payee and depository bank. Despite the differing roles, these cases also hold that a bank owes no duty to one who is neither a customer of the bank nor contractually related to the bank.

1 16 For example, in ALG, Inc. v. Estate of Eldred, 29 Kan.App.2d 1011, 35 P.3d 931 (2001), the defendant employees embezzled money from the plaintiff employers. See id. at 933. Of the 188 embezzled checks, twenty-five were drawn on the same bank into which they were deposited. See id. The remaining 118 checks were drawn on a bank other than the depository bank. Because "[pllaintiffs were not in a customer-payor bank relationship with [the depository bank] with respect to those 113 checks," plaintiffs' motions for summary judgment and to alter or amend the judgment, or grant a new trial, were denied. Id. at 984. The court of appeals affirmed. See id.

{17 The plaintiffs in ALG were not the payees of the checks, as in this case. Nevertheless, the court held that the bank was not liable for those checks which were not drawn on the depository bank, based on the lack of a "customer-payor bank relationship." Id. So too in this case, there is no customer-payor bank relationship between First Seeu-rity and Plaintiff, ALG supports our holding that absent a customer or contractual relationship, First Security owes Plaintiff no duty.

118 Further, in Schleicher v. Western State Bank, 314 N.W.2d 293 (N.D.1982), the plaintiff argued that the bank had a duty to him, the payee of a check with a forged payor's signature, and that this duty was breached when the bank did not compare the signature of the payor with its signature card. See id. at 297. As in the case before this court, the plaintiff was not a customer or depositor of the bank. The court held that under the facts of the case, "the Bank did not have the duty to the payee of a forged check to compare the signature of the payor with its signature card in order to determine the authenticity of the payor's signature, where the payee is not a customer or depositor." Id.

19 In comparison, the twenty-three checks at issue in this case had forged endorsements or no endorsement, rather than a forged payor's signature. However, contrary to Plaintiff's arguments, this difference does not impose a duty on the depository bank to examine its customer's signature card or to directly contact the payee before accepting the check. Indeed, in this case, looking at the signature card of First Security's customer, Hancock, would do nothing to determine the authenticity of Plaintiff's forged endorsement, since Plaintiff was not a customer of the bank, and his endorsement is unrelated to Hancock's signature card. Therefore, this case is similar to Schleicher, where the bank had no duty to determine the authenticity of the plaintiff's signature, where the plaintiff was not a customer of the bank.

CONCLUSION

120 Although the cases discussed above are from jurisdictions other than Utah, they consistently hold that a bank does not owe a duty to a noncustomer payee. Therefore, we hold the trial court did not err when it held that depository bank First Security did not owe payee Plaintiff, a noneustomer of the bank, a duty and granted First Security's motion to dismiss. Plaintiff's complaint fails to allege sufficient facts to support his negligence action against First Security. We affirm.

121 WE CONCUR: NORMAN H. JACKSON, Presiding Judge, and JUDITH M. BILLINGS, Associate Presiding Judge.

      . "On appeal from a motion to dismiss, we review the facts as they are alleged in the complaint. We 'accept the factual allegations in the complaint as true and consider all reasonable inferences to be drawn from those [acts in a light most favorable to the plaintifl.' " Ho v. Jim's Enters., Inc., 2001 UT 63, ¶ 2, 29 P.3d 633 (quoting Prows v. State, 822 P.2d 764, 766 (Utah 1991)).

      . Although Bruce Hancock is a named defendant in this action this appeal does not affect him.

      . The Auction was involuntarily dissolved by the State in January 1999.

      . Utah case law has not previously addressed this issue, although the Utah Supreme Court has held that "that UCC section 4-103 recognizes a bank's duty to act in good faith and exercise ordinary care in all its dealings." Arrow Indus., Inc. v. Zions First Nat'l Bank, 767 P.2d 935, 938 (Utah 1988); see Utah Code Ann. § 70A-4-104 (2001). In Arrow, the court held that based on an alleged oral contract between the parties, and on the payor bank's duty to exercise good faith and ordinary care in all its dealings, the payee's claims should not have been dismissed. See id. al 938-39. The facts in Arrow differ from those in the case before this court because the payee had a contractual agreement with the payor bank, whereas in this case there is no such agreement. Arrow makes clear that where there is a relationship between the parties, a duty is owed; however, the question of a bank's duty to a noncustomer, or to one who is not contractually related to the bank, is not addressed. See id.

      . Indeed, a remedy may have been available in this case if the drawer (the Auction) had brought an action against the drawee bank (Zions First National Bank). The drawee bank would then be able to recover from the depository bank (First Security), through the statutorily mandated collection process. See Utah Code Ann. §§ 70A-4-102 to -504 (2002).

      . The plaintiff was not a depositor in Schleicher v. Western State Bank, 314 N.W.2d 293 (N.D.1982), because he endorsed the check "Remit in cashier's check only/John Schleicher." See id. at 294.

      . Plaintiff maintains that Schleicher is inapplicable because the plaintiff was claiming damages for "malicious prosecution; defamation, libel, and slander; intentional infliction of emotional distress; invasion of privacy; return of proceeds of the check he was alleged to have forged; and punitive damages." Id. at 294, While the cause of action is different, the analysis concerning a bank's duty to a noncustomer payee is similar.