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State Farm Mutual Auto Insurance Co. v. Steul.

2020 COA 146. No. 19CA1325. CRCP 4(m)—CRCP 41(b)—Dismissal of Actions.

October 15, 2020

Steul was involved in a traffic accident with Fehringer, who was insured by State Farm Mutual Auto Insurance Co. (State Farm). State Farm compensated Fehringer for his injuries, and as Fehringer’s subrogee, it sought to recover from Steul. Steul’s insurer, Allstate, failed to settle with State Farm. One day before the applicable statute of limitations expired, State Farm filed a complaint against Steul. The next day, the trial court issued a delay reduction order requiring State Farm to file a return of service within 63 days of filing the complaint, October 10, 2016.

On October 14, 2016, the trial court notified State Farm that the case would be dismissed without prejudice 35 days from the date of the order unless a return of service, notice of dismissal, stipulation for settlement, or statement showing good cause was filed. State Farm thereafter requested and was granted two additional extensions of time based on allegations that it was having difficulty locating Steul. On the day the second extension expired, State Farm filed a motion for substituted service. The trial court did not rule on that motion, but on June 23 it dismissed the case without prejudice.

On December 1, 2017, State Farm filed a motion to reinstate the case. The court granted the motion and subsequently allowed State Farm additional extensions of time to effect substituted service. State Farm ultimately served Steul through Allstate and filed proof of service on December 18, 2018. In January 2019, Steul filed a motion to quash untimely service of process and dismiss the complaint. The trial court found that the service delay was unreasonable and granted the motion.

On appeal, State Farm contended that the trial court erred by applying the wrong law to the dismissal. A trial court has broad discretion when determining whether to dismiss a case under CRCP 41(b). Here, the trial court properly relied on Rule 41(b) and Malm v. Villegas, 2015 CO 4, which construes Rule 41(b), to analyze Steul’s motion and properly applied the law to the facts in determining that State Farm failed to prosecute its claim.

State Farm also argued that the trial court contradicted its own orders extending the time for service under CRCP 4(m) in dismissing its claim. While State Farm conceded that Rule 41(b) is the controlling law, it nonetheless objected to the trial court’s reliance on Malm because Malm did not interpret or apply Rule 4(m) to the question of unreasonable delay. Rule 4(m) gives trial courts broad discretion to extend service deadlines, including the ability to grant a plaintiff an extension without a showing of good cause or any explicit excuse for delay, or to dismiss a case. By contrast, when the court considered Steul’s Rule 41(b) motion to dismiss for failure to prosecute, it was required to evaluate State Farm’s justifications for the extended delay and weigh them against potential prejudice to Steul. Here, the delay at issue extended well beyond the trial court’s initial 63-day deadline. The court granted at least seven extensions of time and approved alternative service methods, and had previously reinstated the case after dismissal for failure to meet a Rule 4(m) deadline. Because the period of delay was so extended, the trial court did not err by relying on Malm and Rule 41(b) to decide the delay issue rather than Rule 4(m).

Lastly, State Farm argued that the trial court erred by failing to consider whether, based on public policy concerns, a plaintiff who effects service pursuant to CRS § 42-7-414(3) must be given extended time to serve a defendant. While this provision allows for service of process on an insurance carrier as the agent of the insured under certain circumstances, the plain language of subsection (3) contains no indication that it was intended to alter plaintiffs’ existing obligations under Rule 41(b) or Rule 4(m). Therefore, the trial court did not err by declining to consider the standards set forth in CRS § 42-7-414(3) in connection with the motion to dismiss.

The order was affirmed.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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