The Colorado Supreme Court agreed on Monday to hear two cases involving the ability of an Adams County school district to challenge a reorganization order from the state, and the parameters of auto insurance policies covering antique or classic cars.
At least three of the court's seven members must consent to take up an appeal.
The first case arose after the Colorado State Board of Education voted in favor of reorganizing Adams County School District #14 pursuant to a 2009 law, the Education Accountability Act. Based on poor academic performance over several years, the board took a series of actions against the district, including bringing in an outside manager and removing, then restoring, its accreditation.
The reorganization could result in closing Adams 14 schools or handing over control to another entity. Following the state board's vote, Adams 14, whose 6,000-plus students are mostly Hispanic and from low-income households, sued the board. Joined by the teachers' union for the district, the lawsuit challenged the constitutionality of the Education Accountability Act, alleged violations of the school district's procedural rights and asserted claims on behalf of the students.
In September, Denver District Court Judge Shelley I. Gilman dismissed the lawsuit for several reasons. Primarily, she invoked the "Rule of Martin," named for a 1976 decision of the state Supreme Court that held a "subordinate state agency" cannot ask a court to review an action by a "superior state agency" unless authorized by law.
"In designing the Education Accountability Act to hold school districts accountable and authorizing the State Board to take significant action and direct school districts, the General Assembly clearly made local school districts subordinate to the State Board," Gilman wrote.
She added that even though the state constitution guarantees control over education by local school boards, the constitution itself did not grant Adams 14 the right to sue the state board.
Adams 14 and the teachers' union appealed to the Court of Appeals. However, the state board, with the plaintiffs' support, petitioned the Supreme Court to hear the case directly instead.
The Supreme Court, argued the state, took up another case late last year implicating the Rule of Martin — questioning whether Weld County could challenge a rule from the state's air quality control commission. The parties to the Adams 14 lawsuit suggested the Supreme Court could address the Rule of Martin's application to school districts in tandem with the Weld County appeal.
"Finally, several school districts aside from Adams 14 are on track to face directed action from the State Board, and pandemic-related learning loss will likely lead to more," wrote the Colorado Attorney General's Office. "As more accountability matters come before the State Board, it is of imperative public importance to determine whether school districts can sue to forestall the State Board’s directed actions for turning around struggling schools."
The justices will examine whether Gilman correctly concluded Adams 14 is barred from suing the state board, or if the constitutional guarantee of local control would support such litigation. The court will further answer whether Adams 14 can sue on behalf of its students and whether the district itself has due process rights, even though it is not a person.
The case is Colorado State Board of Education v. Adams County School District 14 et al.
The Supreme Court will also hear a case out of Boulder County that questions whether someone may use an insurance policy tailored specifically for antique or classic cars can claim benefits after an accident that does not involve a classic or antique car.
In March 2019, a drunk driver hit and injured Beverly Hughes while she was in her car. The other driver's insurance limited his liability to $25,000, but Hughes' injuries exceeded that amount.
Hughes and her husband had two insurance policies: one with Travelers Insurance that covered up to $250,000 for injuries caused by an uninsured or underinsured motorist, and a similar policy from Essentia Insurance Company. The Essentia policy, however, was specifically for "classic car" insurance.
The Essentia policy covered vehicles from 1967 and 1930 that Hughes and her husband owned. Essentia required the policyholder to own a "regular use vehicle" that was not a classic car and to carry separate insurance, which the couple received through Travelers. Even though Hughes was driving her regular use vehicle in the collision, she sought to recover the benefits that came with the classic car policy.
In July 2020, District Court Judge Thomas F. Mulvahill sided with the insurance company. Classic car policies, he pointed out, are not meant for regularly-used vehicles. Because the risk of an accident is lower for lesser-used antique vehicles, the insurance premiums are lower, too. The Essentia policy hinged on Hughes and her husband obtaining insurance elsewhere for their regular vehicle.
"Colorado’s public policy ... is to protect against financial loss caused by negligent financially irresponsible motorists," Mulvahill wrote. "Plaintiff was afforded this protection through the Travelers Insurance Company’s insurance policy."
But last May, a three-judge panel for the Court of Appeals disagreed. The panel interpreted Colorado Supreme Court precedent to require insurance policies to cover people, not specific vehicles, who are injured by uninsured or underinsured motorists.
Essentia cannot escape its duty, wrote Judge Craig R. Welling, to cover "persons, rather than cars, by attempting to tie its provided UM/UIM coverage to the occupancy of 'your covered auto' (in this case, one of the classic cars)."
The insurance company turned to the Supreme Court. The appellate panel's opinion, it argued, had turned specialized insurance policies designed for low-risk, low-cost coverage into all-purpose contracts to cover accident injuries. Neither party had anticipated that outcome when setting up the policy, Essentia insisted.
"Those like Hughes who own antique or classic cars cannot have their cake and eat it, too: they cannot buy low-cost policies and then use them to provide standard UM/UIM coverage for injuries unrelated to the insured hobby cars," wrote Essentia's attorneys.
The Supreme Court will decide whether the exemption for "regular use vehicles" in an insurance policy for classic cars complies with state law.
The case is Essentia Insurance Company v. Hughes.
