The Case for Revising Colorado’s Venue Rule

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Jeffrey Ruebel

Two concepts form the basis governing courts’ authority to act: (1) personal jurisdiction and (2) venue. Personal jurisdiction has been used as a method to constrain the power of the sovereign and to protect litigants against unfair treatment at the hands of a state by asking whether the sovereign has authority over the parties.[1] On the other hand, venue serves to make courts accessible to litigants but also protects against unfair treatment that might result from selecting an inconvenient location for trial.[2]

The rise of interstate commerce since the founding of the United States has resulted in states seeking to reach beyond their borders and expand jurisdictional limits through long-arms statutes.[3] Conceptually, one of the purposes of modern day venue is to serve as a limitation on personal jurisdiction, primarily to ensure fair play and substantial justice.[4] Wright and Miller explain that the purpose of venue rules is “to insure that litigation is lodged in a convenient forum and to protect [the] defendant against the possibility that [the] plaintiff will select an arbitrary place in which to bring suit.”[5]

Venue in Colorado was formerly a creation of statute, but modern venue provisions are primarily found in the Colorado Rules of Civil Procedure. Rule 98 is simply titled “Place of Trial.”[6] It generally reflects both long-standing and more recent concepts of venue and also provides guidance for the transfer of civil actions.[7] However, two recent Colorado Supreme Court decisions have revealed that a section of the seemingly plain language of the rule produces anomalous results. Taken at face value, the rule may conflict with the traditional notions of fair play and due process referenced above.

The section in question can be found in Section (c)(1) of Rule 98. That section reads:

Except as provided in sections (a), (b), and (c)(2) through (6) of this Rule, an action shall be tried in the county in which the defendants, or any of them, may reside at the commencement of the action, or in the county where the plaintiff resides when service is made on the defendant in such county; or if the defendant is a nonresident of this state, the same may be tried in any county in which the defendant may be found in this state, or in the county designated in the complaint, and if any defendant is about to depart from the state, such action may be tried in any county where plaintiff resides, or where defendant may be found and service had.[8]

It should be noted that historically Colorado has approved instituting an action in the county designated in the complaint when the defendant was not a resident of Colorado.[9] A challenge to venue based on this civil code provision was overruled, as the Court held that to hold otherwise would improperly engraft an exception or an amendment to the civil code provision.[10] However, in that case, there was no discussion of whether the rule met the requirements of due process. The application of Rule 98 in the decisions in Magill v. Ford Motor Co.[11] and in Hagan v. Farmers Ins. Exch.[12] reveals that the rule may not pass constitutional muster and may be in contravention of case law.

In Hagan, plaintiffs filed separate actions seeking uninsured motorist benefits from the same defendant, Farmers Insurance Exchange, a nonresident corporation.[13] Under Rule 98(c), a plaintiff may bring a suit against a nonresident, including a nonresident corporation, in the county of Plaintiff’s choice.[14] Suit was filed in Boulder District Court, even though the tort did not occur in that district, and none of the plaintiffs were residents of that district.[15] While the opinion does not set forth the plaintiffs’ reasons for filing in Boulder, two possible reasons come to mind: (1) the office of plaintiffs’ counsel was in Boulder or (2) Boulder is generally considered a more favorable district court for claimants.

The Boulder District Court ordered venue moved to Arapahoe District Court because witnesses were located in that county.[16] The Supreme Court, strictly reading Rule 98, found the transfer was an abuse of discretion and held that Boulder District Court was proper under the rule as it was the county designated in the complaint and the transfer, made without adequate supporting affidavits or an evidentiary hearing as required under Rule 98(f)(2), was error.[17]

In Magill, the plaintiff was severely injured in a motor vehicle accident and brought suit in Denver District Court.[18] The accident occurred in Douglas County, Colorado.[19] The plaintiffs (Magills) resided in Douglas County.[20] A tortfeasor defendant was a resident of El Paso County.[21] Another defendant, Ford Motor Company, was a Delaware corporation with its principal place of business in Michigan and was thus a nonresident.[22] The trial court concluded that venue in Denver was proper because Ford’s registered agent was located there.[23] The Supreme Court disagreed.[24] It held that where at least one defendant is a Colorado resident, a plaintiff may not designate a county that is unrelated to either the defendant's county of residence, the plaintiff's county of residence, or the county in which a tort occurred.[25] Thus, per Rule 98, as interpreted by the Court, venue was only proper in either Douglas County or El Paso County.[26]

This is a curious result, but one mandated by a literal reading of the rule. For service to have been proper in Denver District Court, Ford had to have been found there. However, the location of the constitutionally required registered agent in Denver was held not to translate into the legal conclusion that Ford was “found” there. Apparently, as an incorporeal entity and nonresident, Ford cannot be “found” anywhere in the State of Colorado, at least for the purposes of Rule 98. This provision is an anachronism, apparently based on the original Judiciary Act passed by the U.S. Congress in the 1789 Judiciary Act. In that Act, Congress limited jurisdiction of courts to the jurisdiction in which the defendant was an inhabitant or in which “he shall be found at the time or serving the writ . . . .”[27] The “or where he may be found” language was eliminated when Congress amended the jurisdictional provision for the federal court.[28] It remains in the Colorado venue statute, and apparently creates an option for venue if the defendant is a person, but not if it is any other type of legal entity.

The Rule also then results in another illogical holding. Had the Magills not sued the individual co-defendant tortfeasor, then under the Hagan ruling, venue in Denver would have been proper merely by the Magills designating that District Court in the Complaint. Similarly, if the individual co-defendant tortfeasor was not a resident of Colorado, venue would have been proper in Denver. But, as the defendant tortfeasor was a resident of and lived in El Paso County, venue was improper in Denver.

To summarize, then, in the Court’s own words, “[p]laintiff is entitled to choose the place of trial when venue in more than one county would be proper”[29] but plaintiff’s choice would not be proper when a least one defendant is a Colorado resident, because “[a] plaintiff may not designate a county that is unrelated to either the defendant's county of residence, the plaintiff's county of residence, or the county in which a tort occurred.”[30]

The holding in Magill would appear to fall within the jurisprudential concepts supporting venue discussed above. The holding in Hagan, while consistent with Rule 98, contradicts the principals of venue. Applying Rule 98, a party suing a nonresident can indulge in forum shopping and still be in compliance with the rule. Similarly, an injured party in Julesburg can arbitrarily bring suit against a nonresident in any jurisdiction, including locations hundreds of miles away, such as Telluride, regardless of the inconvenience.

The due process protections served by venue restrictions are clearly compromised by the language in Rule 98 which permits an injured party to select the venue of a civil action against a nonresident by designation in the complaint with no other justification. While this language, like the language of “may be found” could have some historical basis and justification, the Rules Committee should consider modifying the venue rule to bring it into compliance with modern constitutional and venue practice.

 


Jeffrey C. Ruebel, Esq., is a founding partner in Ruebel and Quillen, LLC. A native of Brush, Colorado, he graduated from Lawrence University in Appleton, Wisconsin in 1977 and the University of Colorado School of Law in 1983. He is admitted to practice in Colorado, the U.S. District Court for the District of Colorado, the Tenth Circuit and in Wyoming. The primary focus of his practice is civil litigation. A significant amount of his time concerns representing architects, engineers, and contractors, as well as handling insurance coverage issues. He has tried numerous cases in state and federal jurisdictions involving a variety of issues. He regularly serves as a lecturer in continuing legal education programs and in presentations to trade groups.

[1] Peter L. Markowitz & Lindsay C. Nash, Constitutional Venue, 66 Fla. L. Rev. 1153, 1160 (2014).

[2] Id.

[3] Hanson v. Denckla, 357 U.S. 235, 260 (1958).

[4] See Kevin M. Clermont, Restating Territorial Jurisdiction and Venue for State and Federal Courts, 66 Cornell L. Rev. 411 (1981).

[5] 4 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure, note 14 § 1063.

[6] Colo. R. Civ. P. 98.

[7] Id.

[8] Id. (emphasis added). 

[9] See, e.g., Great Am. Ins. Co. v. Scott, P. 1051, 1051 (Colo. 1931).

[10] N.Y. Life Ins. Co. v. Pike, 117 P. 899, 901 (Colo. 1911).

[11] No. 15SA332, 2016 Colo. LEXIS 933 (Colo. Sept. 12, 2016).

[12] 342 P.3d 427 (Colo. 2015).

[13] Hagan, 342 P.3d at 430–31.

[14] Int’l Serv. Ins. Co. v. Ross, 457 P.2d 917, 923 (Colo. 1969).

[15] Hagan, 342 P.2d at 431.

[16] Id.

[17] Id. at 438.

[18] Magill, at *3–4.

[19] Id. at *3.

[20] Id. at *4.

[21] Id.

[22] Id.

[23] Id. at *5.

[24] Id. at *8.

[25] Id. at *20–21.

[26] Id. at *21.

[27] Judiciary Act of 1789, ch. 20, § 11, 1 Stat. 78–79.

[28] Judiciary Act of 1789 as amended March 3, 1887, ch. 373, 24 Stat. 552.

[29] Hagan, 342 P.3d at 432.

[30] Magill at *20.