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ACE American Insurance Co. v. Dish Network, LLC

United States District Court, D. Colorado

March 3, 2014

ACE AMERICAN INSURANCE COMPANY, Plaintiff,
v.
DISH NETWORK, LLC, Defendant.

ORDER DENYING MOTION TO WITHDRAW & CERTIFY AND ADOPTING RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

ROBERT E. BLACKBURN, District Judge.

This matter is before me on the following: (1) the Combined Motion and Memorandum of Dish Network L.L.C. In Support of its Motion To Dismiss This Action [#22][1] filed June 21, 2013; (2) the Recommendation of United States Magistrate Judge [#34] filed August 13, 2013; and (3) the Combined Motion and Memorandum of Dish Network L.L.C. To Withdraw its Motion To Dismiss [#22], Certify Questions To the Supreme Court of Colorado and To Stay Proceedings In This Case [#41] filed December 6, 2013. The defendant, Dish Network L.L.C., filed objections [#35] to the recommendation. The plaintiff, ACE American Insurance Company, filed a response [#36] to the objections, and the defendant filed a reply [37]. The plaintiff filed a response [#42] to the motion to withdraw and certify, and the defendant filed a reply [#43].

As required by 28 U.S.C. ยง 636(b), I have reviewed de novo all portions of the recommendation to which objections have been filed. I have considered carefully the recommendation, objections, and applicable caselaw. I approve and adopt the recommendation [#34], grant the motion to dismiss [#22] in part and deny it in part, and deny the motion to withdraw and certify [#41].

BACKGROUND

This case is a declaratory judgment action filed by ACE American Insurance Company. ACE seeks declaratory judgments concerning its obligation to provide for the defense of Dish in two underlying lawsuits. In the first underlying lawsuit, the United States and four individual states allege that Dish has violated federal and state laws regulating telemarketing, including the Telemarketing Act and the Telephone Consumer Protection Act (TCPA).[2] In the second underlying lawsuit, Matthew Donaca alleges that Dish violated the Telephone Consumer Protection Act and FCC regulations.[3] Dish sought insurance coverage from ACE for the defense of Dish in these two lawsuits.

In the present case, ACE seeks declaratory judgments essentially declaring that ACE has no duty to defend or to indemnify Dish with respect to the two underlying lawsuits. In its motion to dismiss, Dish contends ACE cannot demonstrate the existence of an actual controversy concerning Count One of the amended complaint [#12] because ACE and Dish agreed four years ago about which claims in the USA Lawsuit are covered under the insurance policies in question. Addressing Count Two of the amended complaint [#12], Dish argues that ACE cannot demonstrate the existence of an actual controversy because once ACE denied coverage for the Donaca Lawsuit, Dish determined no longer to pursue coverage from ACE for the Donaca Lawsuit.

Addressing Count One, ACE contends that there remains an active dispute about coverage for the USA Lawsuit and that, therefore, there is an actual controversy presented in Count One. Specifically, ACE asserts that it has no obligation to pay fines, penalties, punitive damages, and the cost of injunctive relief for any alleged violations of the TCPA. In addition, ACE contends that coverage is not due for claims made by individual states until Dish demonstrates that it has satisfied fully its multiple deductible obligations under each policy for each of the four state claimants. According to ACE, Dish contends that two of the policies in question provide full coverage for TCPA violations and that Dish has satisfied fully its deductible obligations. Addressing Count Two, ACE contends that because Dish no longer claims coverage for the Donaca Lawsuit, ACE is entitled to a declaration of no coverage for that suit.

ANALYSIS

A. Motion To Withdraw & Certify

I address first the motion of Dish to withdraw its pending motion to dismiss, which is addressed in the recommendation, and to certify two questions of law to the Colorado Supreme Court. Dish contends the insurance coverage issues raised in Count One are the subject of two other cases also involving Dish and its insurers. These two other cases concern policies issued by Arch Specialty Insurance Co. and Travelers Property and Casualty Company of America. The Arch case was filed in this court and now is on appeal to the United States Court of Appeals for the Tenth Circuit. The Travelers case is pending in the United States District Court for the Central District of Illinois but, according to Dish, Travelers argues for the application of Colorado law in that case.

According to Dish, the Arch case, the Travelers case, and the present case each raise three state law insurance coverage questions:

1. Do claims asserted against Dish under the TCPA and other similar state and federal laws fall potentially within the coverage given in Dish's commercial general liability insurance policies?
2. Are the remedies sought by the plaintiffs in the USA Lawsuit insurable?
3. Do the allegations against Dish fall solely and entirely within the Insured's Business Exclusion, eliminating any potential coverage under Dish's ...

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