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MT. Hawley Insurance Co. v. National Casualty Co.

United States District Court, District of Colorado

January 30, 2015



Christine M. Arguello Judge

This matter is before the Court on Plaintiff Mt. Hawley Insurance Company’s (“Mt. Hawley”) and Defendant National Casualty Company’s (“NCC”) Motions for Summary Judgment. (Doc. ## 23, 25.) Because NCC does not have a duty to defend any party in connection with the underlying lawsuit, the Court grants NCC’s Motion and denies Plaintiff’s Motion.



On August 15, 2010, Twenty Niners, LLC, doing business as Grand Junction Motor Speedway (“Speedway”)—a company that operates a go-kart track in Colorado— leased its premises to Colorado Junior Karting Company, which hosted an International Kart Federation (“IKF”) sanctioned race event. (Doc. # 25, ¶¶ 31, 32.) Before the race, during a practice session, a maintenance/recovery vehicle entered the racetrack and collided with and killed a minor go-karter. (Id. at ¶ 30.) The minor’s parents sued Speedway, Speedway employees—Darren Cook, Stacey Cook, and Richard Talley, IKF, and others[1] in state court (“State Litigation”). (Doc. # 23, ¶ 1.) Plaintiff in the instant action, Mt. Hawley, has defended IKF as its inured and Speedway and its employees as additional insureds under IKF’s policy in the State Litigation. (Id. at ¶¶ 38, 41.)


During August of 2010, Speedway was a member and participating track of National Karting Alliance (“NKA”), which is insured by NCC, the Defendant in the instant case. (Doc. # 23, ¶¶ 12, 22.) NCC issued a commercial general liability insurance coverage policy (“NKA Policy”) to NKA for the period January 1, 2010 to January 1, 2011.[2] (Doc. # 25, ¶ 1.) Neither NCC nor NKA is a party in the State Litigation; however, because Speedway was a member of NKA and is being funded for its defense in the State Litigation by IKF’s insurance company, Mt. Hawley, NCC as NKA’s insurance company is implicated in this case. (Doc. ## 23, ¶¶ 12, 41; 25, ¶ 24.)

NKA is a membership-based association of independent tracks, clubs, and promoters of kart and small vehicle racing across the United States. (Doc. # 25, ¶ 15.) One of the advertised benefits of membership in NKA is coverage under the NKA Policy, as an additional insured. (Id. at ¶ 17.) The Additional Insured Endorsement in the NKA Policy provides that the following persons or organizations, as defined in the attached Schedule to the policy, are additional insureds under the policy:

(a) Any person or organization engaged in operating, managing, sanctioning, sponsoring the “covered program, ” or providing the “premises” for a “covered program, ” including officials of the “covered program.” (b) Any “participant” (excluding drivers), “competition vehicle” owner and “competition vehicle” sponsor. (c) Any “participant” driver, but only with respect to “bodily injury” or “property damage” to persons other than any other driver.

(Doc. # 23, ¶ 27–8.) “Covered program” is defined as “any event which: (1) Was specifically submitted to us as a scheduled event or activity at the inception of this policy; or (2) Is usual or customary to your business activities and events; or (3) Has been specifically endorsed by this Policy.” (Id. at ¶ 28–8.) The Additional Insured Endorsement is amended to include as an additional insured:

The person(s) or organization(s) shown in the Schedule, but only with respect to liability for “bodily injury, ” “property damage, ” or “personal and advertising injury” caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: (A) In the performance of your ongoing operations; or (B) In connection with your premises owned by or rented to you.[3]


Each month, Speedway submitted NKA-prepared practice activity reports to NKA. (Id. at ¶ 17.) In August 2010, Speedway’s practice activity report notified NKA of the accident and death of the minor go-karter. (Id. at ¶ 19.) In addition, Speedway and its employees, believing themselves to be additional insureds under the NKA Policy, tendered the State Litigation to NCC for coverage. (Doc. # 1, ¶ 19.) NCC denied coverage, claiming Speedway and its employees did not quality as additional insureds under the NKA Policy. (Doc. # 13.)

On June 24, 2013, Plaintiff, Mt. Hawley, filed the instant litigation against NCC seeking both a declaration that NCC breached its duty to defend Speedway and its employees in the State Litigation and a pro rata contribution of the defense costs it has incurred on behalf of Speedway. (Doc. # 23.) On May 5, 2014, Plaintiff moved for partial summary judgment (Doc. # 23) claiming Speedway and its employees qualify as additional insureds under the NKA Policy, and NCC filed a ...

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