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P&S LLC v. National Union Fire Insurance Company of Pittsburgh, PA

United States District Court, D. Colorado

July 29, 2015

P&S LLC, Plaintiff,



This matter is before me on a Motion for Summary Judgment filed by Defendant, National Union Fire Insurance Company of Pittsburgh, PA ("National Union") in which it seeks entry of judgment in its favor and against Plaintiff, P&S LLC ("P&S"). [Doc #45] Oral arguments would not materially assist me in my determination. After consideration of the parties' briefs and attachments, and for the reason stated, I GRANT National Union's Motion for Summary Judgment and, as such, I DISMISS this case.


During the summer of 2007, the manager at P&S contacted Private Escapes Platinum LLC ("Private Escapes") seeking membership in its luxury destination travel club. Mr. Richard Keith was the CEO of Private Escapes. On September 13, 2007, Private Escapes announced it would be merging with Ultimate Resorts LLC, to create a new entity called Ultimate Escapes Holdings, LLC ("Ultimate Escapes").

Before the merger, P&S entered into a Membership Agreement with Private Escapes on December 7, 2007. P&S paid $215, 000 to Private Escapes as a membership deposit and agreed to pay annual dues, and future usage fees. P&S asserts that Mr. Keith induced it to enter into the agreement because he represented that P&S’s benefits under the Membership Agreement would be protected or grandfathered after the planned merger. In May of 2008, Private Escapes and Ultimate Resorts announced that they had merged to create Ultimate Escapes. Although the timing is unclear, it appears that about that time Mr. Keith became Co-CEO of Ultimate Escapes.

After the merger, P&S was informed that it was now a member of Ultimate Escapes and that the terms of its Membership Agreement with Private Escapes would not be honored. Instead, P&S would be required to sign a new agreement with Ultimate Escapes in order to continue its travel club membership. Thereafter, P&S sought a refund of its membership deposit from Private Escapes. Ultimately, on July 23, 2010, P&S entered into an agreement with Private Escapes and Ultimate Escapes in which Private Escapes and Ultimate Escapes agreed to pay P&S $135, 000, in 18 installments, as “a partial refund of the Membership Fee” (the “2010 Settlement Agreement”). After Private Escapes and Ultimate Escapes failed to make the first settlement payment on August 1, 2010, P&S sent them notices of default. Then, on September 15, 2010, P&S filed a lawsuit against Private Escapes and Ultimate Escapes for breach of the 2010 Settlement Agreement. Directly thereafter, on September 20, 2010, Ultimate Escapes filed for Chapter 11 bankruptcy protection. As such, the lawsuit was stayed and eventually administratively closed.

Then, on May 20, 2011, P&S filed a complaint against Private Escapes and Richard Keith, as its CEO, in Denver County District Court (Case No. 11CV3742). In this underlying lawsuit, P&S alleged that Mr. Keith induced P&S to sign the Membership Agreement with Private Escapes by making misrepresentations about having grandfathered rights after the pending merger. In addition, P&S alleged that they failed to disclose Ultimate Escapes’ financial situation when negotiating and signing the 2010 Settlement Agreement. With regard to the underlying lawsuit, Mr. Keith sought defense coverage from Continental Casualty as Private Escapes’ insurance carrier who, in turn, provided Mr. Keith a defense. Mr. Keith also sought defense coverage from National Union under the Executive & Organization Liability Insurance Policy # 01-317-72-99 (the “Policy”) issued to Ultimate Escapes. National Union declined to provide Mr. Keith with a defense and denied coverage based on the Policy’s Specific Entity Exclusion – which provided that National Union “. . . shall not be liable for any Loss in connection with any Claim made against . . . [Private Escapes] . . . and/or any Executive or Employee thereof . . . ” – via denial letter dated February 9, 2012.

On February 13, 2013, P&S settled the underlying lawsuit with Private Escapes, Mr. Keith, and Continental Casualty. Continental Casualty agreed to pay P&S $25, 000. In addition, Mr. Keith also agreed to a stipulated judgment in P&S’s favor (in the amount of $450, 000) and assigned his rights against National Union under the Policy to P&S.

P&S then filed this lawsuit (as Mr. Keith’s assignee) against National Union in Boulder County District Court (Case No. 14CV30016) on January 8, 2014. National Union filed a Notice of Removal to this Court, on March 11, 2014, based on diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441 & 1442. [Doc #1] In its Amended Complaint, P&S seeks declaratory judgment, damages, and statutory damages with respect to benefits due, but unreasonably withheld by National Union under the Policy issued to Ultimate Escapes. It avers that National Union owed coverage to Mr. Keith under the Policy for Executive & Organization liability coverage, but has refused to provide coverage. [Doc #32] P&S asserts claims for: 1) Declaratory Judgment, in the form of a declaration that the stipulated judgment in the underlying lawsuit is a loss covered under the Policy; 2) Breach of Contract for refusing or failing to pay loss arising from Mr. Keith’s wrongful acts that are covered under the Policy; 3) Breach of Duty of Good Faith and Fair Dealing/Bad Faith Denial of Insurance Coverage; and 4) Violations of Colorado Revised Statutes §10-3-115 and §10-3-116 for unreasonable delay and/or denial of payment for Mr. Keith’s claim for benefits under the Policy. [Doc #32]


National Union seeks summary judgment in its favor on P&S’ claims against it and, as such, dismissal of this case. The purpose of a summary judgment motion under Fed.R.Civ.P. 56 is to assess whether trial is necessary. White v. York Int’l Corp., 45 F.3d 357, 360 (10th Cir. 1995). Fed.R.Civ.P. 56(c) provides that summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The non-moving party has the burden of showing that there are issues of material fact to be determined. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).


In this motion, National Union argues that the Policy does not provide coverage for P&S’s underlying claims pursuant to the “Specific Entity Exclusion” which excludes coverage for any loss in connection with any claim made against Private Escapes or its executives. National Union asserts that the Specific Entity Exclusion applies, as a matter of law, to bar coverage of the claims in P&S’s underlying lawsuit brought against Private Escapes and Richard Keith.

With regard to the law related to insurance contract interpretation, the parties appear to agree that Colorado law applies. In its motion, National Union argues that it prevails “regardless of which state’s law is applied, ” including Colorado. P&S cites to Colorado contract interpretation law in its briefing. Thus, I apply the ...

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