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MJA, Inc. v. Western World Insurance Co.

United States District Court, D. Colorado

January 22, 2016

MJA, Inc., dba PRIMETIME SPORTS BAR, Plaintiff,
v.
WESTERN WORLD INSURANCE, Defendants.

ORDER GRANTING PLAINTIFF’S MOTION FOR CERTIFICATION OF QUESTION OF LAW TO THE COLORADO SUPREME COURT PURSUANT TO C.A.R. 2.1

RICHARD P. MATSCH, SENIOR JUDGE

Pursuant to the discussion and rulings made in open court on December 23, 2015, it is ORDERED that the Plaintiff’s motion for certification of question of law to the Colorado Supreme Court Pursuant to C.A.R. 2.1 is granted. It is FURTHER ORDERED that this Court’s ruling on the Defendant’s motion to dismiss under Fed.R.Civ.P. 12(b)(6) is deferred until after the Colorado Supreme Court rules on the question of law or declines to do so.

This court proposes to certify the question in the form of order attached hereto. Counsels’ comments on the proposed form of order may be submitted on or before February 10, 2016.

(PROPOSED) CERTIFICATION OF QUESTION OF LAW TO THE COLORADO SUPREME COURT PURSUANT TO C.A.R. 21.1

Upon the Plaintiff’s motion, the following question is certified to the Colorado Supreme Court pursuant to C.A.R. 21.1:

It is settled law in Colorado that every contract requires the parties to act in good faith and to deal fairly with each other in performing the express terms of the contract.[1] Does that principle of law restrict an insurance company from cancelling a surplus commercial lines insurance policy by issuing a notice of cancellation under the express language of the policy?[2]

A negative answer to that question would require dismissal of this civil action.

STATEMENT OF RELEVANT FACTS

MJA, Inc. d/b/a/ Primetime Sports Bar (“MJA” or “the Plaintiff”) operated the Primetime Sports Bar at 8101 North Washington Street, Denver, Colorado, serving alcoholic drinks pursuant to a valid liquor license.

Western World Insurance Company (“Western World” or “the Defendant”) is an insurance company with its principal place of business in Franklin Lakes, New Jersey. Western World is authorized to write surplus line insurance in the State of Colorado.[3]

Western World issued a commercial lines policy to MJA for the policy period from October 13, 2012, through October 13, 2013 (“the Policy”). The Policy included coverage for liquor liability with combined limits of $300, 000.

Before Western World issued the Policy, MJA completed an insurance application form. The application form required MJA to disclose the number of assault or battery claims in the past three years and past employee practice claims or any known situations that would give rise to a claim. MJA answered all those questions truthfully. The application form did not inform MJA that it should advise Western World of any subsequent changes that would make those answers incorrect.

The Plaintiff’s application for insurance showed that the Plaintiff was a new business.

On July 18, 2013, Western World mailed to MJA a “Notice of Cancellation” which stated that the Policy would be cancelled on August 19, 2013, due to “substantial ...


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