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Gebremedhin v. American Family Mutual Insurance Co.

United States District Court, D. Colorado

February 22, 2016

WELDESAMUEL GEBREMEDHIN, an individual, TERHAS DESTA, an individual, ABRHAM GIDAY, a minor, by and through his guardians and natural parents, Weldesamuel Gebremedhin and Terhas Desta, Plaintiffs,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant.

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

CHRISTINE M. ARGUELLO, UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendant’s Motion for Summary Judgment (Doc. # 171) and Plaintiffs’ Cross-Motion for Partial Summary Judgment (Doc. # 188). Because Defendant has failed to demonstrate that the factual allegations in the underlying complaint fall squarely within the exclusions of the insurance policy at issue in this case, Defendant had a duty to defend its insureds in the underlying litigation.

I. BACKGROUND

This suit arises from Defendant’s refusal to defend and indemnify its insureds Veronica and Glenn Turner (the “Turners”) against claims filed by Plaintiffs in a state court case styled Weldesamuel Giday Gebremedhin, et al. v. Veronica L. Turner and Glenn Turner, District Court for El Paso County, Colorado, Case No. 2011CV2500 (the “Underlying Lawsuit”). (Doc. # 3 at 2.)

Plaintiffs filed the Underlying Lawsuit after their child, Abrham Giday, sustained injuries while in foster care with the Turners. (Id.) Plaintiffs asserted claims against the Turners for negligence and res ipsa loquiter and also asserted claims against Special Kids Special Families, Inc. (SKSF), a non-profit corporation, which allegedly trained, employed, and certified the Turners as foster parents. (Id. at 3.)

At the time of the acts alleged in the Underlying Lawsuit, the Turners were named insureds under a homeowners policy issued by Defendant with personal liability limits of $500, 000. Under a heading entitled “LIABILITY COVERAGES - SECTION II, COVERAGE D - PERSONAL LIABILITY COVERAGE, ” the policy relevantly provides:

We will pay, up to our limit, compensatory damages for which any insured is legally liable because of bodily injury or property damage caused by an occurrence covered by this policy.
Defense Provision.
If a suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this policy applies, we will provide a defense at our expense by counsel of our choice. We will defend any suit or settle any claim for damages payable under this policy as we think proper.

(Doc. # 171-1 at 21) (emphasis in original[1]). Under a heading entitled “EXCLUSIONS - SECTION II, ” the policy notes that personal liability coverage does not apply to:

4. Business. We will not cover bodily injury or property damage arising out of business pursuits or the rental or holding for rental of any part of any premises except a. activities which are normally considered non-business[.]

(Id. at 23) (emphasis in original). In its definition section, the policy defines the word “business”:

2. Business means any profit motivated full or part-time employment, trade, profession or occupation and including the use of any part of any premises for such purposes. The providing of home day care services to other than insureds, for which an insured receives monetary or other compensation for such services is also a business.

(Id. at 13) (emphasis in original).

In addition to this so-called “business pursuits” exclusion, the policy further notes Defendant will not pay compensatory damages arising from legal liability where the injured party bringing suit is an insured:

11. Intra-insured Suits. We will not cover bodily injury to any insured.

(Id. at 23) (emphasis in original). In its definition section, the policy defines the word “insured”:

4. Insured

a. Insured means you and, if residents of ...

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