United States District Court, D. Colorado
ORDER CONCERNING CROSS MOTIONS FOR SUMMARY JUDGMENT
Robert E. Blackburn United States District Judge
This matter is before me on the following: (1) ACE American Insurance Company’s Motion for Summary Judgment and Supporting Memorandum [#97] filed June 15, 2015; and (2) the Motion of DISH Network L.L.C. for Partial Summary Judgment and Supporting Memorandum of Law [#102] filed June 15, 2015. The parties filed responses [#121 & #127] and replies [#140 & #146]. The plaintiff filed a notice [#164] of a recent decision, and the defendant filed a joinder [#168] concerning that notice. The two motions are cross motions for summary judgment which, for the most part, address the same issues. I grant the motion of ACE American Insurance Company and deny the motion of DISH Network LLC.
I have jurisdiction over this matter pursuant to 28 U.S.C. § 1332 (diversity).
II. STANDARD OF REVIEW
The purpose of a summary judgment motion is to assess whether trial is necessary. White v. York Int’l Corp., 45 F.3d 357, 360 (10th Cir. 1995). Summary judgment is proper when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A dispute is “genuine” if the issue could be resolved in favor of either party. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Farthing v. City of Shawnee, 39 F.3d 1131, 1135 (10th Cir. 1994). A fact is “material” if it might reasonably affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Farthing, 39 F.3d at 1134.
A party who does not have the burden of proof at trial must show the absence of a genuine factual dispute. Concrete Works, Inc. v. City & County of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994), cert. denied, 115 S.Ct. 1315 (1995). Once the motion has been properly supported, the burden shifts to the nonmovant to show, by tendering depositions, affidavits, and other competent evidence, that summary judgment is not proper. Id. at 1518. All the evidence must be viewed in the light most favorable to the party opposing the motion. Simms v. Oklahoma ex rel Department of Mental Health and Substance Abuse Services, 165 F.3d 1321, 1326 (10th Cir.), cert. denied, 120 S.Ct. 53 (1999). In either case, once the motion has been properly supported, the burden shifts to the nonmovant to show, by tendering depositions, affidavits, and other competent evidence, that summary judgment is not proper. Concrete Works, 36 F.3d at 1518. All the evidence must be viewed in the light most favorable to the party opposing the motion. Simms v. Oklahoma ex rel Department of Mental Health and Substance Abuse Services, 165 F.3d 1321, 1326 (10th Cir.), cert. denied, 120 S.Ct. 53 (1999). However, conclusory statements and testimony based merely on conjecture or subjective belief are not competent summary judgment evidence. Rice v. United States, 166 F.3d 1088, 1092 (10th Cir.), cert. denied, 120 S.Ct. 334 (1999); Nutting v. RAM Southwest, Inc., 106 F.Supp.2d 1121, 1123 (D. Colo. 2000).
This case concerns the duty of an insurance company to defend its insured in a lawsuit as well as the duty of an insurance company to indemnify its insured for any damages awarded against the insured in the lawsuit. The parties agree that Colorado law controls the interpretation of the insurance policies in question. Under Colorado law, a determination of the duty of an insurer to defend an insured in an underlying lawsuit is made by examining the terms of the insurance policy and the allegations made against the insured in the complaint in the underlying lawsuit. DISH Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010, 1015-16 (10th Cir. 2011). “In the duty to defend context, the ‘complaint rule’ operates to cast a broad net, such that when the underlying complaint alleges any facts or claims that might fall within the ambit of the policy, the insurer must tender a defense.” Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 301 (Colo.2003). While this determination normally is limited to the underlying complaint and the policy, “[e]xtrinsic evidence constituting ‘an indisputable fact that is not an element of either the cause of action or a defense in the underlying litigation’ is admissible.” Dish Network Corp. v. Arch Specialty Ins. Co., 989 F.Supp.2d 1137, 1150 (D. Colo. 2013) (quoting Pompa v. American Family Mut. Ins. Co., 520 F.3d 1139, 1147 (10th Cir. 2008)), aff’d 772 F.3d 856 (10th Cir. 2014).
The insurer resisting a duty to defend has “a heavy burden to overcome in avoiding the duty to defend, such that the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot.” Cyprus Amax, 74 P.3d at 301 (internal quotation and citation omitted). In order to defeat its duty to defend, “an insurer must establish that ‘there is no factual or legal basis on which the insurer might eventually be held liable to indemnify the insured.’” Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814, 829 (Colo. 2004) (quoting Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1089 (Colo. 1991)). In cases of doubt, the insurer must defend its insured. Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 614 (Colo. 1999) (quoting Hecla, 811 P.2d at 1089) (If “there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim”).
An insurer, however, “has no duty to defend if the claims asserted in the complaint are clearly excluded from coverage.” Lopez v. Am. Family Mut. Ins. Co., 148 P.3d 438, 439 (Colo.App. 2006). If there is no duty to defend, there is no duty to indemnify. City of Arvada v. Colorado Intergovernmental Risk Sharing Agency, 988 P.2d 184, 187 (Colo.App. 1999), aff'd, 19 P.3d 10 (Colo. 2001).
In Colorado, insurance policies are construed using the same traditional principles of interpretation that apply to construction of contracts generally. Compass Insurance, 984 P.2d at 613. Unambiguous terms are interpreted in accordance with their plain and ordinary meanings. MarkWest Hydrocarbon, Inc. v. Liberty Mutual Insurance Co., 558 F.3d 1184, 1190 (10th Cir. 2009). Insurance policy terms are ambiguous only if they are subject to more than one reasonable interpretation. Allstate Insurance Co. v. Juniel, 931 P.2d 511, 513 (Colo.App. 1996). Truly ambiguous terms are construed against the insurer and in a manner that would promote rather than deny coverage. Blackhawk-Central City Sanitation District v. American Guarantee & Liability Insurance Co., 214 F.3d 1183, 1191 (10th Cir. 2000).
This case is an action for declaratory judgment filed by ACE American Insurance Company (ACE). ACE seeks a declaratory judgment concerning its obligation to provide for the defense of the defendant, DISH Network, LLC (DISH), in an underlying lawsuit. In the underlying suit, the United States and four states allege that DISH violated federal and state laws regulating telemarketing, including the Telemarketing Act and the Telephone Consumer Protection Act (TCPA). U.S., et al. V. DISH Network LLC, Case No. 3:09-cv-03073 (C.D. Illinois) (underlying suit). ACE seeks a declaratory judgment declaring that ACE has no duty to defend or to indemnify DISH with respect to any of the claims in the underlying suit.
In the underlying suit, the plaintiffs, the United States of America and the states of California, Illinois, North Carolina, and Ohio, allege DISH violated the TCPA and related state and federal laws by making outbound telephone calls to numbers on the National Do Not Call Registry and by making outbound telephone calls to telephone numbers of persons who have stated they do not wish to receive calls from or on behalf of DISH. In addition, the plaintiffs in the underlying suit allege DISH violated the TCPA and related state and federal laws by failing to connect calls to a representative within two seconds of a consumer’s completed greeting and by initiating telephone solicitations using artificial or prerecorded voices without the prior express consent of the called party. The plaintiffs in the underlying suit allege that the violations by DISH began in October 2003 and continue unabated. The plaintiffs in the underlying suit seek statutory damages, civil penalties, and a permanent injunction to prevent future violations of the TCPA and related state and federal laws. The third amended complaint in the underlying suit is docketed as [#98], pp. 5 - 35 (underlying complaint).
A series of insurance policies issued by ACE to DISH are at issue in this case. ACE issued four general liability policies to EchoStar Corp., the predecessor of DISH, for consecutive annual periods from August 1, 2004, through August 1, 2008. [#12-5 (2004), #12-6 (2005), #12-7 (2006), [#12-8, #12-9] (2007). ACE issued three general liability policies to DISH for consecutive annual periods form August 1, 2008, to August 1, 2011. [#12-10, #12-11, #12-12] (2008), [#12-13] (2009), [#12-14] (2010). ACE then issued two excess liability policies to DISH for consecutive annual periods from August 1, 2011, to August 1, 2013. [#12-15] (2011), [#12-16] (2012).
The coverages at issue are categorized in the policies as Coverage A and Coverage B. Coverage A covers bodily injury and property damage caused by an “occurrence.” See, e.g., 2010 - 2011 policy [#12-10] (2008 - 2009 Policy), CM/ECF p. 12, Section I, Coverage A, ¶ 1(b). An “occurrence” means an accident. Id., CM/ECF p. 25, Section V, ¶ 13. Coverage A covers “those sums the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Id., CM/ECF p. 12, Section I, ¶ 1(a).
ACE contends Coverage A does not apply to the underlying suit because the plaintiffs in the underlying suit to not seek damages covered by Coverage A. In addition, ACE argues Coverage A does not apply to the underlying suit because the calls allegedly made by DISH and the injuries suffered by those who received the calls do not fit the definition of “occurrence, ” an accident, as that term is used in Coverage A.
Coverage B covers “those sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury’ to which this insurance applies.” Id., CM/ECF p. 17, Section I, Coverage B, ¶ 1(a). Personal and advertising injury includes injury arising out of “(o)ral or written publication, in any manner, of material that violates a person’s right of privacy.” Id., CM/ECF p. 25, Section V, ¶ 14.
ACE contends Coverage B does not apply to the underlying suit because Coverage B includes an exclusion of coverage for insureds in media and internet type businesses. According to ACE, DISH falls within this ...