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City of Lakewood v. Safety National Casualty Corp.

Court of Appeals of Colorado, Seventh Division

March 9, 2017

City of Lakewood, Colorado, Plaintiff-Appellant and Cross-Appellee,
v.
Safety National Casualty Corporation, Defendant-Appellee and Cross-Appellant.

         Jefferson County District Court No. 14CV32279 Honorable Christopher J. Munch, Judge.

          Sherman & Howard, L.L.C., Christopher R. Mosley, Jennifer Kirk Morris, Denver, Colorado, for Plaintiff-Appellant and Cross-Appellee

          Treece Alfrey Musat P.C., Paul E. Collins, Carol L. Thomson, Denver, Colorado, for Defendant-Appellee and Cross-Appellant

          OPINION

          HARRIS JUDGE

         ¶ 1 The City of Lakewood (City) has an insurance policy that covers losses arising from the workers' compensation or employers' liability laws of any state on account of bodily injury to an employee.

         ¶ 2 After a City police officer was killed by friendly fire, his widow filed a lawsuit under 42 U.S.C. § 1983 (2012), alleging that the City and various fellow officers had violated the deceased officer's rights under the Federal Constitution. The City sought indemnification for its own defense costs and those of the officers named in the lawsuit, which the City has an independent statutory duty to cover. The insurance company, Safety National Casualty Corporation, denied coverage.

         ¶ 3 The district court concluded that a § 1983 claim does not arise under an employer liability law of any state and granted summary judgment for the insurance company. We agree. And while the district court did not reach the separate question of whether the officers' defense costs are covered by the policy, we conclude that they are not. Accordingly, we affirm the summary judgment in favor of the insurance company.

         I. Background

         ¶ 4 The insurance company issued a "Specific Excess Workers' Compensation and Employers' Liability Insurance Agreement" to the City. The policy indemnified the City, as an employer, for "Loss sustained by the EMPLOYER because of liability imposed upon the EMPLOYER by the Workers' Compensation or Employers' Liability Laws of" Colorado or other states, "on account of bodily injury by accident" to "Employees of the EMPLOYER" engaged in job-related activities.

         ¶ 5 "Loss" included two categories of reimbursable costs. First, the City could recoup from the insurance company any "actual payments, less recoveries, legally made by the EMPLOYER to Employees and their dependents in satisfaction of: (a) statutory benefits, (b) settlements of suits and claims, and (c) awards and judgments." Second, the City could recoup its "Claim Expenses, " which is defined as the City's own litigation expenses.

         ¶ 6 During the term of the policy, one of the City's police officers was accidentally shot and killed by a fellow officer while both were on duty. The slain officer's widow later filed a lawsuit under 42 U.S.C. § 1983, alleging that the fellow officer, two of his supervising officers, and the City had violated her husband's federal constitutional rights by subjecting him to the unreasonable use of deadly force.

         ¶ 7 The City sought indemnification under the policy for the costs of its own defense and the defense of the individual officers. When the insurance company denied the claim, the City filed a declaratory judgment action.

         ¶ 8 On cross-motions for summary judgment, the district court reasoned that § 1983 did not qualify as an "employers' liability law" of the State of Colorado or any other state, and therefore it concluded that the policy did not cover the City's losses incurred in connection with its defense of the lawsuit. The court did not address the City's separate claim that it suffered additional losses because of liability imposed by sections 24-10-110 and 29-5-111, C.R.S. 2016, which require the City to cover defense costs for its peace officers.

         II. Discussion

         ¶ 9 On appeal, the City contends that the district court erred in granting summary judgment to the insurance company because the policy unambiguously covers all defense costs incurred ...


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