United States District Court, D. Colorado
ORDERS ON PLAINTIFF'S MOTION FOR FINAL SUMMARY
Richard P. Matsch, Senior Judge
for this insurance coverage dispute is provided by 28 U.S.C.
§ 1332. Colony Insurance Company ("Colony") is
a Virginia corporation with its principal place of business
in Richmond, Virginia. Defendant Expert Group International
d/b/a Expert Au Pair ("Expert Au Pair") is a
Florida corporation with its principal place of business in
St. Petersburg, Florida. Defendant Go Au Pair Operations LLC
d/b/a American Cultural Exchange ("Go Au Pair") is
a Utah limited liability company that is wholly owned by
American Cultural Exchange, LLC. Defendant Au Pair
International, Inc. ("Au Pair Int'l ") is a
Colorado corporation with its principal place of business in
Boulder, Colorado. The individual defendants included in the
caption are named plaintiffs in the civil action entitled
Johana Paola Beltran, et al. v. Inter exchange, Inc., et
al, 14-cv-03074-CMA-CBS, in the United States District
Court for the District of Colorado (the "underlying
action" or "the Beltran action"). The
court has determined that they are not necessary parties to
this civil action between Colony and its insureds.
See Order, May 5, 2016 (doc. 19).
Au Pair, Go Au Pair, and Au Pair Int'l are au pair
placement agencies. They assist foreign nationals seeking to
work in the United States as au pairs and prospective host
families looking for au pairs to find one another. Colony
issued separate professional liability policies to Expert Au
Pair, Go Au Pair, and Au Pair Int'l (collectively
Insureds are three of the named defendants in the
Beltran action. The Insureds tendered the defense to
Colony, and Colony agreed to defend the Insureds under a
reservation of rights. The underlying action is ongoing, and
Colony has been funding the Insureds' defense.
filed this action on November 13, 2015, seeking a declaration
that the subject policies provide no coverage for any of the
claims asserted against the Insureds in the Beltran
action. Colony also seeks reimbursement of the attorneys'
fees and costs it has incurred in defending the Insureds.
September 15, 2016, Colony moved pursuant to Fed.R.Civ.P. 56
for final summary judgment in its favor, arguing that the
express terms of the policies demonstrate that Colony has no
duty to defend and, consequently, no duty of indemnification.
duty to defend and the duty to indemnify are distinct duties.
Because an insurer's duty to defend is broader than the
duty to indemnify, the initial question is whether Colony
owes a duty of defense.
law applies with respect to the Au Pair Int'l policy.
Utah law applies with respect to the Go Au Pair policy, and
Florida law applies with respect to the Expert Au Pair
policy. All three states follow the "four corners"
(also known as the "eight corners") rule. Under
that rule, the duty to defend is to be determined by
comparing the complaint in the underlying action and the
language of the subject policy. Compass Ins. Co. v. City
of Littleton, 984 P.2d 606, 613 (Colo. 1999); Cyprus
Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294,
299-300 (Colo. 2003); Colony Ins. Co. v. Barnes, 410
F.Supp.2d 1137, 1139 (M.D. Fla. 2005); Jones v. Florida
Ins. Guar. Ass 'n, Inc., 908 So.2d 435, 443 (Fla.
2005); Basic Research, LLC v. Admiral Ins. Co., 297
P.3d 578, 580 (Utah 2013).
insurer's duty to defend arises when the underlying
complaint against the insured alleges any facts that might
fall within the coverage of the policy. Hecla Mining Co.
v. N.H. Ins. Co., 811 P.2d 1083, 1089 (Colo. 1991)
(citation, footnote, brackets, and internal quotation marks
omitted). "The actual liability of the insured to the
claimant is not the criterion which places upon the insurance
company the obligation to defend. Rather, the obligation to
defend arises from allegations in the complaint, which if
sustained, would impose a liability covered by the
policy." Id.; see also Constitution Assocs. v. N.H.
Ins. Co., 930 P.2d 556, 563 (Colo. 1996).
operative complaint in the Beltran action is the
second amended complaint, filed October 18, 2016. Pl's
Ex. A. That complaint (the "underlying complaint"
or "Beltran complaint") alleges that the
underlying plaintiffs are each individuals who obtained a J-l
visa and came to the United States to work as an au pair for
a host family. As stated in the Beltran complaint,
the J-l visa au pair program is overseen and administered by
the United States Department of State ("State
Department") under the authority of the Mutual
Educational and Cultural Exchange Act of 1961, as amended,
"allows foreign nationals between the ages of 18 and 26,
with secondary school educations and English proficiency, to
work for 'host families' as child care workers for no
more than 45 hours a week in exchange for room and board and
a legal wage." Underlying Compl. ¶¶
46-47. Any foreign national seeking a position as
an au pair in the United States must be sponsored by an
organization designated by the State Department. The
underlying defendants ("Sponsors") are the
exclusive entities so authorized to recruit and place au
pairs with host families in the United States. ¶ 49.
regulations address the responsibilities of Sponsors.
¶¶ 61-67; see also 22 C.F.R. §§
62.10 & 62.31. Those responsibilities include requiring
that "au pair participants are compensated at a weekly
rate based upon 45 hours of child care services per week and
paid in conformance with the requirements of the Fair Labor
Standards Act as interpreted and implemented by the United
States Department of Labor." 22 C.F.R § 63.31(j)(1)
(cited in ¶ 67).
Beltran Plaintiffs allege that the Sponsors operate
as a cartel and colluded to fix standard au pair wages at the
programmatic wage floor announced by the State Department.
They allege that the Sponsors effected that goal by
wrongfully informing au pairs that au pair wages are set by
law and cannot be increased, and by failing to advise au
pairs that they could be paid more than the amounts
identified by the Sponsors. The Beltran Plaintiffs
claim that the Sponsors - by maintaining au pair wages at
that artificially low rate - are able to increase the fees
paid by host families to Sponsors, while maintaining the
affordability of the au pair arrangements for potential host
families, thereby enhancing the Sponsors' profits at the
expense of the au pairs. ¶¶ 2, 5, 73, 80, 84,
87-89, 135, 143-44, 151, 170, 236, 239, 241, 255, 289, 312.
Beltran complaint includes ten claims for relief
against various sets of the Sponsor defendants. The first
claim is for restraint of trade in violation of Section 1 of
the Sherman Act, 15 U.S.C. § 1, and is alleged against
all Sponsors. The second claim alleges violations of civil
RICO, 18 U.S.C. § 1964(c), by six Sponsors. The
remaining claims allege breach of fiduciary duty; negligent
misrepresentation; constructive fraud or fraudulent
concealment; violations of consumer protection laws;
violations of the Fair Labor Standards Act, 29 U.S.C. §
201 ("FLSA"), and violations of various state
only claim alleged against Au Pair Int'l is the antitrust
claim. Go Au Pair and Expert Au Pair are named as defendants
for the antitrust claim and the claims of negligent
misrepresentation, breach of fiduciary duty, fraud, consumer
protection violations, and certain of the wage and hour
argues that none of the Insureds can show that its
policy's Professional Liability Insuring Agreement
provides coverage for the Beltran action.
professional liability policies that Colony issued to the
Insureds were designed primarily for health care companies
and health care professionals. In each policy, the title of
the professional liability coverage part includes the
following subtitle: " Long Term Care
Facilities/Miscellaneous Health Care Facilities/Social
Services." It is unclear from the record why Colony
issued coverage of that type to insureds whose business is au
pair placement and who do not perform health care services.
Professional Liability coverage part of each policy insures
(subject to the policy's other terms, conditions,
exclusions, or limitations) those sums the Insureds are
legally obligated to pay as "damages" that arise
out of a "wrongful act" that occurred in the
conduct of the Insured's "professional
services." See Pl's Ex. B (Go Au Pair
Policy, Professional Liability Coverage Part, Section I,
Insuring Agreement at p. 1 of 3); Pl's Ex. C (Au Pair
Int'l Policy, Professional Liability Coverage Part,
Section I, Insuring Agreement at p. 1 of 4); Pl's Ex. D
(Au Pair Int'l Policy at Professional Liability Coverage
Part, Section I, Insuring Agreement at p. 1 of 3).
three policies, the term "professional services" is
defined to mean the providing of:
a. medical, surgical, dental, x-ray, mental health or nursing
service or treatment, or the furnishing of food or beverage