United States District Court, D. Colorado
THE PHOENIX INSURANCE COMPANY, a Connecticut corporation, Plaintiff,
HESKA CORPORATION, a Delaware corporation; and SHAUN FAULEY, a natural person, Defendants.
OPINION AND ORDER ON MOTION FOR PARTIAL SUMMARY
S. Krieger United States District Court
MATTER comes before the Court on Plaintiff Phoenix Insurance
Company's Amended Motion for Affirmative Partial Summary
Judgment (# 57) and Defendant Heska
Corporation's Motion to Certify Questions to the Colorado
Supreme Court (# 63). For the following
reasons, the motion to certify is denied and the motion for
partial summary judgment is granted.
Fauley, named as a defendant in this case but never served,
filed a lawsuit against Defendant Heska Corporation in the
Northern District of Illinois (the Underlying Litigation).
See Compl., Frauley v. Heska Corp., No.
15-CV-2171 (Mar. 12, 2015), available at Doc. 5-1.
He seeks to recover under the Telephone Consumer Protection
Act (the Act) on a class-action basis for an unsolicited fax
he alleges he received in May 2013. Id. ¶ 2.
Mr. Fauley seeks the greater of his “actual monetary
loss” or $500 for each violation of the Act,
id. at 13, and seeks treble recovery for a willful
or knowing violation of the Act, id. ¶ 5. With
regard to his monetary loss, Mr. Fauley alleges the fax
caused a loss of paper, toner, and time, and used phone
lines. Id. ¶ 36.
Phoenix Insurance Co. was Heska's provider for commercial
liability insurance at all times relevant to the Underlying
Litigation. To that end, from 2010 to 2014, Phoenix issued
four successive policies (the Policies), each lasting one
year. The Policies each included a provision
undertaking a “right and duty to defend the insured
against any suit seeking” damages for “bodily
injury” or “property damage, ” provided the
damages were “caused by an occurrence that takes place
in the coverage territory.” 2010 Policy, Doc. 57-1 at
Under the Policies, “Property Damage” means
“[p]hysical damage to tangible property of
others” or “[l]oss of use of tangible property of
others that is not physically damaged.” Id. at
151. And “occurrence” is “an accident,
including continuous or repeated exposure to substantially
the same general harmful conditions.” Id. at
the Policies contained exclusions, removing coverage from
“‘[b]odily injury' or ‘property
damage' expected or intended from the standpoint of the
insured.” Id. at 103. The 2010 and 2011
Policies excluded any of the foregoing injuries or damage
“arising out of unsolicited communications by or on
behalf of any insured, ” defining “unsolicited
communications” as “any form of communication,
including but not limited to facsimile, . . . in which the
recipient has not specifically requested the communication.
Unsolicited communications also include [communications] made
in violation of the [Act].” Id. at 139. The
2012 and 2013 Policies addressed unsolicited communications
with substantially similar but slightly different language,
excluding the foregoing injuries or damage “arising out
of any actual or alleged violation of any law that restricts
or prohibits the sending, transmitting or distributing of
‘unsolicited communication, '” defined as
“any communication, in any form, that the recipient of
such communication did not specifically request to
receive.” 2012 Policy, Doc. 57-3 at 143.
denied coverage for the Underlying Litigation in a letter to
Heska. Letter of May 8, 2015, Doc. 58-3 at 8-9. After
communication with Heska that is not in the record, Phoenix
agreed to participate in the Underlying Litigation under an
express reservation of “all of its rights, contractual,
quasi-contractual and/or otherwise, to the extent permitted
by Colorado law, . . . to seek reimbursement or recoupment of
all defense fees and costs paid in connection with any and
all non-covered claims.” Letter of Oct. 16, 2015, Doc.
58-4 at 2. Phoenix also reserved the right “to decline
coverage and withdraw from the defense.” Id.
filed this suit in November 2015, seeking declaratory
judgment on the Policies. Phoenix contends that any number of
the foregoing provisions operates to remove the Underlying
Litigation from coverage. In August 2016, the Court
bifurcated Phoenix's claim into two claims:
“whether it has a contractual obligation to defend
Heska in the underlying action and whether it[ ]has a
contractual obligation to indemnify Heska for its liability,
if any, determined in the underlying action.” Doc. 48.
The Court also stayed discovery as to the duty-to-indemnify
claim pending determination of the duty-to-defend claim.
Phoenix moved for summary judgment, as amended, on September
9, 2016, Doc. 57, and Heska moved to certify questions to the
Colorado Supreme Court on October 30, 2016, Doc. 63.
MOTION TO CERTIFY
initial matter, Heska asks this Court to certify a number of
questions to the Colorado Supreme Court:
1. Whether [Phoenix] has a duty to defend Heska in the
2. Whether this action is an anticipatory declaratory
judgment action . . . .
3. Whether, in an anticipatory declaratory judgment action,
the insurer under a liability insurance policy owes a duty to
defend a lawsuit against the insured unless the insurer can
prove the allegations in the complaint against the insured
fall solely and entirely within an exclusion to the insurance
4. Whether, for purposes of determining the duty to defend .
. ., the allegations in the complaint against the insured
must be construed ...