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Owners Insurance Co. v. Kasloff

United States District Court, D. Colorado

March 6, 2018

OWNERS INSURANCE COMPANY, an Ohio Corporation, Plaintiff,
v.
ALAN KASLOFF and PEGGY KASLOFF, Defendants.

          ORDER GRANTING MOTION TO DISMISS IN PART AND ADMINISTRATIVELY CLOSING THIS ACTION

          WILLIAM J. MARTINEZ, UNITED STATES DISTRICT JUDGE.

         Plaintiff Owners Insurance Company (“Owners”) brings this declaratory judgment action against Alan and Peggy Kasloff (together, the “Kasloffs”), who are separately represented. Currently before the Court is Alan Kasloff's Rule 12(b)(1) Motion to Dismiss Complaint for Declaratory Judgment, and, Alternative Motion to Dismiss Under the Declaratory Judgments Act. (ECF No. 15.) Peggy Kasloff has joined this motion. (ECF No. 16.)

         For the reasons explained below, the Court rejects the Kasloffs' argument that the Court lacks subject matter jurisdiction, but the Court agrees with the Kasloffs that declaratory judgment is, from a practical perspective, not appropriate at this time. Rather than dismissing this case, however, the Court will administratively close it pending certain developments in an ongoing lawsuit in Arizona.

         I. LEGAL STANDARD

         A motion under Rule 12(b)(1) requests that the Court dismiss a claim for lack of subject matter jurisdiction. A plaintiff bears the burden of establishing that the Court has jurisdiction. Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974). “A court lacking jurisdiction cannot render judgment but must dismiss the case at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking.” Id.

         Rule 12(b)(1) motions generally take one of two forms: a facial attack or a factual attack. See Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995). Here, the Kasloffs present a purely facial attack, so the matter will be resolved with reference to Owners' Complaint and attached documents.

         II. BACKGROUND

         The Complaint alleges as follows:

         The Kasloffs are a married couple. (ECF No. 1 ¶ 2.) As of August 2015, the Kasloffs' auto insurer was Owners. (Id. ¶ 3.) In that month, the Kasloffs were moving from Greenwood Village, Colorado, to Atlanta, Georgia. (Id. ¶ 2, 45, 47.) While “in route to Atlanta, ” they took a vacation in Scottsdale, Arizona, where they were involved in a two-vehicle auto accident. (Id. ¶ 4, 45, 47.) Alan Kasloff was driving the Kasloffs' vehicle (in which Peggy was a passenger), and non-party Scott Acton (“Acton”) was driving the other vehicle. (Id. ¶ 4.)

         Alan and Peggy each retained a lawyer, and Alan Kasloff's lawyer soon informed Owners that Peggy had made a claim against Alan. (Id. ¶ 5, 7.) Owners responded by pointing to a portion of the relevant auto insurance policy (“Policy”) commonly known as the “Household Exclusion, ” which excludes bodily injury or property damage caused by a member of the insured's household. (Id. ¶ 7, 40.)

         In November 2015, Owners received correspondence from Peggy Kasloff's lawyer, who notified Owners that Peggy intended to file an uninsured/underinsured (“UM/UIM”) claim. (Id. ¶ 8.) It is not clear whether Peggy's counsel considered Alan to be uninsured or underinsured because of the household exclusion, or whether she considered Acton to be uninsured or underinsured, or both. The letter to Owners is clearly a generic template, and it refers only to “the other motorist.” (ECF No. 1-7.) In any event, Owners again communicated-this time to both of the Kasloffs' respective attorneys-its position that it owed no coverage as to any of Peggy's injuries caused by Alan's negligence. (ECF No. 1 ¶ 9.)

         In December 2015, a paralegal in Peggy Kasloff's attorney's office sent two e-mails to Owners' outside counsel, Mr. Gregory Giometti. The first e-mail asked whether Owners was denying medical payments coverage as well as liability coverage. (Id. ¶ 10.) The second e-mail “ask[ed] Owners to look at the issue of UIM coverage.” (Id.) In January 2016, Mr. Giometti's associate, Mr. Evan Spencer, sent a letter to Peggy Kasloff's attorney denying any claim for UM/UIM coverage based on Alan's actions, but agreeing that medical payments coverage was available. (Id. ¶ 12.)

         In July 2016, Peggy Kasloff filed a lawsuit in Arizona state court, naming Alan Kasloff and Acton as defendants (“Arizona Lawsuit”). (Id. ¶ 17.) Neither Peggy nor her attorney informed Owners of that lawsuit at that time. (Id. ¶¶ 14-17.)

         In March 2017, Peggy Kasloff applied for entry of default against Acton in the Arizona Lawsuit. (Id. ¶ 18.) In May 2017, a paralegal for Peggy's attorney e-mailed Mr. Spencer, attaching various documents from the Arizona Lawsuit, including the application for entry of default. (Id. ¶ 19.) As it turns out, Mr. Spencer had left Mr. Giometti's firm over a year earlier, but his e-mail account “was not properly shut down”-so the e-mail arrived but no one in Mr. Giometti's firm knew about that communication. (Id. ¶ 19 & n.1.)

         Apparently Alan Kasloff, in his capacity as a cross-claimant against Acton in the Arizona Lawsuit, had also applied for default judgment against Acton, because the Arizona court issued a $500, 000 default judgment in favor of Alan and against Acton on June 14, 2017. (Id. ¶ 20; ECF No. 1-12.) Five days later (June 19, 2017), Peggy Kasloff's attorney sent a letter to Mr. Giometti stating that “our previous correspondence has not been responded to” and attaching a copy of the default judgment in favor of Alan. (ECF No. 1-13.)[1] Peggy's attorney demanded $500, 000 from Owners. (Id.) And, the day after that, Alan Kasloff sent a letter addressed to Mr. Spencer demanding $488, 000 in UIM coverage based on the default ...


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