United States District Court, D. Colorado
CULTURAL CARE, INC. Plaintiff,
AXA INSURANCE COMPANY Defendant.
ORDER ON PENDING MOTIONS
BROOKE JACKSON, UNITED STATES DISTRICT JUDGE
matter comes before the Court on defendant AXA Insurance
Company's (“AXA”) Motion to Dismiss for
Failure to State a Claim (ECF No. 23) and plaintiff Cultural
Care, Inc.'s (“CCI”) Motion for Partial
Summary Judgment (ECF No. 28). For the reasons stated herein,
AXA's motion to dismiss is DENIED and CCI's motion
for partial summary judgment is GRANTED.
an insurance coverage dispute about whether AXA is obligated
to insure CCI for its expenses incurred in defending a
lawsuit against CCI (Beltran, et al. v.
Interexchange, No. 14-cv-03074-CMA-CBS (D. Colo.)). CCI
is a United States State Department-designated sponsor of
au pairs, and as such is responsible for hiring and
placing foreign national au pairs with host families
in the United States. ECF No. 28 at 3-4. The underlying
Beltran suit is a class action brought on behalf of
au pairs alleging that au pair sponsors,
including CCI, conspired to set au pair rates of
compensation below market rate in violation of federal and
state minimum wage laws and in violation of racketeering,
tort, and consumer protection laws. ECF No. 23-4 at 2, 7. The
sponsor companies are accused of fixing rates at the price
floor authorized by Fair Labor Standards Act
(“FLSA”) regulations of $195.75 per 45-hour work
week, which amounts to $4.35 per hour. Id. at 3.
According to the Beltran plaintiffs, this rate is
below the federal minimum wage and several states'
minimum wages. Id. at 49, 51-54, 76. The sponsors
are also accused of misinforming the au pairs that
they could not ask their host families to pay them above this
price floor. Id. at 53.
issued CCI liability insurance policies that were in effect
during the relevant time period for the Beltran
suit. ECF No. 28 at 1. AXA has denied any duty
to defend the Beltran suit and has not reimbursed
CCI for its costs to defend the suit. Id. The first
amended Beltran complaint was filed March 13, 2015.
After CCI gave notice of the complaint, AXA denied coverage
in two letters in April and July of 2015. ECF No. 28-5 at 2.
The operative Second Amended Complaint in the
Beltran suit was filed October 17, 2016 and asserts
Count I: Restraint of Trade in Violation of the Sherman Act;
Count II: Civil Racketeering Influenced and Corrupt
Organizations Act (RICO);
Count III: Breach of Fiduciary Duty;
Count IV: Negligent Misrepresentation;
Count V: Constructive Fraud;
Count VI: Consumer Protection;
Count VIII: Failure to Pay Minimum Wage and Overtime
in Violation of FLSA;
Count IX: Unpaid Wages under State Laws;
Count X: Violations of New York Wage Act;
ECF No. 23-4 at 104-15.
to the “Travel Agents and Tour Operators General and
Professional Liability Policy, ” which is attached as
Endorsement #8 of CCI's insurance policy with AXA, AXA
agrees to “pay on behalf of the Insured those sums that
the Insured becomes legally obligated to pay as
Damages because of a negligent act or negligent
omission committed by the Insured . . . in the conduct of
Travel Agency Operations by the Named Insured” that occurs
during the policy period and in the coverage territory. ECF
No. 23-1 at 64. The policy also provides that AXA has a
“duty to defend any Suit against the Insured seeking
Damages on account of such . . . ‘negligent act' or
‘negligent omission' . . . to which this insurance
applies, even if any of the allegations of the Suite [sic]
are groundless, false, or fraudulent.” Id.
insurance policy also contains various exclusions. The two
key exclusions at issue in these motions are Exclusions J and
K, which provide that “[t]his endorsement does not
[Exclusion] J. Any claim or Suit based upon or arising out of
any violation of the Fair Labor Standards Act or any similar
federal, state or local law pertaining to working conditions,
hours, employee benefits or wages.
[Exclusion] K. Any claim or Suit based upon or arising out of
any Occurrence, act or omission, or offense by the Insured
which is intentional, dishonest, fraudulent or malicious, or
criminal, regardless of whether the resultant Damages were
ECF No. 23-1 at 65-66.
complaint, CCI argues that AXA has a duty to defend CCI since
the Beltran suit contains a negligent
misrepresentation claim. ECF No. 1. CCI asserts that AXA
breached the insurance policy when it failed to defend CCI
with respect to the Beltran suit. Id. CCI
also seeks a declaratory judgment that AXA is obligated to
defend CCI in connection with the Beltran action.
Id. In contrast, AXA contends that the suit as a
whole, and the negligent misrepresentation claim in
particular, arise from or are based on alleged violations of
FLSA or similar wage laws, such that Exclusion J forecloses
AXA's duty to defend. ECF No. 23 at 8. As a result, AXA
moves to dismiss CCI's complaint. Id. For its
part, CCI moves for partial summary judgment on its breach of
contract claim. ECF No. 28. The motions have been fully
briefed, and the Court heard oral argument on May 10, 2018.
See ECF Nos. 23, 27, 28, 30-33.
STANDARD OF REVIEW
survive a 12(b)(6) motion to dismiss, the complaint must
contain “enough facts to state a claim to relief that
is plausible on its face.” Ridge at Red Hawk,
L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). A plausible claim is a claim that
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While
the Court must accept the well-pleaded allegations of the
complaint as true and construe them in the light most
favorable to the plaintiff, Robbins v. Wilkie, 300
F.3d 1208, 1210 (10th Cir. 2002), purely conclusory
allegations are not entitled to be presumed true,
Iqbal, 556 U.S. at 681. However, so long as the
plaintiff offers sufficient factual allegations such that the
right to relief is raised above the speculative level, he has
met the threshold pleading standard. See, e.g.,
Twombly, 550 U.S. at 556; Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).
Court may grant summary judgment if “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). The moving party has the burden to show that there is
an absence of evidence to support the nonmoving party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific
facts showing that there is a genuine issue for trial.”
Id. at 324. A fact is material “if under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A
dispute as to a material fact is genuine if “the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson,
477 U.S. at 248. The Court will examine the factual record
and make reasonable inferences therefrom in the light most
favorable to the party opposing summary judgment.
Concrete Works of Colo., Inc. v. City & Cnty. of
Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).