American Select Insurance Co. v. Johnson

          ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiff American Select Insurance Company's Motion for Summary Judgment. (Doc. # 48.) For the reasons stated below, the Court grants the motion.

         I. BACKGROUND

         This action arises from an automobile collision that occurred on December 19, 2016, on Highway 85 in Douglas County, Colorado. Defendant Pablo Hernandez was driving his 2004 Peterbilt dump truck when he collided with a passenger car. Defendant Charles Johnson was driving that car, and Defendant Aileen Johnson (collectively, the “Johnson Defendants”) was a passenger.

         On the day of the collision, Mr. Hernandez was hauling dirt for Troy Forming Concrete, Inc. (“Troy”). Mr. Hernandez and his company Defendant Hernandez Trucking, LLC, also known as Defendant Hernandez, Inc.^[1] (collectively, the “Hernandez Defendants”) had been hauling dirt for Troy on a subcontract basis for almost five years. The Hernandez Defendants had a commercial insurance policy with Artisan and Truckers Casualty Company (“Progressive”), and Troy had a commercial insurance policy with Plaintiff American Select (the “Policy”).

         Following the collision, the Johnson Defendants filed suit against the Hernandez Defendants in the Denver County District Court (the “Underlying Lawsuit”). The Johnson Defendants alleged that Mr. Hernandez negligently operated his dump truck and that the resulting collision caused them significant physical and emotional injuries. The Hernandez Defendants tendered the Johnson Defendants' claims to Progressive, which agreed to defend and indemnify them. Progressive then tendered the claims to Plaintiff American Select to determine whether the Hernandez Defendants were covered under Troy's Policy at the time of the collision. American Select denied coverage to the Hernandez Defendants.

         The Johnson Defendants and the Hernandez Defendants ultimately settled the Underlying Lawsuit. Pursuant to the settlement's terms, Progressive paid to the Johnson Defendants the $1, 000, 000 liability limit of the Progressive Policy. The Johnson Defendants and the Hernandez Defendants also stipulated to a final judgment in the amount of $5, 000, 000 against Mr. Hernandez personally and in favor of the Johnson Defendants. Finally, Defendant Hernandez assigned to the Johnson Defendants his rights, title, and interest in his claims against American Select for the collection of judgment entered against him in the Underlying Lawsuit.

         Plaintiff American Select later commenced this action for declaratory judgment against the Johnson Defendants and the Hernandez Defendants on June 5, 2017. (Doc. # 1.) Plaintiff specifically requests a declaratory judgment regarding the scope of the Policy's coverage, or lack thereof, over the Hernandez Defendants and their 2004 Peterbilt dump truck. (Id. at 6.) The Johnson Defendants filed counterclaims against Plaintiff American Select for breach of contract and bad faith breach (Doc. # 34); the Hernandez Defendants have not filed an answer or otherwise appeared in this case.

         On February 2, 2018, Plaintiff American Select filed the instant Motion for Summary Judgment, wherein it argues that the Hernandez Defendants were not covered by the Policy at the time of the collision and request that this Court enter judgment in its favor against all Defendants. (Doc. # 48.) The Johnson Defendants object to summary judgment, arguing that the Hernandez Defendants were, indeed, covered under the terms of the Policy. Based on the following analysis, the Court agrees with Plaintiff American Select.

         II. ANALYSIS

         A. LEGAL PRINCIPLES

         Summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000). If, after viewing the evidence in the light most favorable to the nonmoving party, the court determines that no reasonable juror could return a verdict for the nonmoving party, summary judgment is warranted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).

         Where, as here, federal jurisdiction is predicated upon diversity, the court applies the substantive law of the forum state. Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994). Under Colorado law, “[t]he interpretation of an insurance policy, like any written contract, presents a question of law and, therefore, is appropriate for summary judgment.” Tynan's Nissan, Inc. v. Am. Hardware Mut. Ins. Co., 917 P.2d 321, 323 (Colo.App. 1995) (citing Bumpers v. Guarantee Trust Life Insurance Co., 826 P.2d 358 (Colo.App. 1991)).

         An insurance policy is a contract between the insurer and the insured which determines the claims which the insurer is legally required to pay. Thus, when construing the terms of an insurance policy, Colorado courts apply traditional principles of contract interpretation. Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814, 819 (Colo. 2004); Essex Ins. Co. v. Vincent, 52 F.3d 894, 896 (10th Cir. 1995). A “court should interpret a contract ‘in its entirety with the end in view of seeking to harmonize and to give effect to all provisions so that none will be rendered meaningless.” Copper Mountain, Inc. v. Industrial Systems, Inc., 208 P.3d 692, 697 (Colo. 2009). Courts are to give effect to the intent and reasonable expectations of the parties and to enforce the policy's plain language unless it is ambiguous. Hoang v. Assurance Co. of Am., 149 P.3d 798, 801 (Colo. 2007).

         The Court recognizes that, unlike a negotiated contract, an insurance policy is often imposed on a “take-it-or-leave-it” basis. Thompson v. Maryland Cas. Co., 84 P.3d 496, 501-02 (Colo. 2004); Huizar v. Allstate Ins. Co., 952 P.2d 342, 344 (Colo. 1998). Therefore, the Court assumes a “heightened responsibility” in reviewing insurance policy terms to ensure that they comply with “public policy and principles of fairness.” Thompson, 84 P.3d at 501-02.

         B. APPLICATION

         The question before the Court is straightforward: could any reasonable juror find that the Hernandez Defendants were covered under the Policy? If so, the case should proceed to trial; it not, summary judgment should be granted in Plaintiff American Select's favor, ending this litigation. Viewing the evidence submitted to the Court in the light most favorable to the Defendants, the Court finds that the Hernandez ...