Holyoke Mutual Insurance Company in Salem v. Cincinnati Indemnity Co.

          ORDER

          SCOTT T. VARHOLAK UNITED STATES MAGISTRATE JUDGE.

         Magistrate Judge Scott T. Varholak This matter comes before the Court on the parties' cross-motions for summary judgment-i.e., the Motion for Summary Judgment filed by Defendant Cincinnati Indemnity Company (“CIC”) [#34] and the Motion for Summary Judgment filed by Plaintiff Holyoke Mutual Insurance Company in Salem, doing business as MiddleOak (“MiddleOak”) [#35]. The parties have consented to proceed before the undersigned United States Magistrate Judge for all proceedings, including entry of a final judgment. [#24, 25] This Court has carefully considered the motions and related briefing, the case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the motions.^[1] For the following reasons, CIC's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART and MiddleOak's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         A. UNDISPUTED FACTS^[2]

         MiddleOak issued an insurance policy to Two Thousand Cheesman East Condominium (“Cheesman”) covering the period February 1, 2015 through February 1, 2016 (the “MiddleOak Policy”). [#38-1, MSOF2; #35-2 at 1-131] CIC issued an insurance policy to American Spectrum Real Estate Services Co, Inc. (“Spectrum”) covering the period October 15, 2014 through October 15, 2017 (the “CIC Policy”). [#38-1, MSOF3; #35-3] Cheesman entered a Management Agreement with Spectrum, pursuant to which Spectrum was a property manager for Cheesman. [#38-1, MSOF6; #35-6] Spectrum was an Additional Insured (“AI”) by definition of the MiddleOak Policy. [#39-1, CSOF17] The CIC Policy provided limited Automatic AI coverage to Cheesman that was limited to coverage for liability incurred by Cheesman caused by Spectrum's acts or omissions; the AI coverage did not extend to liability arising out of Cheesman's independent acts or omissions. [#38-1, MSOF13]

         Cheesman entered into a Service Agreement Proposal with Meridian Fire and Security, LLC (“Meridian”) for inspection and testing of Cheesman's fire alarm and sprinkler system.^[3] [#38-1, MSOF14; #36-4] According to the Complaint, on or about May 15, 2015, Meridian was performing a yearly inspection of the fire suppression system on Cheesman's property when a pipe was damaged and released water into an adjacent property causing significant damage.^[4] [#1 at ¶¶ 15-17] On April 28, 2016, MiddleOak received notice that The Parkville Condominium Association, Inc. (“Parkville”), the owners of the adjacent property, had made a claim against Cheesman. [#39-1, CSOF2] MiddleOak then consulted with counsel concerning the claim. [Id. at CSOF3]

         On January 5, 2017, Parkville filed a lawsuit against Cheesman and Meridian in Denver County District Court (the “Parkville Lawsuit”). [#38-1, MSOF4; #35-4] On January 9, 2017, MiddleOak received notice of the Parkville Lawsuit and assigned counsel to defend Cheesman. [#39-1, CSOF4] On May 1, 2017, Cheesman designated Spectrum as a non-party at fault in the Parkville Lawsuit. [Id. at CSOF5] On May 15, 2017, Parkville filed a motion to amend its complaint to name Spectrum as a defendant, and on June 20, 2017, Spectrum was added as a named defendant in the Parkville Lawsuit. [Id. at CSOF6; #38-1, MSOF5] MiddleOak acknowledged that it insured Spectrum with regard to the claims asserted against Spectrum in the Parkville Lawsuit under the MiddleOak Policy. [#39-1, CSOF8] MiddleOak determined that counsel retained to represent Cheesman could not also represent Spectrum, because he had designated Spectrum as a non-party at fault. [Id. at CSOF26] On or about July 26, 2017, MiddleOak assigned a second adjuster and separate defense counsel to handle Parkville's claim against Spectrum. [Id. at CSOF9] A note in MiddleOak's claim diary for the Spectrum claim dated July 27, 2017 indicates that Spectrum's property management agreement with Cheesman stated that Spectrum would “name [Cheesman] as an additional insured” but “review of the [CIC Policy] does not show that [Cheesman] is an AI.” [#34-4 at 2 (capitalization removed); see also #39-1, CSOF28]

         On or around July 28, 2017, CIC received notice of Parkville's claim against Spectrum from Spectrum's insurance agent and MiddleOak. [#39-1, CSOF10] No. later than August 4, 2017, MiddleOak informed CIC that it had retained counsel to defend Spectrum and requested that CIC share in the defense costs. [#38-1, MSOF7; #39-1, CSOF33] CIC advised MiddleOak that the coverage under the CIC Policy was excess coverage and refused to share in Spectrum's defense of the Parkville Lawsuit. [#39-1, CSOF11; #34-4 at 3-4] During the months of August, September, and October of 2017, CIC's adjuster had multiple conversations with MiddleOak's adjuster concerning the claims against Spectrum and the defense of those claims. [#39-1, CSOF34]

         On September 22, 2017, Cheesman's counsel in the Parkville Lawsuit suggested to MiddleOak that it might tender Cheesman's defense to CIC. [#39-1, CSOF12] On October 12, 2017, MiddleOak's adjuster for the Cheesman claim was provided permission to tender a claim to CIC on behalf of Cheesman. [Id. at CSOF30] On or about November 6, 2017, Cheesman's counsel wrote a letter to Spectrum's counsel in the Parkville lawsuit requesting that CIC share in the defense of Cheesman. [#38-1, MSOF8] Spectrum's counsel received the letter on or about November 7, 2017 and then provided the letter to CIC on November 13, 2017. [Id.] More specifically, the first tender of defense and indemnity by Cheesman to CIC was sent to CIC at 9:46 am on November 13, 2017. [#39-1, CSOF13]

         During an “all day mediation” on November 8, 2017, the parties to the Parkville Lawsuit reached a tentative settlement pursuant to which MiddleOak agreed to pay $300, 000 to settle Parkville's claims against Cheesman and $25, 000 to settle the claims against Spectrum. [Id. at CSOF15, CSOF20; #38-1, MSOF10] After settling the Parkville Lawsuit, MiddleOak demanded that CIC reimburse MiddleOak for the settlement payments, attorney's fees, and costs MiddleOak incurred on behalf of Cheesman and Spectrum.^[5] [#38-1, MSOF9] CIC declined to reimburse MiddleOak for any portion of these amounts. [#1 at ¶¶ 34, 36, 38, 40; #14 at ¶¶ 34, 36, 38, 40]

         B. Procedural History

         On July 20, 2018, MiddleOak filed the instant lawsuit against CIC, asserting the following five causes of action: (1) equitable contribution for MiddleOak's defense and indemnity of Spectrum; (2) equitable contribution for MiddleOak's defense of Cheesman; (3) equitable contribution for MiddleOak's payment of the Cheesman settlement; (4) declaratory judgment regarding CIC's obligations pursuant to the CIC Policy; and (5) unjust enrichment. [#1] On October 4, 2018, CIC filed its answer to the Complaint. [#14] At the Scheduling Conference, the parties proposed-and the Court agreed-”to proceed with dispositive motions to determine the legal question of whether [CIC] has an obligation to share in the defense or indemnity costs for Spectrum or Cheesman in advance of conducting further discovery” in the matter. [#27 at 4]

         On February 8, 2019, the parties filed cross-motions for summary judgment. [#34, 35] On March 1, 2019, CIC responded to MiddleOak's Motion for Summary Judgment [#36], and MiddleOak responded to CIC's Motion for Summary Judgment [#37]. On March 15, 2019, CIC filed a reply in support of its Motion for Summary Judgment [#39], and MiddleOak filed a reply in support of its Motion for Summary Judgment [#38]. On April 10, 2019, MiddleOak filed a sur-reply in response to CIC's reply. [#41]

         II. LEGAL STANDARD

         Summary judgment is appropriate only if “the movant shows that 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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., 41 F.3d 567, 569 (10th Cir. 1994). Where, as here, the Court is presented with cross-motions for summary judgment, the Court “must view each motion separately, in the light most favorable to the non-moving party, and draw all reasonable inferences in that party's favor.” United States v. Supreme Ct. of N.M., 839 F.3d 888, 906-07 (10th Cir. 2016) (quotation omitted).

         When the moving party bears the burden of persuasion at trial, “the moving party must establish, as a matter of law, all essential elements of the [claim on which summary judgment is sought] before the nonmoving party can be obligated to bring forward any specific facts alleged to rebut the movant's case.” Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008). In other words, the moving party “must support its motion with credible evidence showing that, if uncontroverted, the moving party would be entitled to a directed verdict.” Rodell v. Objective Interface Sys., Inc., No. 14-CV-01667-MSK-MJW, 2015 WL 5728770, at *3 (D. Colo. Sept. 30, 2015) (citing Celotex Corp., 477 U.S. at 331). “The burden then shifts to the non-moving party to produce evidence demonstrating the existence of a genuine factual issue for trial.” Id.

         When the moving party does not bear the burden of persuasion at trial, the movant may satisfy its initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact “simply by pointing out to the court a lack of evidence . . . on an essential element of the nonmovant's claim.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir.1998). If the movant carries this initial burden, the burden then shifts to the nonmovant “to go beyond the pleadings and set forth specific facts that would be admissible in evidence in the event of trial.” Id. at 671 (quotation omitted).

         “[A] ‘judge's function' at summary judgment is not ‘to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'” Tolan v. Cotton, 572 U.S. 650, 656 (2014) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury. See Anderson, 477 U.S. at 248-49; Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000); Carey v. U.S. Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987). Evidence, including testimony, offered in support of or in opposition to a motion for summary judgment must be based on more than mere speculation, conjecture, or surmise. Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004). A fact is “material” if it pertains to an element of a claim or defense; a factual dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a reasonable juror could return a verdict for either party. Anderson, 477 U.S. at 248. “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Matsushita Elec. Indus. Co., v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat'l. Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288 (1968)).

         III. ANALYSIS

         MiddleOak's claims are all premised upon its assertion that (1) CIC had a duty under the CIC Policy to indemnify Spectrum in the Parkville Lawsuit and thus now must reimburse MiddleOak for CIC's share of the payment made by MiddleOak to settle Parkville's claims against Spectrum; (2) CIC had a duty under the CIC Policy to defend Spectrum in the Parkville Lawsuit and thus now must reimburse MiddleOak for CIC's share of the payment made by MiddleOak to defend Spectrum; (3) CIC had a duty under the CIC Policy to indemnify Cheesman in the Parkville Lawsuit and thus now must reimburse MiddleOak for CIC's share of the payment made by MiddleOak to settle Parkville's claims against Cheesman; and (4) CIC had a duty under the CIC Policy to defend Cheesman in the Parkville Lawsuit and thus now must ...