United States District Court, D. Colorado
HOLYOKE MUTUAL INSURANCE COMPANY IN SALEM, d/b/a MIDDLEOAK, Plaintiff,
v.
CINCINNATI INDEMNITY COMPANY, Defendant.
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 ...