United States District Court, D. Colorado
Brooke Jackson United States District Judge.
matter is before the Court on plaintiff Philadelphia
Indemnity Insurance Company
(“Philadelphia”)'s motion to dismiss
defendant Joey Cruz's counterclaim, ECF No. 24, and
motion for summary judgement, ECF No. 27. For the reasons
discussed herein, Philadelphia's motion for summary
judgment is GRANTED and its motion to dismiss is MOOT.
Joey Cruz was an employee of Rocky Mountain Human Services
(RMHS). Complaint, ECF No. 1 at ¶10; Answer, ECF No. 23
at ¶10. On June 10, 2015, she was involved in an
automobile accident driving a car that she owned personally
on her way to an appointment within the course and scope of
her employment with RMHS. ECF No. 1 at ¶14; ECF No. 23
at ¶14. At the time of the accident RMHS had an
effective commercial auto insurance policy from Philadelphia,
policy number PHPK1336379 (“the policy”). ECF No.
Cruz claims to have sustained damages in excess of the
at-fault driver's liability insurance limits. She
asserted a claim for underinsured motorist benefits to
Philadelphia under the policy issued to RMHS. ECF No. 1 at
¶19; ECF No. 23 at ¶19. In March 2018, Philadelphia
filed this declaratory judgment action, asking the court to
declare that the policy does not provide UM/UIM coverage to
Ms. Cruz. ECF No. 1. Ms. Cruz filed an answer asserting that
she is an insured under the plain language of the policy. ECF
No. 23. She also asserted a counterclaim for reformation,
arguing that if the policy does not grant her UM/UIM
benefits, it violates Colo. Rev. Stat. § 10-4-609. This
statute requires automobile liability insurers to provide
UM/UIM coverage coextensive with liability coverage unless
the named insured rejects such coverage in writing.
filed a motion to dismiss the reformation counterclaim,
arguing that it is moot, and that Ms. Cruz lacks standing to
seek contractual reformation. ECF No. 24. From
Philadelphia's point of view, the claim is moot because
the policy provides UM/UIM insured coverage to RMHS, and Ms.
Cruz lacks standing because she is not an insured under the
contract or an intended beneficiary of the contract. Ms. Cruz
responded to this motion, ECF No. 25, and Philadelphia
replied, ECF No. 26. Philadelphia then filed a motion for
summary judgment on its complaint for declaratory relief and
against Ms. Cruz on her counterclaim for reformation,
repeating arguments raised in its motion to dismiss. ECF No.
27. Ms. Cruz responded, ECF No. 30, and Philadelphia replied,
ECF No. 31. Because Philadelphia's motion for summary
judgment incorporates arguments from its motion to dismiss, I
will address Philadelphia's request for declaratory
relief and Ms. Cruz's counterclaim in the context of the
motion for summary judgment. Accordingly, the motion to
dismiss, ECF No. 24, is MOOT.
STANDARD OF REVIEW
Summary Judgment Standard.
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
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.
diversity cases, the Court applies the substantive law of the
forum state. Barrett v. Tallon, 30 F.3d 1296, 1300
(10th Cir. 1994). “When federal courts are called upon
to interpret state law, they must look to rulings of the
highest state court, and if no such rulings exist, they must
endeavor to predict how the high court would rule.”
Lovell v. State Farm Mut. Auto. Ins. Co., 466 F.3d
893, 899 (10th Cir. 2016).
initial matter, Plaintiff argues that whether coverage is
available under an insurance policy is a question of fact
making entry of summary judgment improper. Plaintiff cites
Allstate Ins. Co. v. Juniel, 931 P.2d 511, 513
(Colo.App. 1996) for the proposition that “[w]hether
coverage is ultimately available under the policy is a
question of fact for the trier of fact.” Id.
While the determination of events triggering liability for
insurance coverage is a question of fact, here plaintiff has
pled and defendant has judicially admitted the relevant facts
about the ownership of the car and the events surrounding the
collision. What remains in dispute is the meaning of the
insurance policy. The interpretation of the contractual terms
of an insurance policy is a matter of law properly decided in
a motion for summary judgment. Thompson v. Md. Cas.
Co., 84 P.3d 496, 501 (Colo. 2004); Lake Durango
Water Co., Inc. v. Pub. Utils. Comm'n, 67 P.3d 12,
20 (Colo. 2003) (“Whether a written contract is
ambiguous and, if not deemed ambiguous, how the unambiguous
contractual language should be construed, are questions of
law . . . .”). However, once it has been determined
that a contract is ambiguous and that its construction
depends on extrinsic facts and circumstances, then the terms
of the contract become questions of fact for the trier of
fact. May v. Interstate Moving & Storage Co.,
739 F.2d 521, 523 (10th Cir. 1984)
policies are construed under the same principles that govern
the interpretation of any contract. Compass Ins. Co. v.
City of Littleton, 984 P.2d 606, 613 (Colo. 1999). In
interpreting a contract, courts seek to give effect to the
reasonable expectations of the parties. Terms are given their
plain and ordinary meaning unless the intent expressed in the
contract indicates an alternative interpretation should be
used. Id. Colorado courts also recognize that unlike
a negotiated contract, an insurance policy is often imposed
on a “take-it-or-leave-it basis.” Thompson, 84
P.3d at 501 (citing Huizar v. Allstate Ins. Co., 952
P.2d 342, 344 (Colo. 1998)). “Therefore, we assume a
‘heightened responsibility' in reviewing insurance
policy terms to ensure that they comply with ‘public
policy and principles of fairness.'” Id.
Accordingly, Colorado courts construe ambiguous terms in an
insurance policy in favor of coverage. Id. at 502
(citing State Farm Mut. Auto. Ins. CO. v. Nissen,
851 P.2d 165, 166 (Colo. 1993)).
seeks a declaratory judgment that Ms. Cruz is not entitled to
benefits under the policy for injuries from the June 10, 2015
accident. It argues that she is not an insured under the
policy's general liability coverage or the policy's
UM/UIM coverage, and accordingly, there is no basis to reform
the policy to afford her coverage. Although Ms. Cruz is only
seeking underinsured motorist coverage, the general liability
coverage under the policy is relevant because Colo. Rev.
Stat. § 10-4-609 requires UM/ UIM benefits to be
coextensive with a policy's bodily injury liability
coverage unless waived in writing. I will first address the
UM/ UIM coverage under the policy and then analyze the
policy's liability coverage to determine whether the
policy comports with Colorado law.