Dish Network v. Arch Specialty Insurance

FILED
United States Court of Appeals
Tenth Circuit
November 25, 2014
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
DISH NETWORK CORPORATION;
DISH NETWORK, LLC.,
Plaintiffs - Appellants,
v. No. 13-1457
ARROWOOD INDEMNITY
COMPANY; TRAVELERS
INDEMNITY COMPANY OF
ILLINOIS; XL INSURANCE
AMERICA, INC.; NATIONAL
UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA.,
Defendants - Appellees,
and
ARCH SPECIALTY INSURANCE
COMPANY,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:09-CV-00447-JLK-MEH)
Lee M. Epstein of Flaster Greenberg, P.C., Philadelphia, Pennsylvania, for
Plaintiffs-Appellants.
Daniel I. Graham of Nicolaides Fink Thorpe Michaelides Sullivan LLP, Chicago,
Illinois, and Kevin F. Amatuzio of Montgomery, Kolodny, Amatuzio &
Dusbabek, LLP, of Denver Colorado, (George S. McCall and S. Vance Wittie of
Sedgwick, LLC, Dallas Texas; Roger K. Heidenreich and Deborah C. Druley of
Dentons US LLP, St. Louis, Missouri; Anders C. Wick of Dentons US LLP,
Chicago, Illinois; Barbara I. Michaelides, Agelo L. Reppas, and Bridget M. Curry
of Nicolaides Fink Thorpe Michaelides Sullivan LLP, Chicago, Illinois, with them
on the brief), for Defendants-Appellees.
Before BRISCOE, Chief Judge, HARTZ and HOLMES, Circuit Judges.
BRISCOE, Chief Judge.
Plaintiffs DISH Network Corporation and DISH Network LLC filed this
action seeking a declaratory judgment that their commercial general liability and
excess liability insurers (collectively the Insurers), Arch Specialty Insurance
Company (Arch), Arrowood Indemnity Company (Arrowood), Travelers
Indemnity Company of Illinois (Travelers), XL Insurance America, Inc. (XL), and
National Union Fire Insurance Company of Pittsburgh, Pa. (National Union), had
a duty to defend and indemnify plaintiffs in an underlying patent infringement
action. The district court granted summary judgment in favor of the Insurers,
plaintiffs appealed, and this court reversed and remanded for further proceedings.
DISH Network Corp. v. Arch Spec. Ins. Co., 659 F.3d 1010 (10th Cir. 2011)
(DISH I). On remand, the Insurers moved again for summary judgment, but on
different grounds than before. The district court granted the Insurers’ motions,
and plaintiffs appealed. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we
affirm.
2
I
DISH Network Corporation is a Nevada corporation with its principal place
of business in Englewood, Colorado. DISH Network LLC is a Colorado limited
liability company with its principal place of business in Englewood, Colorado.
DISH Network LLC is an indirectly, wholly-owned subsidiary of DISH Network
Corporation. These two entities, which will be referred to collectively as Dish, 1
provide direct-to-the-home satellite television products and services, including
video and audio programming, to more than 14 million paying subscribers.
Dish’s insurance policies
“Between 2001 and 2004, Dish purchased . . . primary and excess
commercial general liability policies . . . from the five defendant Insurers.” DISH
I, 659 F.3d at 1013. “Primary insurance is provided by Arrowood and Travelers,
while XL, Arch, and National Union are responsible for excess coverage if the
primary policies are exhausted.” Id.
“All of the policies promise to defend and indemnify Dish against claims
alleging ‘advertising injury,’ among other things.” Id. “Most of the policies
define ‘advertising injury’” in the following manner:
“Advertising Injury” means injury arising out of one or more of the
following offenses:
1. Oral or written publication of material that slanders or libels
a person or organization or disparages a person’s or
1
Dish was formerly known as EchoStar Communications Corporation and
EchoStar Satellite LLC (collectively EchoStar). DISH I, 659 F.3d at 1012.
3
organization’s goods, products or services;
2. Oral or written publication of material that violates a
person’s right to privacy;
3. Misappropriation of advertising ideas or style of doing
business; or
4. Infringement of copyright, title or slogan.
Id. The National Union policy differs slightly, “limit[ing] coverage to ‘injury
arising solely out of your advertising activities as a result of’ one or more of the
four types of offenses.” Id. (emphasis added in DISH I). Likewise, the Arch
policy defines the phrase “advertising injury” differently, referring to it, in
pertinent part, as “[t]he use of another’s advertising idea in your ‘advertisement.’”
Id. In addition, the Arch policy “contains a clause excluding from coverage ‘any
claim . . . [a]rising out of the infringement of copyright, patent, trademark, trade
secret or other intellectual property rights.’” Id. This exclusion “does not apply
to infringement, in [the insured’s] ‘advertisement,’ of copyright, trade dress or
slogan.” Id. (internal quotation marks omitted).
The underlying patent infringement suit
In approximately 2007, Dish became the defendant in a patent infringement
suit brought in the Northern District of California by Ronald A. Katz Technology
Licensing, L.P. (RAKTL). According to RAKTL’s complaint, RAKTL’s patents
related to “the field of interactive call processing” and “the integration of
telephonic systems with computer databases and live operator call centers to
provide interactive call processing services.” Id. at 1013. RAKTL’s complaint
4
further alleged that Dish
had infringed one or more claims in each of twenty-three patents . . .
by “making, using, offering to sell, and/or selling . . . automated
telephone systems, including without limitation the DISH Network
customer service telephone system, that allow [Dish’s] customers to
perform pay-per-view ordering and customer service functions over
the telephone.”
Id. at 1012-13.
The initiation and initial resolution of this action
“On receiving RAKTL’s complaint, Dish requested a defense from Insurers,
who denied coverage.” Id. at 1014. “Dish then brought this suit, seeking a
judgment declaring that Insurers had a duty to defend and indemnify it in the
underlying action.” Id. “Dish also sued for damages for breach of contract and
Insurers’ duty of good faith and fair dealing.” Id.
The district court, in response to the Insurers’ motions, granted summary
judgment in their favor. “Applying Colorado law, the district court concluded
that a claim for patent infringement, such as the one [asserted by RAKTL against
Dish], could properly give rise to coverage, or even the specter of coverage, such
that an insurer will have a duty to defend.” Id. (internal quotation marks
omitted). “The duty would arise, the court stated, where the insured established
three elements: first, that it was engaged in ‘advertising’ during the relevant
period; second, that the underlying complaint alleged a predicate offense under
the policy language; and third, that a causal connection existed between the
5
advertising and the alleged injury suffered by the patent holder.” Id.
The district court concluded, for purposes of the Insurers’ summary
judgment motion, “that RAKTL’s reference to ‘customer service functions’ in its
complaint was sufficient to allege that Dish engaged in ‘advertising.’” Id. “The
[district] court rejected, however, Dish’s argument that its use of a patented
interactive telephone system to advertise could constitute ‘misappropriation of
advertising ideas or style of doing business,’ the sole predicate offense on which
Dish relied.” Id. The court explained that “[t]he [RAKTL] complaint focuses on
[Dish]’s use of these patented technologies as a means of conveying content to
and tailoring its interactions with its customers.” Id. (internal quotation marks
omitted).
Consequently, the district court did not “address[] the third element of its
test—causation—or the additional arguments certain insurers had raised under
their individual policies.” Id. “The [district] court also did not reach the duty to
indemnify or Dish’s other claims.” Id.
Dish appealed from the district court’s grant of summary judgment in favor
of the Insurers.
The first appeal - DISH I
In DISH I, we reversed the district court’s grant of summary judgment and
remanded for further proceedings. In doing so, we concluded that “a claim for
patent infringement c[ould] . . . constitute ‘advertising injury’ within the relevant
6
policy language.” Id. at 1014. We in turn concluded that RAKTL’s underlying
complaint could “be read to allege ‘misappropriation of advertising ideas,’” as
well as a causal connection between the misappropriation of advertising ideas and
RAKTL’s purported injury. Id. at 1015. Consequently, “[a]s regards the duty to
defend, we h[e]ld that the RAKTL complaint may arguably fall within the
polic[ies] at issue because it potentially alleged advertising injury arising from
Dish’s misappropriation of its advertising ideas, which Dish committed in the
course of advertising its goods, products, or services.” Id. at 1028 (internal
quotation marks and citation omitted).
We noted that “[s]everal issues . . . remain[ed] to be resolved,” id., by the
district court:
In their response brief, Insurers raise arguments regarding unique
language in the policies issued by Arch and National Union;
specifically, they argue that Arch’s intellectual property exclusion
and National Union’s sole causation requirement bar coverage. The
excess insurers, Arch, National Union, and XL, also contend that
they have no duty to defend in the absence of a showing that Dish’s
primary policy coverage has been exhausted. The district court did
not reach these arguments, as it decided the case in favor of Insurers
on other grounds. We express no view as to the merits of those
arguments, but instead REMAND for the district court to address
them in the first instance.
Id. at 1028-29 (internal citations omitted).
The Insurers filed a petition for rehearing en banc, which we denied.
The district court’s determination of the scope of proceedings on remand
The district court’s first step on remand was to order the parties to file a
7
joint status report. The joint status report submitted by the parties noted that they
“disagree[d] as to . . . the claims remaining to be adjudicated [and] . . . whether
th[e] case [wa]s ready to proceed beyond the duty to defend.” App. at 288. Dish
argued “that by virtue of the Tenth Circuit’s ruling, judgment [could] . . . be
entered in favor of [Dish] on Counts One and Three of its complaint with regard
to the duty of its primary insurers, Arrowood Indemnity Company and Travelers
Indemnity Company of Illinois, to defend.” Id. In other words, Dish asserted,
“[t]he duty to defend issue was conclusively decided by the Tenth Circuit” in
DISH I. Id. at 288-89. The Insurers disagreed, arguing that Dish “did not file a
motion for summary judgment with respect to the duty to defend,” and “the Tenth
Circuit did not find a duty to defend or direct the Trial Court to so find.” Id. at
292.
The district court issued a minute order setting a scheduling conference.
The minute order also stated as follows:
This case is not yet ripe for summary disposition. Although the
law of the case doctrine bars Defendants from re-litigating whether
the claims of patent infringement at issue in this case can constitute
advertising injury, it does not preclude the assertion of other
defenses. See, e.g., Dobbs v. Anthem Blue Cross & Blue Shield, 600
F.3d 1275, 1279 (10th Cir. 2010). Defendants are entitled to raise
additional defenses and request leave to file successive motions for
summary judgment. See Hoffman v. Tonnemacher, 593 F.3d 908,
911 (9th Cir. 2010).
Id. at 297.
The district court subsequently conducted the scheduling conference. At
8
the outset of the conference, the district court orally affirmed the ruling contained
in its prior minute order:
The Tenth Circuit’s opinion [in DISH I] contains specific
instructions on remand. It ordered me to consider two arguments
raised by insurers, but not addressed in the original
summary-judgment opinion; one, that Arch’s intellectual-property
exclusion and National Union’s sole-causation requirement barred
coverage; and two, that the excess insures [sic], Arch National Union
and XL Insurance America, Inc., have no duty to defend in the
absence of the showing that Dish’s primary policy coverage has been
exhausted. Significantly, the opinion contains no other limiting
language or additional instructions on remand; that is, to enter
judgment in favor of Dish Network.
Nevertheless, [Dish] argue[s] the scope of remand should be
limited to resolving the issues specifically mentioned by the Tenth
Circuit. Accordingly, [Dish] argue[s] that summary judgment may
be entered against the primary insurers, Arrowood and Travels [sic].
In the absence of additional limitations, I am entitled to exercise
discretion in determining the appropriate scope of a remand, and for
that I cite to United States vs. West[, 646 F.3d 745 (10th Cir. 2011)].
The exercise of that discretion is, however, limited by the law of the
case. Although the Tenth Circuit has addressed the applicability of
the advertising injury exclusion to the underlying Complaint, it did
not address any additional exclusions contained in the relevant CGL
Policies.
Furthermore, [Dish’s arguments] to the contrary not withstanding
[sic], defendant’s [sic] did not conclusively concede that EchoStar
Satellite, LLC is covered under the policies at issue. Their
concession of that argument, per its explicit terms, was, and I quote,
for the purposes of summary judgment and this appeal only, closed
quote. Although clumsily worded, it is apparent that defendants did
not intend to waive this argument for any future proceedings.
Having reviewed the Tenth Circuit opinion, the parties’
joint-status report, my earlier minute order, and the parties proposed
scheduling order, I conclude that the defendants are permitted to file
renewed motions for summary judgment that address issues not
9
previously raised in their initial motions for summary judgment. The
parties shall have up to and including May 9 to submit a proposed
scheduling order reflecting that ruling.
Id. at 368-70.
The district court’s grant of summary judgment in favor of Insurers
The Insurers each filed motions for summary judgment arguing that they
were not obligated to defend Dish in the RAKTL patent infringement action.
Dish filed a cross-motion for summary judgment on that same issue with respect
to its two primary insurers, Arrowood and Travelers. 2
The district court issued a memorandum order and opinion granting
summary judgment in favor of the Insurers regarding their duty to defend Dish in
the underlying RAKTL action. In doing so, the district court began by briefly
revisiting the scope of the proceedings on remand:
Relying on the Court of Appeals’ phrase beginning: “As regards
the duty to defend, we hold that the RAKTL complaint ‘may
arguably fall within the polic[ies]’ at issue. . .,” DISH [I], 659 F.3d
at 1028 (quotation omitted), DISH posits that the Tenth Circuit has
“already decided” that the claims asserted against DISH Network in
the underlying Katz Action fall potentially within the coverage of the
primary insurers commercial general liability (“CGL”) policies.
Doc. 169 at p.7.
From the fact that I let Insurers raise new defenses, however, it is
clear the duty to defend issue was not definitively closed forever and
always by the Tenth Circuit opinion. The first incarnation of this
2
Dish “concede[d] that Arch’s intellectual property exclusion bar[red] any
duty to defend Arch might have regarding the [RAKTL] Action.” App. at 2486.
The district court subsequently granted summary judgment in favor of Arch based
upon Dish’s concession. Id.
10
case involved determining whether the complained of action in the
underlying litigation, specifically patent infringement of telephone
technology, constituted “advertising injury” such that Defendants’
various “advertising injury” exclusions would apply and preclude
Defendants having a duty to defend. Although the Tenth Circuit did
indeed settle that patent infringement for technologies capable of
serving as conduits for advertising could constitute “advertising
injury,” the case as presently postured does not seek to parse what is
or is not an “advertising injury.”
Rather, the instant summary judgment motions foremost query
what import to assign the term “broadcast” in an insurance policy,
Defendants each now invoking various Business Exclusions to negate
coverage for all advertising injuries suffered by insureds involved in
the business of broadcasting. “Although a district court is bound to
follow the mandate, and the mandate controls all matters within its
scope,…a district court on remand is free to pass upon any issue
which was not expressly or impliedly disposed of on appeal.”
Procter & Gamble Co. v. Haugen, 317 F.3d 1121, 1126 (10th Cir.
2003); Aguinaga v. United Food & Commercial Workers Int’l Union,
854 F.Supp.757, 773 (D. Kan. 1994)(“The issue presented by the
Union was not resolved by the Tenth Circuit in the prior appeal, and
the court does no violence to the mandate rule by considering the
issue herein.”) Accordingly, because the Business Exclusion
argument was never before the Tenth Circuit, it is appropriate for
consideration on remand.
Id. at 2486-87.
The district court then turned to the coverage issue and “f[ou]nd the
business in which D[ish] [wa]s engaged to fall squarely within the meaning of
‘broadcasting,’ such that coverage for defending the [RAKTL] Action [wa]s
unavailable under the policies issued to it by Defendant Insurers.” Id. at 2488.
The district court further concluded that “National Union’s policy contain[ed] a
‘sole’ causation requirement . . . that negate[d] coverage.” Id. at 2508. Lastly,
11
the district court concluded that “National Union’s Satellite Exclusion and XL’s
‘as warranted’ provision also fail[ed] to provide coverage.” Id.
The district court entered final judgment in favor of Insurers and Dish filed
a timely notice of appeal.
II
Dish raises four issues on appeal. The first issue concerns whether the
district court violated the law of the case or deviated from our mandate in DISH I
and thereby improperly expanded the scope of the proceedings on remand. The
remaining three issues raised by Dish challenge various aspects of the district
court’s grant of summary judgment in favor of the Insurers.
A
In its first issue on appeal, Dish argues that the district court violated the
law of the case and deviated from our mandate in DISH I when it permitted the
Insurers to present new arguments regarding why they were not obligated to
defend Dish in the RAKTL suit. We review de novo the district court’s
compliance with the mandate in DISH I. See Padilla-Caldera v. Holder, 637 F.3d
1140, 1145 (10th Cir. 2011). In doing so, we examine whether the law of the case
doctrine or the mandate rule “foreclose[d] any of the [district court’s] actions on
remand.” Id. (internal quotation marks omitted).
“Under the law of the case doctrine, when a court decides an issue of law,
that decision should govern all subsequent stages of the litigation.” Id. In other
12
words, “if the first appeal decided the issue then the district court was bound by
its determination under the law of the case doctrine, and under the general rule
that a district court is bound by decisions made by its circuit court.” Dobbs v.
Anthem Blue Cross and Blue Shield, 600 F.3d 1275, 1279 (10th Cir. 2010)
(internal citation omitted).
“The mandate rule is a corollary to the law of the case [doctrine] requiring
trial court conformity with the appellate court’s terms of remand.” United States
v. West, 646 F.3d 745, 748 (10th Cir. 2011); Zinna v. Congrove, 755 F.3d 1177,
1182 (10th Cir. 2014) (holding that the mandate rule “provides that a district
court must comply strictly with the mandate rendered by the reviewing court”).
“[T]he scope of the mandate on remand in the Tenth Circuit is carved out by
exclusion: unless the district court’s discretion is specifically cabined, it may
exercise discretion on what may be heard.” West, 646 F.3d at 749 (discussing
proper scope of resentencing proceedings following remand). “Therefore we do
not make inquiry into whether the issue presented is antecedent to or arises out of
the correction on appeal.” Id. “Instead the district court is to look to the mandate
for any limitations on the scope of the remand and, in the absence of such
limitations, exercise discretion in determining the appropriate scope.” Id. “This
approach has been characterized . . . as a presumption in favor of a general
remand.” Id. Notably, “[t]he mandate rule is a rule of policy and practice, not a
jurisdictional limitation, which thus allows some flexibility in exceptional
13
circumstances.” Id. (internal quotation marks omitted).
1. Did DISH I decide the duty-to-defend issue?
We turn first to the question of whether the district court violated the law-
of-the-case doctrine by allowing the Insurers to present additional arguments
regarding why they were not obligated to defend Dish in the underlying RAKTL
action. According to Dish, “this Court decided the duty to defend issue” in DISH
I. Aplt. Br. at 14. Indeed, Dish asserts, “[i]n seeking rehearing en banc, the
Insurers argued that this Court’s decision [in DISH I] required them to defend
D[ish].” Id. at 8-9.
We reject Dish’s assertion that DISH I resolved the duty-to-defend issue.
The concluding section of DISH I stated, in pertinent part: “As regards the duty to
defend, we hold that the RAKTL complaint may arguably fall within the
polic[ies] at issue because it potentially alleged advertising injury arising from
Dish’s misappropriation of its advertising ideas, which Dish committed in the
course of advertising its goods, products, or services.” Id. at 1028 (emphasis
added) (internal quotation marks and citation omitted). We further noted that
“[s]everal issues the district court did not address [in its summary judgment
order] remain[ed] to be resolved” regarding the Insurers’ duty to defend. Id.
Thus, in sum, DISH I did not resolve the duty-to-defend issue. Consequently, the
law-of-the-case doctrine did not prohibit the district court from resolving the
duty-to-defend issue on other grounds.
14
To the extent it is relevant, we also reject Dish’s assertion that the Insurers
conceded in their petition for rehearing en banc that they were obligated to defend
Dish in the RAKTL action. In their petition for rehearing en banc, the Insurers
argued, in part, that DISH I’s “analysis led [this court] to mistakenly equate the
use of a patented product capable of being used to advertise with
‘misappropriation of an advertising idea’ so as to bring the former within the
‘advertising injury’ coverage afforded by CGL policies, even though ‘patent
infringement’ is not a listed offense to which coverage extends.” App. at 1900
(emphasis in original). The Insurers in turn argued that “[t]he existence of
‘advertising injury’ coverage for patent infringement under commercial general
liability (‘CGL’) insurance is a question of exceptional importance.” Id. And,
they argued, “[t]his decision requires Insurers, and will require other insurers in
the future, to defend and potentially to indemnify insureds for ‘patent
infringement’ claims that are not covered by CGL insurance.” Id. Although Dish
now argues that this last sentence was a concession by the Insurers that they were
obligated to defend Dish in the RAKTL action, we conclude that is an overly
broad reading of the sentence. Quite clearly, the Insurers were taking issue with
the general notion that “advertising injury” coverage under CGL policies could
conceivably provide coverage for patent infringement. But, as we see it, the
Insurers were not conclusively conceding that they were obligated to defend Dish
in the RAKTL action.
15
2. Did the mandate rule effectively prohibit the district court’s actions?
We next turn to the question of whether the district court violated the
mandate rule by allowing the Insurers to file new motions for summary judgment
raising additional policy-based challenges to Dish’s claim that the Insurers were
obligated to defend Dish in the RAKTL action. To decide that question, we
“must look to the mandate in [DISH I] to determine whether it specifically
limit[ed] the scope of remand so as to prevent the district court from considering”
the Insurer’s additional arguments regarding the duty to defend. West, 646 F.3d
at 749 (internal quotation marks omitted).
The remand language in DISH I stated as follows:
We REVERSE the district court’s grant of summary judgment to
the Insurers and REMAND for further proceedings. While we agree
with the district court’s conclusion that patent infringement may,
under certain circumstances, constitute “misappropriation of
advertising ideas,” we disagree with its ruling that the patented
means of conveying advertising content at issue here could not be
“advertising ideas” within the meaning of Dish’s commercial general
liability policies. As regards the duty to defend, we hold that the
RAKTL complaint “may arguably fall within the polic[ies]” at issue,
Cyprus [Amax Minerals Co. v. Lexington Ins. Co.], 74 P.3d [294,]
299 [(Colo. 2003)], because it potentially alleged advertising injury
arising from Dish’s misappropriation of its advertising ideas, which
Dish committed in the course of advertising its goods, products, or
services, Novell[, Inc. v. Federal Ins. Co.], 141 F.3d [983,] 986
[(10th Cir. 1998)].
Several issues the district court did not address remain to be
resolved. In their response brief, Insurers raise arguments regarding
unique language in the policies issued by Arch and National Union;
specifically, they argue that Arch’s intellectual property exclusion
and National Union’s sole causation requirement bar coverage. Ins.
16
Resp. Br. at 66–70. The excess insurers, Arch, National Union, and
XL, also contend that they have no duty to defend in the absence of a
showing that Dish’s primary policy coverage has been exhausted. Id.
at 70. The district court did not reach these arguments, as it decided
the case in favor of Insurers on other grounds. Dish, 734 F. Supp. 2d
at 1185 n. 20. We express no view as to the merits of those
arguments, but instead REMAND for the district court to address
them in the first instance. Accordingly, we also DENY as moot Arch
and National Union’s motion to strike portions of Dish’s reply brief
or for leave to file a surreply regarding these issues.
DISH I, 659 F.3d at 1028-29.
To be sure, this remand language acknowledged the possibility that the
RAKTL complaint might fall within the policies at issue, and unequivocally
directed the district court “to address . . . in the first instance” the additional
arguments that were asserted by the Insurers in their original summary judgment
motions but not resolved by the district court in granting those motions. But Dish
misreads this language as limiting the district court from considering other
arguments the Insurers might have regarding the duty to defend. Although the
Insurers, in their respective answers to Dish’s complaint, asserted a host of
defenses to the purported duty to defend, they argued only a few of them in their
initial motions for summary judgment (presumably believing that the “advertising
injury” argument in particular would prevail). And, because the appeal in DISH I
concerned the district court’s decision to grant the Insurers’ motions for summary
judgment, our decision in DISH I understandably addressed the specific
arguments contained in those motions and did not cast about the district court
17
record for other potential defenses. The important point is that nothing in the
remand language in DISH I specifically limited or prevented the district court
from allowing the Insurers to dispute the purported duty to defend on grounds
other than those that were asserted in the Insurers’ original motions for summary
judgment. As a result, the district court did not violate the mandate rule by
allowing the Insurers to file new motions for summary judgment raising
additional defenses to the purported duty to defend.
B
In its second, third, and fourth issues on appeal, Dish challenges the district
court’s grant of summary judgment in favor of Insurers on the duty-to-defend
issue. We review the district court’s summary judgment ruling de novo, applying
the same legal standards as the district court. Doe v. City of Albuquerque, 667
F.3d 1111, 1123 (10th Cir. 2012). “Summary judgment should be granted if there
is no genuine issue as to any material fact and the movant is entitled to judgment
as a matter of law.” Id.
In a diversity case such as this, “the substantive law of the forum state
governs the analysis of the underlying claims.” Haberman v. Hartford Ins. Grp.,
443 F.3d 1257, 1264 (10th Cir. 2006). We therefore apply Colorado law as we
review the issues raised on appeal by Dish. Under Colorado law, we “review
insurance contract interpretation questions de novo.” Mountain States Mut. Cas.
Co. v. Roinestad, 296 P.3d 1020, 1023 (Colo. 2013).
18
1. The insured’s business exclusion
The district court, in granting summary judgment in favor of the Insurers,
concluded that the policies’ business exclusions for “broadcasting” and
“telecasting” precluded coverage. On appeal, Dish challenges these related
conclusions on a number of grounds.
a) The relevant policy language
All of the policies at issue provide coverage for “advertising injury.” At
the same time, each of the policies contain or effectively incorporate exclusions
to such coverage that hinge on the nature of the insured’s business.
The Travelers and Arrowood CGL policies expressly apply to “‘Advertising
injury’ caused by an offense committed in the course of advertising your goods,
products or services,” and provide that Travelers “will pay those sums that the
insured becomes legally obligated to pay as damages because of . . . ‘advertising
injury.’” App. at 904, 1319. The “Advertising Injury Liability” sections of the
two policies also include, however, several express exclusions. In particular, both
policies state that “[t]his insurance does not apply to . . . ‘Advertising injury’
arising out of . . . [a]n offense committed by an insured whose business is
advertising, broadcasting, publishing or telecasting.” Id. at 904, 1319-20.
Neither policy expressly defines the terms “broadcasting” or “telecasting.”
The Arch commercial umbrella policy states, in pertinent part, that “this
insurance applies to ‘personal and advertising injury’ caused by an offense arising
19
out of your business.” Id. at 1965. The “Exclusions” section of the policy, in
turn, states that “[t]his insurance does not apply to, and we have no obligation to
investigate, settle or defend, or pay the costs of defending, any claim or ‘suit’ for
. . . ‘Personal and advertising injury’ . . . [c]ommitted by an insured whose
business is . . . [a]dvertising, broadcasting, publishing or telecasting.” Id. at
1965-66.
The National Union commercial umbrella policy provides that National
Union “will pay on behalf of the Insured those sums in excess of the Retained
Limit that the Insured becomes legally obligated to pay by law or assumed by the
Insured under an Insured Contract because of . . . Advertising Injury that takes
place during the Policy Period and is caused by an Occurrence happening
anywhere in the world.” Id. at 1167. The Exclusions section of the policy,
however, states that “[t]his insurance does not apply to . . . Advertising Injury
arising out of . . . [a]n offense committed by an Insured whose business is
advertising, broadcasting, publishing or telecasting.” Id. at 1173-74. The
National Union policy also includes an endorsement entitled “BROADCASTING,
TELECASTING, ADVERTISING AND PUBLISHING EXCLUSION.” Id. at
1159. This endorsement states, in pertinent part: “This insurance does not apply
to . . . Advertising Injury committed or alleged to have been committed in any
advertising, advertisement, . . . broadcast, . . . or telecast in the conduct of the
Insured’s advertising, broadcasting, re-broadcasting, televising, [or] re-televising
20
. . . activities.” Id.
Finally, the XL commercial umbrella policy provides two types of
coverage: excess coverage that expressly incorporates most of “[t]he coverage
provisions of the scheduled underlying policies,” including those policies’
business exclusions, and so-called “drop down” coverage that applies in the event
that a loss is covered by the terms of the underlying policies, but the underlying
insurers fail to provide such coverage. Id. at 2048.
b) The terms “broadcasting” and “telecasting”
None of the policies at issue expressly define the terms “broadcasting” or
“telecasting,” nor do they otherwise indicate that these terms were “intended to
have some special meaning peculiar to the insurance industry.” Mid-Century Ins.
Co. v. Robles, 271 P.3d 592, 596 (Colo. App. 2011). As a result, we, like the
district court, are left with the task of “constru[ing] [these terms] in [their]
commonly used sense.” Id.; see also Mountain States Mut. Cas. Co. v. Roinestad,
296 P.3d 1020, 1024 (Colo. 2013). As we discuss below, Dish raises several
challenges to the district court’s construction of those terms.
c) The district court’s construction of the terms
The district court concluded that the term “broadcasting,” as used in the
policies at issue, was “synonymous with ‘transmission,’” App. at 2497 (quoting
Nat’l Ass’n for Better Broad. v. FCC, 849 F.2d 665, 669 (D.C. Cir. 1988)), and it
in turn concluded that “[t]here [wa]s no question that D[ish] transmits, via
21
broadcast satellites, television programming to its subscribers,” id. The district
court rejected Dish’s argument “that the satellite television programming it
provides should not be considered ‘broadcasting’ because it is a subscription
service not available to the ‘indiscriminate public’ or the ‘public generally.’” Id.
In the district court’s view, “[n]othing in the case law or the common usage of the
term ‘broadcasting’ requires that every member of the public actually see what is
broadcast or have access to the broadcast for free before the broadcast will be
considered directed to the ‘public at large.’” Id. at 2498. “It is enough,” the
district court concluded, “for the broadcast or telecast to be readily available to
the public at large, and certainly D[ish] strives for universal access.” Id.
Although Dish argued that subscription television was classified as a non-
broadcast service for purposes of the Federal Communications Act, the district
court concluded that this “fact . . . says nothing about the plain, ordinary meaning
of the term ‘broadcasting’ in general.” Id. at 2499. More specifically, the district
court concluded that “it is irrelevant that ‘broadcasting’ has a statutory definition
in a regulatory scheme that excludes satellite television providers” because “the
average purchaser of insurance would consider D[ish] engaged primarily in the
business of broadcasting.” Id.
Further, the district court concluded that Dish’s “attempt to draw a
distinction between subscription and non-subscription television fails because it
makes no sense in the context of the Business Exclusion” contained in the
22
policies at issue. Id. at 2500. In support, the district court offered the following
explanation:
The reason for an insurance policy to include an exclusion for
insureds in the businesses of “advertising, broadcasting, publishing
or telecasting” is to limit the insurer’s exposure to mass media-type
injuries. The extent of that risk is a function of how many people
have access to the media, not whether they pay for it. Both PBS and
D[ish] are mass media businesses, and whether it is PBS
broadcasting a slanderous statement or D[ish] broadcasting a
slanderous statement, each entity presents a risky enterprise for
purposes of advertising coverage.
Id. (internal footnotes omitted). Moreover, “[t]o the extent that D[ish]
maintain[ed] that the word ‘broadcasting’ is susceptible to an interpretation that
would distinguish traditional television transmission from subscription- or
satellite-based television transmission,” the district court “reject[ed] that
interpretation because the distinction is not supported by the underlying risk.” Id.
at 2503.
The district court construed the term “telecasting” in similar fashion,
effectively concluding that it “involv[ed] the transmission of television
programming (as opposed to only radio broadcasting, for example) to viewers.”
Id. at 2506.
d) Dish’s proposed definition of the terms
Dish argues that the district court erred in granting summary judgment in
favor of the Insurers because the terms “broadcasting” and “telecasting” must be
“defined reasonably with a public distribution requirement,” and “D[ish] does not
23
distribute its products and services to the public and, therefore, is not engaged in”
broadcasting or telecasting. Aplt. Br. at 21. In support, Dish asserts that it “is a
subscription service provider in the business of providing video and audio
programming only to its paying subscribers.” Id. Dish notes that “[a]ll of [its]
Annual Reports contain a . . . disclosure” stating Dish’s belief that, as a provider
of subscription programming, it is “not subject to many of the regulatory
obligations imposed upon broadcast licensees.” Id. at 22. “In addition,” Dish
argues, “[t]he Communications Act of 1934 defines ‘broadcasting’ as the
‘dissemination of radio communications intended to be received by the public,
directly or by the intermediary of relation stations.’” Id. at 22-23 (emphasis
added in Dish’s brief) (quoting 47 U.S.C. § 153(7)). Dish in turn argues that,
“[s]tarting with that definition, the FCC undertook in the mid-1980s to distinguish
‘broadcasting’ services from ‘non-broadcasting’ services” by stating that “‘a
necessary condition for the classification of a service as broadcasting is that the
licensee’s programming is available to all members of the public, without any
special arrangements or equipment,’” and that, in contrast, “‘where a licensee
embarks on a communications service in a manner which permits receipt of that
service only by certain members of the public, that licensee is not
broadcasting.’” Id. at 23 (emphasis added in Dish’s brief) (quoting Subscription
Video Report and Order, 2 FCC Rcd. 1001, ¶ 27 (1987)). In light of these
distinctions drawn by the FCC, Dish argues, “subscription service providers, such
24
as Direct Broadcast Satellite providers, [that] provide their services via a private
contractual relationship with the subscribing audience and an encrypted signal to
prevent unauthorized viewing . . . are classified as non-broadcast services.” Id.
And, Dish asserts, in Nat’l Ass’n For Better Broad., the D.C. Circuit “affirmed
the FCC’s determination that subscription video service providers, such as D[ish],
are not in the business of ‘broadcasting.’” Aplt. Br. at 23-24 (citing 849 F.2d at
669).
Dish also asserts that “[t]he distinction between a subscription service
provider . . . and those involved in ‘broadcasting’ . . . is well known through
government and industry.” Id. at 24. “For example,” Dish asserts, “the Standard
Industrial Classification (SIC) System acknowledges the difference between
D[ish]’s subscription services business and the businesses of ‘broadcasting.’” Id.
(internal footnote omitted). As a result, Dish asserts, federal agencies that utilize
the SIC, such as the Securities Exchange Commission, classify Dish as a “Cable
and Other Pay Television Service[],” rather than as a “Radio Broadcasting
Station[]” or a “Television Broadcasting Station[].” Id. at 24-25.
Addressing Dish’s arguments in reverse order, we reject Dish’s assertion
that the commonly understood definition of the term “broadcasting” can be
gleaned from the SIC system. The SIC system was established by the federal
government in the 1930s as a “structure for the collection, presentation, and
analysis of the U.S. economy,” North Am. Indus. Classification Sys. at Bureau of
25
Labor Statistics, www.bls.gov/bls/naics.htm (last visited Nov. 13, 2014), and it
utilizes industry classifications of varying breadth. 3 Dish presents no evidence or
case law that would allow us to conclude that the classifications found within the
SIC system are so well known or commonly employed that they can serve to
define a term in a commercial general liability policy.
Likewise, the statutory definition of “broadcasting” in the Communications
Act of 1934 (Act), see 47 U.S.C. § 153(7), and the FCC’s 1987 “designation of
subscription television and subscription direct broadcast satellite services as not
being broadcasting within the meaning of the Act,” Nat’l Ass’n For Better Broad.,
849 F.2d at 666, are of little value in this case. The Act defines “broadcasting” as
“the dissemination of radio communications intended to be received by the public,
directly or by the intermediary of relay stations.” 47 U.S.C. § 153(7). For more
than 50 years, the FCC, which was afforded a broad grant of authority under the
Act to regulate radio and television communications, applied this definition to
subscription radio and television services. Nat’l Ass’n For Better Broad., 849
F.2d at 671 (Wald, J., dissenting). In 1987, however, the FCC changed course
and adopted the position that pay television services did not qualify as
3
Not surprisingly, Dish focuses on the most narrow of those classifications
and ignores the broader classifications, which, in pertinent part, place it, along
with radio and television broadcasting stations, within “Major Group 48:
Communications.” U. S. Dep’t of Labor, Occupational Safety & Health Admin.,
SIC Manual, available at https://www.osha.gov/pls/imis/sic_manual.html (last
visited Nov. 13, 2014).
26
“broadcasting” under the Act. Id. The FCC’s change of position was challenged
in court and the D.C. Circuit, in a 2-to-1 decision, affirmed. The panel majority
in that case, in discussing the legislative history of the Act, noted as follows:
Further review of the recorded debate and Senator Dill’s involvement
in it makes it plain that the Senators did not purport to be using the
term “broadcasting” in any technical sense . . . . It must be presumed
that the Senators, like most of the rest of us, at times use
“broadcasting” not in its statutorily defined sense, as [specifically
defined in the Act], but as if it were synonymous with
“transmission.”
Id. at 669. In other words, despite affirming the FCC’s conclusion that pay
television services did not qualify as “broadcasting” under the Act, the panel
majority effectively conceded that the Act’s definition of “broadcasting” was
“technical” and considerably more narrow than the commonly understood
definition of that term. Id. Thus, the Act’s statutory definition of “broadcasting”
and the FCC’s interpretation and application of that statutory definition carry
little weight in a case such as this, where our focus is on the commonly
understood definition of the term “broadcasting.”
That leaves only Dish’s argument that the terms “broadcasting” and
“telecasting” must be defined to require distribution of content to the public at
large for free. To address that argument, we turn to dictionary definitions of
these terms. See Mountain States, 296 P.3d at 1024. The term “broadcast,” as an
adjective, is commonly defined as “cast or scattered in all directions . . . : widely
diffused,” Websters Third New Int’l Dictionary 280 (1993), “made public by
27
means of radio or television,” id., and “[d]isseminated by means of radio or
television,” Oxford English Dictionary Online (OED),
http://www.oed.com/view/Entry/23507 (last visited Nov. 13, 2014). Similarly,
the term “broadcast,” as a noun, is commonly defined as “a casting or scattering
in all directions,” “the act of making widely known: the act of spreading abroad,”
and “the act of sending out sound or images by radio or television transmission
esp. for general reception.” Websters, supra at 280. Finally, the term
“broadcast,” as a verb, is similarly defined as “to scatter or sow,” id., “to make
widely known: disseminate or distribute widely or at random,” id., “to send out
from a transmitting station (a radio or television program) for an unlimited
number of receivers,” id., and “[t]o disseminate (a message, news, a musical or
dramatic performance, or any audible or visible matter) from a radio or television
transmitting station to the receiving sets of listeners and viewers,” OED, supra,
http://www.oed.com/view/Entry/23508 (last visited Nov. 13, 2014).
The common definition of the term “telecast” appears to overlap that of the
term “broadcast.” In its noun form, the term “telecast” is commonly defined as “a
broadcasting or a program broadcast by television.” Websters, supra at 2349. In
its verb form, the term “telecast” is commonly defined as “to broadcast by
television.” Id.
Even assuming that the terms “broadcasting” and “telecasting” include a
“public” component, nothing in any of these common definitions of the terms
28
exclude fee-for-service transmissions. And that makes sense when one considers
that subscription television service “shares most characteristics of traditional
broadcasting, including its primary one—i.e., transmissions are directed toward
‘as many people as can be interested in the particular program as distinguished
from a point-to-point message service to specified individuals.’” Nat’l Ass’n For
Better Broad., 849 F.2d at 677 (Wald, J., dissenting) (quoting Nat’l Ass’n of
Broadcasters v. FCC, 740 F.2d 1190, 1201 (D.C. Cir. 1984)). Indeed,
“[s]ubscription television providers,” such as Dish, “obviously do not care about
the identities of the particular individuals to whom their communications are
transmitted; their real goal is to obtain revenues from any and all possible
viewers.” Id. at 678. “In that sense, they are just like newspaper publishers or
movie producers—their products are aimed at the general public, so long as that
public can pay.” Id.; cf. Suburban Cable TV Co. v. Com., 570 A.2d 601, 609 (Pa.
Commw. Ct. 1990) (concluding, in a case concerning state tax exemptions, that
cable television providers were engaged in “broadcasting” because their
“transmissions, both through the air and by cable, . . . involve[d] the
dissemination of communications to the public”).
Thus, in sum, we reject Dish’s assertion that the terms “broadcasting” and
“telecasting,” as employed in the policies at issue, must be defined to exclude fee-
for-service transmissions, such as those that Dish provides to its subscribers. To
the contrary, we conclude that the commonly-understood definitions of the terms
29
“broadcasting” and “telecasting” undoubtedly encompass Dish’s transmissions.
e) The district court’s consideration of Dish’s broker’s advice
In granting summary judgment in favor of the Insurers on the basis of the
policies’ business exclusions, the district court also took into account evidence
regarding advice given to Dish by its insurance broker. When Dish was shopping
for insurance coverage in 2001 and 2002, it was advised by its insurance broker,
The Lockton Companies (Lockton), that “‘Personal Injury and Advertising Injury
Coverage’ for ‘[a]ny offense if the insured is in the business of advertising,
broadcasting, or telecasting’ [w]as one of several ‘MAJOR EXCLUSIONS’ in
[its] commercial general liability coverage” and an item that warranted
‘DISCUSS[ION].’” App. at 2495. In short, Lockton “explicitly warned D[ish]
that it would not be covered for many injuries because of the Broadcasting
Exclusion.” Id. at 2503.
The district court concluded, for three reasons, that this “broker’s advice”
was “admissible under an exception to [Colorado’s] four corners rule.” 4 Id. First,
the district court noted that “no party dispute[d] the veracity of the broker’s
statements.” Id. at 2504. Second, the district court noted that “neither the
elements of the charges brought in the underlying patent infringement complaint
nor D[ish]’s defenses ha[d] anything to do with whether D[ish] [wa]s in the
4
As we noted in DISH I, “Colorado courts adhere to a ‘four corners rule’
or ‘complaint rule,’ under which the courts compare the allegations of the
underlying complaint with the terms of the applicable policy.” 659 F.3d at 1015.
30
business of broadcasting.” Id. Lastly, the district court noted that “application of
the rule to exclude the broker’s advice would defeat the Colorado Supreme
Court’s very object in creating the rule,” id., i.e., to protect the insured’s
legitimate expectation of a defense. Indeed, the district court questioned “[h]ow.
. . D[ish] [could] assert it had a ‘legitimate’ expectation of a defense when it was
literally instructed not to expect a defense?” Id. (emphasis in original).
On appeal, Dish argues that the district court improperly drew inferences
from Lockton’s statements, and, under applicable Colorado law, should not have
considered the Lockton evidence at all in determining whether the Insurers had a
duty to defend Dish in the underlying RAKTL suit. We find it unnecessary to
reach either of these arguments. Even assuming that the district court should not
have considered the statements made by Lockton to Dish, its interpretation of the
terms “broadcasting” and “telecasting” otherwise rests on firm ground.
f) The overlapping meanings of broadcasting and telecasting
In the course of granting summary judgment in favor of the Insurers, the
district court concluded that “[t]he term ‘telecasting’ [wa]s included [in the
policies at issue] to make clear that businesses involving the transmission of
television programming (as opposed to only radio broadcasting, for example) to
viewers are excluded from advertising injury coverage.” App. at 2506. Dish
challenges this point on appeal, arguing that the district court, “[b]y concluding
that D[ish] is simultaneously engaged primarily in both ‘broadcasting’ and
31
‘telecasting,’ . . . rendered the Insured’s Business Exclusion meaningless and
contradictory.” Aplt. Br. at 41 (internal quotation marks omitted). In support,
Dish argues that if “the ‘transmission of television programming’ is already
excluded by inclusion of the term ‘broadcasting,’ . . . the inclusion of the term
‘telecasting’ [is] superfluous.” Id. In addition, Dish argues that it, “like all
companies, can be engaged ‘primarily’ in only one business at any given time.”
Id.
Dish bases its arguments upon the rule of Colorado law that courts “must
avoid reading an insurance policy so as to render some provisions superfluous.”
Gen. Sec. Indem. Co. of Ariz. v. Mountain States Mut. Cas. Co., 205 P.3d 529,
537 (Colo. App. 2009). Dish, however, would have us apply the rule so as to
prevent any overlapping terms whatsoever in an insurance policy. 5 Because we
are not convinced that this was the intent of the Colorado courts in adopting the
rule, we decline to adopt Dish’s position. Moreover, even assuming the terms
“broadcasting” and “telecasting” have overlapping meanings, that does not render
the business exclusion provisions of the policies superfluous. Rather, as the
district court aptly noted, the record suggests that the Insurers, by using both of
the terms at issue, were simply attempting “to make clear that businesses
involving the transmission of television programming . . . to viewers [we]re
5
Under Dish’s position, for example, an automobile liability insurance
policy could not use both the terms “vehicle” and “automobile” because they have
overlapping meanings.
32
excluded from advertising injury coverage.” App. at 2506. We therefore
conclude the district court did not err in determining that Dish was engaged
“primarily” in both “broadcasting” and “telecasting,” given that these two terms
have overlapping meanings.
g) Conclusion
For all of these reasons, we agree with the district court that Dish is
engaged primarily in the business of “broadcasting” and “telecasting,” and that,
consequently, coverage for advertising injuries is unavailable under the policies at
issue.
2. The umbrella insurers
Defendants Arch, National Union and XL are Dish’s umbrella insurers. On
remand, Dish conceded that Arch “had satisfied the requisites for applying [the]
intellectual property exclusion” in its policy “and consented to the entry of
summary judgment in Arch’s favor.” Aplt. Br. at 49. As for National Union and
XL, the district court concluded that neither of them had a duty to defend Dish in
the RAKTL action and thus granted summary judgment in their favor. In doing
so, the district court noted that it was undisputed “that the CGL insurance policies
issued by Travelers and Arrowood have not been exhausted by payments of
claims to which the National Union and XL policies apply.” Id. In addition, the
district court concluded that “National Union and XL have no duty to defend
because their policies, like those of the primary insurers, contain exclusions for
33
advertising injuries where the insurer is engaged in the business of
‘broadcasting.’” Id. “Furthermore,” the district court concluded, “National
Union’s policy contains a ‘sole’ causation requirement . . . that negates
coverage.” Id. at 2508. And lastly, the district court concluded that “National
Union’s Satellite Exclusion and XL’s ‘as warranted’ provision also fail[ed] to
provide coverage.” Id.
In its appeal, Dish takes issue with these conclusions.
a) XL’s “as warranted” provision
Dish argues that “the district court failed to apply the specific ‘as
warranted’ language of the XL Policy correctly.” Aplt. Br. at 51. In order to
understand Dish’s arguments on this point, it is necessary to review several
provisions of the XL Policy. To begin with, the XL Policy contains two separate
coverage provisions: (1) “Coverage A,” which provides coverage for “those sums
that the ‘Insured’ becomes legally obligated to pay as damages arising out of an
‘occurrence’ which are in excess of the underlying insurance stated in Schedule A
of th[e] [XL] policy”; and (2) “Coverage B,” which provides coverage “[w]ith
respect to any loss covered by the terms and conditions of this policy, but not
covered as warranted by the underlying policies listed on Schedule A, or any
other underlying insurance.” App. at 2048 (emphasis added). “The ‘not
covered[] as warranted’ language of [this policy] establishes that [XL] must drop
down for occurrences that are, in fact, covered by the underlying insurance policy
34
despite the wrongful denial of coverage by” the primary insurers. Hocker v. New
Hampshire Ins. Co., 922 F.2d 1476, 1482 (10th Cir. 1991) (interpreting identical
policy language). With respect to the duty to defend, the XL Policy states that
“[w]e will defend any ‘suit’ seeking damages covered by this policy” “but not
covered by any other insurance or underlying insurance.” App. at 2048. Lastly,
the XL Policy includes a number of specific exclusions, including what the
parties refer to as “Exclusion O,” which states as follows: “This insurance does
not apply to . . . [a]ny defense, investigation, settlement or legal expense covered
by underlying insurance.” Id. at 2055-57.
The district court concluded that, in light of Exclusion O, “the XL Policy is
not required to drop down and provide primary coverage even if Arrowood’s
denial of coverage was wrongful.” Id. at 2515. Dish now argues on appeal that
“[t]he district court’s application of the ‘as warranted’ provision and Exclusion O
renders them meaningless and contradictory.” Aplt. Br. at 52 (internal quotation
marks omitted). In support, Dish asserts that “[t]he district court . . . reads the
[Exclusion O] defense provision as relieving XL of responsibility for any defense
covered by underlying insurance even if the underlying insurer wrongfully denies
coverage.” Id. “Thus,” Dish argues, “contrary to even the district court’s reading
of the ‘as warranted’ provision, XL will never be obliged to drop down and
defend when the underlying insurer wrongfully denies coverage.” Id.
We need not decide whether the district court erred in interpreting
35
Exclusion O because we conclude that XL has no obligation under either of the
coverage provisions of its policy to defend Dish in connection with the RAKTL
action. More specifically, there is no excess coverage or related duty to defend
under the “Coverage A” provision of the XL policy because, in light of the
business exclusions we have already discussed, the underlying insurers have no
obligation to indemnify or defend Dish in the RAKTL action. As for the
“Coverage B” provision of the XL policy, its “not covered as warranted” language
clearly refers to situations where the underlying policies on Schedule A were
supposed to provide coverage, but the underlying insurers wrongfully denied
coverage and thus did not actually pay to defend or indemnify the insured.
Because the underlying insurers in this case have no obligation to indemnify or
defend Dish in the RAKTL action, XL has no obligation to provide drop-down
coverage to Dish.
b) The National Union “sole causation” requirement
The “Coverage” provision of the National Union Policy states, in pertinent
part, that “[w]e will pay on behalf of the Insured those sums in excess of the
Retained Limit that the Insured becomes legally obligated to pay by reason of
liability imposed by law . . . because of . . . Advertising Injury that . . . is caused
by an Occurrence.” App. at 1167 (emphasis in original). The National Union
Policy defines “Advertising Injury,” in pertinent part, as “injury arising solely out
of your advertising activities.” Id. at 1169. The National Union Policy also
36
defines “Occurrence,” in pertinent part, in the following manner: “As respects
Advertising Injury, an offense committed in the course of advertising your
goods, products and services that results in Advertising Injury.” Id. at 1171
(emphasis in original).
The district court concluded that “[t]he complaint filed in the [RAKTL]
Action d[id] not allege injury ‘arising solely out of’ the Dish parties’ advertising
activities.” Id. at 2510. Rather, the district court concluded, the RAKTL action
alleged “injuries outside of advertising,” including Dish’s pay-per-view ordering
and its performance of customer service functions. Id. The district court also
rejected Dish’s assertion “that the sole causation requirement conflicts with the
requirement in the definition of Occurrence [in the National Union Policy] that
provides that the offense must be committed in the course of advertising the
named insured’s goods, products, or services.” Id. at 2510-11.
On appeal, Dish argues that “[t]he District Court erred by finding that
conflicting causation provisions,” i.e., the definitions of “Advertising Injury” and
“Occurrence,” “within the National Union policy could be harmonized and
construed in favor of the insurer, when Colorado law requires conflicting
provisions ‘to be construed against the insurer and in favor of coverage to the
insured.’” Aplt. Br. at 52 (quoting Simon v. Shelter Gen. Ins. Co., 842 P.2d 236,
239 (Colo. 1992)). More specifically, Dish argues that “the district court
misapplied the law and misread the National Union Policy when it held that the
37
‘occurrence’ definition modifies the offense, not the injury.” Id. at 54.
We disagree. In order for coverage to exist under the National Union
Policy, there must be liability imposed on Dish “because of Advertising Injury . .
. caused by an Occurrence.” App. at 1167. As noted, an “Occurrence” means “an
offense committed” by Dish “in the course of advertising [its] goods, products
and services that results in Advertising Injury.” Id. at 1171. In turn,
“Advertising Injury” means an “injury arising solely out of your advertising
activities.” Id. at 1169. Construed together, “Dish must have committed an
offense in the course of advertising that caused RAKTL injury,” and “[t]hat
offense, in turn, must be the sole cause of RAKTL’s injury.” Aplee. Br. at 65.
This interpretation, which allows all of the provisions of the National Union
Policy to be read in harmony and in accordance with their plain language, must
prevail over Dish’s attempt to create a conflict. See generally Farmers Ins.
Exchange v. Anderson, 260 P.3d 68, 83 (Colo. App. 2010) (“In determining
whether there is an ambiguity in a policy provision, we evaluate the policy as a
whole and construe the language in harmony with the plain meaning of the words
employed.”).
3. Liability for damages, costs and fees
In its final issue on appeal, Dish argues that, “[a]s a direct result of the
Primary Insurers’ wrongful denial of a defense, [it] was forced to defend itself
simultaneously against the claims asserted in the [RAKTL action] and to
38
prosecute this insurance coverage action.” Aplt. Br. at 55. “Under Colorado
law,” Dish argues, it “is entitled to an award of general and consequential
damages, including the costs and attorneys’ fees incurred in both actions.” Id.
These arguments can be disposed of quickly. Because the district court
correctly concluded that none of the Insurers were obligated to defend Dish in the
RAKTL action, Dish is not entitled to damages, costs or fees incurred in defense
of the RAKTL action or in the pursuit of its insurance coverage claims.
III
The judgment of the district court is AFFIRMED.
39