Government Employees Insurance v. Moore

FILED
United States Court of Appeals
Tenth Circuit
June 20, 2011
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
GOVERNMENT EMPLOYEES
INSURANCE COMPANY, a
Maryland corporation,
Plaintiff - Appellee,
v. No. 10-1468
(D.C. No. 09-CV-02666-WDM-BNB)
STACEY MOORE, individually and as (D. Colo.)
mother and next friend of Caleb
Moore; CALEB MOORE,
individually; JEREMY VIALPANDO,
individually,
Defendants - Appellants,
DAVID L. BROWN; AMANDA L.
BROWN, individuals,
Defendants.
ORDER AND JUDGMENT *
Before KELLY, BALDOCK, and LUCERO, Circuit Judges.
In this declaratory judgment action, Plaintiff-Appellee GEICO successfully
sought a judgment that it did not owe its insured (Defendants David L. and
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Amanda Brown) a duty to defend or indemnify arising from claims on behalf of
Defendants-Appellants Caleb Moore and Jeremy Vialpando. Defendants-
Appellants argue that a car-to-car shooting is a compensable accident under
Colorado insurance law and that a policy exclusion for intentionally causing
injury is void as against public policy. Our jurisdiction arises under 28 U.S.C.
§ 1291 and we affirm.
Background
This case arises out of the unfortunate series of events that we previously
examined in State Farm v. Fisher, 618 F.3d 1103 (10th Cir. 2010). Fisher
concerned the shooting of Michael Fisher in the street following a car chase. This
case concerns the events taking place prior to that shooting. On November 5,
2007, A.J. Brown visited the home of his ex-girlfriend, Tiffany Howard, and
demanded to be let in. She refused him entry and called a friend, Jeremy
Vialpando, for help. Mr. Vialpando and three friends, Caleb Moore, Robert
Ellsworth, and Michael Fisher, drove over to Ms. Howard’s home and picked her
up. As they were driving away from her home, the group became aware that Mr.
Brown was following them in his car. Mr. Brown first struck the rear of their
vehicle with his own. He then pulled alongside their vehicle, aimed a shotgun out
of his passenger-side window, and fired. The shotgun blast shattered the left-
passenger window and hit Mr. Vialpando in the side of the head. Mr. Moore was
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injured by flying glass from the same shot.
The 1989 Chevrolet Suburban that Mr. Brown was driving was owned by
his parents, David and Amanda Brown. It was covered by a GEICO automobile
insurance policy providing that GEICO “will pay damages which an insured
becomes legally obligated to pay because of: 1. bodily injury, sustained by a
person, and; 2. damage to or destruction of property, arising out of the ownership,
maintenance, or use of the owned auto or a non-owned auto. We will defend any
suit for damages payable under the terms of this policy.” Aplt. App. 4. However,
the policy also contains the following exclusion: “Bodily injury or property
damage caused intentionally by or at the direction of the insured is not covered.”
Id. at 5.
GEICO filed this action seeking a declaration that it owed no duty under
the terms of the policy to defend or to indemnify the Browns for the claims
asserted against them on behalf of Mr. Moore and Mr. Vialpando in state court
actions. See Gov’t Emps. Ins. Co. v. Brown, 739 F. Supp. 2d 1317, 1320 (D.
Colo. 2010). Defendants-Appellants moved for summary judgment contending
that GEICO’s intentional act exclusion was void as against Colorado public
policy. GEICO in turn moved for summary judgment contending the exclusion
precludes recovery for the Browns despite Colorado’s mandatory insurance laws.
The district court granted partial summary judgment in GEICO’s favor,
concluding that the intentional act exclusion was not void, the intentional act
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exclusion applied in the circumstances at hand, and, therefore, GEICO could incur
no coverage obligation to defend the Browns, nor, as it follows, to indemnify
them. See id. at 1326. The parties do not dispute that the shooting in this case
falls within the scope of the exclusion. Therefore we consider only the legal
question of its validity. Because we conclude that Colorado law permits the
intentional acts exclusion, we affirm.
Discussion
We review appeals from a district court’s grant of summary judgment de
novo, affirming if, viewing the facts in the light most favorable to the
non-movant, there remains no genuine issue as to any material fact and the
movant is entitled to judgment as a matter of law. Mathews v. Denver Newspaper
Agency LLP, --- F.3d ----, 2011 WL 1901341, at *3 (10th Cir. May 17, 2011); see
Fed. R. Civ. P. 56(a). In diversity cases, the substantive law of the forum state
governs the underlying claims. Therefore we apply Colorado law in examining
the district court’s grant of summary judgment. See Fisher, 618 F.3d at 1106. In
making this inquiry, “we apply the law as set forth by Colorado’s highest court.
The decisions of lower Colorado courts, while persuasive, are not dispositive.”
Id. (internal quotation marks and citations omitted).
Colorado recognizes a broad duty to defend, requiring an insurance
company to defend where the complaint against the insured “alleges any facts that
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might fall within the coverage of the policy, even if allegations only potentially or
arguably fall within the policy’s coverage.” Thompson v. Md. Cas. Co., 84 P.3d
496, 502 (Colo. 2004) (internal quotation marks and citation omitted). Because
the parties do not dispute that the acts in question were intentional and thus
expressly excluded by the terms of the policy, we must affirm if the exclusion is
valid under Colorado law. See Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083,
1090 (Colo. 1991) (en banc); Sachs v. Am. Family Mut. Ins. Co., --- P.3d ----,
2010 WL 3259822, at *5 (Colo. App. Aug. 19, 2010).
The Colorado Supreme Court construes automobile insurance contracts as
“express attempts to conform to statutory requirements.” State Farm Mut. Auto.
Ins. Co. v. Kastner, 77 P.3d 1256, 1260 (Colo. 2003) (en banc). Accordingly, it
has held that an exclusion in an automobile policy is void as against public policy
if it excludes coverage in a situation for which insurance is mandatory or if it
dilutes coverage to such an extent that the practical effect is to render one
uninsured in such a situation. See Meyer v. State Farm Mut. Auto Ins. Co., 689
P.2d 585 (Colo. 1984) (en banc) (exclusion by terms); Farmers Ins. Exch. v.
Dotson, 913 P.2d 27 (Colo. 1996) (en banc) (dilution). Therefore, “[t]he starting
point for our analysis begins with the Act.” Meyer, 689 P.2d at 588.
Colorado’s compulsory automobile insurance laws provide in relevant part,
“Every owner of a motor vehicle who operates the motor vehicle on the public
highways of this state . . . shall have in full force and effect a complying policy
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under the terms of this part 6 covering the said motor vehicle . . . .” Colo. Rev.
Stat. § 10-4-619. They also provide that “the basic coverage required for
compliance with this part 6 is legal liability coverage for bodily injury or death
arising out of the use of the motor vehicle.” Id. § 10-4-620.
Exclusions to compulsory coverage are permitted “where the injured
person: (a) Sustains injury caused by his or her own intentional act; or (b) Is
operating a motor vehicle as a converter without a good faith belief that he or she
is legally entitled to operate or use such a vehicle.” Id. § 10-4-623(2). There
may also be other, valid, exclusions beyond those expressly stated in Colo. Rev.
Stat. § 10-4-623(2) provided they “are not inconsistent with the requirements of
this part 6.” Colo. Rev. Stat. § 10-4-623(1).
Defendants argue that Meyer v. State Farm sets out the relevant framework
to examine whether an automobile insurance policy exclusion not expressly
provided for by statute is void as against Colorado public policy. See 689 P.2d
585 (Colo. 1984), superceded by Colo. Rev. Stat. § 10-4-418(2)(b), as recognized
in Schlessinger v. Schlessinger, 796 P.2d 1385, 1389 (Colo. 1990). Meyer
invalidated a household exclusion on the grounds that it was not expressly
authorized by the predecessor to Colo. Rev. Stat. § 10-4-623 and that it conflicted
with the broader Automobile Reparations Act (“No Fault Act”). 689 P.2d at 592.
Meyer’s analysis largely was informed by the stated legislative purpose of the No
Fault Act, which was repealed effective July 1, 2003. See Colo. Rev. Stat.
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§ 10-4-726, amended by 2001 Colo. Sess. Laws, Ch. 165 § 6 and 2002 Colo. Sess.
Laws, Ch. 189 § 1; Meyer, 689 P.2d at 588 (quoting Colo. Rev. Stat. § 10-4-702(1973)).
According to Defendants, Meyer compels the following premise and
deduction: If the intentional acts exclusion renders the driver uninsured in case of
bodily injury or death arising out of the use of the motor vehicle, see Colo. Rev.
Stat. § 10-4-620, then this exclusion, because not expressly permitted under Colo.
Rev. Stat. § 10-4-623, violates public policy and is void. Under Colorado law the
injuries in a car-to-car shooting arise out of the use of the motor vehicle.
Therefore, the exclusion in this case applies to a situation in which coverage is
mandated and is void.
The district court’s conclusion was based on the presumption that an
intentional shooting is not an “accident” under the terms of an automobile
insurance policy:
I conclude that the intentional conduct exclusion does not conflict
with the statute, which sets forth mandatory minimum coverage for
bodily injury and property damage caused by an accident involving a
motor vehicle. Our legal system is replete with the distinctions
between intentional and unintentional, that is, negligent or
accidental, conduct. Just as manslaughter is not equated with
murder, conduct that intentionally causes such bodily injury cannot
fairly be considered a negligent act or an accident. Nothing in the
statute indicates that the general assembly concluded that Colorado
policy mandated coverage of injuries caused by such intentional
conduct.
Brown, 739 F. Supp. 2d at 1323.
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We conclude that enforcing the intentional acts exclusion in this case is not
contrary to the requirement that persons obtain “legal liability coverage for bodily
injury or death arising out of the use of the motor vehicle” because Mr. Brown’s
actions in this case did not arise out of the use of a motor vehicle; therefore we
need not consider the question of whether an intentional shooting may be deemed
an “accident” for the purpose of determining the extent of mandatory liability
coverage under Colorado law.
The Colorado Supreme Court has not definitively indicated that Meyer is
the appropriate framework for our analysis, and GEICO argues that Meyer and its
progeny should be distinguished from this case because they concerned policy
exclusions narrowing the class of persons covered by a policy. See Colo. Rev.
Stat. § 10-4-601(5) (defining “insured” as “the named insured, relatives of the
named insured who reside in the same household as the named insured, and any
persons using the described motor vehicle with the permission of the named
insured”); see, e.g., Meyer, 689 P.2d at 588; Farmers Ins. Exch. v. Dotson, 913
P.2d 27, 30 (Colo. 1996); St. Paul Fire & Marine Ins. Co. v. Mid-Century Ins.
Co., 18 P.3d 854, 855 (Colo. App. 2001); see also Pacheco v. Shelter Mut. Ins.
Co., 583 F.3d 735, 738 (10th Cir. 2009). However, the portions of the No-Fault
Act upon which the court relied in Meyer to determine that the exclusion
conflicted with the coverage laws were incorporated into Colorado’s mandatory
insurance laws. See Meyer, 689 P.2d at 589. Compare Colo. Rev. Stat. § 10-4-
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620 (minimum liability coverage), and id. § 10-4-623 (exclusions), with Colo.
Rev. Stat. § 10-4-705(1) (minimum liability coverage, repealed), and id. § 10-4-
712 (exclusions, repealed). Therefore, we conclude that Meyer provides the
appropriate framework under Colorado law to examine the validity of the
intentional acts exclusion. Even applying this framework, however, we conclude
that the injuries incurred from the car-to-car shooting in this case did not “arise
out of the use of the motor vehicle,” and, therefore, the intentional acts exclusion
does not conflict with Colorado’s mandatory insurance laws and is not void under
Meyer. This conclusion is consistent with Colorado public policy, which, as
explained below, recognizes an interest in allowing insurers to shift risk based on
an insured’s misconduct and in limiting insurance coverage to “calculable risks.”
In Meyer, the Colorado Supreme Court examined the validity of a
household exclusion clause. To determine whether the exclusion was consistent
with Colorado public policy, the court looked to both the language and the
legislative purpose of the No Fault Act. Meyer, 689 P.2d at 588 (“The starting
point for our analysis begins with the Act. In order to determine whether the
household exclusion is inconsistent with the Act, we first look to the underlying
public policy expressed by the General Assembly.”). The court first looked to the
legislative declaration to determine that the legislative purpose behind the No
Fault Act was “[t]o avoid inadequate compensation to victims of automobile
accidents, and to require that motor vehicle owners purchase insurance policies
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which provide coverage for both liability and no-fault benefits.” Id. The court
then looked to the language of the statute to determine whether liability coverage
was required by the act and, if so, whether the household exclusion clause was
within the act’s permitted exclusions. Id. at 588-89. It determined that the
exclusion rendered the party uninsured in a situation for which the act required
coverage and that the exclusion was not permitted by the statute. Therefore, the
court held, the exclusion was invalid because it was “neither authorized by statute
nor in harmony with the legislative purpose mandating liability insurance to
provide coverage for bodily injury and property damages to avoid inadequate
compensation to victims of automobile accidents.” Id. at 592.
Accordingly, under Meyer’s framework, we must first examine whether the
intentional acts exclusion renders Mr. Brown uninsured “for bodily injury or
death arising out of the use of the motor vehicle.” Colo. Rev. Stat. § 10-4-620.
We conclude it does not. The Colorado Supreme Court engages in a two-part test
to determine whether injuries “aris[e] out of the use of the motor vehicle,” which,
when applied, operates to exclude intentional acts that are not inexorably
intertwined with the use of the subject vehicle: (1) the vehicle must be used in a
manner “foreseeably indentifiable with the inherent purpose of a motor vehicle,”
Kastner, 77 P.3d at 1263; and (2) there must be a “causal connection” between the
use of the automobile and the injury, id.
To date, the Colorado Supreme Court has considered the issue of whether
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in cases of shootings involving automobiles a sufficient causal nexus is present to
compel coverage under state-mandated insurance only in the context of uninsured
motorist coverage. These cases are relevant because uninsured motorist coverage
must be offered to a class coextensive with the class covered under a policy’s
liability provision. See Pacheco, 583 F.3d at 739. However, it remains an open
question under Colorado law whether the circumstances here present an adequate
causal nexus to conclude that the injuries arise out of the use of the automobile
such that coverage would be required under the policy.
In Cung La v. State Farm, the plaintiff was driving along the highway when
three other cars, whose drivers recognized him from a prior incident, boxed him
in. One of the drivers then fired a shot into the plaintiff’s vehicle, injuring him.
The Colorado Supreme Court sitting en banc concluded that under these
circumstances the plaintiff raised an issue of fact as to whether the shooting
involved the use of the vehicle and whether that use caused the injuries. Cung La
v. State Farm Auto. Ins. Co., 830 P.2d 1007, 1011 (Colo. 1992) (en banc). The
court instructed that the causation query should be whether the “vehicle
contributed to the injuries and the injuries would not have been sustained but for
the assailant’s use of the uninsured vehicle.” Id. at 1009. Determinative in Cung
La was whether “the assailant identified and shot [the victim] because of the
vehicle he was driving and would not have shot him but for his driving of the
vehicle.” Id. at 1012 (emphasis added). “If . . . the assailant identified and shot
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him because of the vehicle he was driving and would not have shot him but for
his driving the vehicle,” then, the court concluded “the injuries he sustained from
the gunshot were causally related to his use of the vehicle.” Id.State Farm v. McMillan, 925 P.2d 785 (Colo. 1996) (en banc), would
appear to bolster the conclusion that injuries from car-to-car shootings are caused
by the use of a motor vehicle; however, its import is somewhat limited. The
parties in McMillan stipulated that the decision in Cung La, then in the Colorado
Court of Appeals, would control the outcome of the insurer’s summary judgment
motion in their case. See McMillan, 925 P.2d at 788. In McMillan, the insured
had a verbal exchange with another driver who had been tailgating her while they
were stopped at a traffic light, and the second driver then followed her and fired
several shots into her car, injuring her. Once the Colorado Court of Appeals
entered summary judgment in favor of the insurer in Cung La, the McMillan court
granted summary judgment to the insurer as well. Id. But, when the Colorado
Supreme Court reversed the decision of the Court of Appeals in Cung La, the
insured in McMillan filed a motion for relief from the judgment, which was
granted. Id. at 789. The insurer amended its complaint to add the claim that the
insured’s injuries did not arise out of an “accident,” which argument was
ultimately rejected by the Colorado Supreme Court. McMillan, 925 P.2d at 795.
But the issue of whether the injuries arose from an “accident” is distinct from that
of causal connection to the use of the automobile. And in any event it is not clear
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that Colorado would extend its rationale regarding whether an intentional act is an
accident where the act is committed by the insured; McMillan concerned
uninsured motorist coverage, which does not pose the same moral hazard risk as
covering the intentional acts of an insured. The court’s recent decision in Bailey
v. Lincoln Gen. Ins. Co., --- P.3d ----, 2011 WL 2150759 (Colo. May 16, 2011),
discussed below, suggests the court would not.
In State Farm v. Fisher, 618 F.3d 1103, we addressed whether a sufficient
causal nexus was present between the operation of a motor vehicle and a shooting
in the street such that an insured could recover pursuant to uninsured motorist
coverage. Fisher concerned Mr. Brown’s shooting of Michael Fisher in the street
after both had exited the vehicles. After seeking recovery from GEICO, which
was declined based on the subject intentional acts exclusion, Mr. Fisher’s mother
then filed an uninsured motorist claim with her own insurer, State Farm. Id. at
1105. Applying Colorado law, we assumed without deciding that the use prong
was satisfied, id. at 1108, and reasoned that “[i]t appears clear under Colorado
law that if an assailant’s injurious conduct is predicated upon his or her presence
in a moving vehicle, such as in a so-called ‘drive by’ shooting, the requisite
causal nexus is present.” Id. at 1108 (citing McMillan, 925 P.2d at 794; Cung La,
830 P.2d at 1011). Mr. Brown, however, had stopped his vehicle and exited
before shooting Mr. Fisher and had not used his vehicle as an instrumentality of
the assault; therefore, we concluded, “[Mr.] Brown used the Suburban, in essence,
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as a means to transport himself to the scene of his assault of Mr. Fisher. And, it
is clear that such ‘use’ is insufficient to establish the causal nexus required by
Kastner’s second prong.” Id. at 1109 (citing Kastner, 77 P.3d at 1266).
Here we conclude that, as in Fisher, Mr. Brown’s action was not predicated
upon his presence in a moving vehicle. We recognize that there may be
instances–as in some cases of “drive-by” shootings and “road rage”–in which a
sufficient nexus between the use of the vehicle and the injuries is present such
that they must be deemed to arise out of the use of the vehicle under Colorado
law and exclusion of which may therefore contravene Colorado mandatory
insurance laws. However, in these circumstances, the shooting was independent
of both Mr. Brown’s use and Mr. Vialpando’s use of the motor vehicles.
Although Mr. Brown and the victims remained in the vehicles, as in Fisher Mr.
Brown’s vehicle was merely “a means to transport himself to the scene of his
assault.” Mr. Brown saw Mr. Moore and Mr. Vialpando enter their vehicle,
followed them, then commissioned the intentional act. There is no allegation that
the injuries were caused by Mr. Brown’s use of his vehicle as an instrumentality
or that Mr. Brown identified and shot at the victims based on the vehicle they
drove. See Cung La, 830 P.2d at 1012.
Even assuming that the shooting in this instance bore sufficient causal
nexus to implicate Cung La, the Colorado Supreme Court has articulated a strong
public policy against the coverage of intentional acts by an insured, which
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compels us to conclude that the exclusion in this case would be upheld. In Bailey
v. Lincoln General Insurance Co., the court considered the question whether the
policy of fair compensation for innocent victims should override a crime
exclusion in the context of supplemental insurance coverage. See 2011 WL
2150759. Because Bailey concerned supplemental coverage, the court did not
construe the provisions that pertain here. See id. at *5. But in considering the
validity of the crime exclusion the court stated, “There are multiple, competing
public-policy principles animating Colorado’s insurance laws: not only is it the
public policy of this state to protect tort victims, but it is also the public policy of
this state to provide insurers and insureds the freedom to contract, allowing
insurers to shift risk based on their insureds’ misconduct, especially when that
misconduct significantly increases the risk of insurers’ liability and may be
encouraged by indemnification.” Id. at *6. Moreover, “public policy is also
concerned with insurers giving insureds license to engage in intentional
misconduct, which, may be ‘more likely if . . . insured[s] believe [they] will not
have to bear the financial costs of the intentional conduct.’” Id. at *7 (quoting 7
Couch on Insurance § 101-21 (2006) (alterations in original)).
The court recognized that “intentional-act exclusions ‘are necessary to help
insurers set rates and supply coverage. If a single insured is allowed, through an
intentional act, to consciously control risks covered by the policy, the central
concept of insurance is violated.’” Id. at *6 (quoting State Farm Fire & Cas. Co.
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v. Leverton, 732 N.E.2d 1094, 1097 (Ill. App. Ct. 2000)) (citing Charter Oak Fire
Ins. Co. v. Color Converting Indus. Co., 45 F.3d 1170, 1174 (7th Cir. 1995)).
This statement of Colorado public policy is consistent with the prior statement in
American Family Mutual Insurance Co. v. Johnson, 816 P.2d 952 (Colo. 1991),
that “[t]he purpose of the exclusion of intentional injuries from coverage is to
prevent extending to the insured a license to commit harmful, wanton or
malicious acts. This purpose serves a valid public policy.” Id. at 957 (citations
omitted).
In sum, we must conclude that enforcing the intentional acts exclusion in
this case is not contrary to the requirement that persons obtain “legal liability
coverage for bodily injury or death arising out of the use of the motor vehicle”
and that the exclusion is consistent with Colorado public policy limiting insurance
coverage to calculable risks.
AFFIRMED.
Entered for the Court
Paul J. Kelly, Jr.
Circuit Judge
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