Cornhusker Cas. Co. v. Skaj

Decision Date18 May 2015
Docket Number13–8010,13–8014.,Nos. 13–8004,s. 13–8004
Citation786 F.3d 842
PartiesCORNHUSKER CASUALTY COMPANY, a Nebraska corporation, Plaintiff Counter Defendant–Appellee, v. Shari SKAJ; Steve Skaj, Defendants Counter Plaintiffs, and Vincent Rosty, Defendant Counter Plaintiff–Appellant. Cornhusker Casualty Company, a Nebraska corporation, Plaintiff Counter Defendant–Appellee, v. Shari Skaj; Steve Skaj, Defendants–Counter–Plaintiffs–Appellants, and Vincent Rosty, Defendant Counter Plaintiff. Cornhusker Casualty Company, a Nebraska corporation, Plaintiff Counter Defendant–Appellant, v. Shari Skaj; Steve Skaj, Defendants Counter Plaintiffs–Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Terence M. Ridley of Wheeler Trigg O'Donnell LLP, Denver, CO (Evan B. Stephenson and Ryan P. Day of Wheeler Trigg O'Donnell LLP, Denver, CO, with him on the briefs), for Plaintiff Counter DefendantAppellee Cornhusker Casualty Company.

R. Todd Ingram of Ingram Olheiser, P.C., Casper, WY (Scott J. Olheiser of Ingram Olheiser, P.C., Casper, WY, and Timothy W. Miller, Miller Law Firm, Casper, WY, with him on the brief), for Defendants Counter Plaintiffs Shari Skaj and Steve Skaj.

Robert M. Shively, Casper, WY (T. Thomas Metier, Metier Law Firm LLC, Fort Collins, CO, with him on the brief), for Defendant Counter PlaintiffAppellant Vincent Rosty.

Before HOLMES, MATHESON, and BACHARACH, Circuit Judges.


HOLMES, Circuit Judge.

Cornhusker Casualty Company (Cornhusker) appeals from the district court's summary-judgment ruling, arguing that the district court incorrectly concluded that Cornhusker was estopped from asserting noncoverage as a defense to the claims of Shari and Steve Skaj. The Skajs have cross-appealed the district court's sua sponte entry of summary judgment against them on their counterclaim for attorneys' fees. Vincent Rosty has filed a cross-appeal as well,1 alleging that the district court erred in granting summary judgment to Cornhusker on some of his tort-based counterclaims.

Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the judgment of the district court. We deny the Skajs' pending motion to file a supplemental appendix and deny as moot Cornhusker's pending motion to seal the contents of that proposed appendix.


R & R Roofing, Inc. (“R & R”) is a Wyoming construction company primarily operated by Randy Rosty and Steven Rosty. In 2007, R & R purchased a Cornhusker commercial liability policy (“the Policy”) that took effect on November 27, 2007, and listed “R & R” and Randy Rosty as the named insureds. Vincent, who was an R & R employee at that time, does not appear as a named insured under the Policy.

The Policy includes business automobile coverage with a liability limit of $1,000,000. By its terms, the Policy obligates Cornhusker to “pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from ... use of a covered ‘auto.’ J. App. at 187 (Bus. Auto. Decls., effective Nov. 27, 2007). It ascribes to Cornhusker the “duty to defend any ‘insured’ against a ‘suit’ asking for ... damages” and defines “insureds” as (a) You for any covered ‘auto’ [and] (b) Anyone else while using with your permission a covered ‘auto.’ Id. Several “covered autos” appear on the Policy's automobile schedule, including as pertinent here, a 1974 Ford F 600 dump truck. Id. at 181.

Additionally, the Policy establishes a number of loss conditions. It states, We have no duty to provide coverage under this policy unless there has been full compliance” with various duties. Id. at 192. In particular, after an accident, or after the filing of a claim or lawsuit, the policyholder must promptly notify Cornhusker by [i]mmediately send[ing] ... copies of any request, demand, order, notice, summons or legal paper received concerning the claim or ‘suit.’ Id. A cooperation clause memorializes the policyholder's assent to [c]ooperate with [Cornhusker] in the investigation or settlement of the claim or defense against the ‘suit.’ Id.

On May 6, 2008, Vincent drove R & R's 1974 Ford F 600 dump truck to the residence of Ms. Skaj to deliver roofing supplies and “to see if his kids were there.” Id. at 1338 (Order, filed Dec. 11, 2012). Vincent has two children by Ms. Skaj. At some point after Vincent stopped in an alley behind the Skaj residence, the truck (with a manual transmission) was accidentally knocked into second gear. The truck then rolled forward toward Ms. Skaj as she approached and pinned her against a parked motor home, producing serious injuries. A laboratory test performed later that day detected the presence of marijuana and methamphetamines in Vincent's bloodstream.

Within a few days of Ms. Skaj's accident, Cornhusker retained AmeriClaim adjuster Charles Brando to perform an investigation. Mr. Brando sent a report detailing his findings to Cornhusker on May 22, 2008. Among other things, the report described interviews with Vincent, Mr. Skaj, two police officers, Randy, and Steven. In particular, it noted that Vincent had driven “off route ... to stop at his [e]x's[, i.e., Ms. Skaj's] residence. Id. at 701 (Claim Report, dated May 22, 2008). The report described Randy as being “adamant that [Vincent] was aware of the company policy that the insured vehicles [including the Ford dump truck involved in the accident] are not to be used for personal business,” though Randy acknowledged that there were “no written policies on use of company vehicles.” Id. at 694.2

In October of 2008, counsel for the Skajs wrote to Cornhusker to notify it of a forthcoming claim. Cornhusker sent a [n]otice of potential excess exposure” to R & R, Steven, and Vincent on October 30, 2008, referencing Ms. Skaj's demand for $2,000,000. Id. at 339 (Notice, dated Oct. 30, 2008). Besides reporting the possibility of exposure in excess of the Policy's $1,000,000 limit, the notice stated:

[W]e wish to advise you of your right to retain personal counsel, at your own expense, as pertains to your potential excess exposure. We are not advising that you must retain personal counsel, as Cornhusker Casualty Company will continue to provide a defense, but merely to advise you of your right to do so.
It is likely that the [Skajs'] attorney might file a [lawsuit] against you. If you do receive any legal papers, please advise us immediately and send us copies.

Id. at 340 (emphasis added).

On November 13, 2008, the Skajs' counsel wrote to Cornhusker—this time in anticipation of litigation. Months later, on April 16, 2009, the Skajs did file a lawsuit in Natrona County, Wyoming, against R & R, Steven, and Vincent. The Skajs asserted several claims sounding in negligence and requested punitive damages based on their allegations that Vincent was intoxicated at the time of Ms. Skaj's accident. Service on Vincent was accomplished on April 17, 2009, by delivering a copy of the summons and complaint to his mother. Actually locating Vincent, however, proved more difficult.3 When Mr. Brando attempted to do so on May 12, 2009, by visiting Vincent's mother's home, he encountered Rosty family members who professed a lack of knowledge both as to Vincent's whereabouts and how to contact Vincent.

At the conclusion of his investigation, Mr. Brando advised Cornhusker about possible ways that Vincent might be reached, specifically:

to send him three letters to his (mother['s] ) Post Office Box[,] ... one certified-return receipt requested signature required (if he is still getting mail at this Post Office Box), one regular mail (that may be forwarded if he filed a forwarding address), and one Return Service Requested (if he filed a forwarding address and the post office returns the letter with the new mailing address).

Id. at 435 (Supp. Report, dated May 13, 2009) (emphases omitted). The record does not offer any indication that Cornhusker followed Mr. Brando's advice.4

Meanwhile, in April of 2009, counsel retained by Cornhusker to defend against the Skajs' lawsuit sought and received an extension of “the answer deadline for all defendants. Id. at 430 (Letter, dated Apr. 29, 2009) (emphasis added). Communication related to that request indicates that defense counsel at that point “d[id] not know if [she would] be representing all of the defendants.” Id. A few weeks later, defense counsel filed an answer to the Skajs' complaint on behalf of Steven and R & R only, noting, “I do not represent Vincent Rosty.” Id. at 448 (Letter, dated May 18, 2009). During that time period, Cornhusker reached the conclusion, [b]ased on the allegations of the complaint and the policy, ... that Vincent ... was not entitled to a defense under the policy.” Id. at 1222 (Dep. of Thomas Mortland, dated Aug. 15, 2012). Cornhusker did not attempt to advise Vincent of its decision at that time not to represent him. More specifically, Vincent later testified via affidavit that he “had no knowledge of the ongoing matter.” Id. at 1238 (Aff. of Vincent Rosty, dated Nov. 1, 2010).

An entry of default against Vincent issued on May 21, 2009. Over the next year, proceedings stalled as the non-defaulting defendants were dismissed from the litigation and the Skajs sought to recover a judgment as to Vincent. The Wyoming trial court eventually set a default-judgment hearing for September of 2010. At that juncture, Cornhusker hired separate representation for Vincent. Cornhusker's retained counsel for Vincent entered an appearance on September 23, 2010, and opposed the default-judgment proceedings. The state court held a hearing on the matter on September 24, 2010, and, after considering the parties' arguments, announced that it would enter a default judgment in favor of the Skajs and against Vincent. Shortly thereafter, the court issued a default-judgment order assessing a total in damages and costs of $897,344.24 against Vincent.

One week after the default-judgment hearing, Cornhusker sent Vincent a letter purporting for the first time to deny coverage. In...

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