Flannery v. Allstate Ins. Co.

• Decision Date: 03 June 1999
• Docket Number: No. Civ.A.97-B-210.,Civ.A.97-B-210.
• Citation: 49 F.Supp.2d 1223
• Parties: Michael N. FLANNERY, an individual, Plaintiff, v. ALLSTATE INSURANCE COMPANY, a corporation, and DOES 1 through 10, inclusive, Defendants.
• Court: U.S. District Court — District of Colorado

Page 1223

49 F.Supp.2d 1223

Michael N. FLANNERY, an individual, Plaintiff, v. ALLSTATE INSURANCE COMPANY, a corporation, and DOES 1 through 10, inclusive, Defendants.

No. Civ.A.97-B-210.

United States District Court, D. Colorado.

June 3, 1999.

Thomas L. Roberts, Roberts & Zboyan, P.C., Denver, CO, for plaintiff.

Arthur R. Karstaedt III, Jamey W. Jamison, A. Peter Gregory, Harris, Karstaedt, Jamison & Powers, P.C., Englewood, CO, for defendants.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

Plaintiff, Michael Flannery, moves for partial summary judgment pursuant to Rule 56. Defendant Allstate Insurance Company ("Allstate") moves for determination of questions of law, which I deem a cross-motion for partial summary judgment pursuant to Rule 56. The motions are adequately briefed and the parties presented oral argument on April 30, 1999. For the reasons set forth below, I grant, in part, and deny, in part, both motions. Subject-matter jurisdiction exists under 28 U.S.C. § 1332.

I. FACTS

The following material facts are undisputed unless otherwise noted. In 1991, Flannery Properties, a general partnership, purchased a vacation home in Vail, Colorado. In 1992, Mr. Flannery, a partner of Flannery Properties, purchased a homeowner's insurance policy from Allstate ("the Policy") insuring the vacation home. (Deluxe Homeowner's Policy No. 076181322, Ex. A of Plf.'s 1/14/99 Brf.) Mr. Flannery is the sole insured under the Policy. (Deluxe Homeowner's Policy No. 076181322, Ex. A of Plf.'s Compl.)

On November 22, 1995, Flannery Properties filed a complaint in the United States District Court for the District of Colorado against Ron Byrne and BMS Vail Limited Partnership ("the underlying litigation"). The underlying litigation, which involved a dispute over the legal boundaries between two properties, was assigned to District Court Judge Zita L. Weinshienk. Flannery Properties eventually averred eleven claims for relief in the underlying litigation: (1) reformation of deed due to fraud; (2) reformation of deed due to mutual mistake; (3) constructive trust; (4) fraud; (5) negligent misrepresentation; (6) breach of contract; (7) specific performance of a restrictive covenant of the "Byrne deed;" (8) specific performance of a restrictive covenant of the "Flannery deed;" (9) specific performance of covenants under the Vail Village First Filing; (10) promissory estoppel; and (11) trespass. Mr. Byrne counterclaimed against Flannery Properties and Mr. Flannery in his individual capacity, alleging: (1) slander of title; (2) abuse of process; (3) trespass; and (4) business disparagement. Mr. Byrne premised the slander of title and abuse of process counterclaims on Mr. Flannery's filing of a lis pendens. Mr. Byrne based the trespass counterclaim on the alleged destruction of a fence located on the disputed strip of land, and construction of a drainage system that caused water to flow onto Mr. Byrne's property. Mr. Byrne's business disparagement counterclaim derived from Mr. Flannery's purchase of an advertisement in a Vail, Colorado newspaper that allegedly damaged the reputation of Mr. Byrne and his business enterprises.

On January 4, 1996, Mr. Flannery, through his attorney, notified Allstate of the counterclaims and requested that Allstate defend and indemnify him. (Ltr. from Slamkowski to Pike of 1/22/96, Ex. 1 of Defs.' 1/15/99 Mot.) On March 4, 1996, Allstate informed Mr. Flannery that it had no duty to defend or indemnify him in the underlying litigation. (Ltr. from Nevens to Flannery of 3/4/96, Ex. D of Plf.'s 1/14/99 Brf.) Allstate based its denial of coverage on the intentional acts exclusion of the policy, but purportedly reserved its right to assert additional grounds for denying coverage.

Mr. Flannery then commenced this anticipatory declaratory action in the Superior Court of Los Angeles County, California on September 17, 1996 (Case No. BC 157482), seeking declaratory relief as well as monetary damages for breach of contract and breach of implied covenant of good faith and fair dealing. Allstate removed the case to the United States District Court for the Central District of California on October 16, 1996 (Civil Case No. CV 96-7257 DT). Allstate then filed a motion to transfer the action to the United States District Court for the District of Colorado on October 30, 1996, which motion was granted by District Court Judge Dickran Tevrizian on January 21, 1997. Upon transfer, the case was assigned to Judge Weinshienk as related to the underlying litigation.

On November 5, 1997, Judge Weinshienk heard oral argument on the cross-motions for summary judgment of Mr. Flannery and Allstate. Mr. Flannery argued that Allstate had a duty to defend the trespass counterclaim pursuant to the Policy. At the conclusion of oral argument and in open court, Judge Weinshienk granted Mr. Flannery's motion for partial summary judgment and ruled that Allstate had a duty to defend the trespass counterclaim. Judge Weinshienk also denied Allstate's cross-motion for summary judgment. (Reporter's Transcript of 11/5/97 Proceedings, Ex. E of Plf.'s 1/14/99 Brf.)

The underlying litigation proceeded to trial on January 5, 1998. The jury returned its verdicts on January 16, 1998. I take judicial notice of the special verdict form and judgment, which entered on January 16 and 22, 1998, respectively. The jury found in favor of Flannery Properties and against Mr. Byrne on its negligent misrepresentation claim, awarding Flannery Properties $60,000. Mr. Byrne was adjudged the owner of the disputed strip of land and prevailed on his trespass counterclaim against Flannery Properties and Mr. Flannery, for which he was awarded $1.

Despite Judge Weinshienk's decision that Allstate had a duty to defend Mr. Flannery against the trespass counterclaim, Allstate refused to defend him in the underlying litigation. By a letter dated February 5, 1995, Allstate refused to pay the unapportioned attorney fees and costs submitted by Mr. Flannery, arguing primarily that it is not responsible for paying "all of Mr. Flannery's fees and costs incurred in pursuing his nine or ten claims against Byrne and in defending four other counterclaims that have no factual nexus to the trespass counterclaim." (Ltr. from Gregory to Smith of 2/5/95, Ex. G of Plf.'s 1/14/99 Brf.)

On January 28, 1998, Judge Weinshienk issued an order to show cause why this action should not be dismissed. Both Mr. Flannery and Allstate responded to the order to show cause by notifying the court that the claim for breach of covenant of good faith and fair dealing had not been adjudicated and remained viable. Judge Weinshienk recused herself on February 27, 1998 and the case was reassigned to me. I discharged the order to show cause on March 5, 1998.

II. SUMMARY JUDGMENT STANDARDS

Rule 56 provides that summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c) The non-moving party has the burden of showing that issues of undetermined material fact exist. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A party seeking summary judgment bears the initial responsibility of informing the court of the basis for its motion, and identifying those portions of the pleadings, depositions, interrogatories, and admissions on file together with affidavits if any, that it believes demonstrate the absence of genuine issues for trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir.1992). Once a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in the complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried. Otteson v. United States, 622 F.2d 516, 519 (10th Cir. 1980); Fed.R.Civ.P. 56(e). These specific facts may be shown "by any of the kinds of evidentiary materials listed in Rule 56(c), except the pleadings themselves." Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Where, as here, the parties file cross motions for summary judgment, I assume that no evidence need be considered other than that filed by the parties. James Barlow Family Ltd. Partnership v. David M. Munson, Inc., 124 F.3d 1321, 1323 (10th Cir.1997). Nevertheless, summary judgment is inappropriate if genuine issues of material fact exist. Id.

Summary judgment is also appropriate when the court concludes that no reasonable juror could find for the non-moving party based on the evidence present in the motion and response. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The operative inquiry is whether, based on all documents submitted, reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment should not enter if, viewing the evidence in a light most favorable to the nonmoving party and drawing all reasonable inferences in that party's favor, a reasonable jury could return a verdict for that party. Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505; Mares, 971 F.2d at 494.

III. ANALYSIS OF CROSS-MOTIONS FOR SUMMARY JUDGMENT

a. Choice of Law

In its motion for summary judgment, Allstate first argues that, as a matter of law, Colorado law governs the resolution of its dispute with Mr. Flannery. Mr. Flannery concedes that Colorado law applies and, therefore, I grant, as confessed, Allstate's motion for summary judgment on that issue.

b. Law of the Case Doctrine

Judge Weinshienk ruled that Allstate had a duty to defend Mr. Flannery against the trespass counterclaim in the underlying litigation. "The law of the case" is a...