Pompa v. American Family Mut. Ins. Co.

• Citation: 506 F.Supp.2d 412
• Decision Date: 05 March 2007
• Docket Number: Civil Action No. 05-cv-02366-WYD-PAC.
• Parties: David Cidrillo POMPA; Rosemary Santeler; and Shawn Michael Domianus; and Scott Christopher Domianus, by and through their next best friend and Natural Parent, Terry Domianus, Plaintiff(s), v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant(s).
• Court: U.S. District Court — District of Colorado

506 F.Supp.2d 412

David Cidrillo POMPA; Rosemary Santeler; and Shawn Michael Domianus; and Scott Christopher Domianus, by and through their next best friend and Natural Parent, Terry Domianus, Plaintiff(s), v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant(s).

Civil Action No. 05-cv-02366-WYD-PAC.

United States District Court, D. Colorado.

March 5, 2007.

Michael Justin Rosenberg, Roberts, Levin & Patterson, P.C., Richard Paul Brentlinger, Inman Flynn Biesterfeld Brentlinger & Moritz, P.C., Denver, CO, for Plaintiffs.

Stephanie A. Montague, Suzanne J. Lambdin, Lambdin & Chaney, LLP, Denver, CO, for Defendant.

ORDER

DANIEL, District Judge.

I. INTRODUCTION AND FACTUAL BACKGROUND

THIS MATTER is before the Court on Defendant's Motion for Summary Judgment, filed March 27, 2006 (docket # 11) and Plaintiff David Cidrillo Pompa's Cross Motion for Partial Summary Judgment on Breach of Contract Claim, filed April 24, 2006 (docket # 20).

This case concerns a dispute over whether Defendant American Family Mutual Insurance Company ("American Family") has a duty to defend and indemnity its insured, Plaintiff David Cidrillo Pompa, for liability he incurred as a result of a wrongful death lawsuit brought by Plaintiffs Rosemary Santeler, Shawn Michael Domianus, and Scott Christopher Domianus (the "Domianus Heirs"). According to the undisputed facts alleged in the motion and cross-motion, on September 8, 2002, Pompa and Stephen Domianus were involved in an altercation at the Lake Avenue Inn in Adams County, Colorado in which Stephen Domianus was killed. Criminal charges were filed against Pompa for reckless manslaughter and second-degree assault, and on May 16, 2003, Pompa pled guilty to criminally negligent homicide. The Domianus Heirs reported this incident to American Family on July 14, 2003. On October 8, 2003, the Domianus Heirs filed a wrongful death suit against Pompa in District Court in Adams County, Colorado (the "underlying suit"). After receiving the suit papers, American Family investigated the claim under a reservation of rights and on December 2, 2003, issued a letter declining to provide Pompa with a defense in the underlying suit. The denial was based, in part, on the Intentional Injury and Violation of Law exclusions in Pompa's homeowners' policy. On December 30, 2004, the Adams County District Court entered a judgment against Pompa, and in favor of the Domianus Heirs, in the amount of $983,609.90, plus costs and interest. Unable to satisfy the judgment, Pompa entered into a settlement agreement with the Domianus Heirs patterned on Northland Ins. Co. v. Bashor, 494 P.2d 1292 (Colo.1972) (the "Bashor Agreement"). Pompa initiated this action pursuant to the terms in the Bashor Agreement.

In this case, Pompa and the Domianus Heirs bring claims for breach of contract, willful breach of contract and bad faith breach of contract based on American Family's refusal to defend and indemnify Pompa the underlying suit. In addition, the Plaintiffs bring a fourth claim for relief for declaratory judgment in which they request this Court declare the "rights and legal relations of [the Domianus Heirs] as an interested party in the within insurance coverage dispute." In its motion, American Family asserts that it is entitled to summary judgment on all of Plaintiffs' claims because the Domianus Heirs lack standing to pursue their claims against American Family, and because the Violation of Law exclusion in the policy precludes all coverage for the incident for which Pompa pleaded guilty. Pompa's cross-motion seeks partial summary judgment on his breach of contract claim only. Pompa states that he is not seeking partial summary judgment on the damages component of his breach of Contract claim, but only as to the issue of whether American Family breached the terms of the policy at issue by failing to provide Pompa with a defense in the underlying lawsuit.

II. ANALYSIS

A. Summary Judgment Standard

Summary judgment may be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if `any, show that there is no genuine issue as to any material fact and the ... moving party is entitled to judgment as a matter of law." FED.R.Civ.P. 56(c). The burden of showing that no genuine issue of material fact exists is borne by the moving party. E.E.O.C. v. Horizon/CMS Healthcare Corp., 220 F.3d 1184, 1190 (10th Cir.2000). In reviewing a summary judgment motion, the court must view the evidence in the light most favorable to the nonmoving party. Anaya v. Crossroads Managed Care Systems, Inc., 195 F.3d 584 (10th Cir. 1999). All doubts must be resolved in favor of the existence of triable issues of fact. Boren v. Southwestern Bell Tel. Co., 933 F.2d 891, 892 (10th Cir.1991).

When cross motions for summary judgment are filed, the court "`is entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts.'" Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir.2000) (quotation omitted). Cross motions for summary judgment must be treated separately; the denial of one does not require the grant of another. Buell Cabinet v. Sudduth, 608 F.2d 431, 433 (10th Cir.1979).

B. Whether Summary Judgment is Appropriate In this Case.

I first address the arguments raised in American Family's motion concerning the Domianus Heirs' ability to assert claims in this case.

1. Whether the Domianus Heirs Have Standing

Defendant asserts that the Domianus Heirs lack standing to bring claims against American Family in this case. According to Defendant, the only claims asserted in this action — breach of contract and bad faith — involve the coverage dispute between Defendant and Plaintiff Pompa, and Pompa is the only party entitled to assert such claims.

Fed.R.Civ.P. 17(a) states that every action shall be prosecuted in the name of the "real party in interest." Only the "real party in interest" has standing to bring suit in federal court. US Fax Law Center, Inc. v. iHire, Inc., 373 F.Supp.2d 1208, 1210 (D.Colo.2005). "A `real party in interest' is a party that has a substantive right that is enforceable under applicable substantive law." US Fax Law Center, 373 F.Supp.2d at 1210-11. Because whether a party is a real party in interest depends upon the parties' substantive rights, this issue is determined by applicable state law. Id. at 1211. Therefore, whether the Domianus Heirs are real parties in interest in this case is a question of Colorado law. Id. Both the standing doctrine and the real party in interest doctrine require that a plaintiff must have suffered an injury to a legally protected interest. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (in order to achieve standing a plaintiff must demonstrate the existence of an injury in fact, causation, and redressability).

It is undisputed that the Domianus Heirs are not parties to the insurance contract at issue, and no contractual duties exist between them and Defendant. Similarly, no tort duties exist between the Domianus Heirs and Defendant because an insured's tort liability for bad faith derives from the quasifiduciary nature of the relationship between the insured and the insurer. Lira v. Shelter Ins. Co., 913 P.2d 514, 516 (Colo.1996). Nevertheless, the Domianus Heirs contend that Defendant's "denial of coverage has injured the Domianus Heirs' ability to recover their damages [from Pompa]." However, under substantive Colorado law, an injured claimant cannot maintain a direct action on the liability policy protecting the insured unless specifically authorized by statute. All Around Transport, Inc. v. Continental Western Ins. Co., 931 P.2d 552, 556-57 (Colo.App.1996); Schnacker v. State Farm Mut. Auto. Ins. Co., 843 P.2d 102 (Colo. App.1992) (injured third-party claimant did not have standing to allege bad faith cause of action against tortfeasor's insurer). Similarly, an injured claimant "has no standing even to prosecute a declaratory judgment against a liability insurer." All Around Transport, 931 P.2d at 556 (citing Farmers Ins. Exchange v. District Court, 862 P.2d 944 (Colo.1993)).

Based on the foregoing authorities, I conclude that the Domianus Heirs have no legally protected interest in the controversy in this case and lack standing to pursue their claims against Defendant. Therefore, Defendant is entitled to summary judgment in its favor with regard to all claims asserted by the Domianus Heirs in this case.

2. Whether Summary Judgment is Appropriate As to Pompa's Claims

Defendant next asserts that it is entitled to summary judgment with regard to the claims asserted by Pompa because pursuant to the Violation of Law exclusion, Pompa is not entitled to liability coverage under the policy for the wrongful death claim asserted by the Heirs. In response, Pompa argues that the Violation of Law exclusion is ambiguous and, as applied in this case, contrary to public policy. Pompa has also filed a cross-motion with respect to his claim for breach of the duty to defend.

The policy at issue in this case contains the following relevant provisions:

COVERAGE D — PERSONAL LIABILITY COVERAGE

We will pay, up to our limit, compensatory damages for which an insured is legally liable because of bodily injury ... caused by an occurrence covered by this policy.

Defense Provision. If any suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this policy applies, we will provide a defense....

The term "occurrence" is defined by the policy to mean "an accident ... which results during the policy period in ... bodily injury...."

Violation of Law. We will not cover bodily injury or property damage arising out of:

a. violation of any criminal...