Thompson v. Maryland Cas. Co.
| Decision Date | 09 February 2004 |
| Docket Number | No. 02SC525.,02SC525. |
| Citation | 84 P.3d 496 |
| Parties | John Doss THOMPSON, Jr.; and Hiwan Ridge Development Company, Inc., Petitioners, v. MARYLAND CASUALTY COMPANY and Northern Insurance Company of New York, Respondents. |
| Court | Colorado Supreme Court |
Kelly Haglund Garnsey Kahn LLC, Norman D. Haglund, Christine L. Murphy, Denver, Colorado, Attorneys for Petitioners.
Wells, Anderson & Race LLC, Geoffrey S. Race, L. Michael Brooks, Jr., Denver, Colorado, Attorneys for Respondents.
In this duty to defend insurance case, we review the court of appeals' decision in Thompson v. Maryland Casualty Co., No. 01CA1039, slip op., 2002 WL 1452541 (Colo. App. June 27, 2002). That court held that under the facts alleged in the underlying complaint the insurers have no duty to defend the insureds under provisions of a commercial general liability insurance policy that provides the insureds coverage against claims of malicious prosecution and disparagement. Alternatively, the court of appeals held that the insurers had no duty to defend against the disparagement claim because allegations in the underlying complaint triggered a policy provision excluding coverage for material published with knowledge of its falsity. We affirm.
In this case, the insureds, John D. Thompson, Jr. and Hiwan Ridge Development Company, Inc. (collectively, "Thompson"), purchased insurance policies through Maryland Casualty Company and Northern Insurance Company of New York ("insurers") covering claims for malicious prosecution and disparagement. Thompson brought this suit against the insurers seeking the costs of defending against the malicious prosecution and disparagement claims.
We hold that claims covered in an insurance policy must be construed as legal claims rather than as lay terms. In analyzing the insurer's duty to defend, we look initially to the claims expressly covered by the policy, and next we determine the elements of those claims under Colorado case law. This approach furthers the reasonable expectations of the parties to the insurance contract.
Applying this standard here, we hold that an insurer is not required to defend its insured against a claim of malicious prosecution where the complaint fails to allege that the insured's wrongful filing of a lis pendens was resolved in favor of the plaintiff. Under Colorado law the tort of malicious prosecution requires that the element of favorable resolution of the prior action be alleged.
We disagree with the court of appeals' holding that the complaint failed to allege the elements of a claim for disparagement of services as covered in the insurance policy. The complaint alleged that the insureds disparaged the services of the plaintiff by interfering with the plaintiff's ability to develop and sell real property. However, the insurers had no duty to defend because the complaint alleged that the insureds knew that their disparaging statement was false, and, as a consequence, the knowledge-of-falsity exclusion provision precluded coverage.
We therefore affirm the court of appeals' holding affirming the trial court's grant of summary judgment for the insurers, and return this case to that court with directions to remand the case to the trial court to dismiss.
Petitioner Thompson purchased commercial general liability insurance policies through respondents Maryland Casualty Company and Northern Insurance Company of New York.1 Maryland was the primary carrier and Northern was the excess carrier.
Thompson's policy provides that the insurers will defend against claims for "personal injury," which include "[m]alicious prosecution" and "[o]ral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products, or services." The policy excludes coverage for disparagement claims where the insured publishes material "with knowledge of its falsity."2
In 1992, Thompson and Ridge at Hiwan, Ltd. ("Ridge"),3 a landholding partnership that subsequently became involved in real estate development, settled a dispute arising from an earlier real estate venture. This settlement agreement provided, in part, that Thompson would have a right of first refusal to purchase property owned by Ridge and that Thompson would cooperate with Ridge in future platting efforts in Jefferson County. According to Ridge, Thompson agreed in this settlement to provide Ridge with necessary documents and property if Ridge required "an earlier conveyance for purposes of meeting platting requirements of Jefferson County."
Eventually another dispute arose between Ridge and Thompson, which ultimately led Ridge to file a complaint against Thompson. In its 1994 complaint, Ridge alleged that two years after their settlement agreement, when Ridge attempted to dedicate property to Jefferson County, Thompson refused to consent to or cooperate with the platting and development process or to waive his right of first refusal. Ridge claimed that Thompson's refusal to cooperate in the platting process violated the settlement agreement and constituted breach of contract, tortious interference with prospective economic or business advantage, and slander of title.
After Ridge's initial complaint was filed, Thompson sent a letter to the Jefferson County Planning Department claiming a preemptive right of first refusal covering the property to be dedicated, and stating that he would "not subordinate this right to Jefferson County, consent to the plat, nor in any way sign or participate in any plat documents or subdivision improvement agreements." Thompson also filed a notice of lis pendens against Ridge's property and recorded the 1992 settlement agreement between him and Ridge in Jefferson County.
Ridge then amended its complaint, alleging that Thompson's letter to the Jefferson County Planning Department claiming a preemptive right of first refusal was "false" and "contrary to the express and implied terms" of their 1992 settlement agreement. The amended complaint included additional claims against Thompson, including intentional interference with contractual relations, breach of implied covenants of good faith and fair dealing, and fraud.
The gist of Ridge's complaint was that by sending the false letter to the Planning Department, Thompson breached the terms of the 1992 settlement agreement, which prevented Jefferson County from granting final plat approval and interfered with Ridge's sale of the property. Further, the complaint alleged that Thompson's lack of cooperation in violation of the settlement agreement would force Ridge to obtain less favorable bank financing or to sell the property as an undivided parcel at a significantly reduced price. In addition, Ridge claimed that when Thompson sent the letter in 1994, Thompson knew that Ridge had entered into a contract to sell the property to a specific third party. Ridge claimed that all of Thompson's actions in breach of their earlier settlement were "intentional," "malicious," "willful and wanton," and "attended by circumstances of fraud."
Over a year after Ridge's amended complaint was filed, Thompson informed the insurers of this lawsuit. The insurers refused to defend or indemnify Thompson, reasoning that the claims raised against Thompson did not fall within his insurance coverage.
A jury found for Ridge at trial.4 At that time, Thompson requested that the insurers reconsider their denial of coverage, but they refused.
Subsequently, Thompson filed a complaint against the insurers, alleging that they had breached their contractual duty to defend and indemnify him in this litigation. Both the insurers and Thompson filed cross-motions for summary judgment. The trial court granted summary judgment for the insurers, concluding that they had no duty to defend in this case. Thompson appealed. The court of appeals affirmed the trial court, holding that the insurers were not required to defend him because factual allegations in the underlying complaint did not support either a claim of malicious prosecution or disparagement. See generally Thompson, No. 01CA1039, slip op.
The court of appeals reasoned that the term "malicious prosecution" is not ambiguous under Colorado law. The factual allegations in the underlying complaint failed to allege that the earlier action filed by Thompson against Ridge had been resolved in Ridge's favor, which is a necessary element of malicious prosecution. Thus, the court concluded that the insurers' duty to defend had not been triggered. Id. at 10.
Further, the court reasoned that although a lis pendens filing could form the basis of a malicious prosecution claim, such a claim could not be brought until the action involving the lis pendens ended in favor of the plaintiff. Id. at 7. Because the underlying complaint failed to allege that the action involving the lis pendens had terminated in Ridge's favor, the court concluded that the insurers had no duty to defend on the basis of the insurance policy's malicious prosecution coverage. Id. at 8-9.
Turning to the disparagement claim, the court of appeals held that the insurers did not have a duty to defend Thompson because Ridge's complaint failed to allege that Thompson disparaged Ridge's "goods, products, or services" as those terms are defined in the policy. Id. at 12. Alternatively, the court of appeals ruled that "[t]o the extent that the allegations in the amended complaint imply that [Thompson] knew" that he had waived his right of first refusal when he sent the letter to Jefferson County, the insurers had no duty to defend him because the policy excluded coverage for disparaging material published by the insured "with knowledge of its falsity." Id. at 15.
Thompson now appeals, arguing that the insurers have a duty to defend him in this case under the terms of the policy.5
To continue reading
Request your trial
-
Cotter Corporation v. American Empire Surplus Lines Insurance Company, Case No. 02SC707 (CO 6/7/2004)
...moving party. Id. When construing the terms of insurance policies, we apply principles of contract interpretation. Thompson v. Md. Cas. Co., 84 P.3d 496, 501 (Colo. 2004). As when interpreting contracts, we attempt to carry out the parties' intent and reasonable expectations when they draft......
-
Barton v. City and County of Denver
...common law malicious prosecution; there is also the requirement that the prosecution be brought maliciously. See Thompson v. Maryland Cas. Co., 84 P.3d 496, 503 (Colo.2004). In the context of a case such as this, the malice requirement could be met by evidence that the officers' statements ......
-
Goode v. Gaia, Inc.
...(2) the prior action ended in favor of the plaintiff; (3) no probable cause; (4) malice; and (5) damages. Thompson v. Md. Cas. Co., 84 P.3d 496, 503 (Colo. 2004). At the outset, the Court notes that to the extent Ms. Montalbano bases her malicious prosecution claim on the instant case, the ......
-
Cotter Corp. v. AMERICAN EMPIRE SURPLUS
...moving party. Id. When construing the terms of insurance policies, we apply principles of contract interpretation. Thompson v. Md. Cas. Co., 84 P.3d 496, 501 (Colo.2004). As when interpreting contracts, we attempt to carry out the parties' intent and reasonable expectations when they drafte......
-
Chapter 3
...Guarantee and Liability Insurance Co., 181 Cal. App.4th 616, 105 Cal. Rptr.3d 64 (2010). Colorado: Thompson v. Maryland Casualty Co., 84 P.3d 496 (Colo. 2004). Connecticut: Peerless Insurance Co. v. Gonzalez, 697 A.2d 680 (Conn. 1997); New London County Mutual Insurance Co. v. Bialobrodec, ......
-
Chapter 8
...Co. v. Swift Distribution, Inc., 59 Cal.4th 277, 326 P.3d 253, 172 Cal. Rptr.3d 653 (2014). Colorado: Thompson v. Maryland Casualty Co., 84 P.3d 496 (Colo. 2004). Florida: Khatib v. Old Dominion Insurance Co., 153 So.3d 943 (Fla. App. 2014); St. Paul Fire & Marine Insurance Co. v. Naples Co......
-
CHAPTER 3 The Insurance Contract
...Guarantee and Liability Insurance Co., 181 Cal. App.4th 616, 105 Cal. Rptr.3d 64 (2010). Colorado: Thompson v. Maryland Casualty Co., 84 P.3d 496 (Colo. 2004). Connecticut: Peerless Insurance Co. v. Gonzalez, 697 A.2d 680 (Conn. 1997); New London County Mutual Insurance Co. v. Bialobrodec, ......
-
CHAPTER 9 Comprehensive General Liability Insurance—The Pollution Exclusions
...Co. v. Swift Distribution, Inc., 59 Cal.4th 277, 326 P.3d 253, 172 Cal. Rptr.3d 653 (2014). Colorado: Thompson v. Maryland Casualty Co., 84 P.3d 496 (Colo. 2004). Florida: Khatib v. Old Dominion Insurance Co., 153 So.3d 943 (Fla. App. 2014); St. Paul Fire & Marine Insurance Co. v. Naples Co......