ACE AMERICAN INSURANCE COMPANY, Plaintiff/Counter Defendant-Appellee,
DISH NETWORK, LLC, Defendant/Counterclaimant - Appellant.
from the United States District Court for the District of
Colorado D.C. No. 1:13-CV-00560-REB-MEH.
A. Shumsky, Orrick, Herrington & Sutcliffe, Washington,
D.C. (Lee M. Epstein, Emily B. Markos, Weisbrod Matteis &
Copley PLLC, Philadelphia, Pennsylvania, on the briefs) for
Jonathan D. Hacker, O'Melveny & Myers LLP,
Washington, D.C. (Thomas M. Jones, Terri A. Sutton, Cozen
O'Connor, Seattle, Washington, and Christopher S.
Clemenson, Cozen O'Connor, Denver, Colorado, with him on
the brief) for Appellee.
LUCERO, McKAY, and McHUGH, Circuit Judges.
McHUGH, Circuit Judge.
appeal we must decide whether the district court correctly
held that ACE American Insurance Company (ACE) has no duty to
defend and indemnify DISH Network (DISH) in a lawsuit
alleging that DISH's use of telemarketing phone calls
violated various federal and state laws. The primary question
is whether statutory damages and injunctive relief under the
Telephone Consumer Protection Act are "damages"
under the insurance policies at issue and insurable under
Colorado law, or are uninsurable "penalties." We
conclude they are penalties under controlling Colorado law,
and we affirm the district court's grant of summary
judgment in favor of ACE.
April 2009, the federal government and the "State
Plaintiffs" (the States of California, Illinois, North
Carolina, and Ohio) sued DISH, alleging violations of the
Telemarketing Sales Rule (TSR), the Telephone Consumer
Protection Act (TCPA), and a variety of state laws
("Underlying Lawsuit"). Relevant here are the
alleged violations of the TCPA,  which makes it
"unlawful for any person [subject to a limited list of
exceptions] . . . to initiate any telephone call to any
residential telephone line using an artificial or prerecorded
voice to deliver a message without the prior express consent
of the called party." 47 U.S.C. § 227(b)(1)(B). The
TCPA also permits states to "bring a civil action on
behalf of its residents to enjoin such calls, an action to
recover for actual monetary loss or receive $500 in damages
for each violation, or both such actions." Id.
§ 227(g)(1). For each violation that is committed
"willfully or knowingly, " the statute allows for
treble damages up to $1, 500. Id.
counts V and VI of the complaint in the Underlying Lawsuit
("Underlying Complaint"), State Plaintiffs assert
violations of the TCPA, "seek a permanent injunction and
other equitable relief, " and allege "DISH
Network's violations are willful and knowing."
Underlying Complaint ¶¶ 71, 73, 75, 77, Aplt.
App'x at 2042, 2043. The Underlying Complaint
characterizes the injury by asserting "[c]onsumers in
the United States have suffered and will suffer injury as a
result of [DISH's] violations of the TSR, the TCPA, [and
various state laws]. Absent injunctive relief by this Court,
[DISH] is likely to continue to injure consumers and harm the
public interest." Id. ¶ 97, Aplt.
App'x at 2049. The prayer for relief requests the court
to "[p]ermanently enjoin [DISH] from violating the TCPA,
both generally, and specifically" and asks the court to
award "damages of $1, 500 for each violation of the TCPA
found by the Court to have been committed by [DISH] willfully
and knowingly . . . [and] damages of $500 for each violation
of the TCPA" the court finds was not willful and
knowing. Prayer for Relief ¶¶ 4-5, Aplt. App'x
at 2051. Finally, they request the court to "[o]rder
[DISH] to pay the costs of this action, including costs of
investigation incurred by State Plaintiffs, "
id. ¶ 16, Aplt. App'x at 2053, and to
"[a]ward Plaintiffs such other and additional relief as
the Court may determine to be just and proper, "
id. ¶ 17, Aplt. App'x at
2004 through 2012, DISH contracted with ACE to provide two
types of liability insurance: Coverage A and Coverage B.
Under Coverage A, ACE has a duty to defend and indemnify DISH
for "those sums that [DISH] becomes legally obligated to
pay as damages because of 'bodily injury' or
'property damage'" that "is caused by an
'occurrence.'" Aplt. App'x at 164, 226.
Under Coverage B, ACE has a duty to defend and indemnify DISH
for "those sums that [DISH] becomes legally obligated to
pay as damages because of 'personal and advertising
injury.'" Id. at 168, 230. Additionally,
Coverage B has an exclusion from coverage for
"'[p]ersonal and advertising injury' committed
by an insured whose business is . . . [a]dvertising,
broadcasting, publishing or telecasting[.]" Aplt.
App'x at 169, 231. Beginning in 2006, both ACE policies
incorporated a specific exclusion for violations of the TCPA
that was not included in the 2004 and 2005 policies.
receiving the initial complaint in the Underlying Lawsuit,
DISH sought a defense and indemnification from ACE. ACE
responded with a letter noting that there was no coverage for
any of the asserted counts under Coverage A, but that there
might be potential coverage under Coverage B for the counts
alleging violations of the TCPA. The letter listed the
possible exclusions that could result in a lack of coverage
and "reserve[d] the right to deny or limit coverage on
th[ose] bas[es]." Aplt. App'x at 2142. Following the
filing of the second amended complaint, ACE again indicated
potential coverage existed under Coverage B, but reserved its
right to "address additional coverage issues as they may
arise [during ACE's investigation of the claim] and/or
decline coverage" if a determination of no coverage was
made. Id. at 2164. In December 2013, ACE determined
that DISH was entitled to coverage and issued a check for
later reversed its decision and filed a Complaint for
Declaratory Judgment, seeking a declaration that ACE did not
have a duty to defend or indemnify DISH in the Underlying
Lawsuit. In response to the parties' cross-motions for
summary judgment, the district court ruled ACE had no duty to
defend under either Coverage A or Coverage B because
"the ACE policies do not provide coverage for any of the
claims asserted in the underlying suit." ACE Am.
Ins. Co. v. DISH Network (DISH I), 173
F.Supp.3d 1128, 1139 (D. Colo. 2016). Relying on the Colorado
Supreme Court's decision in Kruse v. McKenna,
178 P.3d 1198 (Colo. 2008), the district court concluded that
the TCPA statutory damages were a penalty and therefore
uninsurable under Colorado public policy. Id. at
1133-36. The district court also determined that the
associated injunctive relief did not qualify as
"damages" under the policies' definition.
Id. at 1136-37. As an additional ground to support
its decision, the district court held that DISH was in the
business of broadcasting and thus precluded from coverage
under Coverage B's broadcaster exception. Id. at
1137-38. Finally, the district court reasoned that, because
ACE did not have a duty to defend DISH, it also did not have
a duty to indemnify DISH. Id. at 1139.
review the district court's grant of summary judgment
de novo, applying the same legal standards used by
that court." Blackhawk-Cent. City Sanitation Dist.
v. Am. Guar. & Liab. Ins. Co., 214 F.3d 1183,
1187-88 (10th Cir. 2000). "Summary judgment should not
be granted unless the evidence, viewed in the light most
favorable to the party opposing the motion, shows there are
no genuine issues of material fact and the moving party is
due judgment as a matter of law." Id. at 1188.
"Furthermore, the proper interpretation and construction
of an insurance policy is a matter of law, ...