from the United States District Court for the District of
Colorado (D.C. No. 1:14-CV-02905-NYW)
J. Arguello, Colorado Insurance Law Center, Westminster,
Colorado (Bradley A. Levin, Levin Sitcoff PC, Denver,
Colorado, with him on the briefs), for Defendants-Appellants.
Courtney Koger, Kutak Rock LLP, Kansas City, Missouri (Elayna
Fiene and Linda J. Knight, Wilson Elser Moskowitz Edelman
& Dicker, Denver Colorado, on the brief), for
TYMKOVICH, Chief Judge, BACHARACH, and MORITZ, Circuit
BACHARACH, CIRCUIT JUDGE.
appeal involves the extent of a duty to defend under a
"professional services" policy of liability
insurance issued to a law firm (The Law Office of Michael P.
Medved, P.C.). The extent of this duty came into play when
the law firm was confronted with allegations of overbilling.
The insurer (Evanston Insurance Company) defended the law
firm under a reservation of rights but ultimately concluded
that the allegations of overbilling fell outside the law
firm's coverage for professional services. The law firm
disagrees with this conclusion; the district court agreed
with the insurer, and we do too.
The Medved firm faced allegations of overbilling.
Michael Medved is a Colorado attorney who has handled
foreclosures. When foreclosing on properties, he billed his
attorney fees and costs to his firm's clients, which were
lenders and investors. Ultimately, however, the attorney fees
and costs were passed on to the property owners (or buyers,
if the property was resold).
2012, the Colorado Attorney General began investigating Mr.
Medved and other foreclosure attorneys, questioning whether
they had overbilled. When the investigation became public, a
group of property owners brought a class action against Mr.
Medved and his law firm for overbilling.
Mr. Medved submitted a claim under his liability
time, the Medved firm had a liability policy with Evanston
that covered professional services. Based on this policy, Mr.
Medved informed Evanston that he and his firm had been sued
in a class action, and Evanston assumed defense of the suit
"subject to a reservation of rights."
Appellants' App'x at 319. But Evanston waited roughly
ten more months to explain why it was reserving its rights to
contest coverage. With this eventual explanation, Evanston
continued to defend Mr. Medved and his firm until they
settled with the property owners.
the class action was being litigated, Mr. Medved periodically
updated Evanston on the Colorado Attorney General's
investigation. These updates informed Evanston that the
Colorado Attorney General had twice subpoenaed Mr. Medved.
Aware of the subpoenas, Evanston declined to decide whether a
potential suit by the Colorado Attorney General would be
covered, viewing such a decision as premature until Mr.
Medved received a complaint.
investigation culminated with the Colorado Attorney
General's initiation of a suit against Mr. Medved and his
firm. Following the provision of a draft complaint, Evanston
agreed to defend under a reservation of rights. But Mr.
Medved settled with the Colorado Attorney General for $1
million, obviating any need for a defense.
Evanston obtained summary judgment.
sued Mr. Medved and his firm for
. declaratory relief, stating that the
Medved firm's professional- services policy did not cover
either the class action or the Colorado Attorney
General's investigation and
. reimbursement of attorney fees and costs
incurred in defending the class action.
Mr. Medved and his firm filed counterclaims against Evanston
for breach of the insurance contract and bad faith.
moved for summary judgment on all claims and counterclaims.
The district court granted the motion, concluding that
. Evanston had no duty to defend the class
action because the allegations had pertained only to billing
practices, which were not "professional services, "
. Evanston was not estopped from asserting
coverage defenses for the class action because estoppel
cannot create insurance coverage,
. Evanston had no duty to defend the
Colorado Attorney General's investigation because (1) no
"claim" could arise until Mr. Medved or his firm
had received a written demand for monetary damages and (2)
the allegations had pertained only to billing practices,
. Mr. Medved and his firm's
counterclaims for bad faith failed because there was no
coverage under the policy, and
. Evanston was entitled to reimbursement of
defense fees and costs.
Medved and his firm appeal, arguing that the district court
erred on four issues:
1. Did the class action and Colorado Attorney General's
investigation arise from alleged wrongful acts or omissions
in the performance of "professional services"?
2. Had Evanston incurred a duty to defend against the
Colorado Attorney General's investigation before Mr.