Phila. Indem. Ins. Co. v. N. Tex. Annual Conference of the United Methodist Church, Inc.

PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiff, v. NORTH TEXAS ANNUAL CONFERENCEOF THE UNITED METHODISTCHURCH, INC.; STONEBRIDGE UNITED METHODIST CHURCH;FRANK WILEY; and TAYLOR GREER, Defendants.

Civil Case No. 16-cv-02984-LTB-KLM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

May 22, 2018

LEWIS T. BABCOCK, JUDGE

ORDER

Before me are cross-motions for summary judgment on this declaratory judgment action filed by Plaintiff Philadelphia Indemnity Insurance Company ("Philadelphia Indemnity"). The Motion for Summary Judgment filed by Defendant Frank Wiley ("Mr. Wiley") seeks dismissal of Philadelphia Indemnity's request for declaratory relief regarding its duties to defend and to indemnify, under the at-issue insurance policy, for injuries Mr. Wiley incurred during a ski accident in March of 2016. [Doc #50] Philadelphia Indemnity's Motion for Summary Judgment seeks judgment in its favor, and a declaration that there is no duty to defend or indemnify. [Doc #51] Oral arguments would not materially assist me in my determination. After consideration of the parties' briefs, and for the reasons stated, I DENY Mr. Wiley's motion. In addition, I GRANT the motion filed by Philadelphia Indemnity, I ORDER declaratory relief as requested, and I ORDER the entry of summary judgment in its favor.

I. BACKGROUND

On March 8, 2016, Mr. Wiley was injured in a ski accident at Wolf Creek Ski Resort that he claims was caused by the negligence of Taylor Greer (the "ski accident"). Mr. Greer was on a high school youth ski trip to Colorado organized by North Texas Annual Conference of the United Methodist Church ("NTAC") and Stonebridge United Methodist Church ("Stonebridge Church"). At the time of the accident, NTAC was insured under a general liability policy issued by Philadelphia Indemnity (PHPK 1301820 - effective from April 1, 2015 through April 1, 2016). Stonebridge Church was also a named insured under the policy as an affiliated church.

On August 9, 2016, Mr. Wiley sued Mr. Greer for the personal injuries he sustained as a result of the ski accident in State of Colorado District Court, Mineral County, Case No. 2016-CV-3002 (the "state court action"). Mr. Wiley claimed that Mr. Greer was a new snowboarder and that, at the time of the accident, he was on terrain above his skill level when he gained too much speed and ran into Mr. Wiley, the downhill skier. Mr. Wiley also brought claims against NTAC and Stonebridge Church for failure to supervise Mr. Greer by allowing him to snowboard on terrain above his ability and without proper knowledge of skiing protocol.

Thereafter, on December 6, 2016, Philadelphia Indemnity filed this lawsuit seeking declaratory relief under the Federal Declaratory Judgments Law, 28 U.S.C.§ 2201 et seq. and Fed. R. Civ. P. 57, against NTAC, Stonebridge Church, Mr. Wiley and Mr. Greer. Specifically, Philadelphia Indemnity sought a declaration that it had no duty to provide insurance coverage for the ski accident. [Doc #31]

On March 28, 2017, default judgment was entered against NTAC and Stonebridge Church after they failed to file a response or enter an appearance in this case. [Doc #22] On April 4, 2017, default judgment was entered against Mr. Greer for failure to enter an appearance in this case. [Doc #32] The orders of default declared that: (1) Philadelphia Indemnity "has no duty to provide insurance, including defense or indemnity, coverage to Taylor Greer for the ski accident which took place on March 8, 2016 at Wolf Creek Ski Area, Mineral County, State of Colorado, involving Mr. Greer and Frank Wiley" and (2) "there is no coverage under any part of the [Philadelphia Indemnity] policy for the March 8, 2016 ski accident." Default judgment was not entered against Defendant Wiley, who has filed a response and remains a party to this action.

Then, in September of 2017, Mr. Wiley settled his claims in the state court action with Mr. Greer for $900,000. Mr. Wiley agreed to partial payment from Mr. Greer of $100,000, and further agreed not to execute on or make any efforts to collect/enforce the balance of the judgment "except to the extent of coverage from Philadelphia [Indemnity]." [Doc #56-1] Mr. Wiley also settled his state court claims for failure to supervise against NTAC and Stonebridge Church for $12,500. [Doc #50-6] Following negotiation of the settlement agreements, the parties' filed the cross-motions for summary judgment at issue here.

II. STANDARD OF REVIEW

In his motion, Mr. Wiley contends that he is entitled to summary judgment in his favor on the question of whether Philadelphia Indemnity: (1) had a duty to defend Mr. Greer in the underlying state court action; and (2) has a duty to indemnify and provide coverage for the injuries Mr. Wiley incurred during the ski accident on March 8, 2016. [Doc #50] Specifically, he argues that Philadelphia Indemnity owes a duty to defend Mr. Greer because the allegations in the state court action "contain multiple facts and claims [against Mr. Greer] that might fall within the ambit of the policy." Mr. Wiley further argues that Philadelphia Indemnity owes a duty to indemnify NTAC, Stonebridge Church, and Mr. Greer because the facts as developed, including their subsequent settlement with Mr. Wiley, reveal that Mr. Greer was covered by the policy because he was engaging in a church activity at the time of the accident.

Philadelphia Indemnity, in its motion, asserts that it is entitled to summary judgment in its favor and a declaration that it has no duty to defend or to indemnify any party for the damages incurred by Mr. Wiley in the ski accident. [Doc #51] Philadelphia Indemnity argues that because NTAC, Stonebridge Church, and Mr. Greer have failed to respond, default judgment was entered against them which indicated that "there is no coverage under any part of the policy for the March 8, 2016 ski accident." Although Mr. Wiley was not subject to a default judgment, Philadelphia Indemnity argues that he has no standing to seek a determination of coverage. Philadelphia Indemnity also asserts, in the alternative, that it is entitledto summary judgment and declaratory relief because the policy does not provide coverage in that Mr. Greer did not, at the time of the ski accident, incur liability due to the activities of Stonebridge Church as an entity, nor was he acting on Stonebridge Church's behalf.

The standard for granting summary judgment on a request for a declaratory judgment is the same as for any other type of relief. Am. Family Mut. Ins. Co. v. Eagle Gen. Contractors, Inc., 2007 WL 3090765 (D. Colo. 2007)(unpublished); see also United States v. Gammache, 713 F.2d 588, 594 (10th Cir. 1983). Summary judgment is appropriate when the moving party can demonstrate that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also Plaza Ins. Co. v. Lester, 110 F.Supp.3d 1041, 1043 (D. Colo. 2015)(noting that when the material facts relevant to a declaratory judgment claim are undisputed, cross-motions seeking summary judgment can be determined as a matter of law).

III. ANALYSIS

A. Standing/Mootness

I first address Philadelphia Indemnity's argument that because default judgment has been entered against NTAC, Stonebridge Church, and Mr. Greer in this matter, and because it is undisputed that they have settled the underlying state court action with Mr. Wiley, Philadelphia Indemnity is entitled to summary judgment in its favor on the basis that Mr. Wiley has no standing.

The law in Colorado is that Mr. Wiley, as the injured party, has standing to challenge the declaratory relief sought by Philadelphia Indemnity under the circumstances and posture of this case. In Constitution Associates v. New Hampshire Insurance Co., 930 P.2d 556 (Colo. 1996), the Colorado Supreme Court held that (1) it was proper for the insurer to name the injured party as a party defendant in the declaratory judgment action; and (2) "once joined, [the injured party] may fully participate in the action." Id. at 562. As a result, when the insured in that case failed to defend the insurer's motion for summary judgment, the Court ruled that the injured party was entitled to do so, concluding that the injured party "may defend an anticipatory declaratory judgment as long as the action is properly initiated by a party with a legally cognizable claim." Id.; see also Johnson ex rel. Johnson v. Bodenhausen,835 F.Supp.2d 1092, 1097 (D. Colo. 2011)(allowing "an injured party to bring a counterclaim for declaratory relief in a declaratory judgment action initiated by an insurer against its insured and the injured party"); Am. Family Mutual Ins. Co. v. Harris, 2007 WL 2890132 (D. Colo. Sept. 27, 2007) (unpublished). I reject Philadelphia Indemnity's assertion, made without any authority, that Constitution Associates v. New Hampshire Insurance supports a ruling that if the injured party is named in a declaratory judgment action, as is the case here, default judgment entered against the defaulting parties is binding on the injured party who failed to object.

Philadelphia Indemnity also contends that the request for declaratory relief as to its duty to indemnify NTAC and Stonebridge Church is now moot because they have settled in full the claims raised by Mr. Wiley in the underlying state court action. Because default judgment was entered against NTAC and Stonebridge Church, and Mr. Wiley is not now and never will be a judgment creditor of NTAC and Stonebridge Church because his claims against them in the state court actions have been settled for $12,500, I agree with Philadelphia Indemnity that "[t]here is no longer a controversy to decide as to indemnity for NTAC and Stonebridge [Church]." See generally Columbian Fin. Corp. v. BancInsure, Inc., 650 F.3d 1372, 1379 (10th Cir. 2011)(noting that a court does not have jurisdiction to resolve the issue...