Colorado Court of Appeals Opinions
February 14, 2013
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2013 COA 14. No. 11CA2637. DC-10 Entertainment, LLC v. Manor Insurance Agency, Inc.
Insurance Coverage—Broker—Damages—Assignment of Claims—Assault and Battery Exclusion—Negligent Misrepresentation.
DC-10 Entertainment, LLC (DC-10) appealed the trial court’s summary judgment in favor of Manor Insurance Agency, Inc. (Manor). The judgment was reversed and the case was remanded for further proceedings.
DC-10, a nightclub and lounge, obtained insurance coverage through Manor, an independent insurance broker that services multiple insurance companies. Through Manor, DC-10 procured a commercial general liability policy with Penn-Star Insurance Company (Penn-Star) and a liquor liability policy with Founders Insurance Company (Founders).
Heaven Henderson suffered injuries when she was physically assaulted by an unknown assailant on DC-10’s premises. Henderson sued DC-10. DC-10 then submitted claims to Penn-Star and Founders for defense and indemnity coverage. Both companies denied the claim because the policies contained an assault and battery exclusion. DC-10 settled with Henderson and then sued Manor, asserting claims of negligence and negligent misrepresentation. The court granted Manor’s motion for summary judgment.
DC-10 contended the trial court erred in determining that the settlement agreement was insufficient to establish that DC-10 incurred damages. Because the agreement does not contain a pretrial stipulated damages award, DC-10 did not bear the burden of proving the reasonableness of the judgment. Instead, the burden shifted to Manor to prove that the damages award, as determined by the arbitration judge, was unreasonable. In challenging the reasonableness of the damages award, Manor also may raise the affirmative defense of collusion or fraud. Because these are factual issues, the trial court erred in granting summary judgment.
Manor challenged the enforceability of an assignment of proceeds of negligence claims against an insurance broker. Manor owed a duty to DC-10 to obtain the insurance coverage that DC-10 requested. An assignment of claims against an insurance broker, where the claim arises from a commercial transaction and the insured has the same expectations of the insurance broker that he or she would have of the insurer, is not prohibited. Accordingly, DC-10’s assignment of the proceeds from its negligence and negligent misrepresentation claims against Manor to Henderson, the injured third party, was enforceable.
Finally, Manor contended that DC-10’s negligence and negligent misrepresentations claims failed as a matter of law because DC-10 did not present evidence that assault and battery coverage, if obtained, would have covered the alleged patron-on-patron assault in the underlying lawsuit. Because the availability of coverage sought by DC-10 remained a disputed factual question, Manor did not meet its burden of proof on this issue on its motion for summary judgment.
Colorado Court of Appeals Opinions