Opinion ID: 672338
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Heading: The Coverage Issue Under the CNA Policy.

Text: 32 As noted, the CNA policy provides coverage for liability arising from an occurrence, defined as an accident or happening or event ... which results in personal injury or property damage. Principal Brief of Appellant, App. 1 at 0022. In the summary judgment ruling, the district court held that the insuring provisions provide coverage for the Waranch action against PSC as a matter of law, thus creating a duty on the part of CNA to pay the cost of PSC's defense in the Waranch action and to indemnify the company for the amount paid in settlement of it. The district court thus rejected CNA's claim that the language of the policy excludes coverage for intentional discrimination. 33 We review the district court's grant of summary judgment de novo, construing all facts and reasonable inferences in a light most favorable to the nonmoving party. Eaton v. Jarvis Prods. Corp., 965 F.2d 922, 925 (10th Cir.1992); Anderson v. Dept. of Health & Human Services, 907 F.2d 936, 946-47 (10th Cir.1990). Summary judgment is proper if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). 34 Citing Reed v. United States Fidelity & Guaranty Co., 176 Colo. 568, 491 P.2d 1377, 1380 (1971), Hartford Fire Insurance Co. v. Karavan Enterprises, Inc., 659 F.Supp. 1075, 1076 (N.D.Cal.1986), and St. Paul Fire and Marine Ins. Co. v. Campbell County School Dist. No. 1, 612 F.Supp. 285, 287 (D.Wyo.1985), CNA contends that the Waranch action did not result from an accident or happening or event within the meaning of the CNA policy because the action arose out of intentional conduct by PSC, i.e. the calculated business decision to discriminate against mobile home parks in providing natural gas service. CNA points out that the Waranch jury imposed punitive damages against PSC, thus implicitly finding that PSC willfully and intentionally discriminated against the Waranch plaintiffs in violation of C.R.S. Sec. 40-3-106. 2 35 We are not persuaded by CNA's analysis or authorities on the coverage issue. The proper interpretation of the CNA policy is governed by Colorado contract and insurance law. Broderick Inv. Co. v. Hartford Acc. & Indemn. Co., 954 F.2d 601, 605 (10th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 189, 121 L.Ed.2d 133 (1992). Under Colorado law, the policy terms are interpreted according to their plain and ordinary meaning; if ambiguous, they will be construed in favor of the insured, PSC. Hecla Min. Co. v. New Hampshire Ins. Inc., 811 P.2d 1083, 1090-91 (Colo.1991); Kane v. Royal Ins. Co. of America, 768 P.2d 678, 683 (Colo.1989). Applying Colorado law to the insurance provisions in CNA's policy, we hold that there was coverage here, requiring both defense and indemnity to PSC as was held by the district court. 36 In our view, CNA's interpretation of the relevant policy language conflicts with the applicable rules of construction. Nothing in the CNA policy limits its coverage to damages caused by unintentional or accidental conduct. On the contrary, in addition to providing indemnity for damage resulting from accident[s], the policy provides indemnity for liability caused by any happening or event not otherwise excluded. This policy thus differs from those in Reed, Hartford and St. Paul, relied on by CNA, because coverage is not limited to accident[s] or damages neither expected nor intended by the insured. Instead, the policy covers separately any non-excluded happening or event. Without addressing the meaning of the term happening, we conclude that the term event is reasonably susceptible to an interpretation that includes intentional conduct. 37 It is true, as CNA points out, that Black's Law Dictionary (6th ed. 1990) in one place indicates that an event is [d]istinguished from an act in that an act is the product of the will whereas an event is an occurrence which takes place independent of the will such as an earthquake or flood. Id. at 555. While this isolated statement may seem to support an interpretation of the term event that excludes intentional conduct, a closer look at the relevant authorities shows variations and considerable ambiguity in the way the term has been used and understood. 38 In addition to the language quoted above, Black's Law Dictionary describes the term event as [t]he consequence of anything; ... that in which an action ... terminates. Id. at 554-55 (emphasis added). The latter, more inclusive, definition comports better with definitions found elsewhere, including Webster's Third New International Dictionary 788 (1981) (event includes something that happens, ACTIVITY, and the outcome or consequence of anything), Webster's New Collegiate Dictionary 392 (1979) (event includes something that happens, and a social occasion or activity), and The American Heritage Dictionary 635 (3d ed. 1992) (event includes [s]omething that takes place, [a] social gathering or activity, and [t]he final result; the outcome). 39 We note further that the context in which the term event appears in the CNA policy indicates that the term was intended to encompass intentional conduct. The context does not suggest that the term 'event' is synonymous with 'accident'--and therefore simply redundant--since it appears in a definition purporting to provide additional coverage. United Pacific Ins. Co. v. McGuire Co., 229 Cal.App.3d 1560, 1565, 281 Cal.Rptr. 375 (Cal.1991), rev. denied (1991). In United Pacific, the court concluded that [t]he word has no connotation of fortuity; under any accepted usage, it obviously embraces intentional conduct. 229 Cal.App.3d at 1565, 281 Cal.Rptr. 375. Similarly, in Save Mart Supermarkets v. Underwriters, 843 F.Supp. 597, 605 (N.D.Cal.1994), the court construed the term to include intentional sex discrimination in the employment context. 40 In short, because the term event is reasonably susceptible to the interpretation advanced by PSC, that interpretation controls for purposes of determining potential coverage in this case. Hecla, 811 P.2d at 1090-91 (ambiguities in policy language must be resolved in insured's favor); see also Sims v. Sperry, 835 P.2d 565, 570 (Colo.App.1992) (observing existence of divergent interpretations of term created and adopting interpretation most favorable to insured), cert. denied (Colo. Aug. 31, 1992). Had CNA intended to exclude intentional conduct from the definition of occurrence, it could have done so when the parties entered into the insurance contract. CNA could have incorporated the same kinds of limiting provisions discussed in Reed, Hartford and St. Paul, supra, or it could have omitted any reference to happening or event. Having failed to do so, CNA cannot escape liability by insisting on an interpretation of the broad policy language that is neither supported nor compelled by the ordinary meaning of the relevant terms. See Worsham Construction Co., Inc. v. Reliance Ins. Co., 687 P.2d 988, 991 (Colo.App.1984) (fact that [t]he intent to exclude [particular] damage from coverage could have been clearly expressed but ... was not supports finding of coverage). 41 Finally, we note that CNA's position is undermined by insuring provision 1(b), quoted in Part I-A of this opinion. There, personal injuries are defined as including, inter alia, false arrest, false imprisonment, wrongful eviction, detention, malicious prosecution, discrimination.... Defining personal injuries growing out of an occurrence as including false arrest, false imprisonment, and malicious prosecution is surely not consistent with CNA's position that an occurrence does not include intentional conduct. The Colorado courts have recognized that the latter three terms involve intentional acts. 3 Thus while the conduct of Public Service here would appear to be deliberate discrimination and intentional conduct, we hold that it is within the broad coverage of CNA's policy. 42 On the coverage issue, CNA on appeal makes an additional brief contention. CNA argues that there is no coverage because it has been held that a contract of insurance to indemnify a person for damages resulting from his own intentional wrong is void as against public policy, and that the courts will not construe a policy to provide such coverage. Industrial Sugars, Inc. v. Standard Accident Insurance Co., 338 F.2d 673, 676 (7th Cir.1964). Principal Brief of Appellant at 19. 43 We decline to consider this additional argument made by the statement quoted above. Although PSC does not argue that CNA failed to make the public policy argument in the district court, we note that the record indicates no assertion of this theory there, either in CNA's summary judgment brief or at the summary judgment hearing. Moreover, no mention of such an argument was made in the district judge's order or remarks. The failure to raise the issue with the trial court precludes review except for the most manifest error.... [Appellant] offers no reason why we should grant an exception to the general rule here, and, after reviewing the record, we believe no basis for an exception is present. Hicks v. Gates Rubber Co., 928 F.2d 966, 970 (10th Cir.1991). Accord Petrini v. Howard, 918 F.2d 1482, 1483 n. 4 (10th Cir.1990) (A federal court, as a general rule, will not reverse a judgment on the basis of issues not presented below.); Lone Star Steel v. United Mine Workers of America, 851 F.2d 1239, 1243 (10th Cir.1988) (Ordinarily, a party may not lose in the district court on one theory of the case, and then prevail on appeal on a different theory.). 4 44 In sum, we hold that the district court was correct in determining that CNA's policy afforded coverage and obliged CNA to defend and indemnify PSC in connection with the Waranch litigation. 45