Opinion ID: 2814736
Heading Depth: 2
Heading Rank: 2

Heading: Catlin’s Duty to Indemnify11

Text: a reply brief.”). This argument is otherwise forfeited because Mr. Templeton did not present it to the district court and does not argue plain error on appeal. See Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1127-28 (10th Cir. 2011). 10 Mr. Hall requests costs and attorney fees for successfully defending this appeal under C.R.S. §§ 13-16-113 and 13-17-201. See Hall Br. at 28-29. We leave the determination of costs and attorney fees to the district court on remand. 11 Catlin argues we lack jurisdiction to review the court’s grant of summary judgment on its counterclaim because Mr. Templeton’s July 3, 2014 notice of appeal concerned only the district court’s June 24, 2014 order entering judgment for Catlin on Mr. Templeton’s claims against it, and not the district court’s August 1, 2014 order, which entered judgment for Catlin on its counterclaim. Catlin further argues that Mr. Templeton’s appeal of the district court’s grant of summary judgment to Catlin on his indemnification claim is therefore moot because reversing would have no effect on the counterclaim, which granted Catlin a declaration that it owed no duty to indemnify Mr. Templeton. We reject both arguments. Even though Mr. Templeton’s July 3, 2014 notice of appeal was inadequate to appeal the court’s judgment with respect to Catlin’s counterclaim, Mr. Templeton’s August 28, 2014 “Status Report re Rule 54(b) Certification and Supplement to His Notice of Appeal and Docketing Statement” qualifies as a “functional equivalent” of a notice of appeal. See Smith v. Barry, 502 U.S. 244, 248-49 (1992) (“If a document filed within the time specified by Rule 4 gives the notice required by Rule 3, it is effective as a notice of appeal.”). Mr. Templeton’s Status Report was filed within 30 days of the district court’s judgment on Catlin’s counterclaim, see Fed. R. App. P. 4(a)(1)(A) (providing a 30-day time period after the entry of judgment for filing a notice of appeal), and provides the notice required by Federal Rule of Appellate Procedure 3(c)(1), including specifying the district court’s judgment on Catlin’s counterclaim as an issue on appeal. See Fed. R. App. P. 3(c)(1) (stating that a notice of appeal must “specify the party or parties taking the appeal . . . ; designate the judgment, order, or part thereof being appealed; and . . . name the court to which the appeal is taken”). We therefore have jurisdiction to review Mr. Templeton’s appeal of the counterclaim summary judgment, and his appeal of his indemnity claim is not moot. -27- Mr. Templeton argues the district court erred in granting summary judgment to Catlin on his indemnification claim and Catlin’s counterclaim for declaratory relief. The district court concluded coverage was excluded under Exclusion D.1.b and that Catlin should not be equitably estopped from relying on the exclusion.12 We affirm because Mr. Templeton is not entitled to indemnification based on Exclusion D.1.b of the Policy and the district court did not abuse its discretion in denying Mr. Templeton’s request for equitable estoppel.13
We review a grant of summary judgment de novo, “using the same standard applied by the district court pursuant to Fed. R. Civ. P. 56(a).” Cillo v. City of Greenwood Vill., 739 F.3d 451, 461 (10th Cir. 2013). “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [its] favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Moreover, we must not “weigh the evidence and determine the truth of the matter,” but instead must merely determine “whether there is a genuine issue for trial.” Id. at 249. Summary judgment shall be granted if “there is no genuine dispute as to any material fact” and the moving party is 12 The court also rejected Mr. Templeton’s argument that Catlin waived its right to invoke Exclusion D.1.b. Mr. Templeton does not contest this ruling on appeal. 13 The district court also concluded Catlin had no duty to indemnify Mr. Templeton based on Exclusion N, the “insolvency/receivership” exclusion. Because we conclude Exclusion D.1.b bars coverage, we decline to reach whether Exclusion N also supports summary judgment. -28- “entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party must first demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “[A] movant that will not bear the burden of persuasion at trial need not negate the nonmovant’s claim.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998). Instead, the moving party may “simply . . . point[] out to the court a lack of evidence for the nonmovant on an essential element of the nonmovant’s claim.” Id. If the movant meets its initial burden, “the burden shifts to the nonmovant to go beyond the pleadings and set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.” Id. (quotations omitted).

i. Interpreting insurance contracts under New York law The district court concluded Exclusion D.1.b barred coverage for Mr. Templeton’s claim because the MedCap II transactions and MedCap IV transaction were interrelated wrongful acts under the Policy. We agree. Exclusion D.1.b states, in relevant part: This policy shall not apply to and the Insurer shall pay neither Damages nor Defense Expenses for any Claim . . . arising out of, based upon or in consequence of, directly or indirectly resulting from or in any way 14 The parties dispute whether Catlin should be able to rely on Mr. Cordaro’s testimony before the FINRA arbitration panel to support its position. Because we conclude Exclusion D.1.b applies without considering this evidence, we do not reach this issue. -29- involving . . . any Wrongful Act occurring on or after the Retroactive Date which, together with a Wrongful Act occurring on or prior to such Retroactive Date, would constitute Interrelated Wrongful Acts. . . . App. at 882 (Policy § III.D.1.b). The Policy defines wrongful acts as “Interrelated Wrongful Acts” if they are “similar, repeated or continuous,” or “connected by reason of any common fact, circumstance, situation, transaction, casualty, event, decision or policy or one or more series of facts, circumstances, situations, transactions, casualties, events, decisions or policies.” Id. at 880 (Policy § II.M). The Catlin Policy contains a choice-of-law provision stating that New York law governs claims brought under the Policy. Id. at 894 (Policy § XIII). New York law therefore applies to Mr. Templeton’s indemnification claim. Under New York law, interpretation of an insurance contract is a question of law. Int’l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76, 83 (S.D.N.Y. 2002). Summary judgment is appropriate when the words of a contract convey a definite and precise meaning without any ambiguity. Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992). An insurer bears the burden of proving that a claim falls within the scope of a policy exclusion. Vill. of Sylvan Beach v. Travelers Indem. Co., 55 F.3d 114, 115 (2d Cir. 1995). The insurer meets this burden by establishing “that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case.” Id. at 115-16 (quotations omitted). ii. Exclusion D.1.b is not ambiguous Mr. Templeton appears to argue the exclusion is ambiguous. He contends that -30- affording the ordinary meaning to the term “similar” is too broad and would be contrary to the reasonable expectations of the average insured. We discern no ambiguity in this provision because the exclusion’s language is “complete, clear, and unambiguous.” Greenfield v. Phillies Records, Inc., 780 N.E.2d 166, 170 (N.Y. 2002). Mr. Templeton correctly identifies that the focus of our inquiry is “on the reasonable expectations of the average insured upon reading the policy and employing common speech.” Mostow v. State Farm Ins. Cos., 668 N.E.2d 392, 394 (N.Y. 1996) (citations omitted). His reliance on such reasonable expectations, however, is unpersuasive because the terms of the exclusion are subject to only one meaning. Mr. Templeton himself acknowledges the term “similar” is “extremely broad in everyday usage.” Aplt. Br. at 52; see Fed. Ins. Co. v. Int’l Bus. Machs. Corp., 965 N.E.2d 934, 936 (N.Y. 2012) (explaining that a policy term will be considered ambiguous only where “there is a ‘reasonable basis for a difference of opinion’ as to the meaning of the policy” (quoting Greenfield, 780 N.E.2d at 170-71)). In other words, the reasonable expectation of the average insured would be to understand the word “similar” in its common usage. Moreover, courts have uniformly concluded that policy provisions similar to this one are unambiguous. Glascoff v. OneBeacon Midwest Ins. Co., No. 13 Civ. 1013(DAB), 2014 WL 1876984, at  (S.D.N.Y. May 8, 2014) (unpublished); Zahler v. Twin City Fire Ins. Co., No. 04 Civ. 10299(LAP), 2006 WL 846352, at  (S.D.N.Y. Mar. 31, 2006) (unpublished). We therefore apply the exclusion’s plain meaning. See Greenfield, 780 -31- N.E.2d at 170.15 iii. Exclusion D.1.b excludes coverage under its plain meaning Under its plain meaning, Exclusion D.1.b excludes coverage for Mr. Templeton’s claim. As stated above, the Policy defines “Interrelated Wrongful Acts” as wrongful acts that are “similar, repeated or continuous,” or “connected by reason of any common fact, circumstance, situation, transaction, casualty, event, decision or policy or one or more series of facts, circumstances, situations, transactions, casualties, events, decisions or policies.” App. at 880 (Policy § II.M). Catlin argues the exclusion bars coverage because the MedCap II and MedCap IV transactions are “similar” or “connected” by common facts and circumstances. In common usage, “similar” means “having characteristics in common.”16 Merriam-Webster Online Dictionary, http://www.merriamwebster.com/dictionary/similar (last visited June 24, 2015); see also Oxford English Dictionary Online, http://www.oed.com/view/Entry/179873 (last visited June 24, 2015) (defining similar as “[h]aving a marked resemblance or likeness; of a like nature or 15 Because we conclude the policy language is unambiguous, we reject Mr. Templeton’s argument that we should apply the doctrine of contra proferentem, which provides that an ambiguity in an insurance contract should be resolved in favor of the insured. See Morgan Stanley Grp. Inc. v. New England Ins. Co., 225 F.3d 270, 276 (2d Cir. 2000) (explaining rules of contract construction, such as contra proferentem, are only applicable where the contract language is ambiguous). 16 New York courts commonly refer to dictionary definitions to ascertain the common and ordinary meaning of the words of an insurance policy. See 2619 Realty, LLC v. Fid. & Guar. Ins. Co., 756 N.Y.S.2d 564, 566 (App. Div. 2003). -32- kind”). “Connected” is defined as “joined or linked together.” Merriam-Webster Online Dictionary, http://www.merriam-webster.com/dictionary/connected (last visited June 24, 2015); see also Oxford English Dictionary Online, http://www.oed.com/view/Entry/39329 (last visited June 24, 2015) (defining “connected” as “[r]elated, associated (in nature or idea).” These definitions are consistent with applying a “sufficient factual nexus” test, which this and other courts have used in considering similar interrelated wrongful acts provisions under New York law. See Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003, 715 F.3d 1231, 1238 & n.3 (10th Cir. 2013).17 In Brecek, we considered an identical interrelated wrongful acts provision under New York law and found claims asserted in three separate arbitration proceedings were interrelated wrongful acts. Id. at 1238-39. Our conclusion was based on the fact “[s]everal common facts” connected the arbitrations, including that the arbitrations had overlapping (although not identical) respondents, all the misconduct was alleged to have occurred during the same time frame—from the late 1990s to the mid-2000s, and all the 17 See also Glascoff, 2014 WL 1876984, at  (“To demonstrate a sufficient factual nexus, the claims need not involve precisely the same parties, legal theories, Wrongful Acts, or requests for relief.” (quotations omitted)); Quanta Lines Ins. Co. v. Investors Capital Corp., No. 06 Civ. 4624(PKL), 2009 WL 4884096, at  (S.D.N.Y. Dec. 17, 2009) (unpublished) (explaining that “[a] sufficient factual nexus exists where the Claims are neither factually nor legally distinct, but instead arise from common facts and where the logically connected facts and circumstances demonstrate a factual nexus among the Claims” (quotations omitted)); Seneca Ins. Co. v. Kemper Ins. Co., No. 02 Civ. 10088(PKL), 2004 WL 1145830, at  (S.D.N.Y. May 21, 2004), aff’d, 133 F. App’x 770 (2d Cir. 2005) (unpublished). -33- claims had similar allegations and were premised on similar legal theories of liability. Id. at 1238. Specifically, we noted that all of the claims had similar allegations that the respondents sold unsuitable investment products involving various annuities, all the claims included allegations of “churning and flipping,” and Brecek’s liability in all the actions was predicated on the same theories—vicarious liability and failure to supervise. Id. We conclude the MedCap II transactions and the MedCap IV transaction constitute “Interrelated Wrongful Acts” under the Policy. First, the Policy’s definition of “Interrelated Wrongful Acts” is broad, requiring only that the wrongful acts be “similar” or “connected by reason of any common fact, circumstance, situation, transaction, casualty, event, decision or policy.” App. at 880 (Policy § II.M) (emphasis added). Second, common facts connect the MedCap II and MedCap IV transactions. They were sales to the same clients—the Cordaros, investments in subsidiaries of the same company, and sales by the same securities broker—Mr. Templeton. Even if the Cordaros did not merely “roll over” the proceeds from their MedCap II investment into MedCapIV, they reinvested the entire return on their MedCapII investment into MedCap IV. Third, the Cordaros’ claims regarding the MedCap II and MedCap IV transactions alleged liability based on the same conduct by Mr. Templeton—his failure to disclose the same material facts about MedCap Holdings, his failure to investigate the products he sold, and his failure to conduct a proper suitability analysis of the Cordaros before selling them the MedCap II and MedCap IV notes. The MedCap II and MedCap IV transactions are -34- “similar” and “connected by reason of any common fact [or] circumstance.” They therefore meet the Policy definition of “Interrelated Wrongful Acts.” Mr. Templeton’s attempt to distinguish the MedCap II and MedCap IV transactions is not persuasive. He posits the MedCap II transactions occurred when he was a USA registered representative, whereas the MedCap IV transaction occurred when he was with CapWest. He further argues the Cordaros did not merely “roll over” the funds they received when the MedCap II notes matured to purchase the MedCap IV note, but they instead paid separately for the MedCap IV note, so he and CapWest did not maintain control of the funds. He also contends the Cordaros filled out new account forms with CapWest, including new suitability and risk tolerance forms.18 These dissimilarities, however, do not show the wrongful acts were not “similar” or “connected.” Because the MedCap II and MedCap IV transactions qualify as “Interrelated Wrongful Acts,” and the MedCap II transactions occurred before the Retroactive Date of the Catlin Policy, Mr. Templeton’s indemnification claim is barred by Exclusion D.1.b.19 18 The Cordaros filled out new account forms, which included a customer suitability and risk tolerance section, when Mr. Templeton transferred their account to CapWest in 2005. There is no indication they filled out additional risk tolerance or suitability forms prior to their purchase of the MedCap IV note in 2007. 19 Mr. Templeton’s argues we should reverse based on the deposition testimony of Mr. Mooney, Catlin’s claims director and designated corporate representative, under Federal Rule of Civil Procedure 30(b)(6). Mr. Mooney testified Mr. Templeton was owed indemnity for the Cordaros’ claims regarding MedCap IV. This court has not Continued . . . -35-
Mr. Templeton argues that even if Exclusion D.1.b otherwise bars coverage under the Policy, we should nonetheless apply equitable estoppel to prevent Catlin from relying on it because Catlin did not invoke Exclusion D.1.b in its reservation of rights letter. Under New York law, “[w]here an insurer defends an action on behalf of an insured, with knowledge of a defense to the coverage of the policy, it thereafter is estopped from asserting that the policy does not cover the claim.” Hartford Ins. Grp. v. Mello, 437 N.Y.S.2d 433, 434 (App. Div. 1981); see also Albert J. Schiff Assocs., Inc. v. Flack, 417 N.E.2d 84, 87 (N.Y. 1980) (“[T]he intervention of principles of equitable estoppel [is appropriate] . . . where an insurer, though in fact not obligated to provide coverage, without asserting policy defenses or reserving the privilege to do so, undertakes the defense in the case, in reliance on which the insured suffers the detriment of losing the right to control its own defense.”). Estoppel applies only if the insurer’s actions have prejudiced the insured. Hartford, 437 N.Y.S.2d at 434. Prejudice “is established only addressed whether the testimony of a Rule 30(b)(6) representative qualifies as a judicial or evidentiary admission. The majority of courts to reach the issue, however, treat the testimony of a Rule 30(b)(6) representative as merely an evidentiary admission, and do not give the testimony conclusive effect. See, e.g., A.I. Credit Corp. v. Legion Ins. Co., 265 F.3d 630, 637 (7th Cir. 2001); 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice & Procedure § 2103 (3d ed. 2010) (“Testimony given at a deposition of a designated corporate representative is not a judicial admission that ultimately decides the case.”); but see Rainey v. Am. Forest & Paper Ass’n, Inc., 26 F. Supp. 2d 82, 96 (D.D.C. 1998) (refusing to consider an affidavit that contradicted a Rule 30(b)(6) deposition). We do not need to decide this issue because coverage is a question of law. Regardless of whether Mr. Mooney’s testimony qualifies as a judicial or evidentiary admission, his testimony does not create a triable issue of fact. -36- where the insurer’s control of the defense is such that the character and strategy of the lawsuit can no longer be altered.” Brecek, 715 F.3d at 1242 (quotations omitted). The district court denied Mr. Templeton’s equitable estoppel claim because the reservation of rights letter specifically referenced Exclusion D and contained a broad reservation of Catlin’s rights to deny coverage at any time. We review the district court’s denial of equitable estoppel for abuse of discretion. Id. at 1240. “A district court abuses its discretion when its judgment is arbitrary, capricious, whimsical, or manifestly unreasonable.” Id. As the district court concluded, Catlin provided Mr. Templeton notice that it was reserving its rights to deny coverage of the Cordaros’ claim, and the reservation of rights letter referenced Exclusion D as a possible basis for denying coverage. Although the letter did not specifically mention the “Interrelated Wrongful Acts” exclusion, that exclusion is part of Exclusion D, and Mr. Templeton cites no authority that notice here was inadequate. In fact, an insurer’s reservation of rights prevents an insured from later claiming detrimental reliance, “even if the insurer later disclaims [coverage] on a basis different from the ground originally asserted in the reservation of rights.” Federated Dep’t Stores, Inc. v. Twin City Fire Ins. Co., 807 N.Y.S.2d 62, 67 (App. Div. 2006). The district court did not abuse its discretion in denying Mr. Templeton’s request to estop Catlin from relying on Exclusion D.1.b.