Court Opinion

ID: 798288
Source: CourtListenerOpinion
Date Created: 2012-04-19 16:12:43+00
Date Added: 2024-06-11T17:59:44.660028
License: Public Domain

FILED
                                                           United States Court of Appeals
                                                                   Tenth Circuit
                    UNITED STATES COURT OF APPEALS
                                                                   April 19, 2012
                           FOR THE TENTH CIRCUIT               Elisabeth A. Shumaker
                                                                   Clerk of Court

    EMPLOYERS’ MUTUAL
    CASUALTY COMPANY, an Iowa
    corporation,

               Plaintiff-Appellee,
                                                        No. 11-8026
    v.                                        (D.C. No. 1:07-CV-00182-WFD)
                                                         (D. Wyo.)
    BARTILE ROOFS, INC., a Utah
    corporation, and JOHN DOES 1-50,

               Defendant-Appellant.

                           ORDER AND JUDGMENT *

Before KELLY, MURPHY, and HOLMES, Circuit Judges.

         Employers Mutual Casualty Company (“EMC”) brought an action in the

District of Wyoming, seeking a declaratory judgment that it had no duty under its

policies with Bartile Roofs, Inc. (“Bartile”) to defend Bartile against a Third

Amended Cross-Complaint filed in California state court by Jacobsen

*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Construction Company (“Jacobsen”). The district court granted declaratory relief

to EMC. We affirmed. Emp’rs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d

1153 (10th Cir. 2010) (Bartile I).

      While Bartile I was pending, EMC sought a further declaratory judgment

pursuant to 28 U.S.C. § 2202 that it also owed no duty to defend Bartile against

Jacobsen’s Fourth Amended Cross-Complaint (“Fourth ACC”), filed in the same

California state court action. The district court determined that the allegations in

the Fourth ACC arose from “Bartile’s failure to fulfill its contractual obligation to

perform skillful and defect-free work” and that such allegations did not require

EMC to defend Bartile. Aplt. App., Vol. II at 536. Bartile now appeals from the

district court’s order granting EMC further declaratory relief.

      The law announced in our decision in Bartile I precludes the relitigation of

certain issues raised by Bartile in this appeal. The district court properly granted

summary judgment to EMC on these and the other issues that Bartile now raises.

Accordingly, we affirm the award of summary judgment to EMC.

                                  BACKGROUND

      Bartile contends that the Third and Fourth ACC differ significantly in both

factual and legal import. Some discussion of the background of these complaints

and the history of this case is therefore in order.

                                          -2-
      1. The Origin of Jacobsen’s Cross-Complaints

      This case arises out of the construction of the “Four Seasons Resort

Jackson Hole” in Jackson, Wyoming (the “Project”). FS Jackson Hole

Development Company, LLC (“FSJH”) was the Project’s owner and developer.

Jacobsen was the Project’s original contractor and was responsible for hiring

subcontractors (“subs”) to perform work on the Project. One of these subs was

Bartile.

      Sometime prior to March 2004, disputes arose between FSJH and Jacobsen.

As a result, FSJH fired Jacobsen from the Project. In March 2004, Jacobsen sued

FSJH in California state court, asserting claims against FSJH arising from

construction of the Project. FSJH cross-complained against Jacobsen, seeking

damages for alleged construction defects. Jacobsen in turn filed a series of

cross-complaints against its subs and their insurers.

      On September 22, 2006, Jacobsen filed its Third ACC in the California

action. In the Third ACC, Jacobsen sought to offset FSJH’s claims against it by

obtaining indemnity and contribution from its subs and various other entities.

Bartile was not expressly named in the Third ACC, but was implicitly included as

one of Jacobsen’s “ROES 1 through 50” who “provided services, labor and/or

materials for the Project pursuant to a subcontract agreement with Jacobsen.” Id.

Vol. I at 14.

                                         -3-
      2. EMC’s Declaratory Judgment Action

      EMC had issued Commercial General Liability Coverage (“CGL”) policies

to Bartile naming Bartile as the insured. Bartile tendered its request for defense

and for indemnity under these policies to EMC. EMC initially defended Bartile,

but then filed this suit in the District of Wyoming seeking a declaration that

Jacobsen’s claims against Bartile were not covered under the policies.

      The district court granted summary judgment to EMC, finding that EMC

had no duty to defend Bartile against the Third ACC. It also denied Bartile’s

motion to dismiss or to transfer venue to the District of Utah. Bartile appealed,

raising issues in this court concerning personal jurisdiction, proper venue, and the

appropriate choice of law. In the course of resolving these issues, we reached

certain conclusions about the scope of coverage under the CGL policies that are

relevant to the current appeal.

      3. The Prior Appeal (Bartile I)

      In Bartile I, among other issues, this court considered Bartile’s objections

to the district court’s choice-of-law determinations. The district court had applied

Wyoming law to interpret the CGL policies because it concluded there was no

actual conflict between Wyoming and Utah law. On appeal, Bartile argued that

the district court should have applied Utah law because Wyoming and Utah law

conflicted concerning (1) the admissibility of extrinsic evidence in determining

                                        -4-
the scope of an insurer’s duty to defend, and (2) the definition of an “accident”

under the CGL policies.

      Addressing these challenges, we held that the differences in Wyoming and

Utah law were not material and that they would not produce different outcomes.

Bartile I, 618 F.3d at 1171. Both Utah and Wyoming law would bar the

admission of extrinsic evidence to determine the scope of EMC’s duty to defend

under the policies. Id. at 1171-73. More importantly, there was also no

significant difference in the state law definitions of “accident,” a key definition

pertinent to the current appeal. Id. at 1173-75.

      Under the CGL policies--the same policies at issue in this case--EMC

“assume[d] the duty to defend against any suits seeking damages for property

damage caused by an ‘occurrence’ within the coverage territory.” Id. at 1173

(quoting policies). The CGL policies defined an “occurrence” as an “‘accident,

including continuous or repeated exposure to substantially the same general

harmful conditions.’” Id. (quoting policies). The policies did not define

“accident,” so the district court had to look to state law for the definition of this

term. Wyoming and Utah law defined “accident” differently:

                                          -5-
 Wyoming                                      Utah
 [A] fortuitous circumstance, event, or       [T]he word [accident] is descriptive of
 happening, an event happening                means which produce effects which are
 without any human agency, or if              not their natural and probable
 happening wholly or partly through           consequences. . . . An effect which is
 human agency, an event which under           the natural and probable consequence
 the circumstances is unusual or              of an act or course of action is not an
 unexpected by the person to whom it          accident, nor is it produced by
 happens; an unusual, fortuitous,             accidental means. It is either the result
 unexpected, unforeseen or unlooked           of actual design, or it falls under the
 for event, happening or occurrence;          maxim that every man must be held to
 . . . chance or contingency; fortune;        intend the natural and probable
 mishap; some sudden and unexpected           consequence of his deeds.
 event taking place without expectation,
 upon the instant, rather than something      Bartile I, 618 F.3d at 1173-74
 which continues, progresses or               (alterations in original) (internal
 develops . . . .                             quotation marks omitted).

 Bartile I, 618 F.3d at 1173 (alterations
 in original) (internal quotation marks
 omitted).

      We concluded that “Wyoming law focuses on the unexpectedness of the

event, while Utah law focuses on the unexpectedness of the result or injury.” Id.

at 1174. But given the nature of the underlying cross-claims against Bartile, this

was a distinction without a difference.

      [E]ven though the underlying complaints plead claims under several
      labels, the claims all arise out of Bartile’s allegedly negligent roofing
      work and its alleged breach of its contractual duties to perform
      roofing work, indemnify the general contractor, and obtain insurance
      for the general contractor. Under [both] Wyoming and Utah law, the
      natural results of an insured’s negligent and unworkmanlike

                                            -6-
      construction do not constitute an occurrence triggering coverage
      under a CGL policy.

Id. (internal quotation marks and alterations omitted).

      Thus, we concluded, “the district court properly found that Wyoming and

Utah would apply the same law to this action regarding the admissibility of

extrinsic evidence and the definition of the term ‘accident.’ The district court

also correctly applied the law of the forum [i.e., Wyoming].” Id. at 1175. We

therefore affirmed summary judgment for EMC.

      4. The Fourth Amended Cross-Complaint

      In October 2009, prior to our decision in Bartile I, Jacobsen filed its Fourth

ACC in California state court. In contrast with the Third ACC, Bartile is the only

defendant expressly named in the Fourth ACC. This is because “[t]he Underlying

Action was settled by all parties except for Jacobsen and Bartile.” Aplee Br. at 5;

see also Aplt. App., Vol. II at 208-23 (order approving settlement). 1

      The Fourth ACC asserts claims against Bartile for equitable indemnity,

contribution, breach of contract, express indemnity, and negligence. Only the

negligence claim is entirely new. The Fourth ACC also includes new, more

detailed factual allegations that describe the basis for Jacobsen’s claims against

Bartile. See Aplt. App., Vol. I at 63-66.

1
      Notwithstanding the settlement, the Fourth ACC retains language
throughout concerning certain ROE defendants. Their presence in the suit does
not appear to affect the issues on appeal.

                                         -7-
      As Bartile notes, the Fourth ACC also contains a new reference to an

“accident.” This comes in its description of FSJH’s prior complaint against

Jacobsen, which alleged that “[a]s a result of Jacobsen’s failure to properly

manage the performance of the work by both its subcontractors and its own

employees, much of that work was negligently performed so as to accident[ally]

cause physical damage to, and loss of use of other parts of the work at the

project.” Id. at 62.

      5. District Court Disposition

      Bartile once again sought defense and indemnity from EMC for the claims

asserted against it in the Fourth ACC. EMC responded by filing its “Petition for

Further Relief” in district court, seeking a declaration that it owed no duty to

defend or to indemnify Bartile against the claims asserted in the Fourth ACC.

The district court granted EMC summary judgment on its petition. This appeal

followed.

                                    ANALYSIS

      1. District Court’s Reasoning

      The district court began its analysis by noting that the Fourth ACC was

“nearly identical” to the Third ACC. Id., Vol. II at 528. Bartile, however, relied

on two additional features of the Fourth ACC that it claimed triggered EMC’s

duty to defend. The first was the new cause of action grounded in negligence.

The second was an allegation that Bartile’s defective workmanship caused water

                                         -8-
intrusion resulting in consequential property damage to other portions of the

Project.

      The district court stated, as we had previously stated in Bartile I, that the

policies define an occurrence as “an accident, including continuous or repeated

exposure to substantially the same general harmful conditions.” Id. at 533

(internal quotation marks omitted). It then turned to Wyoming law to define the

term “accident,” relying on essentially the same definition we had previously

cited in Bartile I, 618 F.3d at 1173. The district court then moved away from our

prior analysis, however, turning instead to the distinction between tort-based and

contract-based causes of action.

      The district court reasoned that “[a] breach of contract is not an

‘accident.’” Aplt. App., Vol. II at 534. This is because “[t]he risk that a party

will breach the agreement and become [liable] to the other party is inherent in

every contract.” Id. Thus, a breach is not “unusual and unexpected” to the

non-breaching party and is not an “accident” under Wyoming law. Id. at 534-35

(internal quotation marks omitted). Notwithstanding Bartile’s arguments to the

contrary, “the allegations in the [Fourth ACC] sound in contract and not in tort.”

Id. at 535. Moreover, “couching a claim for breach of contract in terms of

negligence does not trigger a duty to defend.” Id. The district court concluded

that the negligence claim therefore did not create a duty to defend.

                                         -9-
      Turning to the allegations of water damage, the district court discerned a

meaningful split between Utah and Wyoming law concerning the meaning of the

term “accident”:

      In Wyoming, an accident is an unusual and unexpected event. By
      contrast, in Utah, the word accident is descriptive of means which
      produce effects which are not their natural and probable
      consequences. Thus, . . . Wyoming law focuses on the
      unexpectedness of the event, while Utah law focuses on the
      unexpectedness of the result or injury.

Id. at 535-36 (citations and internal quotation marks omitted).

      The district court then determined that Wyoming law, rather than Utah law,

applied. Under Wyoming law, the district court concluded, the relevant “event”

was “Bartile’s failure to perform as required by its contract.” Id. This event was

“not so unusual or unexpected as to be considered an accident as defined by

Wyoming law.” Id.

      2. Summary Judgment Standard of Review

      “We review the district court’s grant of summary judgment de novo,

viewing the evidence in the light most favorable to the non-moving party.”

McCarty v. Gilchrist, 646 F.3d 1281, 1284 (10th Cir. 2011). “Summary judgment

is appropriate when there is no genuine issue of material fact and the movant is

entitled to judgment as a matter of law.” Id. at 1284-85. In conducting our

review, “we may affirm on any basis supported by the record, even though not

                                        -10-
relied on by the district court.” Id. at 1285 (internal quotation marks and

alteration omitted).

      3. EMC’s Preclusion Argument

      EMC contends that our decision in Bartile I explicitly or implicitly

addressed all of the issues raised by Bartile in the present appeal, and therefore

that decision mandates a ruling in favor of EMC under the law of the case

doctrine. “The law of the case doctrine posits that when a court decides upon a

rule of law, that decision should continue to govern the same issues in subsequent

stages in the same case.” Rimbert v. Eli Lilly & Co., 647 F.3d 1247, 1251

(10th Cir. 2011) (internal quotation marks omitted). 2 A court must have actually

2
       An interesting issue not addressed by the parties is whether this declaratory
judgment proceeding should even be treated as the “same case” as Bartile I for
law of the case purposes. The current proceeding began after a final judgment
and appeal, when EMC requested “further relief” under 28 U.S.C. § 2202.
Section 2202 allows a party to seek “[f]urther necessary or proper relief based on
a declaratory judgment or decree.” Id. (emphasis added). The previous
declaratory judgment in this case, however, declared only that there was no
coverage for the Third ACC. In this case, EMC essentially sought a new
declaratory judgment that there was also no coverage for the Fourth ACC. Did
this make this proceeding a “new case” for law of the case purposes, rather than a
subsequent stage of an existing case? If so, either the “prior panel rule” or
collateral estoppel (issue preclusion), rather than law of the case, would seem to
be the applicable preclusion doctrine. We need not worry further about this
procedural difficulty, however, because in either event, the result achieved by
applying preclusion principles would be the same. See, e.g., Kokins v. Teleflex,
Inc., 621 F.3d 1290, 1295 (10th Cir. 2010) (“[W]hen a panel of this Court has
rendered a decision interpreting state law, that interpretation is binding on . . .
subsequent panels of this Court, unless an intervening decision of the state’s
highest court has resolved the issue.” (internal quotation marks omitted)).

                                        -11-
decided an issue, “either explicitly or by necessary implication,” to create law of

the case. Copart, Inc. v. Admin. Review Bd., 495 F.3d 1197, 1201 (10th Cir.

2007) (internal quotation marks omitted); see also Hale v. Gibson, 227 F.3d 1298,

1329 n.13 (10th Cir. 2000).

      Obviously, we did not determine in Bartile I that EMC had no duty to

defend or indemnify Bartile against the Fourth ACC. That issue was not present

in Bartile I, either expressly or by implication. What we did determine was the

meaning of the term “accident” under the policies and the relevant state law.

That prior determination has two consequences pertinent to this appeal.

      First, to the extent that Bartile attempts to circumvent our prior legal

conclusion concerning what constitutes an “accident” under the CGL policies, the

law of the case doctrine bars the attempt. Second, to the extent that the Fourth

ACC, like the Third ACC, does not seek recovery for an “accident” because it

asserts only causes of action based on the natural results of Bartile’s negligent

and unworkmanlike construction, any difference in wording between the two

complaints is immaterial, and EMC is entitled to relief for the same reasons stated

in Bartile I. Cf. Greene v. Safeway Stores, Inc., 210 F.3d 1237, 1242 (10th Cir.

2000) (stating immaterial differences in evidence produced in second trial after

remand were insufficient to justify departure from law of the case concerning

sufficiency of evidence).

                                         -12-
      4. Bartile’s Appellate Arguments

              A. Negligence Claim: Tort vs. Contract

      Bartile begins by attacking the applicability of the district court’s

distinction between coverage for actions sounding in tort and contract.

Notwithstanding the district court’s attempt to characterize the negligence claim

in the Fourth ACC as contractually-based, Bartile reasons, it is actually a tort

claim. It follows, Bartile argues, that the district court’s reason for concluding

that the resulting breach was neither unusual or unexpected--because a breach of

contract is always within the realm of possibility whenever two parties contract--

was invalid, as was its further conclusion that the breach of contract involved no

“accident.”

      We need not linger long over this attempted distinction. 3 Coverage here

does not depend on whether the claims against Bartile sound in tort or contract.

As we explained in Bartile I, regardless of the label applied to a claim, “[u]nder

[both] Wyoming and Utah law, the natural results of an insured’s negligent and

unworkmanlike construction do not constitute an occurrence triggering coverage

under a CGL policy.” Bartile I, 618 F.3d at 1174 (internal quotation marks and

3
       Bartile devotes a significant portion of its brief to proving that Wyoming
law would hold that conduct constituting both a breach of contract and a tort can
trigger a duty to defend. See Aplt. Opening Br. at 20-27. But for the reasons we
have stated, the tort/contract distinction is essentially irrelevant to the applicable
definition of an “accident” discussed in Bartile I. Accordingly, we do not discuss
further Bartile’s argument on this point.

                                         -13-
alterations omitted); see also id. n.17 (stating difference in Wyoming and Utah

law concerning whether CGL policies cover contract claims was irrelevant to

choice-of-law issue because real issue was “whether the natural results of an

insured’s unworkmanlike or negligent construction can constitute an occurrence,”

a question on which “the law of Wyoming and Utah is in agreement, answering in

the negative”). The issue therefore is not whether the Fourth ACC contains a tort

claim, but whether the Fourth ACC seeks to hold Bartile liable for something

other than the natural results of its own negligent and unworkmanlike

construction. Bartile has failed to show this is the case. 4

             B. Unforeseen and Unexpected Result

      Given our statements about the law in Bartile I, one might have expected

Bartile’s appellate briefing in this appeal to focus on whether the consequential

water damage to other portions of the Project not under Bartile’s control were an

unnatural result of its negligence. But that is not the argument Bartile makes.

4
       In determining whether the Fourth ACC charges Bartile with an “accident,”
the district court applied Wyoming law. See Aplt. App., Vol. II at 533-36.
Bartile does not contest this choice of law. See, e.g., Aplt. Opening Br. at 12.
Oddly, however, Bartile mounts an argument, based in part on the application of
Utah law, concerning the “expected” and “foreseeable” results of an injury. See
id. at 12-16. This argument is irrelevant to the issues here, given Bartile’s
concession that Wyoming law applies. We would also note that we previously
rejected this identical argument in Bartile I itself, 618 F.3d at 1175 n.18. Bartile
gives us no reason to revisit an issue already discussed and disposed of in the
previous appeal.

                                          -14-
      Instead, citing Wyoming law which focuses on the “event” triggering

coverage, and viewing its own negligence rather than the water damage itself as

the relevant “event,” Bartile argues that “[t]here is nothing in the [Fourth] ACC,

or in any other evidence before the trial court, or in any logical, common sense

understanding, to suggest that Bartile foresaw, or expected, or intended, any of

the negligent conduct alleged against it in the [Fourth] ACC.” Aplt. Opening Br.

at 14 (emphasis added). To bolster this argument, Bartile contends that “it can

safely be assumed that construction subcontractors don’t intend to be careless,”

id. at 16, and “reputable roofing subcontractors do not expect to accidentally

cause damage,” id. at 19.

      This argument, however, merely represents an attempted “end run” around

the definition of “accident” we established in Bartile I, which constitutes the law

of this case. In Bartile I we repeatedly insisted that both Utah and Wyoming

would agree that “the natural results of an insured’s unworkmanlike or negligent

construction” do not “constitute an occurrence (i.e. accident) triggering coverage

under a CGL policy.” 618 F.3d at 1174 n.17 (emphasis added). Again, Bartile

makes no argument that the consequential water damage at issue here was not a

natural result of Bartile’s own unworkmanlike or negligent construction. 5 This

5
      In its opening brief, Bartile does occasionally mention the allegations in the
Fourth ACC that it “accidentally” caused damage to property other than its own
work. See, e.g., Aplt. Opening Br. at 2. But Bartile fails to argue that this result
                                                                      (continued...)

                                        -15-
being the case, under the very law we repeatedly emphasized in Bartile I, Bartile

has not established an “accident” subject to policy coverage.

      Simply put, Bartile’s argument is devoid of merit because it does not focus

on the proper and applicable “natural results” standard we established in Bartile I.

Nor does Bartile advance any argument that the “event” of its unworkmanlike or

negligent construction produced any unnatural or unexpected results. 6

                                  CONCLUSION

      The law announced in our decision in Bartile I precludes the relitigation of

the issues raised by Bartile in this appeal. The district court properly granted

5
 (...continued)
was an “unnatural” result of its own negligence. See id. (“Bartile breached a
duty, imposed by law, of reasonable care, by negligently and “accidentally”
performing defective roofing work”) (emphasis added). In its reply brief, Bartile
appears to shift gears, concentrating more on the accidental results of its
negligence. We decline to consider arguments raised for the first time in reply
briefs, however. Reedy v. Werholtz, 660 F.3d 1270, 1274 (10th Cir. 2011).
6
      Nor is there merit in Bartile’s assertion that the potential that its negligent
acts might have been unexpected by someone involved is enough to trigger
EMC’s duty to defend. Aplt. Opening Br. at 19-20. Absent a showing that the
claims against it involved something other than the natural results of its own
unworkmanlike or negligent construction, Bartile entirely fails to bring itself
within the ambit of potential coverage under the policies, as we squarely held in
Bartile I.

                                         -16-
summary judgment to EMC. Accordingly, the judgment of the district court is

AFFIRMED.

                                                 Entered for the Court

                                                 Michael R. Murphy
                                                 Circuit Judge

                                     -17-