Berry & Murphy, P.C. v. Carolina Casualty Insurance

FILED
United States Court of Appeals
Tenth Circuit

November 12, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

BERRY & MURPHY, P.C.;
TIMOTHY H. BERRY, P.C.,

Plaintiffs-Appellants,
v. No. 09-1004
CAROLINA CASUALTY
INSURANCE COMPANY,

Defendant-Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:08-cv-01903-RPM)

Steven J. Dawes (Sophia H. Tsai with him on the briefs), of Light, Harrington &
Dawes, P.C., for Plaintiffs-Appellants.

Jeffrey A. Goldwater of of Bollinger, Ruberry & Garvey, Chicago, Illinois,
(Perry M. Shorris, Bollinger, Ruberry & Garvey, Chicago, Illinois; Patrick Q.
Hustead and Melissa W. Shisler, the Hustead Law Firm, Denver, Colorado, with
him on the brief), for Defendant-Appellee.

Before HENRY, Chief Circuit Judge, BRISCOE, and LUCERO, Circuit Judges.

BRISCOE, Circuit Judge.
 Plaintiffs-Appellants Berry & Murphy, P.C. and Timothy H. Berry, P.C.

(“plaintiffs”) appeal the district court’s grant of summary judgment to Defendant-

Appellee Carolina Casualty Insurance Company (“Carolina Casualty”) on

plaintiffs’ claim for insurance coverage for a malpractice lawsuit. Plaintiffs filed

their action in state court and Carolina Casualty removed the case to federal

court, alleging diversity jurisdiction under 28 U.S.C. § 1332. The district court

concluded that Carolina Casualty had no duty to defend or indemnify plaintiffs

because a claim was first made against “an insured” in January 2007 – more than

one year prior to the policy period.

We have jurisdiction over plaintiffs’ timely appeal pursuant to 28 U.S.C. §

1291 and affirm.

I

Oksana and William Burkhardt (the “Burkhardts”) hired Seth Murphy, a co-

shareholder of the law firm of Berry & Murphy, P.C., to represent them in a

personal injury suit arising out of an alleged assault by Joseph Ciri (the “Ciri

Lawsuit”). In January 2005, Murphy filed a complaint on behalf of the

Burkhardts in Colorado state court. The Ciri Lawsuit was governed by

Colorado’s simplified procedure rule, Colo. R. Civ. P. 16.1, and Murphy did not

opt out of proceeding under Rule 16.1. 1

1
Colorado provides for “Simplified Procedure” for civil actions wherein
(continued...)

2
 Over a year later, in March 2006, Murphy left Berry & Murphy, P.C. and

joined the law firm of Richmond, Neiley, Sprouse, & Murphy, LLC. Murphy

took the Ciri Lawsuit with him to his new law firm. About the same time,

however, Murphy filed a motion to withdraw as counsel from the Ciri Lawsuit

because he was allegedly having a difficult time getting the Burkhardts to

cooperate in the prosecution of their claims.

In April 2006, the defendants in the Ciri Lawsuit filed a motion to dismiss

for failure to prosecute. The motion to dismiss alleged: (1) failure to supplement

initial disclosures regarding damages as required by Colo. R. Civ. P. 26(a); (2)

failure to respond to a November 2005 letter from defendants’ counsel regarding

additional disclosures; (3) failure to produce a release for medical records for the

previous five years; (4) failure to produce complete billing information from

medical providers; (5) failure to produce employment records in violation of

Colo. R. Civ. P. 16.1(k)(1)(B)(ii); (6) failure to disclose any expert witness before

the deadline set forth in Rule 16.1(k)(2); and (7) failure to produce non-expert

witness information pursuant to Rule 16.1(k)(3). At the end of May 2006, the

court orally granted Murphy’s motion to withdraw as counsel from the Ciri

1
(...continued)
the “maximum allowable monetary judgment” is $100,000 against a party and
early disclosures are required. Colo. R. Civ. P. 16.1(a)(2). The simplified
procedure rule applies unless the party “timely and properly elects to be excluded
from its provisions.” Id.

3
Lawsuit. Shortly thereafter, on June 27, 2006, the court granted, without

prejudice, the defendants’ motion to dismiss for failure to prosecute and entered a

written order granting Murphy’s motion to withdraw.

The Burkhardts then hired new counsel and moved for reconsideration of

the order dismissing their lawsuit and for reinstatement of the case. In November

2006, the court granted the Burkhardts’ motion. The court also ordered the

Burkhardts to file new non-expert witness disclosures which complied with Rule

16.1(k)(3) by December 11, 2006.

On January 10, 2007, Cindy Tester, the Burkhardts’ new attorney in the

Ciri Lawsuit, sent the following letter to Murphy at Richmond, Sprouse &

Murphy, LLC (formerly Richmond, Neiley, Sprouse & Murphy, LLC):

Dear Mr. Murphy:

This is to advise you to put your legal malpractice
insurance carrier on immediate notice a [sic] legal
malpractice claim that I plan on filing against you on
behalf of my clients, Mr. & Mrs. William Burkhardt. The
Court recently found that your conduct in handling the
Burkhardts’ case was so egregious and so woefully
inadequate that the case was nearly dismissed. Only
through over hundreds of hours of pleadings practice,
thousands of dollars paid to experts to obtain expert
reports and innumerable hours of work put into this case
since I took it over, were we able to somewhat resurrect
this case to give the Plaintiffs a chance at their day in
Court.

Moreover, the Court made certain findings as to
your conduct and culpability regarding the manner in
which you handled this case and the way you flagrantly

4
 disregarded your duties as an attorney. As such, put your
carrier on notice immediately and give me the name of
your insurance adjuster, so I may forward your adjuster a
complete copy of the transcript of the Court’s findings, the
recent pleadings that have been filed in this case, which is
still very minimally on tract [sic] at best given the plethora
of the Defendants recent pleadings trying yet again to have
it dismissed (and it was already dismissed once due to
your conduct).

The Plaintiffs shall hold you entirely liable for all
your misfeasance and malfeasance concerning your
egregious inaction in handling and mishandling this case
and the extreme amount of mental anguish, hours put into
this case and the precarious position that you have put
them in through failing to even remotely properly even the
most mediocre attorney could handle a case [sic].

I expect to hear from your carrier shortly.

App. at 216-17 [sic throughout] (hereinafter the “Tester Letter”). The Tester

Letter was not sent to Murphy’s former co-shareholder, Timothy H. Berry, and

Berry was not given notice of the letter at the time. Murphy, upon receipt of the

Tester Letter, put his law firm’s malpractice carrier—which happened to be

Carolina Casualty—on notice of the claim.

Defendants in the state court Ciri Lawsuit, having not received the recently

court-ordered material by the end of December deadline, next renewed their

request for dismissal of the Ciri Lawsuit. In February 2007, the court denied the

defendants’ request to dismiss, but struck all but eight of the Burkhardts’

potential witnesses and required Rule 16.1(k)(3) compliant non-expert witness

disclosures for these eight witnesses by March 27, 2007. The Burkhardts failed to

5
comply with the court’s order by this new deadline and defendants then filed a

second renewed motion to dismiss. The court granted, with prejudice, the second

renewed motion to dismiss in December 2007. 2

On January 30, 2008, the Burkhardts filed a legal malpractice claim against

Seth Murphy and Berry & Murphy, P.C. in the Pitkin County, Colorado district

court (the “Malpractice Lawsuit”). The Malpractice Lawsuit generally alleged

that Seth Murphy and Berry & Murphy, P.C. missed the deadline for filing a

notice to elect exclusion from Simplified Procedures pursuant to Colo. R. Civ. P.

16.1 in the Ciri Lawsuit. The Malpractice Lawsuit also generally alleged that

Seth Murphy and Berry & Murphy, P.C. were “negligent” and breached their

“fiduciary duty of loyalty” to the Burkhardts. The Malpractice Lawsuit’s

claimed damages were “loss in the value of a chose, plus litigation costs, attorney

fees, and interest.” App. at 79.

Berry & Murphy, P.C. was the predecessor firm to Timothy H. Berry, P.C.

Timothy H. Berry, P.C. is a Leadville, Colorado professional corporation engaged

in the practice of law. As regards the insurance policy for Timothy H. Berry,

P.C., “Timothy H. Berry, P.C.” was the named insured on a lawyers’ professional

liability insurance policy issued by Carolina Casualty, an Iowa insurance

2
The Burkhardts appealed the dismissal of the Ciri Lawsuit to the
Colorado Court of Appeals, which affirmed the trial court’s dismissal of the case.
See App. at 288–303 (decision from the Colorado Court of Appeals—Burkhardt et
al. v. Ciri et al., No. 08CA0490 (Colo. Ct. App. Apr. 2, 2009)).

6
company. The claims-made insurance policy was effective from February 6, 2008

to February 6, 2009. On July 23, 2008, Timothy Berry accepted service of the

Malpractice Lawsuit, and he gave notice to Carolina Casualty of the filing of the

Malpractice Lawsuit on that date. Berry alleges he had no knowledge of either

the Tester Letter or the Malpractice Lawsuit until he accepted service of the

Malpractice Lawsuit on July 23, 2008.

Plaintiffs filed this action to resolve the parties’ dispute regarding

insurance coverage for the Malpractice Lawsuit. Carolina Casualty denied

coverage for the Malpractice Lawsuit on the grounds that the alleged malpractice

claim was first made against an insured (i.e., Seth Murphy) prior to the inception

of the insurance policy (i.e., via the Tester Letter), thereby falling outside the

claims-made coverage of the policy. Plaintiffs’ complaint asserts claims for

declaratory relief, injunctive relief, breach of contract, and bad faith.

Before the district court, plaintiffs filed a motion for preliminary injunction

and a motion for leave to add additional claims. Carolina Casualty and plaintiffs

then filed cross-motions for summary judgment. The district court, orally at a

motions hearing, granted Carolina Casualty’s motion for summary judgment,

denied plaintiffs’ motion for summary judgment, and found plaintiffs’ remaining

motions moot. In granting Carolina Casualty’s motion, the district court stated:

I’m going to grant [Carolina Casualty’s] motion for
summary judgment. [Murphy] is an insured. He had notice
from this Tester letter that he was going to be accused, or

7
 was directly accused of malpractice in the representation
of [the Burkhardts] in the Pitkin County case, and that it
had been dismissed. And, it isn’t just a question of his
failing to timely make this election under Colorado Rule
16.1, it’s really the failure to proceed with that lawsuit and
make the disclosures, whatever the rule was. And, I think
that his further conduct in not notifying his former partner,
or firm, that this claim was going to be made for his
conduct while he was with that firm, you know, the burden
doesn’t fall on the insurance company for that.

App. at 286. The district court later awarded costs to Carolina Casualty based on

its finding that Carolina Casualty was the prevailing party.

II

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

applying the same standard as the district court.” Butler v. Compton, 482 F.3d

1277, 1278 (10th Cir. 2007). Summary judgment is appropriate “if the pleadings,

the discovery and disclosure materials on file, and any affidavits show that there

is no genuine issue as to any material fact and that the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(c) (2007). We examine the

record and “all reasonable inferences that might be drawn from it in the light most

favorable to the non-moving party.” Antonio v. Sygma Network, Inc., 458 F.3d

1177, 1181 (10th Cir. 2006) (quotation omitted).

In addition, we review the district court’s interpretation and determination

of state law de novo. Freightquote.com, Inc. v. Hartford Cas. Ins. Co., 397 F.3d

888, 892 (10th Cir. 2005). Because this is a diversity action, we “apply the

8
substantive law of the forum state, including its choice of law rules.” Pepsi-Cola

Bottling Co. of Pittsburg, Inc. v. Pepsico, Inc., 431 F.3d 1241, 1255 (10th Cir.

2005). Colorado is the forum state in this appeal. Under Colorado choice-of-law

rules, an insurance contract is governed by the law of the state with the most

significant relationship to the insurance contract. See Fire Ins. Exch. v. Bentley,

953 P.2d 1297, 1300 (Colo. Ct. App. 1998) (citing Wood Bros. Homes, Inc. v.

Walker Adjustment Bureau, 601 P.2d 1369, 1372 (Colo. 1979)).

Although the record does not address the issue directly, we conclude that

Colorado law applies. The insurance contract was apparently negotiated and

entered into in Colorado and the insured’s place of business is in Colorado. See

Wood Bros. Homes, Inc., 601 P.2d at 1372 nn.3–4 (listing factors to be taken into

account to determine the state with the most significant relationship). Colorado

therefore has the most significant relationship to the insurance policy.

Colorado courts “construe an insurance policy’s terms according to

principles of contract interpretation.” Thompson v. Md. Cas. Co., 84 P.3d 496,

501 (Colo. 2004). In Thompson, a duty to defend insurance policy case, the

Colorado Supreme Court said:

In interpreting a contract, we seek to give effect to the
intent and reasonable expectations of the parties.
Accordingly, unless the parties intend otherwise, terms in
an insurance policy should be assigned their plain and
ordinary meaning.

We also recognize that unlike a negotiated contract, an

9
 insurance policy is often imposed on a “take-it-or-leave-it”
basis. Therefore, we assume a “heightened responsibility”
in reviewing insurance policy terms to ensure that they
comply with public policy and principles of fairness.
Accordingly, ambiguous terms in an insurance policy are
construed against the insurer.

Id. at 501–02 (internal citations omitted).

A. The policy language.

We turn then to the language of the insurance policy at issue. See State

Farm Mut. Auto. Ins. Co. v. Nissen, 851 P.2d 165, 166 (Colo. 1993) (“Our

starting point is the plain language of the contract and the intent of the parties as

expressed in that language.”). The insurance policy contains the following

“Insuring Agreement”:

This Policy shall pay on behalf of the Insured all
Damages and Claims Expense that the Insured shall
become legally obligated to pay, arising from any Claim
first made against an Insured during the Policy Period
and reported to the Insurer in writing during the Policy
Period or within 60 days thereafter, for any Wrongful
Act, provided that prior to the inception date of the first
Lawyers’ Professional Liability Insurance Policy issued by
the Insurer to the Named Insured, which has been
continuously renewed and maintained in effect to the
inception of this Policy Period, the Insured did not know,
or could not reasonable foresee that such Wrongful Act
might reasonably be expected to be the basis of a Claim.

App. at 39. 3 The insurance policy also provides that “[t]he Insurer shall have the

3
The policy at issue is a “claims made policy,” one that “confers coverage
for claims presented during the policy period.” Hoang v. Assurance Co. of Am.,
(continued...)

10
right and the duty to defend any Claim to which this insurance applies . . . .” Id.

at 43.

The insurance policy defines the bold-faced terms. “Claim” is defined as

“a written demand for monetary or non-monetary relief including, but not limited

to, a civil, criminal, administrative or arbitration proceeding . . . . A Claim shall

be deemed to have been first made at the time notice of the Claim is first

received by any Insured.” Id. at 40. The insurance policy defines “Wrongful

Act” as “any actual or alleged act, omission, or Personal Injury arising out of

Professional Services rendered by an Insured or by any person for whose act or

omission the Insured is legally responsible” and “Related Wrongful Act” as

“Wrongful Acts which are logically or causally connected by reason of any

common fact, circumstance, situation, transaction, casualty, event or decision.”

3
(...continued)
149 P.3d 798, 802 (Colo. 2007) (citing 8 John W. Grund & J. Kent Miller,
Colorado Personal Injury Practice–Torts and Insurance § 46.6 (2000)); see also
Lee R. Russ & Thomas F. Segalla, 1 Couch on Insurance § 1:5 (3d ed. 1996)
(explaining that “‘[c]laims made’ policies, which have become a popular means
for insuring against professional malpractice, differ from traditional ‘occurrence’
policies primarily in the scope of the risk against which they insure. In a claims
made policy, coverage is effective if a negligent or omitted act is discovered and
brought to the attention of the insurance company during the period of the policy,
no matter when the act occurred. In an occurrence policy, coverage is effective if
a negligent or omitted act occurred during the period of the policy, whatever the
date of claim against the insured. Thus, the basic difference between these types
of policies is that a ‘claims made’ policy provides unlimited retroactive coverage
and no prospective coverage at all, while an ‘occurrence’ policy provides
unlimited prospective coverage and no retroactive coverage at all.”).

11
Id. at 41. And finally, the insurance policy has a section titled “Notice of Claim

and Multiple Claims” which states in pertinent part:

A. As a condition precedent to their rights under this
Policy, an Insured shall give the Insurer written
notice of any Claim as soon as practicable.

B. If during the Policy Period an Insured becomes
aware of any fact, circumstance or situation which
may reasonably be expected to give rise to a Claim
being made against any Insured and shall give
written notice to the Insurer, as soon as practicable
(but prior to the expiration or cancellation of the
Policy), of:

1. the specific fact, circumstance or situation,
with full details as to dates, persons, and
entities involved; and

2. the injury or damages which may result
therefrom; and

3. the circumstances by which the Insured first
became aware thereof;

then any Claim subsequently made arising out of
such fact, circumstance or situation shall be deemed
to have been made when notice was first given to
the Insurer.

C. All Claims based upon or arising out of the same
Wrongful Acts or any Related Wrongful Acts, or
one or more series of any similar, repeated or
continuous Wrongful Act or Related Wrongful
Acts, shall be considered a single Claim. Each
Claim shall be deemed to be first made at the
earliest of the following times:

1. when the earliest Claim arising out of such
Wrongful Act or Related Wrongful Acts is

12
 first made, or

2. when notice pursuant to section [] B. of a
fact, circumstance or situation giving rise to
such Claim is given.

Id. at 43 (underlining emphasis added).

We do not find any of the terms above to be ambiguous—they all have

plain and ordinary meanings that can be applied to the language of the insurance

policy. See Cary v. United of Omaha Life Ins. Co., 108 P.3d 288, 290 (Colo.

2005) (“An insurance policy is ambiguous if it is susceptible on its face to more

than one reasonable interpretation. . . . A mere disagreement between the parties

concerning interpretation of the policy does not create an ambiguity. To

determine whether a policy contains an ambiguity, we must evaluate the policy as

a whole.” (internal citations omitted)). Therefore, we will enforce the insurance

policy as written. See Hoang, 149 P.3d at 801 (“In interpreting a contract, we

give effect to the intent and reasonable expectations of the parties. We must

enforce the plain language of the policy unless it is ambiguous.” (internal

citations omitted)).

B. Do the Tester Letter and the Malpractice Lawsuit involve a single claim?

We must first determine whether the Tester Letter and the Malpractice

Lawsuit allege “related wrongful acts” which would be considered as one “claim”

under the policy. Here, the insurance policy required that, as a condition

precedent to triggering rights under the policy, an “Insured” must give the

13
“Insurer” written notice of the claim “as soon as practicable.” App. at 43. 4 And,

a “claim” is deemed to have been first made at the time notice of the “claim” is

first received by “any Insured.” Id. at 40 (emphasis added). Further, all claims

“based upon or arising out of the same Wrongful Acts or any Related Wrongful

Acts, or one or more series of any similar, repeated or continuous Wrongful Act

or Related Wrongful Acts, shall be considered a single Claim.” Id. at 43. And,

a “claim” is first made when “the earliest Claim arising out of such Wrongful

Act or Related Wrongful Acts is first made.” Id.

Therefore, the first step in untangling the factual scenario in this case is to

analyze the insurance policy’s definition of “related wrongful act.” If the Tester

Letter makes a claim that is a “related wrongful act” to the Malpractice Lawsuit,

then the Tester Letter was the first notice of the “claim.” As stated above, a

“related wrongful act” is defined as “Wrongful Acts which are logically or

causally connected by reason of any common fact, circumstance, situation,

transaction, casualty, event or decision.” Id. at 41. Therefore, we must determine

whether the acts alleged in the Tester Letter and the Malpractice Lawsuit are

“logically or causally connected.”

4
“[T]he event that invokes coverage under a ‘claims-made’ policy is the
transmittal of notice of the claim to the insurance carrier.” St. Paul Fire &
Marine Ins. Co. v. Estate of Hunt, 811 P.2d 432, 434 (Colo. Ct. App. 1991).

14
 Plaintiffs cite the federal district court case 5 of Professional Solutions Ins.

Co. v. Mohrlang, No. 07-cv-02481-PAB-KLM, 2009 WL 321706 (D. Colo. Feb.

10, 2009), in support of their position that the claim asserted in the Tester Letter

and the claims asserted in the Malpractice Lawsuit are not logically or causally

connected. In Mohrlang, an insurer filed suit seeking a declaration that the

relevant insurance policy did not require payment to the defendants, Harry and

Lenora Mohrlang, and Bruce Mohrlang, who became trustee of their various

trusts. 2009 WL 321706, at *1. The insurer provided professional malpractice

insurance to an attorney and the defendants were clients of that attorney. Id.

The attorney was sent a letter and draft complaint from Bruce Mohrlang

which indicated a professional negligence action would be brought against the

attorney for the attorney’s allegedly deficient advice in negotiating and

structuring the sale of the defendants’ business. Id. at *2. The attorney was then

sent a letter and draft complaint from Harry Mohrlang alleging professional

negligence for advice concerning the sale of stock in the defendants’ business and

breach of “fiduciary duties of loyalty, disclosure, candor” regarding release of

promissory notes. Id. The insurance policy at issue was limited to $500,000 per

“claim” with a $1,000,000 aggregate term limit; all “related claims” were

considered to be a single claim by the policy. Id. at *3.

5
There are no Colorado state court cases analyzing this insurance policy
language.

15
 The insurance policy defined “claim” as “a demand you receive for money

or services, including suit or institution of arbitration proceedings against you.”

Id. at *3 (internal quotations, alterations, and emphasis omitted). The insurance

policy then defined “related claim” as “claims arising out of a single act or

omission or arising out of related acts or omissions in the rendering of

professional services.” Id. (internal quotations and emphasis omitted). And

finally, the insurance policy defined “related acts or omissions” as “all acts or

omissions in the rendering of professional services that are temporally, logically

or causally connected by any common fact, circumstance, situation, transaction,

event, advice or decision.” Id. (internal quotations and emphasis omitted).

The district court in Mohrlang first found that the language of the insurance

policy was not ambiguous and that the policy’s terms should be given their plain

and ordinary meaning. Id. at *9. The district court then went on to define the

“temporally, logically or causally connected” phrase used in the “related acts or

omissions” definition of the insurance policy. The district court found no

temporal connection between the sale of the business and the breach of fiduciary

duties because there was a temporal break between the two events. Id. at *11.

The district court then defined “logically connected” as “connected by an

inevitable or predictable interrelation or sequence of events,” noting that “for two

things to be logically connected, one must attend or flow from the other in an

inevitable or predictable way.” Id. The district court found no logical connection

16
between the two alleged acts of malpractice because the sale agreement did not

account for the promissory note and deed of trust that were the subject of the

alleged breaches of fiduciary duties; they were independent obligations. Id.

Finally, the district court defined “causally connected.” Id. The district

court defined causally connected as “where one person or thing brings about the

other.” Id. The district court also noted that “the common understanding of

causation” requires a showing of but-for causation and “a situation where the first

thing leads to the second in a direct and traceable way, and where no independent,

significant thing interrupts the causal chain between the two.” Id. The district

court found that the two alleged acts of malpractice were not causally connected

because the sale of the business “did not directly or traceably—and certainly did

not foreseeably—lead to the [attorney’s] violation of his fiduciary duties.” Id. at

*12.

Because the district court in Mohrlang found that the alleged acts of

malpractice were not “temporally, logically, or causally connected by any

common fact, circumstance, situation, transaction, event, advice, or decision,” the

district court concluded that the two claims were not “related claims” under the

insurance policy. Id. at *13. Plaintiffs ask us to adopt the result reached in

Mohrlang to the facts of this case. While we agree that, like the insurance policy

in Mohrlang, the terms of this insurance policy are not ambiguous and should be

defined by their plain and ordinary meaning, we conclude that the acts of

17
malpractice alleged in the Tester Letter and the Malpractice Lawsuit are logically

or causally connected.

Here, using the common definition of “logically connected” expressed in

Mohrlang, the alleged acts of malpractice in the Tester Letter and the Malpractice

Lawsuit are “connected by an inevitable or predictable interrelation or sequence

of events.” Id. at *11. The Tester Letter faults Murphy for not submitting Rule

16.1’s required witness disclosures. The Malpractice Lawsuit flows from

Murphy’s decision to proceed under Rule 16.1. Surely these two acts “attend or

flow from the other in an inevitable or predictable way.” See id. A required

disclosure under Rule 16.1 and the decision to proceed under Rule 16.1 are

predictably interrelated because the decision not to opt out of Rule 16.1 resulted

in a timeline for witness disclosures under that rule.

Both parties then also discuss the case of Bay Cities Paving & Grading,

Inc. v. Lawyers’ Mut. Ins. Co., 855 P.2d 1263 (Cal. 1993), which determined the

meaning of “claim” and “related” under a claims-based legal liability insurance

policy. In Bay Cities, the alleged malpractice was an attorney’s failure to serve a

“stop notice” on a construction project’s lenders and a failure to timely foreclose

on a mechanic’s lien. 855 P.2d at 1264. The insurance policy provided coverage

“for each claim” and further provided that “[t]wo or more claims arising out of a

single act, error or omission or a series of related acts, errors or omissions shall

be treated as a single claim.” Id.

18
 Bay Cities argued that it was entitled to the policy limits for two claims

because the attorney’s two omissions resulted in separate injuries to Bay Cities.

Id. at 1265. The insurer argued that Bay Cities had a single cause of action and a

single injury stemming from the attorney’s conduct. Id. The California Supreme

Court in Bay Cities determined that the insurance policy’s definition of “claim”

limited Bay Cities to only one claim under the policy. Id. at 1266. The court

stated:

[W]hen, as in this case, a single client seeks to recover
from a single attorney alleged damages based on a single
debt collection matter for which the attorney was
retained—there is a single claim under the attorney’s
professional liability insurance policy.
...
[I]f an attorney’s single error harmed two clients and gave
each of them a separate claim, those two claims would be
treated as a single claim under the policy’s limitation of
liability. It would be anomalous to limit liability in that
circumstance but to disregard the limitation when, as in
this case, a single client suffers a single injury as a result
of multiple errors.

Id.

The Bay Cities court then went on to determine, in the alternative, whether

the insurance policy’s “related acts, errors or omissions” language would limit

Bay Cities to the policy’s per claim limit. Id. at 1270. The court found that the

term “related” was not ambiguous and that it was “broad enough to encompass

both logical as well as causal relationships . . . .” Id. at 1271. The court found

that the alleged acts of malpractice were related. Id. at 1275. The court noted

19
that the acts “arose out of the same specific transaction, the collection of a single

debt,” that the acts “arose as to the same client,” that the acts were “committed by

the same attorney,” and that the acts “resulted in the same injury.” Id.

Carolina Casualty argues that Bay Cities’ reasoning should be applied here,

and urges us to conclude that plaintiffs have one malpractice claim and that the

alleged acts of malpractice in the Tester Letter and the Malpractice Lawsuit

should be deemed related. Carolina Casualty analogizes Bay Cities because here:

“(1) there is a single client—the Burkhardts; (2) there is a single attorney—Mr.

Murphy; and (3) there is a single tort claim for which Mr. Murphy was retained.”

Appellee Br. at 23. Carolina Casualty also contends that the Burkhardts suffered

a single harm from Murphy’s alleged acts of malpractice—“the lost opportunity to

recover some or all of their damages in the Ciri Lawsuit.” Id. We agree with

Carolina Casualty that the Burkhardts suffered one injury in the facts underlying

this case. Where there is one injury flowing from multiple acts of malpractice, it

seems logical to connect those multiple acts of malpractice as “related.” See,

e.g., Gregory v. Home Ins. Co., 876 F.2d 602, 606 (7th Cir. 1989) (“[T]he

common understanding of the word ‘related’ covers a very broad range of

connections, both causal and logical.”). Because the insurance policy here treats

as one claim all “related wrongful acts,” we therefore conclude the Burkhardts

state one claim.

And finally, a case cited by Carolina Casualty discusses the determination

20
of whether a single claim or multiple claims have been made under a claims-made

legal liability insurance policy. See Eagle Am. Ins. Co. v. Nichols, 814 So. 2d

1083 (Fla. Dist. Ct. App. 2002). In Nichols, the insurance policy limited

coverage per “claim” for “related wrongful acts.” 814 So. 2d at 1086. The

alleged acts of malpractice were the attorney’s failure to name a hospital and each

individual physician from that hospital as defendants in a medical malpractice

lawsuit. Id. at 1084. Nichols asserted that he had multiple claims because “his

attorney committed multiple wrongful acts by failing to join several defendants,”

depriving him of a claim against each defendant for that defendant’s maximum

liability coverage. Id. at 1085. The insurer alleged that Nichols had only one

malpractice claim and one injury—the loss of a complete recovery. Id.

The court concluded that the negligent acts alleged by Nichols were

logically related. The court stated:

[I]n this case, the claim was for the entire amount of
Nichols’ uncollected damages as a result of the failure to
join several defendants in the suit, and all of the acts of
negligence caused or contributed to the inability of
Nichols to collect the entire amount of his damages.

Id. at 1086. Similar to our discussion regarding the Bay Cities case above, we

conclude that the Burkhardts’ one malpractice cause of action resulting in the one

claim for injury encompasses all alleged acts of malpractice related to that

malpractice cause of action. Here, an alleged failure to comply with Colorado’s

rules for disclosure of witnesses is related to an alleged failure to opt out of those

21
same rules. We conclude that the Tester Letter and the Malpractice Lawsuit

allege “related wrongful acts” under the insurance policy. Therefore, they should

be considered one “claim” under that policy.

C. Was Murphy an “insured” under plaintiffs’ policy?

The insurance policy covers claims that were first made to an “insured”

during the policy period. Thus, we must now determine whether Murphy was an

“insured” under the definitions of the policy when he received the Tester Letter.

As stated above, per the terms of the insurance policy, a “Claim shall be

deemed to have been first made at the time notice of the Claim is first received

by any Insured.” App. at 40. An “Insured” is defined as:

“Insured” means:

1. the Named Insured and any Predecessor Firm;

2. any individual or professional corporation who is or
becomes a partner, officer, director, stockholder, or
employee of the Named Insured, but solely while
acting within the scope of their duties on behalf of
the Named Insured;

3. any individual or professional corporation who was
a partner, officer, director, stockholder, or employee
of the Named Insured or Predecessor Firm, but
solely while acting within the scope of their duties
on behalf of the Named Insured or Predecessor
Firm;

4. any individual or professional corporation
designated “counsel” or “of counsel” to the Named
Insured, but solely while acting within the scope of
their duties on behalf of the Named Insured for

22
 which a fee inured to the Named Insured;

5. the heirs, executors, administrators, and legal
representatives of each Insured in the event of
death, incapacity or bankruptcy, but solely with
respect to the liability of each Insured as otherwise
covered by this Policy.

Id. (underlining emphasis added).

Again, we find no ambiguity in the above-quoted language of the insurance

policy. All the terms have ordinary, common meanings associated with them.

The plain meaning of the applicable definitional subsection covers a very broad

swath of individuals, and then narrows that swath. It begins with the phrase “any

individual” and is then limited by a requirement that the individual “was a

partner, officer, director, stockholder, or employee” of the “named insured,”

which was Timothy H. Berry, P.C. Id. (emphasis added). It is undisputed that

Murphy was a co-shareholder in Berry & Murphy, P.C. and was therefore an

individual who was a partner of the named insured.

The second limit on the “insured” definition is the language “but solely

while acting within the scope of their duties on behalf of the Named Insured.”

Id. This clause, when read in context with the rest of this definitional subsection,

cannot mean that an individual is an insured only while acting on behalf of the

named insured, but must mean that an individual is an insured only if the claim

being made is related to that individual’s duties on behalf of the named insured.

Otherwise, no former employee of the named insured could ever be an “insured.”

23
If “insured” were interpreted to mean that an individual was an insured only while

acting within the scope of business of the named insured, it would be paradoxical

to define “insured” to include former employees – any individual “who was a

partner, officer, director, stockholder, or employee of the Named Insured,”

Timothy H. Berry, P.C. Id. (emphasis added).

In our opinion, the better view is that “insured” is defined to include an

individual after he has left the law firm if the claim involves that individual’s acts

or omissions that occurred while at the law firm. 6 Here, that is the case, because

Murphy withdrew from the Ciri Lawsuit almost simultaneously with leaving

Berry & Murphy, P.C. We therefore conclude that notice of the “claim” was

given to Murphy, an “insured” via the Tester Letter, before the policy period. 7 As

6
The dissent suggests that we have conflated the concepts of “notice” and
“coverage.” However, the policy language is clear and unambiguous. The policy
provides a single definition of “Insured.” The policy does not differentiate
between who is an “Insured” for purposes of “coverage” and who is an “Insured”
for purposes of “notice.” If Murphy is an “Insured” for purposes of coverage, as
the dissent contends, he is also an “Insured” for purposes of notice. The policy is
clear as regards notice: a “Claim shall be deemed to have been made at the time
notice of the Claim is first received by any Insured.” App. at 40 (underlining
emphasis added). “Where there is a written instrument, the intent of the parties is
determined from the plain language of the instrument itself. When a contractual
provision is clear and unambiguous, courts should neither rewrite it nor limit its
effect by a strained construction.” Parrish Chiropractic Ctrs., P.C. v. Progressive
Cas. Ins. Co., 874 P.2d 1049, 1055 (Colo. 1994) (internal citation omitted).
7
Plaintiffs make a brief argument that because Murphy was no longer an
agent of Berry & Murphy, P.C. at the time he received the Tester Letter, Berry &
Murphy, P.C. can not be charged with notice of that letter. Aplt. Br. at 26.
However, the insurance policy does not require an agency relationship within the
(continued...)

24
a result, Carolina Casualty had no duty to defend or indemnify plaintiffs.

Because Carolina Casualty had no legally cognizable duty to defend or

indemnify a claim, plaintiffs’ bad faith claim also cannot survive. Leprino v.

Nationwide Prop. & Cas. Ins. Co., 89 P.3d 487, 492 (Colo. Ct. App. 2003). We

affirm the judgment of the district court.

III

We acknowledge that this is a harsh result for Thomas Berry. Murphy was

apparently no longer in communication with Berry after he left their law firm and

Murphy did not give Berry notice of the Tester Letter by which Berry could have

notified his insurer of the malpractice claim. But the insurance policy’s language

requires this result, and that is the language Berry agreed to when he entered this

contract with Carolina Casualty. The Colorado Supreme Court has given a

summary of its rules for the interpretation of an insurance contract, which is

particularly applicable here:

An insurance policy is a contract which should be
interpreted consistently with the well settled principles of
contractual interpretation. This approach acknowledges
that:

[A]n insurance contract is a mutual agreement,
ratified by the insured by his acceptance, both
parties are bound by its provisions, unless waived or

7
(...continued)
definition of “insured” and we find no basis for applying one to a contract which
expressly defines the scope of the covered relationships.

25
 annulled for lawful reasons. In the absence of
statutory inhibition, an insurer may impose any
terms and conditions consistent with public policy
which it may see fit.

Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748, 750 (Colo. 1990) (internal

quotations and citations omitted).

In addition, the Colorado courts recognize the utility of claims-made

insurance policies:

[I]n a “claims-made” policy, the notice provision provides
a certain date after which an insurer knows it no longer is
liable under the policy and, accordingly, allows the insurer
to fix more accurately its reserves for future liabilities and
compute premiums with greater certainty. . . . It is because
of this significant role of notice in “claims-made” policies
that numerous courts have held that excusing a delay in
notice beyond the policy period should not be done,
because to do so would alter a basic term of the insurance
contract which expresses the parties’ agreement.

Estate of Hunt, 811 P. 2d at 435. The same reasoning applies to refusing to

excuse the failure to give notice of a claim when the initial notice of that claim

was given prior to the start of the policy period. Carolina Casualty bargained for

the terms of the insurance policy applied herein and we have found no basis to

deprive them of the benefit of their bargain.

IV

The judgment of the district court is AFFIRMED.

26
09-1004, Berry & Murphy, P.C. v. Carolina Cas. Ins. Co.

LUCERO, J. dissenting

The result in this case is harsh, but it is improperly so. Because the majority

denies Timothy Berry the very coverage for which he paid premiums, thus creating a

windfall for Carolina Casualty Insurance Company (“Carolina Casualty”), I respectfully

dissent. What the majority does here is create an escape hatch by which insurers can

promise coverage, collect premiums, and yet avoid responsibility to the named insured by

redefining notice in a manner inconsistent with the insurance contract and Colorado law.

I agree with the majority that the Tester Letter and the Malpractice Lawsuit are

“logically or causally connected” and thus constitute a single “Claim” under the policy at

issue. (Majority Op. 17, 21.) However, I disagree with the majority’s conclusion that

delivery of the Tester Letter to Seth Murphy constituted notice to an insured under the

policy’s terms. (Id. at 21-24.)

In construing the policy’s definition of “Insured,” the majority opinion misapplies

Colorado law. At a minimum, that definition is ambiguous as to whether a former

stockholder is an insured for notice purposes. I would resolve this ambiguity against

Carolina Casualty, and hold that Murphy was not an insured acting within the scope of

his duties to Berry & Murphy, P.C. at the time he received notice of Oksana and William

Burkhardt’s claim. It was Berry who was the first insured acting within the scope of his

duties on behalf of the premium-paying insured to receive notice of the Burkhardts’

claim. Because Berry both received notice and advised the defendant-insurer within the
policy period, the district court’s grant of summary judgment to Carolina Casualty was

erroneous.

I

As I do not take issue with the majority’s factual recitation, I repeat only a few key

facts. Under the policy, a claim is “deemed to have been first made at the time notice of

the Claim is first received by any Insured.” “Insured” is defined in relevant part to mean

“any individual . . . who was a . . . stockholder . . . of the . . . Predecessor Firm, but solely

while acting within the scope of their duties on behalf of the . . . Predecessor Firm.” It is

undisputed that Murphy was once a stockholder of Berry & Murphy, P.C. and that Berry

& Murphy, P.C. is a “Predecessor Firm” to Timothy H. Berry, P.C., the “Named

Insured.” However, the definition of insured contains a further limitation: A former

stockholder is only an insured “while acting within the scope of their duties on behalf of

the . . . Predecessor Firm.”

Murphy received the Tester Letter, which put him on notice of the Burkhardts’

malpractice claim, on January 26, 2007, nearly a year after he left Berry & Murphy, P.C.

The Tester Letter was addressed to Murphy at his new firm, Richmond Sprouse &

Murphy, LLC, and Murphy forwarded the letter to his new firm’s insurer (coincidentally,

also Carolina Casualty). Berry, who remained a stockholder of the named insured, did

not receive notice of the Burkhardts’ complaint until nearly a year and a half later, on

July 23, 2008.

2
 II

What the majority does is conflate two inquiries, coverage and notice. Although

the policy utilizes the same definition of an “Insured” for various purposes, that

definition’s use of the phrase “but solely while acting within the scope of their duties”

must necessarily be read in different time contexts for coverage and notice. Because a

claims made policy is under consideration, assuredly the law firm is covered for liability

incurred by previous stockholders and employees for past acts. And because Murphy

was a stockholder at the time some of the predicate acts of negligence are claimed to have

occurred, he also is covered. The majority goes off track when it comes to notice. It

does so by failing to recognize that a former stockholder of a law firm not presently in

privity with the named insured cannot be said to be acting within the scope of his duties

to the previous firm for notice purposes. The majority’s reasoning is tantamount to

holding that service of process on Berry could be accomplished by serving his former

partner. No one would seriously insist that such notice was proper let alone would satisfy

due process requirements. Yet, the majority’s unfortunate construction of this insurance

contract permits the same result.

The majority contends that “Insured” means “an individual after he has left the

law firm if the claim involves that individual’s acts or omissions that occurred while at

the law firm.” (Majority Op. 23.) But this reading is wholly unmoored from the text of

the policy and violates Colorado jurisprudence regarding insurance contract

interpretation.

3
 As with any contract, Colorado courts construe insurance policies “to promote the

intent of the parties.” State Farm Mut. Auto. Ins. Co. v. Stein, 940 P.2d 384, 387 (Colo.

1997). “Where there is a written instrument, the intent of the parties is determined from

the plain language of the instrument itself.” Parrish Chiropractic Ctrs., P.C. v.

Progressive Cas. Ins. Co., 874 P.2d 1049, 1055 (Colo. 1994). Courts should “not rewrite

a contractual provision that is clear and unambiguous, but must give effect to the plain

and ordinary meaning of its terms.” Wota v. Blue Cross & Blue Shield of Colo., 831

P.2d 1307, 1309 (Colo. 1992) (citation omitted). “However, where there is ambiguity or

uncertainty as to coverage, courts should construe the policy in favor of the insured.”

Republic Ins. Co. v. Jernigan, 753 P.2d 229, 232 (Colo. 1988).

Applying these rules of contract interpretation, Murphy was not an insured when

he received notice of the Burkhardts’ claim. An “individual . . . who was a . . .

stockholder . . . of the . . . Predecessor Firm” is an insured, “but solely while acting

within the scope of their duties on behalf of the . . . Predecessor Firm.” Because the latter

limitation does not employ words with technical or specialized meanings, we should

adopt “the plain and ordinary meaning of its terms.” Wota, 831 P.2d at 1309. In

ordinary English usage, stating that Murphy is an insured, “but solely while acting within

the scope of [his] duties on behalf of” Berry & Murphy, P.C., means that Murphy is not

an insured while acting outside the scope of his duties on behalf of that firm. In other

words, Murphy is an insured for the purposes of certain acts (acts committed within the

scope of his duties on behalf of his former firm) but not others (acts committed outside

the scope of his duties). There is no dispute that Murphy was not acting on behalf of

4
Berry & Murphy, P.C. when he received the Tester Letter; thus notice to him was not

notice to an insured.

According to the majority, “but solely while acting within the scope of their duties

on behalf of” a predecessor firm “cannot mean that an individual is an insured only while

acting on behalf of” a predecessor firm. (Majority Op. 23.) Yet that is precisely how

“Insured” is defined in the policy.

This policy definition is rejected by the majority through utilization of “the general

rule of contract construction that a court should seek to give effect to all provisions so

that none will be rendered meaningless.” Pub. Serv. Co. v. Wallis & Cos., 986 P.2d 924,

933 (Colo. 1999) (quotation omitted). We are told by the majority that “[i]f ‘insured’

were interpreted to mean that an individual was an insured only while acting within the

scope of business of the named insured, it would be paradoxical to define ‘insured’ to

include former employees.” (Majority Op. 23.)

But interpreting the definition of insured consistent with its ordinary meaning does

not render the clause at issue meaningless; it simply makes it unlikely that a former

stockholder can receive notice of a claim. Only if it is established that a former

stockholder has given notice in fact to his previous employer may an issue of notice in

this context be properly raised. The defined term “Insured” is used throughout the policy.

And although the plain meaning of the former stockholder clause would rarely carry

force with respect to the policy’s notice provision, it fits perfectly well in other contexts.

For example, the policy defines “Professional Services” in part as services “rendered by

an Insured solely as a lawyer, mediator, arbitrator, or notary public for others.”

5
“Professional Services” would thus include services rendered by an individual who was a

stockholder of a predecessor firm, but solely while acting within the scope of their duties

on behalf of the predecessor firm as a lawyer, mediator, arbitrator, or notary public for

others. That is, “Professional Services” refers to services rendered by a person who is

now a former stockholder, but only those services that the former stockholder rendered

while acting on behalf of the predecessor firm.

Moreover, the plain text meaning of the former stockholder clause can be given

effect with respect to the policy’s notice provision. An individual can be both a former

stockholder and acting on behalf of her former law firm in certain circumstances. An

individual might semi-retire from the practice of law and renounce stockholder status, but

take occasional cases on behalf of her former firm on a contract basis. The ordinary

meaning of the definition of insured cannot be dispatched simply because its operation is

unlikely; rather, it must be meaningless. See Pub. Serv. Co., 986 P.2d at 933.

Further, in rejecting the plain text construction of the former stockholder clause,

the majority fails to apply Colorado case law holding that policy language must be

construed in favor of the insured where it is “susceptible to more than one reasonable

interpretation.” Id. at 931. I submit that the ordinary meaning of the former stockholder

clause is a reasonable interpretation. Although the majority’s construction comports with

the general understanding of a claims made policy, it ignores the policy’s plain text.

Absent an absurd result, see Huizar v. Allstate Ins. Co., 952 P.2d 342, 345 (Colo. 1998),

we are not free to “rewrite, add, or delete provisions in our interpretation,” General Sec.

Indem. Co. v. Mt. States Mut. Cas. Co., 205 P.3d 529, 532 (Colo. Ct. App. 2009). It is

6
not absurd for an insurance policy to provide coverage for the prior acts of a former

stockholder while not treating her as an insured for notice purposes.

“The majority opinion is not simply interpreting what this insurance contract

covers; it is interpreting what the majority thinks the insurance contract ought to cover.

. . . [W]e should not rewrite insurance contracts based on what we think the insured

might have intended.” Fire Ins. Exch. v. Sullivan, 2009 Colo. App. LEXIS 994, at *17-

18 (Colo. Ct. App. May 28, 2009) (quotation omitted) (adopting the approach of a

Maryland dissent in applying Colorado contract law).

III

Murphy was not an insured when he received the Tester Letter. Thus, the

Burkhardts’ claim cannot be deemed to have been made with delivery of that letter.

Instead, the evidence shows that the claim was first made to an insured on July 23, 2008,

when Berry accepted service of the Burkhardts’ complaint. The policy covers claims

made from February 6, 2008, to February 6, 2009. Because the Burkhardts’ claim was

made within the policy period, I would reverse the district court’s grant of summary

judgment in favor of Carolina Casualty and remand for further proceedings.

7