ACE American Insurance Company v. Dish Network

FILED
United States Court of Appeals
PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS February 21, 2018

Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________

ACE AMERICAN INSURANCE COMPANY,

Plaintiff/Counter Defendant - Appellee,

v. No. 17-1140

DISH NETWORK, LLC,

Defendant/Counterclaimant - Appellant.
_________________________________

Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:13-CV-00560-REB-MEH)
_________________________________

Eric A. Shumsky, Orrick, Herrington & Sutcliffe, Washington, D.C. (Lee M. Epstein,
Emily B. Markos, Weisbrod Matteis & Copley PLLC, Philadelphia, Pennsylvania, on the
briefs) for Appellant.

Jonathan D. Hacker, O’Melveny & Myers LLP, Washington, D.C. (Thomas M. Jones,
Terri A. Sutton, Cozen O’Connor, Seattle, Washington, and Christopher S. Clemenson,
Cozen O’Connor, Denver, Colorado, with him on the brief) for Appellee.
_________________________________

Before LUCERO, McKAY, and McHUGH, Circuit Judges.
_________________________________

McHUGH, Circuit Judge.
_________________________________

In this appeal we must decide whether the district court correctly held that

ACE American Insurance Company (ACE) has no duty to defend and indemnify
DISH Network (DISH) in a lawsuit alleging that DISH’s use of telemarketing phone

calls violated various federal and state laws. The primary question is whether

statutory damages and injunctive relief under the Telephone Consumer Protection

Act are “damages” under the insurance policies at issue and insurable under Colorado

law, or are uninsurable “penalties.” We conclude they are penalties under controlling

Colorado law, and we affirm the district court’s grant of summary judgment in favor

of ACE.

I. BACKGROUND

A. Underlying Lawsuit

In April 2009, the federal government and the “State Plaintiffs” (the States of

California, Illinois, North Carolina, and Ohio) sued DISH, alleging violations of the

Telemarketing Sales Rule (TSR), the Telephone Consumer Protection Act (TCPA),

and a variety of state laws (“Underlying Lawsuit”). Relevant here are the alleged

violations of the TCPA,1 which makes it “unlawful for any person [subject to a

1
Most of the State Plaintiffs’ alleged violations of the TSR and state statutes
are not at issue because those claims require knowing violations of the law or request
uninsurable civil penalties. A knowing violation of a statute is not covered by the
policies, and Colorado public policy “prohibits an insurance carrier from providing
insurance coverage for punitive damages[,]” Lira v. Shelter Ins. Co., 913 P.2d 514,
517 (Colo. 1996). But DISH argues the California State Plaintiff’s request that the
court order DISH “to restore to any person in interest any money or property which
[DISH] may have acquired . . . pursuant to California Business & Professions Code
section 17203 or by violating section 17592” creates a duty to defend. See Aplt.
App’x at 2052. We disagree. The California Supreme Court has held that “damages
cannot be recovered” under these statutes and “plaintiffs are generally limited to
[civil penalties,] injunctive relief and restitution.” Korea Supply Co. v. Lockheed
Martin Corp., 29 Cal. 4th 1134, 1144 (2003); see also Bank of the West v. Super. Ct.,
2
limited list of exceptions] . . . to initiate any telephone call to any residential

telephone line using an artificial or prerecorded voice to deliver a message without

the prior express consent of the called party.” 47 U.S.C. § 227(b)(1)(B). The TCPA

also permits states to “bring a civil action on behalf of its residents to enjoin such

calls, an action to recover for actual monetary loss or receive $500 in damages for

each violation, or both such actions.” Id. § 227(g)(1). For each violation that is

committed “willfully or knowingly,” the statute allows for treble damages up to

$1,500. Id.

In counts V and VI of the complaint in the Underlying Lawsuit (“Underlying

Complaint”), State Plaintiffs assert violations of the TCPA, “seek a permanent

injunction and other equitable relief,” and allege “DISH Network’s violations are

willful and knowing.” Underlying Complaint ¶¶ 71, 73, 75, 77, Aplt. App’x at 2042,

2043. The Underlying Complaint characterizes the injury by asserting “[c]onsumers

in the United States have suffered and will suffer injury as a result of [DISH’s]

violations of the TSR, the TCPA, [and various state laws]. Absent injunctive relief by

this Court, [DISH] is likely to continue to injure consumers and harm the public

interest.” Id. ¶ 97, Aplt. App’x at 2049. The prayer for relief requests the court to

“[p]ermanently enjoin [DISH] from violating the TCPA, both generally, and

specifically” and asks the court to award “damages of $1,500 for each violation of

2 Cal. 4th 1254, 1266 (1992) (“[D]amages are not available under section 17203.”).
Because the complaint fails to allege “any facts that arguably fall under the coverage
of the policy” with respect to these claims, no duty to defend is triggered. Blackhawk-
Cent. City Sanitation Dist. v. Am. Guar. & Liab. Ins. Co., 214 F.3d 1183, 1188 (10th
Cir. 2000).
3
the TCPA found by the Court to have been committed by [DISH] willfully and

knowingly . . . [and] damages of $500 for each violation of the TCPA” the court finds

was not willful and knowing. Prayer for Relief ¶¶ 4–5, Aplt. App’x at 2051. Finally,

they request the court to “[o]rder [DISH] to pay the costs of this action, including

costs of investigation incurred by State Plaintiffs,” id. ¶ 16, Aplt. App’x at 2053, and

to “[a]ward Plaintiffs such other and additional relief as the Court may determine to

be just and proper,” id. ¶ 17, Aplt. App’x at 2054.2

B. Current Lawsuit

From 2004 through 2012, DISH contracted with ACE to provide two types of

liability insurance: Coverage A and Coverage B. Under Coverage A, ACE has a duty

to defend and indemnify DISH for “those sums that [DISH] becomes legally

obligated to pay as damages because of ‘bodily injury’ or ‘property damage’” that “is

caused by an ‘occurrence.’” Aplt. App’x at 164, 226. Under Coverage B, ACE has a

duty to defend and indemnify DISH for “those sums that [DISH] becomes legally

obligated to pay as damages because of ‘personal and advertising injury.’” Id. at 168,

230. Additionally, Coverage B has an exclusion from coverage for “‘[p]ersonal and

advertising injury’ committed by an insured whose business is . . . [a]dvertising,

broadcasting, publishing or telecasting[.]” Aplt. App’x at 169, 231. Beginning in

2
The underlying lawsuit reached final judgment on June 5, 2017. See United
States v. Dish Network LLC, 256 F. Supp. 3d 810, 991 (C.D. Ill. 2017) (hereinafter
“Final Judgment”). The court awarded statutory damages under the TCPA, which it
concluded was “a compensatory award fixed by Congress and d[id] not require proof
of intent or motive.” Id. at 950–51.
4
2006, both ACE policies incorporated a specific exclusion for violations of the TCPA

that was not included in the 2004 and 2005 policies.

Upon receiving the initial complaint in the Underlying Lawsuit, DISH sought a

defense and indemnification from ACE. ACE responded with a letter noting that

there was no coverage for any of the asserted counts under Coverage A, but that there

might be potential coverage under Coverage B for the counts alleging violations of

the TCPA. The letter listed the possible exclusions that could result in a lack of

coverage and “reserve[d] the right to deny or limit coverage on th[ose] bas[es].” Aplt.

App’x at 2142. Following the filing of the second amended complaint, ACE again

indicated potential coverage existed under Coverage B, but reserved its right to

“address additional coverage issues as they may arise [during ACE’s investigation of

the claim] and/or decline coverage” if a determination of no coverage was made. Id.

at 2164. In December 2013, ACE determined that DISH was entitled to coverage and

issued a check for $913,650.

ACE later reversed its decision and filed a Complaint for Declaratory

Judgment, seeking a declaration that ACE did not have a duty to defend or indemnify

DISH in the Underlying Lawsuit. In response to the parties’ cross-motions for

summary judgment, the district court ruled ACE had no duty to defend under either

Coverage A or Coverage B because “the ACE policies do not provide coverage for

any of the claims asserted in the underlying suit.” ACE Am. Ins. Co. v. DISH Network

(DISH I), 173 F. Supp. 3d 1128, 1139 (D. Colo. 2016). Relying on the Colorado

Supreme Court’s decision in Kruse v. McKenna, 178 P.3d 1198 (Colo. 2008), the

5
district court concluded that the TCPA statutory damages were a penalty and

therefore uninsurable under Colorado public policy. Id. at 1133–36. The district court

also determined that the associated injunctive relief did not qualify as “damages”

under the policies’ definition. Id. at 1136–37. As an additional ground to support its

decision, the district court held that DISH was in the business of broadcasting and

thus precluded from coverage under Coverage B’s broadcaster exception. Id. at

1137–38. Finally, the district court reasoned that, because ACE did not have a duty to

defend DISH, it also did not have a duty to indemnify DISH. Id. at 1139.

II. DISCUSSION

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

the same legal standards used by that court.” Blackhawk-Cent. City Sanitation Dist. v.

Am. Guar. & Liab. Ins. Co., 214 F.3d 1183, 1187–88 (10th Cir. 2000). “Summary

judgment should not be granted unless the evidence, viewed in the light most

favorable to the party opposing the motion, shows there are no genuine issues of

material fact and the moving party is due judgment as a matter of law.” Id. at 1188.

“Furthermore, the proper interpretation and construction of an insurance policy is a

matter of law, and therefore we review the policies at issue de novo in order to

determine whether they gave rise to a duty to defend.” Id.

“When, as here, a federal court is exercising diversity jurisdiction, it must

apply the substantive law of the forum state.” Id. Both parties agree “the most recent

statement of Colorado law [as articulated] by the Colorado Supreme Court” governs

our interpretation of these policies. See id. If the Colorado Supreme Court has not

6
decided an issue, “we seek to predict how that court would decide the question.” Id.

“We review the district court’s determination of Colorado law de novo.” Id.

A. Colorado Insurance Principles

Before addressing the specific claims at issue here, we pause to review

Colorado’s insurance policy interpretation principles. “An insurance policy is a

contract which should be interpreted consistently with the well settled principles of

contractual interpretation.” Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613

(Colo. 1999) (citation omitted). “Our construction of the policy provisions must be

fair, natural and reasonable rather than strained or strictly technical.” Vill. Homes of

Colo., Inc. v. Travelers Cas. & Sur. Co., 148 P.3d 293, 296 (Colo. App. 2006)

(internal quotation marks omitted), aff’d, 155 P.3d 369 (Colo. 2007). “Words used in

an insurance policy should be given their plain and ordinary meaning unless the

intent of the parties, as expressed in the contract, indicates that an alternative

interpretation is intended.” Compass, 984 P.2d at 613 (internal quotation marks

omitted). “When faced with terms in an insurance policy that are not defined . . . such

terms [must] be given their plain, ordinary meaning and interpreted according to the

understanding of the average purchaser of insurance.” Id. at 617. “When determining

the plain and ordinary meaning of words, definitions in a recognized dictionary may

be considered.” Hecla Min. Co. v. New Hampshire Ins. Co., 811 P.2d 1083, 1091

(Colo. 1991). “Courts should not rewrite insurance policy provisions that are clear

and unambiguous.” Compass, 984 P.2d at 613. “However, when a contractual

7
provision is reasonably susceptible to different meanings it must be construed against

the drafter and in favor of providing coverage to the insured.” Id. (citation omitted).

“Under Colorado law, an insurance carrier’s duty to defend under a liability

insurance policy arises whenever a complaint alleges any facts that arguably fall

under the coverage of the policy.” Blackhawk-Cent. City Sanitation Dist., 214 F.3d at

1188. “The actual liability of the insured to the claimant is not the criterion which

places upon the insurance company the obligation to defend.” Compass, 984 P.2d at

613 (citation omitted). “Rather, the obligation to defend arises from allegations in the

complaint, which if sustained, would impose a liability covered by the policy.” Id.

“[W]here the insurer’s duty to defend is not apparent from the pleadings in the case

against the insured, but the allegations do state a claim which is potentially or

arguably within the policy coverage, . . . the insurer must accept the defense of the

claim.” Hecla, 811 P.2d at 1089 (citations omitted). This duty exists even if “there is

some doubt as to whether a theory of recovery within the policy coverage has been

pleaded.” Id. “An insurer is not excused from its duty to defend unless there is no

factual or legal basis on which the insurer might eventually be held liable to

indemnify the insured.” Compass, 984 P.2d at 614. “In other words, the insured need

only show that the underlying claim may fall within policy coverage; the insurer must

prove that it cannot.” Id. (citation omitted).

“We determine the duty to defend on the same basis both before and after the

completion of the underlying litigation to ensure that insurers that refuse to defend do

not gain an advantage over insurers that establish their obligations before the

8
litigation has completed.” Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d

814, 828 (Colo. 2004). “When resolving an insurer’s obligations in an anticipatory

declaratory action brought before the conclusion of the underlying dispute, an

insurer’s duty to defend is determined from the face of the complaint.” Id.

“Therefore, for insurers that refuse to defend, we similarly base their duty to defend

on the face of the complaint.” Id. “Determining the duty to defend based on the

allegations contained within the complaint comports with the insured’s legitimate

expectation of a defense.” Hecla, 811 P.2d at 1090.

B. Damages Under the TCPA

Pursuant to the TCPA, State Plaintiffs in the Underlying Lawsuit sought

statutory damages for willful violations, statutory damages for non-willful violations,

and injunctive relief. (Unless otherwise indicated, we refer to statutory damages for

willful violations and statutory damages for non-willful violations collectively as

“statutory damages.”) The district court determined that none of the damages sought

were insurable under Coverage A or Coverage B. See DISH I, 173 F. Supp. 3d at

1133–38. The court reached this conclusion first by interpreting the term “damages”

within the policies as “actual damages,” i.e., compensatory damages for injury. Id. at

1133. The court then determined that the TCPA statutory damages were civil

penalties not covered by the policies and uninsurable under Colorado law. Id. at

1133–36. Finally, the court held the policies did not cover the injunctive relief

because they are “focused on preventing future violations [of the TCPA], not on

remedying past violations.” Id. at 1136.

9
1. Claim for Statutory Damages

DISH’s first contention on appeal is that the district court erred in concluding

the TCPA statutory damages for non-willful violations are penal under Colorado law

because they represent liquidated damages, not punitive damages. Alternatively,

DISH argues that even if the TCPA damages were a penalty, coverage would still

apply because ACE did not exclude penalties from coverage. We conclude the

TCPA’s statutory damages are penal under Colorado law and, even if they were

otherwise covered under the policies, Colorado’s public policy prohibits the

insurability of such penalties and bars coverage.

The Colorado Supreme Court has held that Colorado public policy prohibits

“insuring intentional or willful wrongful acts.” Bohrer v. Church Mut. Ins. Co., 965

P.2d 1258, 1262 (Colo. 1998). “The purpose of the exclusion of intentional injuries

from coverage is to prevent extending to the insured a license to commit harmful,

wanton or malicious acts.” Am. Family Mut. Ins. Co. v. Johnson, 816 P.2d 952, 957

(Colo. 1991). Specifically, “[t]he public policy of Colorado prohibits an insurance

carrier from providing insurance coverage for punitive damages.” Lira v. Shelter Ins.

Co., 913 P.2d 514, 517 (Colo. 1996). Punitive damages are “intended to punish the

defendant for his wrongful acts and to deter similar conduct in the future” rather than

compensate the plaintiff. Id.

In Kruse, the Colorado Supreme Court considered whether the statutory

damages available under the TCPA are assignable, or whether they are instead

unassignable penalties. There, the plaintiff filed suit against the defendant, Douglas

10
Kruse, asserting that Mr. Kruse had sent three unsolicited facsimile advertisements to

plaintiff’s assignor. Kruse, 178 P.3d at 1199. After the court of appeals reversed the

trial court’s order dismissing the matter for lack of subject matter jurisdiction, the

Colorado Supreme Court granted certiorari and requested briefing on the plaintiff’s

standing to bring the TCPA claim. Id. And because the plaintiff’s standing was

dependent upon the validity of the assignment, the question before the Colorado

Supreme Court was whether an injured party could assign its right to collect TCPA

statutory damages. Id. The answer turned on whether the TCPA damages were

“punitive damages or penalties,” which are not assignable under Colorado law, as

opposed to compensatory liquidated damages, which are assignable. Id. at 1200. To

determine whether the TCPA damages were punitive, the Colorado Supreme Court

employed a three-part test looking at “whether (1) the statute asserted a new and

distinct cause of action; (2) the claim would allow recovery without proof of actual

damages; and (3) the claim would allow an award in excess of actual damages.” Id. at

1201. “A statutory claim may be found to be a ‘penalty’ under this test even if it

results in a damage award to an individual, rather than the state; this is because the

damage award is serving the public interest in deterring or punishing the conduct at

issue.” Id. The Colorado Supreme Court determined that a claim for either non-

willful or willful statutory damages under the TCPA is a claim for a penalty because

the TCPA created a new and distinct cause of action, did not require proof of injury,

and allowed damage awards that would always be greater than any actual damage

suffered. Id.

11
 DISH argues the Kruse test applies only when determining whether a statute is

penal for purposes of assignability and should not be applied in the context of

determining insurance coverage.3 To support its argument that the TCPA is a penal

statute only for assignability purposes, DISH cites to a case from the Western District

of New York, applying federal common law. See Hannabury v. Hilton Grand

Vacations Co., LLC, 174 F. Supp. 3d 768, 774 (W.D.N.Y. 2016). There, the court

noted that “in contexts other than survivability of claims, other courts are split as to

whether the TCPA is penal or remedial.” Id. As examples, the court compared

decisions holding, like Kruse, that for purposes of assignability, the statute is penal,

with decisions from other jurisdictions holding that in the context of insurability, the

TCPA is remedial. Id. The court then explained the rationale for treating the TCPA as

remedial in the insurance context:

[I]n these cases, insurance companies were arguing as follows: Because
the TCPA is penal in nature, and because the insurance policies at issue
did not cover penalty payments, they as insurance companies did not
have to cover damages awards under the TCPA. Accordingly, if the
courts . . . found that the TCPA was penal in nature, they would
necessarily also be finding that the TCPA damages awards at issue were
not covered by the policies. Such a finding would run directly counter to
the general idea that courts should interpret insurance contracts to
include rather than exclude coverage. In short, in the insurance context,
there are policy considerations at play that counsel against construing

3
Contrarily, in the Underlying Lawsuit, “Dish argue[d] that the [TCPA
statutory] award is punitive.” Final Judgment, 256 F. Supp. 3d at 951. DISH has also
characterized the TCPA statutory damages as a penalty for statute of limitations
purposes. Warnick v. Dish Network, L.L.C., No. 12-cv-01952-WYD-MEH, 2013 WL
1151884, at *2 (D. Colo. May 19, 2013) (unpublished) (“Under Colorado law, Dish
asserts that statutory damages such as those requested by Plaintiff under the TCPA
are a penalty and must be commenced within one year after the cause of action
accrues pursuant to C.R.S. § 13–80–103(1)(d).”).
12
 the TCPA as penal in nature. These policy considerations are not at play
in the context of survivability of claims.

Id. at 774–75 (citations omitted). DISH asks us to adopt the reasoning of Hannabury,

and to limit the reach of Kruse to the question of assignability. But absent a

compelling reason to believe the Colorado Supreme Court would limited its holding

in Kruse to assignability, we cannot depart from that decision.

It is true that the Colorado courts have not had occasion to apply Kruse in the

context of insurance coverage. But the three-part test applied in Kruse was developed

in the statute of limitations context and found equally applicable to the question of

assignability. Kruse, 178 P.3d at 1201–02; see also Ermentraut v. State Farm Fire &

Cas. Co., No. 14-CV-00061-RM-KLM, 2016 WL 9735723, at *3 (D. Colo. Sept. 26,

2016) (unpublished) (applying the Kruse test to a statute of limitations claim);

Gerald H. Phipps, Inc. v. Travelers Prop. Cas. Co. of Am., No. 14-CV-01642-PAB-

KLM, 2015 WL 5047640, at *1 (D. Colo. Aug. 27, 2015) (unpublished) (same). And

our reluctance to assume the Colorado Supreme Court will limit its holding to these

two contexts is heightened by the fact that other courts have read Kruse as holding

broadly that the TCPA is a penal statute. See Standard Mut. Ins. Co. v. Lay, 989

N.E.2d 591, 600 (Ill. 2013) (characterizing Kruse as holding “that the TCPA-

prescribed damages of $500 per violation constitute penal or punitive damages”).

Although DISH cites a significant number of cases in which other jurisdictions have

come to the opposite conclusion about the penal nature of the TCPA, “the question

we must answer . . . [is] what Colorado law says on the subject.” Valley Forge Ins.

13
Co. v. Health Care Mgmt. Partners, 616 F.3d 1086, 1091 (10th Cir. 2010) (emphasis

added).

DISH also offers Travelers Prop. Cas. Co. of Am. v. Dish Network, LLC

(Travelers), No. 12-03098, 2014 WL 1217668 (C.D. Ill. Mar. 24, 2014)

(unpublished), as support for its argument that the Colorado Supreme Court will find

the TCPA penal in the assignability context, but not for purposes of insurability.4 In

Travelers, the Central District of Illinois held that, under both Illinois and Colorado

law, the TCPA statutory damages are remedial for purposes of insurability. Id. at

*14–15. It reasoned that the Colorado Supreme Court in Kruse “never addressed the

intent or wrongful acts of the parties,” and thus concluded that Kruse “is not

precedential on whether the Telephone Consumer Protection Act damages are

insurable as a matter of Colorado public policy.” Id. at *15. As discussed, however,

we are not convinced that Kruse can be read so narrowly—at least by a federal court

sitting in diversity. Kruse’s assignability analysis turned on whether a TCPA claim

would “survive[] the death of the person originally entitled to assert the claim.”

Kruse, 178 P.3d at 1200. Under Colorado law, “punitive damages shall not be

awarded nor penalties adjudged after the death of the person against whom such

punitive damages or penalties are claimed.” Id. (quoting Colo. Rev. Stat. § 13-20-

101) (emphasis omitted). The Colorado Supreme Court ultimately held that: “[A]

4
Travelers also involves the Underlying Lawsuit. There, DISH sought a
declaration that a different insurance company, The Travelers Indemnity Company of
Illinois, had a duty to defend and indemnify DISH based on the alleged TCPA
violations. Travelers, 2014 WL 1217668, at *2.
14
claim under the TCPA for $500 in liquidated damages per violation [non-willful

statutory damages] is a penalty that cannot be assigned,” and “[f]or the same reasons,

a claim for treble the amount of those liquidated damages [willful statutory damages]

is also a penalty that cannot be assigned.” Id. at 1201–02. In support, Kruse cited

favorably to U.S. Fax Law Ctr., Inc. v. T2 Techs., Inc., 183 P.3d 642 (Colo. App.

2007). In T2 Techs., the Colorado Court of Appeals acknowledged that “courts in

other jurisdictions have held that the TCPA is not a penal statute.” 183 P.3d at 646.

But it nevertheless held that even if the TCPA “affords remedial remedies that might

be assignable in other circumstances,” the “sums sought by the plaintiff in this action

[willful and non-willful statutory damages] were penalties and, as such, were not

assignable.” Id. at 646–47. That is, Colorado courts focus on the precise TCPA

remedy sought by the plaintiff, and where that claim is for statutory damages, the

TCPA is treated as penal under Colorado law.

DISH next argues that, even if the TCPA’s provision for willful and non-

willful statutory damages is a penal provision, the statute’s provision for actual

monetary loss is a remedial provision insurable under Colorado public policy and

sufficient to trigger the duty to defend. It is true that “[a] statute can be both penal

and remedial in nature.” Front Range Christian Ministries v. Travelers Indem. Co. of

Am., No. 16-CV-01923-PAB-CBS, 2017 WL 1148690, at *2 (D. Colo. Mar. 27,

2017) (unpublished) (citing Moeller v. Colo. Real Estate Comm’n, 759 P.2d 697, 701

(Colo. 1988)). Indeed, “[t]he Colorado Supreme Court has distinguished between

penal and remedial remedies even when they arise from a single statutory section.”

15
Id. (citing Carlson v. McCoy, 566 P.2d 1073, 1075 (Colo. 1977)). While “penalties in

excess of actual damage are penal” and serve the public interest of deterrence,

“recovery of the actual amount” of the damages suffered is remedial. Carlson, 566

P.2d at 1075. “The determination of whether a portion of the statute is penal or

remedial depends on the facts of the case.” Front Range Christian Ministries, 2017

WL 1148690, at *2 (citing Moeller, 759 P.2d at 701).

As discussed, when the Colorado Court of Appeals was presented with the

argument that the TCPA has both penal and remedial components, the court

determined that the actual relief sought by the plaintiffs—the statutory damages

permitted by the statute—was penal. T2 Techs., Inc., 183 P.3d at 646–47. So, even

assuming the TCPA has remedial components that would be insurable under

Colorado law, whether the plaintiffs have alleged any remedial damage is a fact-

specific inquiry. DISH contends the State Plaintiffs have alleged remedial damages

by asserting in the Underlying Complaint that they were “authorized . . . to obtain

actual damages or damages of $500 for each violation” of the TCPA. Underlying

Complaint ¶¶ 5–8, Aplt. App’x at 2028–30. Had the Underlying Complaint requested

relief in the same way, DISH’s argument might succeed; however, the prayer for

relief specifically asks the court to:

Assess against [DISH] and in favor of the State Plaintiffs damages of
$1,500 for each violation of the TCPA found by the Court to have been
committed by [DISH] willfully and knowingly; if the Court finds
[DISH] has engaged in violations of the TCPA which are not willful and
knowing, then assessing against [DISH] damages of $500 for each
violation of the TCPA. . . .

16
Prayer for Relief ¶ 4, Aplt. App’x at 2051. This request does not ask, even in the

alternative, for actual monetary loss. Instead, it explicitly seeks only statutory

damages which, under T2 Techs. and Kruse, are not remedial. See also Hannabury,

174 F. Supp. 3d at 776 (stating that the plaintiffs’ relief request for $500 in liquidated

damages indicates the claim is penal, despite the fact the statute allows the plaintiff

to sue for actual damages).

Finally, DISH argues that Colorado’s public policy is inapplicable here

because, at least for the claims committed unknowingly, prohibiting insurance does

not serve the goal of preventing the insured from receiving a “license to commit

harmful, wanton or malicious acts.” Aplt. Br. at 52–53 (quoting Bohrer, 965 P.2d at

1262 (quotation marks omitted)). But Colorado law also prohibits insuring against

punitive damages, see Lira, 913 P.2d at 517, and the Colorado Supreme Court has

held that the TCPA’s statutory damages are penal, Kruse, 178 P.3d at 1201. If a

distinction is to be drawn between penal statutes that involve willful conduct and

penal statutes merely designed to deter, as DISH argues, “that decision is [the

Colorado Supreme Court’s] decision to make, not ours.” Espinoza v. Ark. Valley

Adventures, LLC, 809 F.3d 1150, 1153 (10th Cir. 2016). “[I]t is not our place to

expand [Colorado] state law beyond the bounds set by the [Colorado] Supreme

Court.” Belnap v. Iasis Healthcare, 844 F.3d 1272, 1295 (10th Cir. 2017) (citation

omitted). Our job is to “follow the most recent decisions of the state’s highest court.”

Wade v. EMCASCO Ins. Co., 483 F.3d 657, 665–66 (10th Cir. 2007). “[A]ny further

development of the law on this point” is properly reserved for Colorado authorities.

17
Russo v. Ballard Med. Prod., 550 F.3d 1004, 1023 (10th Cir. 2008). To be sure, the

Colorado Supreme Court may decide, when actually faced with the question, that the

TCPA is penal in some contexts, but remedial in others. But, “[a]bsent a strong

showing to the contrary, we are disinclined to predict that the [Colorado] Supreme

Court would recognize” such a distinction. Belnap, 844 F.3d at 1295.

In sum, the provision awarding statutory damages for violating the TCPA is a

penalty under Colorado law and uninsurable as a matter of Colorado public policy.

Therefore, ACE has no duty to defend DISH on these claims.

2. Claim for Equitable Relief

DISH next argues that the district court’s interpretation of insurable damages

as “actual damages” was improperly narrow because the Colorado Supreme Court has

held “that the ordinary meaning of ‘damages’ is broad and covers” equitable relief.

See Compass, 984 P.2d at 622–23. Therefore, DISH continues, the costs of

complying with an injunction are insurable damages under the ACE policies.

It is true that the Colorado Supreme Court has refused to draw a bright line

between legal remedies and equitable remedies. Id. But neither has it mandated that

insurers absorb the costs of preventing future damages, and Compass does not

suggest otherwise. In Compass, the Colorado Supreme Court held that “the plain and

ordinary meaning” of the term “damages” included “government mandated response

or cleanup costs” to remediate environmental pollution. Id. Critically, Compass dealt

with the insurability of an equitable remedy intended to ameliorate already existing

damage, not—as DISH requests here—an equitable remedy to prevent potential

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future damages. See Cutler-Orosi Unified Sch. Dist. v. Tulare Cty. Sch. Dists.

Liab./Prop. Self Ins. Auth., 31 Cal. App. 4th 617, 629 (Cal. Ct. App. 1994) (finding

injunctive remedies under the Voting Rights Act are “essentially prophylactic

methods of preventing the future reoccurrence of past illegal actions” which cannot

be classified as “damages”). Under the plain language of the policies, ACE is

obligated to indemnify damages arising from past injuries, not the cost of preventing

future violations. See Aplt. App’x at 164, 168, 226, 230 (requiring ACE to “pay those

sums that [DISH] becomes legally obligated to pay as damages because of [injuries

or damage] to which this insurance applies” (emphasis added)). Therefore, the

injunctive relief requested by the State Plaintiffs does not constitute “damages” as

defined by the ACE policies.5

Finally, DISH cites the Prayer for Relief’s request for “other ancillary relief to

remedy injuries caused by DISH Network’s violation of the TCPA,” and argues the

State Plaintiffs have requested other equitable relief to compensate the victims for

damages already incurred. Aplt. Br. at 36. But we will not interpret a boilerplate

5
DISH also relies on the State Plaintiffs’ request in their summary judgment
motion to require that DISH “‘hire[] a telemarketing-compliance expert . . . who will
prepare a plan . . . [for] compliance’ and an order requiring DISH to fully fund a
claims administrator ‘in order to identify and distribute damage awards to consumers
in the Plaintiff States who received calls that violated the TCPA.’” Aplt. Br. at 36.
This subsequent document, however, cannot be considered under Colorado’s
“complaint rule.” “We determine the duty to defend on the same basis both before
and after the completion of the underlying litigation. . . .” Cotter Corp. v. Am. Empire
Surplus Lines Ins. Co., 90 P.3d 814, 828 (Colo. 2004). This determination is based
“on the face of the complaint.” Id. As this relief was not requested in the complaint,
we do not consider it here.

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provision seeking “other ancillary relief” so as to make it impossible for insurers to

avoid a duty to defend, even when the asserted damages are expressly uninsured by

the policy. Because the specific statutory damages and injunctive relief requested do

not create any possibility that ACE would be obligated to indemnify DISH, it has no

duty to defend.6

***

As the “underlying claim [cannot] fall within policy coverage,” Compass, 984

P.2d at 614 (citation omitted), ACE does not have a duty to defend DISH in the

Underlying Lawsuit.7

III. CONCLUSION

We AFFIRM the district court’s grant of summary judgment in favor of ACE.

6
Because we conclude the plaintiffs in the Underlying Lawsuit have not
asserted any insurable damages, we do not address ACE’s alternative arguments that:
(1) there was no coverage under Coverage A because the asserted damages were not
“bodily injury” or “property damage” caused by an “occurrence” and (2) there was no
coverage under Coverage B because DISH falls within the “broadcaster” exception.
7
ACE also does not have a duty to indemnify DISH. See Compass Ins. Co. v.
City of Littleton, 984 P.2d 606, 621 (Colo. 1999) (“[W]here there is no duty to
defend, it follows that there can be no duty to indemnify.” (citation omitted)).

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