FILED
United States Court of Appeals
Tenth Circuit
March 31, 2008
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
DAVID CIDRILLO POMPA,
Plaintiff - Appellant,
and
ROSEMARY SANTELER; SHAWN
MICHAEL DOMIANUS; SCOTT
CHRISTOPHER DOMIANUS, by and
through their natural parent and next
friend Terry Domianus,
Plaintiffs,
v. No. 07-1138
AMERICAN FAMILY MUTUAL
INSURANCE COMPANY, a
Wisconsin corporation,
Defendant - Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. NO. 05-cv-2366-WYD-PAC)
Zachary C. Warzel (Michael J. Rosenberg, with him on the brief), of Roberts,
Levin & Patterson, P.C., Denver, Colorado, for Plaintiff -Appellant.
Suzanne Lambdin (Stephanie A. Montague, with her on the brief), of Lambdin &
Chaney, LLP, Denver, Colorado, for Defendant - Appellee.
Before HARTZ and GORSUCH, Circuit Judges, and BRIMMER, * District
Judge.
HARTZ, Circuit Judge.
At issue in this appeal is whether Defendant American Family Mutual
Insurance Co. (AFM) had a duty to defend and indemnify its insured, Plaintiff
David Cidrillo Pompa, with respect to a wrongful-death action brought against
him. AFM argues that Mr. Pompa’s plea of guilty to negligent homicide for the
conduct that gave rise to the wrongful-death action triggers the criminal-
conviction exclusion in his homeowner’s insurance policy. Mr. Pompa counters
that the exclusion applies only to a conviction after trial, that public policy bars
the exclusion, and that Colorado law does not permit consideration of his
conviction in determining the duty to defend when the wrongful-death complaint
makes no mention of it. We reject Mr. Pompa’s arguments and affirm the
judgment of the district court that AFM had no duty to defend or indemnify
Mr. Pompa.
I. BACKGROUND
In September 2002 Mr. Pompa and Steven Domianus had an altercation that
resulted in Domianus’s death. Mr. Pompa pleaded guilty to criminally negligent
*
Honorable Clarence A. Brimmer, United States District Judge, District of
Wyoming, sitting by designation.
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homicide in May 2003. Domianus’s heirs then filed a wrongful-death action
against Mr. Pompa in Colorado state court. Mr. Pompa, a holder of homeowner
insurance with AFM, requested it to defend the civil action. AFM, relying on the
intentional-injury and criminal-conviction exclusions in Mr. Pompa’s insurance
policy, denied that it owed Mr. Pompa a duty of defense or indemnification. A
judgment was entered against Mr. Pompa in the amount of $983,609.90, plus
costs. Mr. Pompa, unable to satisfy the judgment, then entered into a settlement
agreement with Domianus’s heirs in which he agreed to bring an action against
AFM and assign to them the bulk of the proceeds he obtained.
Mr. Pompa filed an action in Colorado state court against AFM, alleging
breach of contract, willful breach of contract, and bad-faith breach of insurance
contract. AFM removed the suit to the United States District Court for the
District of Colorado under 28 U.S.C. § 1441 and filed a motion for summary
judgment, claiming that under the policy’s criminal-conviction exclusion it had no
duty to defend Pompa. That exclusion provides that AFM “will not cover bodily
injury or property damage arising out of . . . violation of any criminal law for
which any insured is convicted.” Aplt. App. at 78. The defense provision of the
contract states that AFM will provide a defense at its expense “[i]f a suit is
brought against any insured for damages because of bodily injury or property
damage caused by an occurrence to which this policy applies.” Id. at 76.
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Mr. Pompa responded with three arguments why the exclusion did not
apply. First, he contended that the criminal-conviction exclusion applies only
when the insured has been convicted by a jury. He argued that the phrase “for
which any insured is convicted” is ambiguous because it could be referring only
to convictions obtained after trial, as opposed to those obtained through guilty
pleas, and that any ambiguity had to be resolved in favor of coverage. Second, he
contended that applying the exclusion would violate public policy because
virtually any act creating liability could be prosecuted as a criminal offense,
depending on the exercise of discretion by the prosecutor. Third, he argued that
the “complaint rule,” which holds that the determination of an insurer’s duty to
defend must be based solely on the allegations of the complaint, precluded the
court from considering his conviction for negligent homicide because the
wrongful-death complaint did not allege that he had been convicted of any crime.
The district court rejected these arguments and granted summary judgment to
AFM. Mr. Pompa renews these three arguments on appeal.
II. DISCUSSION
We review de novo the district court’s grant of summary judgment,
applying the same legal standard that governs the district court. See Simms v.
Oklahoma ex rel. Dep’t of Mental Health & Substance Abuse Servs., 165 F.3d
1321, 1326 (10th Cir. 1999). Summary judgment is appropriate when there is no
genuine issue of material fact and the moving party is entitled to judgment as a
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matter of law. See Fed. R. Civ. P. 56(c). The parties agree that there are no
factual disputes and that we must apply the substantive law of Colorado. As we
shall see, the Colorado Supreme Court has not addressed the specific issues raised
in this appeal, so we must predict how that court would rule. See Rash v. J.V.
Intermediate, Ltd., 498 F.3d 1201, 1206 (10th Cir. 2007) (“Where the state’s
highest court has not addressed the issue presented, the federal court must
determine what decision the state court would make if faced with the same facts
and issue.” (internal quotation marks omitted)).
A. Interpretation of the Criminal-Conviction Exclusion
Mr. Pompa argues that the criminal-conviction exclusion is ambiguous
because the word convicted has two meanings. He acknowledges that it could
refer to any conviction, whether obtained by guilty plea or after trial, but
contends that it could also refer only to convictions after a trial. The district
court erred, he asserts, in choosing the more expansive interpretation over his
reasonable narrower interpretation. We disagree.
Colorado law requires that ambiguities in an insurance policy be construed
in favor of the insured. E.g., State Farm Mut. Auto Ins. Co. v. Stein, 940 P.2d
384, 390 (Colo. 1997). The prerequisite to application of this rule is a
determination that the policy is ambiguous. “Terms used in a contract are
ambiguous when they are susceptible to more than one reasonable interpretation.”
Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1091 (Colo. 1991). The mere
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fact that the parties disagree on the meaning of a term does not establish
ambiguity. See Nat’l Cas. Co. v. Great Sw. Fire Ins. Co, 833 P.2d 741, 746. Nor
can a policy term “be read in isolation to create an ambiguity in the policy as a
whole where none exists.” Union Ins. Co. v. Houtz, 883 P.2d 1057, 1061 (Colo.
1994). In construing a term, a court should ascertain what “a person of ordinary
intelligence” would understand the term to mean, Stein, 940 P.2d at 390, giving
words their “plain meaning according to common usage.” Allstate Ins. Co. v.
Starke, 797 P.2d 14, 18 (Colo. 1990).
To support their interpretations of the word conviction, both parties quote
dictionary definitions. AFM offers: “The act or process of judicially finding
someone guilty of a crime; the state of having been proved guilty.” Black’s Law
Dictionary 358 (8th ed. 2004). Mr. Pompa, in turn, points to: “In a general
sense, the result of a criminal trial which ends in a judgment or sentence that the
accused is guilty as charged.” Black’s Law Dictionary 333 (6th ed. 1990). He
asserts that his definition’s appearance in a leading legal dictionary compels the
conclusion that his interpretation is reasonable and the term thus ambiguous.
Dictionaries, however, are “imperfect yardsticks of ambiguity.” New Castle
County v. Hartford Accident & Indem. Co., 933 F.2d 1162, 1193–94 (3rd Cir.
1991). A word may take on a variety of meanings in different contexts.
Dictionaries can inform us of all the accepted meanings, but not which of those
meanings fits in a particular context. As one court perceptively observed:
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The mere fact that a word has more than one dictionary meaning, or
that the parties disagree about the meaning, does not necessarily
make the word ambiguous if the court concludes that only one
meaning applies in the context and comports with the parties’
objectively reasonable expectations. Thus it is inappropriate to
create ambiguity by simply finding two different dictionary
definitions of [a] word . . . . Dictionary definitions can shed only
partial light on the reasonable understanding of an insured with
regard to words in the context of a particular insurance policy.
Sprangers v. Greatway Ins. Co., 514 N.W.2d 1, 7 (Wis. 1994) (citation and
footnote omitted). In particular, construction of a potentially ambiguous term in
an insurance-policy provision requires consideration of the purpose of the
provision. See Branscum v. Am. Cmty. Mut. Ins. Co., 984 P.2d 675, 678 (Colo.
Ct. App. 1999) (a court should consider the purpose of a policy in construing a
policy term).
The undoubted purpose of the criminal-conviction exclusion is to avoid
extending coverage to liability stemming from acts that the government has
decided to prosecute criminally and has prosecuted successfully. There would be
no reason for the AFM policy to distinguish between a conviction obtained by a
guilty plea and a conviction obtained after a trial. Mr. Pompa argues that an
insured who is innocent of a crime may decide to plead guilty to a lesser offense
rather than face the risk of being convicted of a more serious crime. But we are
not persuaded that an insurer, or even an insured, would think that a guilty plea is
so much less reliable than a trial verdict that a plea should be treated differently
than a verdict for purposes of this policy exclusion.
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Mr. Pompa’s sole case support for the distinction consists of decisions that
distinguish between a guilty plea and a conviction at trial when resolving whether
issue preclusion applies in a later civil case. See generally State Farm Fire &
Cas. Co. v. Fullerton, 118 F.3d 374, 380–81 (5th Cir. 1997) (listing cases). The
underlying rationale for issue preclusion, however, rests not so much on views
regarding reliability as on concerns about excessive use of judicial resources: a
party that has actually litigated an issue should not be given an extra bite at the
apple. Thus, a party that has stipulated to a fact in a civil case (which would
ordinarily be an indication that the fact is indisputable) is not barred by issue-
preclusion doctrine from challenging the fact in later litigation because it has not
yet actually litigated the issue. See Restatement (Second) of Judgments § 27 cmt.
e (1982). The point in the cases relied upon by Mr. Pompa is not that one who
pleads guilty is not “convicted” of the crime; rather, it is that guilt was not
“actually litigated” to arrive at the conviction, just as a stipulated fact was not
actually litigated to arrive at a civil judgment. See, e.g., Rawling v. City of New
Haven, 537 A.2d 439, 445 (Conn. 1988) (plea is not entitled to issue-preclusive
effect because a plea is not “the product of actual litigation”); Aetna Cas. & Sur.
Co. v. Niziolek, 481 N.E.2d 1356, 1363 (Mass. 1985) (“[N]o issue is actually
litigated since the defendant declines to contest his guilt in any way.” (brackets
and internal quotation marks omitted)); Restatement (Second) of Judgments § 85
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cmt (b) (similar). In any event, none of the issue-preclusion cases cited by
Mr. Pompa states that a guilty plea is not a conviction.
Not only has Mr. Pompa failed to provide a reason why the insurance
company would want to exclude guilty pleas from the definition of convicted in
the policy, but he has made no effort to show why an insured would prefer the
more limited definition in acquiring the policy. To be sure, the narrower
definition could result in coverage that would otherwise be excluded. Consider,
however, the quandary in which that definition would place an insured accused of
a crime. The pressure to plead guilty escalates when the insured knows that he
will not receive insurance protection if he opts for a trial of the criminal charges
and is convicted. For example, the desire to preserve his reputation could be
overborne by a feeling of responsibility toward the economic well-being of his
family. We doubt that a potential purchaser of the policy would be particularly
pleased to learn that if he is charged with a crime, all he would need to do to
preserve coverage is plead guilty.
There being only one reasonable interpretation of the word convicted in this
policy, we conclude that the district court did not err in holding that the policy
unambiguously excluded coverage for the conduct for which Mr. Pompa pleaded
guilty.
B. Public Policy
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Mr. Pompa next argues that even if the criminal-conviction exclusion is not
ambiguous, it nonetheless violates public policy. An exclusion that encompasses
negligent conduct, he contends, defeats the reasonable expectations of the insured
as to coverage because the purpose of purchasing liability insurance is to shield
against liability arising from negligent acts and most negligent acts are a violation
of some criminal law. He asserts that it is contrary to public policy to allow an
exclusion that “eviscerate[s] coverage for such a large class of otherwise covered
negligent acts.” Aplt. Br. at 38. We are not persuaded.
To begin with, to the extent that Mr. Pompa asserts that his crime was one
of simple negligence, he is incorrect. The offense was criminally negligent
homicide, which is defined as “caus[ing] the death of another person by conduct
amounting to criminal negligence.” Colo. Rev. Stat. Ann. § 18-3-105 (2008).
Under Colorado law, “[a] person acts with criminal negligence when, through a
gross deviation from the standard of care that a reasonable person would exercise,
he fails to perceive a substantial and unjustifiable risk that a result will occur or
that a circumstance exists.” Id. § 18-1-501(3). Thus, criminally negligent
homicide requires “a failure to perceive, through a gross deviation from the
standard of reasonable care, a substantial and unjustifiable risk that death will
result from certain conduct.” People v. Shaw, 646 P.2d 375, 380 (Colo. 1982).
Simple negligence will not suffice.
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Moreover, Mr. Pompa’s public-policy argument is not supported by
Colorado case law. Ordinarily, limitations on insurance coverage are acceptable.
See O’Connor v. Proprietors Ins. Co., 696 P.2d 282, 284 (Colo. 1985). Colorado
courts have held only two types of exclusions in insurance policies to violate
public policy. One is exclusions that attempt to “dilute, condition, or limit
statutorily mandated coverage.” Farmers Ins. Exch. v. Dotson, 913 P.2d 27, 30
(Colo. 1996) (internal quotation marks omitted). But Mr. Pompa has not pointed
to any Colorado statute that proscribes a criminal-conviction exclusion or that
mandates coverage for acts covered by such an exclusion.
The second type consists of exclusions that render coverage illusory, “in
effect allow[ing] the insurer to receive premiums when realistically it is not
incurring any risk of liability.” O’Connor, 696 P.2d at 285. The O’Connor court
suggested that a provision in an aircraft insurance policy that denied coverage if
an accident occurred while the aircraft was in violation of any Federal Aviation
Administration (FAA) regulation might violate public policy. Such a provision
would eliminate any risk of liability because it is virtually impossible for a plane
crash to occur without violating at least one FAA regulation. See id. Likewise,
an exclusion that nullified coverage for all negligent acts would strip coverage
from essentially every case in which liability might arise. But the criminal-
conviction exclusion leaves the vast majority of otherwise covered conduct
untouched—namely, all negligent acts for which the insured is not criminally
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convicted. Indeed, the Colorado Court of Appeals upheld a provision excluding
coverage for “criminal acts” because it did not “eviscerate the grant clause, but
merely exclude[d] a reasonable subset of injuries—those resulting from criminal
acts.” Allstate Ins. Co. v. Juniel, 931 P.2d 511, 516 (Colo. Ct. App. 1996). See
also Horace Mann Ins. Co. v. Peters, 948 P.2d 80, 86 (Colo. Ct. App. 1997)
(intentional-acts exclusion did not nullify all of policy coverage).
Accordingly, we conclude that a Colorado court would not find AFM’s
criminal-conviction exclusion to be void as contrary to public policy.
C. The “Complaint” Rule
Finally, Mr. Pompa contends that the district court erred in considering a
fact extrinsic to the wrongful-death complaint—namely, his conviction of
negligent homicide—to reject his claim that AFM had a duty to defend him in the
wrongful-death litigation. His contention derives from a doctrine variously called
the “complaint” rule, the “comparison test,” the “four corners” rule, or the “eight
corners” rule (referring to both the complaint and the policy). Under the
complaint rule, the insurer’s duty to defend is determined by examination of
solely the policy and the complaint.
The complaint rule applies only when the insurer has failed to provide a
defense throughout the underlying litigation. When the insurer has provided that
defense (presumably under a reservation of rights) and then seeks to recover
defense costs from the insured, the insurer may “rely on facts outside of the
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complaint” to show that “the incident resulting in liability was not covered by the
policy.” Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814, 827
(Colo. 2004) (emphasis and internal quotation marks omitted). But if the insurer
wishes to avoid the cost of a defense before the underlying litigation has
concluded—either by simply refusing to defend or by bringing a declaratory
judgment action while the litigation is proceeding—its duty to defend is
determined under the complaint rule. See id. at 828–29. That determination is
made as follows:
An insurer’s duty to defend arises when the underlying complaint
against the insurer alleges any facts that might fall within the
coverage of the policy. The actual liability of the insured to the
claimant is not the criterion which places upon the insurance
company the obligation to defend. Rather, the obligation to defend
arises from allegations in the complaint, which if sustained, would
impose a liability covered by the policy. Where 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, or there is some doubt as to
whether a theory of recovery within the policy coverage has been
pleaded, the insurer must accept the defense of the claim.
Hecla, 811 P.2d at 1089 (citation, footnote, brackets and internal quotation marks
omitted); see also Cotter, 90 P.3d at 828.
The Colorado Supreme Court has articulated two reasons for adopting the
complaint rule. First, the rule “protects the insured’s ‘legitimate expectation of a
defense.’” Id. at 828 (quoting Hecla, 811 P.2d at 1090). Because of that
legitimate expectation, the risk of the uncertainty of coverage should fall on the
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insurer. That is, the insured should not have to bear the burden of advancing the
costs of defense just because there is a possibility that future developments in the
case will establish that there is no insurance coverage. Rather, the insurer should
have to pay the defense costs and then recover from the insured if it turns out that
there was no coverage. As Cotter put it, “By purchasing insurance, the insured
reasonably expects that he will not be required to furnish the cost of defending
actions that facially fall within the terms of his policy.” Id. at 828. See also
Hecla, 811 P.2d at 1090. The insured will be deprived of the peace of mind that
insurance promises if the insurer can refuse to defend the case, await
developments, and then decide to reimburse the insured for defense costs only
once it is clear that there was coverage. To deter such refusals, an insurer who
refused to provide a defense during the litigation is excused from reimbursing
defense costs only if it is clear from the complaint that there was no coverage.
See Cotter, 90 P.3d at 828.
Second, the complaint rule prevents the insured’s defense in the underlying
action from being compromised by a declaratory-judgment action brought by the
insurer while the underlying action is in progress. See Hecla, 811 P.2d at 1090
n.10. In certain circumstances, the insured, in attempting to establish coverage
under the policy, might have to produce evidence in the declaratory-judgment
action that would subject it to liability in the underlying action. See id. (pointing
out how that could happen in that case). The complaint rule, by postponing the
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consideration of facts not alleged in the underlying action until the conclusion of
that action, avoids placing the insured in this dilemma. This rationale for the
complaint rule does not appear to apply when the insurer simply refuses to
provide coverage and then defends against the insured’s claim for defense costs
upon conclusion of the underlying action. In that circumstance the litigation
between the insurer and insured cannot prejudice the insured in the underlying
action because that litigation is over. But Cotter explains that the basis of the
duty to defend should be the same whether (1) the insurer brings a declaratory-
judgment action during the underlying litigation (when this rationale for the
complaint rule applies) or (2) the insurer refuses to defend and the insured then
seeks reimbursement of defense costs. If the coverage determination for the
insurer who refused to defend were not based on the complaint rule, there would
be “an incentive for insurers to refuse to defend in the hope that [the underlying]
litigation w[ould] reveal that no duty to defend exists.” 90 P.3d at 828.
Although the Colorado Supreme Court has not recognized any exceptions to
the complaint rule, other courts have. One widely recognized exception states
that “an insurer should not have a duty to defend an insured when the facts
alleged in the complaint ostensibly bring the case within the policy’s coverage,
but other facts that are not reflected in the complaint and are unrelated to the
merits of the plaintiff’s action plainly take the case outside the policy coverage.”
1 Allan D. Windt, Insurance Claims and Disputes § 4.4, at 293–94 (4th ed. 2001),
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citing, among other cases, Dairy Rd. Partners v. Island Ins. Co., Ltd., 992 P.2d
93, 117 (Haw. 2000) (insurer may “disclaim its duty to defend by showing that
none of the facts upon which it relies might be resolved differently in the
underlying lawsuit.”). See also 22 Eric Mills Holmes & L. Anthony Sutin,
Holmes’ Appleman on Insurance ¶ 136.3, at 22 (2d ed. 2003) (“When the
extrinsic facts relied on by the insurer are relevant to the issue of coverage, but do
not affect the third party’s right of recovery, courts occasionally have held that
the insurer may refuse to defend third-party actions, even though the allegations
in the complaint suggest that coverage exists.”); 14 Lee R. Russ & Thomas F.
Segalla, Couch on Insurance § 200:21 n.1 (3d ed. 2005) (“Courts have considered
known or discoverable facts and/or extrinsic evidence where . . . [c]overage is
based on a factual issue which will not be resolved in the underlying case.”).
Courts have also recognized an exception “when the [insurer] determines that,
even assuming that the insured is liable based on the allegations in the complaint,
there can, in fact, be no coverage because of the falsity of some extraneous fact
alleged in the complaint,” Windt, supra, at 299.
Given this authoritative support for some exceptions to the complaint rule,
we believe that the Colorado Supreme Court would recognize an exception when
doing so would not undercut the purposes served by the rule. Lending support to
our belief is the Colorado Supreme Court’s suggestion that it might, in an
appropriate case, recognize such an exception. Cotter stated in a footnote: “For
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now, we assume [the complaint] rule applies to bona fide allegations contained in
a complaint. We leave open the question whether allegations framed to trigger an
insurance policy create a duty to defend.” 90 P.3d at 829 n.9. See also
Constitution Assocs. v. N.H. Ins. Co., 930 P.2d 556, 563 n.10 (Colo. 1996) (“We
leave for another day the question of whether unsupported allegations framed to
trigger insurance coverage give rise to a duty to defend under Hecla.”).
In our view, such an exception would apply here. Mr. Pompa’s conviction
is an indisputable fact that is not an element of either the cause of action or a
defense in the underlying litigation (the wrongful-death case). Recognizing an
exception in this circumstance would not undercut the policies supporting the
complaint rule. First, it would not defeat the legitimate expectations of the
insured to a defense, because an insured can have no reasonable expectation of a
defense when an indisputable fact, known to all parties, removes the act in
question from coverage. That the complaint made no mention of Mr. Pompa’s
conviction cannot turn an expectation of a defense in these circumstances into a
reasonable one. Nor would recognition of this exception jeopardize the insured’s
defense in the underlying action, because the extrinsic fact is undisputed. Even if
the wrongful-death action against Mr. Pompa were still in progress, recognizing,
for purposes of a coverage determination, the indisputable fact of his conviction
could not prejudice his defense in the wrongful-death action. Moreover,
recognizing this exception serves a beneficial purpose: freeing an insurer from
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having to defend an action that from the outset clearly falls outside the policy’s
coverage, particularly when, as here, the insurer has no realistic hope of
recovering the costs of the defense from its insured. See Constitution Assocs.,
930 P.2d at 563 (when allegations of complaint do not give rise to duty to defend,
“it may be appropriate to allow the insurer an opportunity to obtain an
anticipatory declaration of its obligations towards its insured prior to the
expenditure of considerable resources.”).
To be sure, the Colorado Supreme Court has not yet embraced this
exception to the complaint rule. But it has not had the opportunity. We have
found no Colorado case in which the court could have applied this exception. The
three leading cases in which the Colorado Supreme Court discussed the complaint
rule all involved insurance policies that excluded from coverage property damage
arising from the discharge of pollution, unless that discharge was “sudden and
accidental.” See Cotter, 90 P.3d at 820; Compass Ins. Co. v City of Littleton, 984
P.2d 606, 612 (Colo. 1999); Hecla, 811 P.2d at 1087. In all three cases the
insurers sought to avoid defending the insureds because, they claimed, the
discharges of pollution were not “sudden and accidental.” See Cotter, 90 P.3d at
817; Compass, 984 P.2d at 612; Hecla, 811 P.2d at 1087. The allegations in the
complaints were broad enough to cover “sudden and accidental” discharges, see
Cotter, 90 P.3d at 829; Compass, 984 P.2d at 618; Hecla, 811 P.2d at 1092, and
whether the discharges were “sudden and accidental” was disputed. In all three
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cases the Colorado Supreme Court held that the insurers were obligated to defend
the insureds because the allegations of the complaints created the potential for
liability covered by the policies. Cotter, 90 P.3d at 829; Compass, 984 P.2d at
618; Hecla, 811 P.2d at 1092. In none of the cases did the insurers attempt to
escape coverage by relying on an undisputed fact that was not an element of the
claim or defense in the underlying litigation. The court in these cases 1 therefore
did not have an opportunity to consider whether the exception we adopt might
apply.
Moreover, the one circumstance about which the Colorado Supreme Court
has explicitly reserved judgment regarding the application of the complaint
rule—a bad-faith allegation “framed to trigger an insurance policy,” Cotter, 90
P.3d at 829 n.9,—is such a close cousin to the circumstance here that we can
assume that the court would, at the least, not reject out of hand the exception we
recognize. After all, the best evidence that an allegation triggering coverage is
not bona fide is that it is indisputably untrue and is not necessary to establish
1
Mr. Pompa also cites Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74
P.3d 294 (Colo. 2003), for support. But the insurance policy at issue in Cyprus
provided only indemnification, not defense. See id. at 300. The Colorado
Supreme Court also mentioned the complaint rule in Thompson v. Md. Cas. Co.,
84 P.3d 496, 502 (Colo. 2004), and alluded to it in Constitution Assocs., 930 P.2d
at 563, but neither case concerned evidence extrinsic to the complaint. The
question in Thompson was whether the complaint sufficiently alleged elements of
a claim covered by the policy to bring it within the policy’s coverage, see 84 P.3d
at 503–04, and Constitutional Associates concerned the circumstances under
which a court should entertain an anticipatory declaratory-judgment action, see
930 P.2d at 561.
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liability in the underlying litigation. The potential exception noted in Cotter
would be applicable if the wrongful-death complaint had alleged that Mr. Pompa
had not been convicted of an offense against Steven Domianus. That exception
and the one we endorse are almost mirror images of one another.
Finally, we observe that if one adopts an interpretation of the complaint
rule that is consistent with the notion of a complaint under the rules of civil
procedure, our conclusion follows without any need to recognize an exception to
the rule. When considering a motion to dismiss a complaint for failure to state a
claim, Colorado courts may consider matters of which they can take judicial
notice even if not mentioned in the complaint. See Walker v. Van Laningham,
148 P.3d 391, 397–98 (Colo. Ct. App. 2006) (considering convictions of
plaintiffs), citing 2 James Wm. Moore et al., Moore's Federal Practice § 12.34[2],
at 1269 (3d ed. 1997) and 5C Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1366 (3d ed. 2004); cf. Tellabs, Inc. v. Makor Issues &
Rights, Ltd., 127 S.Ct. 2499, 2509 (2007). In essence, judicially noticeable facts
are incorporated into the complaint. Because the district court could have taken
judicial notice of Mr. Pompa’s conviction, that fact can be said to appear within
the four corners of the complaint.
III. CONCLUSION
Based on the valid and unambiguous criminal-conviction exclusion,
applicable because of the uncontested fact of Mr. Pompa’s conviction, AFM had
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no duty to defend Mr. Pompa in the wrongful-death action against him. The
judgment of the district court is AFFIRMED.
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