261 F. Supp. 3d 1119
D. Colo.2017Background
- Ciber, Inc. tendered defense to ACE under a claims-made Digital & Technology Professional Liability policy (effective July 1, 2009–July 1, 2010) for the 2009 Baton Rouge Action alleging misappropriation, conspiracy, and related torts arising from development/sales of a wireless surveillance system.
- ACE denied coverage and a defense, asserting the Baton Rouge Action arose from the same wrongful acts as a 2007 New Orleans Action and thus was an interrelated claim first made before the policy inception.
- The Policy defines “interrelated wrongful acts” broadly as wrongful acts sharing a common nexus in facts, circumstances, events, transactions, or a series of related causes; it treats all such claims as a single claim deemed first made on the earliest date.
- Ciber argued the interrelated-acts provision requires a causal (but-for or proximate) link and that the Baton Rouge claims were sufficiently distinct to trigger coverage and ACE’s duty to defend.
- ACE argued the two suits arise from a single scheme (steering subcontract work to city-employee entities and misappropriating camera-system technology), so the 2009 suit is interrelated and barred by the policy’s prior-claim rule.
- The court applied Colorado law, concluded the two suits were interrelated (a single scheme tied to the same contract and transactions), held the Baton Rouge Action was deemed made in 2007, and entered judgment for ACE; no duty to defend or indemnify, and Ciber’s bad-faith claim failed. The court denied ACE’s request for attorney fees because Ciber’s position was not frivolous.
Issues
| Issue | Ciber's Argument | ACE's Argument | Held |
|---|---|---|---|
| Whether Colorado law governs and how to interpret policy terms | Colorado law applies; terms given plain meaning | Same | Colorado law governs; policy construed under Colorado contract principles |
| Scope of “interrelated wrongful acts” — whether it requires causal (but‑for/proximate) link | “Nexus” requires causal link; absent causation, possibility of coverage exists | Definition needs only a factual connection/substantial overlap; no but‑for test | No causal (but‑for) requirement; plain policy language supports a broad nexus test |
| Whether the New Orleans and Baton Rouge suits are interrelated (thus deemed first made in 2007) | Allegations against Ciber in New Orleans were limited and distinct from Baton Rouge; not same wrongful act | Both actions arise from same single scheme (steering subcontractors, misappropriating tech) tied to the July 2004 contract | The court found a common nexus/a single scheme; suits are interrelated and deemed first made in 2007 |
| Duty to defend/indemnify and bad faith; entitlement to attorney fees | If policy covers Baton Rouge, ACE had duty to defend/indemnify; bad faith claim viable; fees not owed | No coverage, so no duty to defend/indemnify; bad faith fails; seeks fees if action frivolous | No duty to defend/indemnify; bad-faith claim dismissed; attorney‑fees request denied because Ciber’s positions were not frivolous |
Key Cases Cited
- Thompson v. Maryland Casualty Co., 84 P.3d 496 (Colo. 2004) (insurance policy terms construed under contract principles and ordinary meaning)
- Compass Insurance Co. v. City of Littleton, 984 P.2d 606 (Colo. 1999) (no duty to indemnify follows where no duty to defend)
- Hoang v. Assurance Co. of America, 149 P.3d 798 (Colo. 2007) (explaining claims-made policy coverage)
- Corder v. Lewis Palmer School District No. 38, 566 F.3d 1219 (10th Cir. 2009) (standard for Rule 12(c) motion parallels Rule 12(b)(6))
- TON Services, Inc. v. Qwest Corp., 493 F.3d 1225 (10th Cir. 2007) (plausibility pleading standard cited)
- Park University Enterprises, Inc. v. American Casualty Co., 442 F.3d 1239 (10th Cir. 2006) (judgment on the pleadings appropriate only where no material facts remain)
- Berry & Murphy, P.C. v. Carolina Casualty Insurance Co., 586 F.3d 803 (10th Cir. 2009) (bad-faith claim fails where insurer has no duty to defend or indemnify)