DC-10 Entertainment, LLC v. Manor Insurance Agency, Inc
308 P.3d 1223
Colo. Ct. App.2013Background
- DC-10 Entertainment obtained commercial general liability and liquor liability coverage from Manor for its nightclub operations.
- Henderson, injured by an unknown assailant on DC-10 premises, sued DC-10; DC-10 sought defense and indemnity from Penn-Star and Founders, each with assault and battery exclusions.
- Founders agreed to defend under a reservation of rights; Penn-Star denied coverage due to an assault and battery exclusion.
- DC-10 settled with Henderson; settlement included a $15,000 payment by Founders and an arbitration to determine further damages, with DC-10 assigning Henderson its rights to proceeds from a related negligence action against Manor.
- DC-10 sued Manor for negligence and negligent misrepresentation, claiming Manor had a duty to obtain appropriate coverage and inform DC-10 of coverage gaps; trial court granted Manor summary judgment on damages.
- This appeal challenges the sufficiency of the settlement to establish damages, the enforceability of the assignment of proceeds, and whether assault and battery coverage could have affected the outcome.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Bashor-style damages framework applicable? | DC-10 argues the arbitration-determined damages can establish actual damages. | Manor contends no pretrial stipulated damages were set, so damages must be proven as reasonable by trial evidence. | Damages must be proven for reasonableness; summary judgment improper. |
| Is the assignment of proceeds from negligence claims against Manor enforceable? | Assignment to Henderson is valid under the insured-insurer relationship and commercial transaction theory. | Assignment of personal or confidence-based claims should be disallowed. | Assignment is enforceable; valid under Colorado law. |
| Did Manor meet its burden on assault and battery coverage at summary judgment? | DC-10 showed a dispute about whether assault and battery coverage would have applied to Henderson's claims. | Manor argued such coverage would not extend to the underlying patron-on-patron assault, based on deposition statements. | Reasonableness of the coverage issue remains disputed; summary judgment reversed. |
Key Cases Cited
- Bashor v. Northland Ins. Co., 480 P.2d 864 (Colo. App. 1970) (pretrial stipulated judgments; enforcement depends on reasonableness and defense at trial)
- Old Republic Ins. Co. v. Ross, 180 P.3d 427 (Colo. 2008) (stipulated judgments in bad-faith context; not per se unenforceable)
- Nunn v. Mid-Century Ins. Co., 244 P.3d 116 (Colo. 2010) (pretrial stipulated judgments may establish damages for bad-faith claim; reasonableness matters)
- Serna v. Kingston Enterprises, 72 P.3d 376 (Colo. App. 2002) (distinguishes Bashor-like arrangements; involves consent judgment and non-appeal provisions)
- Goodson v. American Standard Ins. Co., 89 P.3d 409 (Colo. 2004) (insurance contract generally; special nature of insurance relationship; bad-faith breach tolls tort liability)
- Bayly, Martin & Fay, Inc. v. Pete's Satire, Inc., 739 P.2d 239 (Colo. 1987) (insurance broker duty to procure coverage; broker-liability in procurement context)
- Haw. Ct. App. McLellan v. Atchison Ins. Agency, Inc., 912 P.2d 559 (Haw. Ct. App. 1996) (assignments of negligence claims against insurance agents permitted)