Cornhusker Casualty Co. v. Skaj, No. 13-8004 (10th Cir. 2015)
Annotate this CaseCornhusker Casualty Company appealed a district court’s summary-judgment ruling, arguing that the district court incorrectly concluded that Cornhusker was estopped from asserting noncoverage as a defense to the claims of Shari and Steve Skaj. The Skajs cross-appealed the district court’s sua sponte entry of summary judgment against them on their counterclaim for attorneys’ fees. Vincent Rosty filed a cross-appeal too, alleging that the district court erred in granting summary judgment to Cornhusker on some of his tort-based counterclaims. R&R Roofing, Inc. was a Wyoming construction company primarily operated by Randy Rosty and Steven Rosty. R&R purchased a Cornhusker commercial liability policy listing “R&R” and “Randy Rosty” as the named insureds. Vincent, who was an R&R employee at that time, did not appear as a named insured under the Policy. Vincent drove R&R’s dump truck to the Skaj home to deliver roofing supplies. The truck was accidentally knocked into second gear, rolled forward toward Ms. Skaj as she approached, and pinned her against a parked motor home, injuring her. A laboratory test performed later that day detected the presence of marijuana and methamphetamines in Vincent’s bloodstream. The Skajs ultimately sued R&R, Steven, and Vincent, asserting several negligence claims. Counsel retained by Cornhusker to defend against the Skajs’ lawsuit sought and received an extension of “the answer deadline for all defendants.” Communication related to that request indicated that defense counsel at that point “d[id] not know if [she would] be representing all of the defendants.” Defense counsel filed an answer to the Skajs’ complaint on behalf of Steven and R&R only, noting, “I do not represent Vincent Rosty.” In filing its answer, Cornhusker did not attempt to advise Vincent of its decision at that time not to represent him. An entry of default against Vincent issued, and the non-defaulting defendants were dismissed from the litigation. The Skajs sought to recover a judgment as to Vincent. Cornhusker hired separate representation for Vincent who opposed the default-judgment proceedings. The state court issued a default-judgment order assessing a total in damages and costs of $897,344.24 against Vincent. One week after the default-judgment hearing, Cornhusker sent Vincent a letter purporting for the first time to deny coverage on grounds that Vincent was not a named insured to the R&R policy. Cornhusker repeated this ground in its declaratory judgment action in federal district court. Vincent responded by counterclaiming against Cornhusker, asserting various contract and tort theories. The Skajs filed their own counterclaim, seeking a declaration “that Cornhusker [was] required to pay the judgment in the underlying action." All parties filed motions for summary judgment, but the court announced that there would be no trial. It declared that Cornhusker was estopped from denying coverage to Vincent because Cornhusker had represented that it would provide a defense, never reserved its rights, and did not advise Vincent of its decision to deny coverage until more than sixteen months after the entry of default. Cornhusker appealed the district court's judgment. But finding no reversible error, the Tenth Circuit affirmed the court's judgment.
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