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Case 1:11-cv-00715-RPM Document 64 Filed 11/01/12 USDC Colorado Page 8 of 18 instruction made by or on behalf of any governmental body or agency. However, with respect to coverage A. Professional Liability, whenever coverage under this policy would be excluded because of any dishonest, fraudulent, malicious, or knowingly wrongful act, error, omission, we agree that such insurance as would otherwise be afforded under this policy will be applicable with respect to those insureds who did not personally participate or personally acquiesce in or remain passive after having knowledge of such conduct. Each such innocent insured must promptly comply with all provisions of this policy upon learning of any concealment. (Ex. 1, PERMT Form, p. 6). The term “responsible insured” is defined in Section V of the Policy to mean “any of your (1) owners, officers, directors, or partners; or (2) managers, supervisors, or licensed professionals; or (3) employees that are responsible for environmental affairs, control or compliance.” (Ex. 1, PERMT, p. 17). The terms “you” and “your” refer to Stratus. The Complaint and Amended Complaint allege that Beltman is an Executive Vice President of Stratus, and that Maest is a Managing Scientist at Stratus. (Ex. 2., 15, 16; Amended Complaint 5.6. Therefore, both Beltman and Maest qualify as “responsible insureds” under the stated definition. Furthermore, the Complaint and Amended Complaint allege that Lipton is the President of Stratus, and that Chapman is a Principal and head of the natural resource economics group at Stratus. (Amended Complaint 11 and Ex. A, 274). Therefore, Lipton and Chapman also qualify as “responsible insureds” under the Policy. The terms “dishonest, fraudulent, malicious, or knowingly wrongful…” are not defined in the Policy and, thus, must be given their plain and generally accepted meaning. See, e.g., Bohrer v. Church Mut. Ins. Co., 965 P.2d 1258, 1262 (Colo. 1998). The Colorado Supreme Court has held that “’dishonest’ is a synonym for ‘untruthful’,” In Re: Plaintiff: The People of the State of Colorado v. Segovia, 196 P.3d 1126, 1132 (Colo. 2008), and has construed the phrase “fraudulent or dishonest” in an insurance context to mean an act “for a wrongful purpose and moral obliquity. Such an act must be one done in bad faith involving a breach of honesty to such 8
Case 1:11-cv-00715-RPM Document 64 Filed 11/01/12 USDC Colorado Page 9 of 18 an extent as to amount to official dishonesty and lack of moral character.” Western Surety Co. v. May Mercantile Assoc., 283 P.2d 959, 961 (Colo. 1955). See also The People of the State of Colorado v. Katz, 58 P.3d 1176, 1189 (Colo. O.P.D.J. 2002) (“’dishonesty’… encompasses fraudulent, deceitful, or misrepresentative behavior. In addition to these, however, it encompasses conduct evincing ‘a lack of honesty, probity or integrity in principle; a lack of fairness and straightforwardness…’ Thus, what may not legally be characterized as an act of fraud, deceit or misrepresentation may still evince dishonesty.”) The elements of fraud under Colorado law have been stated to be: (1) a false representation of a material existing fact; (2) knowledge on the part of the one making the representation that it is false; (3) ignorance on the part of the one to whom the representation is made of the falsity; (4) representation made with intention that it be acted upon; (5) representation resulting in damage. Kinsey v. Preeson, 746 P.2d 542, 550 (Colo. 1987) (citations omitted). The term “malicious” includes “acts done intentionally or with willful disregard of likelihood of damage….” United States of America v. Wiktor, 146 F.3d 815, 818 (10th Cir. 1998) (defining term “maliciously”). See also Richards v. Sanderson, 89 P. 769, 772 (Colo. 1907) (“Maliciously…means a wrongful act done intentionally, without just cause or excuse…”); Bonidy v. Vail Valley Center for Aesthetic Dentistry, P.C., 232 P. 3d 277, 286 (Colo. App. 2010) (Webster’s Dictionary defines ‘malice’ as ‘an intention or desire to harm another [usually] seriously through doing something unlawful or otherwise unjustified’ or ‘revengeful or unfriendly feelings’”). Finally, the term “knowingly” is defined as “’with knowledge; consciously; intelligently; willfully, intentionally,’” City of Englewood v. Hammes, 671 P. 2d 947, 953 (Colo. 1983) (quoting definition from Black’s Law Dictionary, 5th ed. (1979)), and “‘wrongful’ means ‘unlawful’ or ‘unjust.’” Sears v. Penrose Hospital, 942 P. 2d 1345, 1348 (Colo. App. 1997) (quoting definition from Webster’s Third New International Dictionary 2642), overruled on other grounds, Holliday v. Bestop, Inc., 23 P. 3d 700 (Colo. 2001). 9
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