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Board of County Commissioners v. Colorado Counties Casualty and Property Pool12/15/1994
In this action contesting the denial of coverage under a liability insurance policy, plaintiff, Board of County Commissioners of Fremont County (County), appeals the summary judgment entered in favor of defendant, Colorado Counties Casualty and Property Pool (CAPP). In addition, CAPP cross- appeals the trial court's denial of its motion for attorney fees. We affirm.
In November 1986, the sheriff of Fremont County fired a deputy under his command. In April 1987, the deputy, through his attorney, sent a letter to the sheriff notifying him of a possible tort claim for injuries resulting from his termination. The letter was not sent to the County or to the county attorney, nor did the sheriff notify the County that he had received this letter.
The first notification of the deputy's claim received by any representative of the County, other than the sheriff, was when the deputy filed a federal civil rights suit in February 1988 and served the County with a copy of the complaint and summons. Immediately upon receipt of the deputy's complaint, the County requested coverage under the CAPP policy.
Following the trial of his civil rights case, the deputy entered into a settlement agreement with the county and received $120,000 for compensatory damages, interest, attorney fees, costs, and expenses. Additionally, the County paid attorney fees and expenses for the defense of the sheriff and itself in the lawsuit. It is for both those sums that the County now seeks reimbursement from CAPP.
As the result of changing its liability insurer, the County, on July 1, 1987, entered into an insurance contract with CAPP. The policy was a hybrid of a "claims-made" and an "occurrence" type policy, was for a term of one year, and provided for an extension or renewal for consecutive one-year terms thereafter. The policy also contained language indicating that it had a "retroactive date," and it excluded coverage for acts that occurred prior to that date. In some parts of the policy the retroactive date was designated as July 1, 1987, but in two places it was shown as July 1, 1986.
Despite the policy references to July 1, 1986, it is undisputed that the County was informed that the CAPP policy would not apply to a claim that occurred prior to July 1, 1987, and that the County's prior policies ended their coverage before that date. Consequently, the County entered into the insurance contract knowing that there was a "gap" in coverage between its prior policies and the CAPP policy.
The County argues that the policy should be construed so that its retroactive date was July 1, 1986, with the result being that its indemnification claim would fall within the policy period since the deputy's discharge occurred after that date. Alternatively, the County argues that the deputy's claim against it arose in February 1988, when it was first notified of his lawsuit and that, therefore, it would be a covered claim that arose within the one-year policy term.
Also, the County claims that the CAPP policy is one-sided and illusory because of its short policy period and limited retroactive coverage so as to render its exclusions from coverage unconscionable and unenforceable as a matter of law. Finally, the County claims that insofar as the insurance contract excluded coverage for events that occurred prior to the retroactive date, it is void as a matter of public policy because it did not provide for continuous coverage when the County changed insurance companies but maintained the same type of insurance.
Conversely, CAPP has consistently asserted that the "retroactive date" of the policy was July 1, 1987, the date the policy commenced. CAPP argues that the
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