Colorado Casualty v. Safety Control (CA1 9/11/12)

This is a modified opinion on motion for rehearing. We blogged the original here. Amended opinions usually have changes or additions that seem fairly subtle – except to those who fought for or against the rehearing – and this one is no exception. The bottom line is the same but the court has come up with what somebody thinks is a better idea to support it.

There are, to no apparent purpose, a few small changes in wording here and there.

The major change is to the analysis of the collusion argument. Our original blog said this of it:

Employers also argued that the Damron was collusive because Colorado Casualty agreed to defend DBA when Employers refused to and that the agreement was therefore intended not to protect DBA from liability but merely to shift liability for the settlement from Colorado Casualty to Employers. The court ruled that an insurer can’t escape the consequences of denying its contractual obligation simply because another steps in, and that the agreement shifted the liability for settlement to where it should have been in the first place.

    Now the court begins by saying that DBA assigned to Roman only its indemnity claim against the sub’s carrier – which  the A Tumbling-T Ranches case had held could be the subject of a Damron – not a claim for breach of an insured/insured duty. This primarily gives the court another reason to distinguish the Leaflet case, the handling of which was apparently thought a weakness in the original decision.

    The court then inserts a new paragraph to affirm that a Damron does not create coverage that an insured did not purchase.

    The rest of the opinion is essentially unchanged, though the new indemnity theory alters slightly the discussion of the matters to be considered on remand.

    (link to opinion)