FILED
                                                            United States Court of Appeals
                                                                    Tenth Circuit

                                                                    July 30, 2015
                      UNITED STATES COURT OF APPEALS
                                                   Elisabeth A. Shumaker
                                                                    Clerk of Court
                                  TENTH CIRCUIT


 LANDMARK AMERICAN
 INSURANCE COMPANY,

          Plaintiff - Appellee,                          No. 14-1270
                                            (D.C. No. 1:13-CV-01386-WJM-KMT)
 v.                                                       (D. Colo.)

 VO REMARKETING CORP.; KAYE
 LAURA TIBBE,

          Defendants - Appellants.


                              ORDER AND JUDGMENT *


Before KELLY, EBEL, and LUCERO, Circuit Judges.



      Plaintiff-Appellee Landmark American Insurance Company brought this

declaratory judgment action seeking a determination that it had no duty to defend

or indemnify its insured, Defendant-Appellant VO Remarketing Corp (VO), in a

lawsuit brought in Colorado state court. The district court granted Landmark’s

motion for judgment on the pleadings, Fed. R. Civ. P. 12(c), and VO, along with




      *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Defendant-Appellant Kaye Laura Tibbe, appeals. 1 Exercising jurisdiction under

28 U.S.C. § 1291, we affirm.



                                    Background

A.    The Injury and Underlying Lawsuit

      This case arises out of an accident that occurred on November 2, 2012, as

two VO employees attempted to maneuver a Stairmaster exercise machine to the

second-story loft of Kaye Laura Tibbe’s home. Ms. Tibbe had purchased the

Stairmaster from VO and arranged for its delivery. As the two VO employees

were maneuvering the Stairmaster up the stairs to the loft, they lost control of the

machine, causing it to tumble down the stairs. Ms. Tibbe, who was standing at a

lower point along the stairway, was crushed by the Stairmaster and sustained

serious injuries as a result.

      At the time of the accident, VO held a Commercial General Liability (CGL)

policy through Landmark (the Policy). The Policy obligates Landmark to

indemnify VO for “sums that the insured becomes legally obligated to pay as

damages because of ‘bodily injury’ or ‘property damage’ to which this insurance

applies.” 1 Aplt. App. 198. Landmark must also defend VO in “suits” seeking

such damages. 

convenience, we refer to both of the Defendant-Appellants as “VO.”

                                         -2-
      The Policy contains various exclusions, one of which is at the center of this

case. In pertinent part, coverage under the Policy does not apply to bodily injury

or property damage “arising out of the ownership, maintenance, use or

entrustment to others of any aircraft, ‘auto’ or watercraft owned or operated by or

rented or loaned to any insured. Use includes operation and ‘loading or

unloading.’” 

(emphasis added) (hereinafter, the Auto Exclusion).

“Loading or unloading” means:

      [T]he handling of property:

              ...

              (c) While it is being moved from an aircraft, watercraft or
              “auto” to the place where it is finally delivered;

              but “loading or unloading” does not include the movement of
              property by means of a mechanical device, other than a hand
              truck, that is not attached to the aircraft, watercraft or “auto”.

      Following the accident, Landmark received notice of a claim made by Ms.

Tibbe against VO. Landmark hired a third party to investigate the claim and,

based on the results of that investigation, determined that the Policy’s Auto

Exclusion precluded coverage for Ms. Tibbe’s injuries. In short, Landmark

determined that the Stairmaster had not reached its place of final delivery when

the accident occurred and therefore the process of “unloading” was ongoing.

Landmark notified VO by letter on March 8, 2013 that there was no coverage or


                                           -3-
potential coverage under the Policy and that it would not be providing a defense.

2 Aplt. App. 396–97.

      About a month later, on April 10, 2013, Ms. Tibbe filed a lawsuit against

VO in Colorado state court. 1 Aplt. App. 175–82 (hereinafter, the Underlying

Lawsuit). Ms. Tibbe sought damages resulting from VO’s alleged negligence. As

relevant here, her complaint alleged:

      1. This action against VO arises out of the personal injury and
      property damage sustained by Tibbe, on or about November 2, 2012,
      at her residence in Greeley, Colorado. After VO delivered a “Step
      Mill 7000 PT Stairmaster” and the equipment was inside of Tibbe’s
      residence, VO attempted to maneuver the equipment up the stairs of
      the residence. The equipment crashed down the stairs of the
      residence and crushed Tibbe.

      ...

      8. After the [Stairmaster] was delivered and inside of Tibbe’s
      Residence, two employees of VO attempted to maneuver the
      [Stairmaster] to the second story loft of Tibbe’s Residence. At the
      crest of the stairs VO’s employees and/or agents lost control of the
      [Stairmaster] and it cascaded down the flight of stairs and crushed
      Tibbe against the exterior wall of the vestibule of the Residence.

      ...

      17. On or about November 2, 2012, after the [Stairmaster] was
      delivered and inside of Tibbe’s Residence, the Defendant negligently
      attempted to maneuver the [Stairmaster] to the second story loft of
      Tibbe’s Residence, causing property damage and the Plaintiff’s
      injuries.

      After examining the complaint, Landmark again notified VO that it would


                                        -4-
not be providing a defense. Subsequently, Ms. Tibbe and VO entered into a

settlement agreement pursuant to which a neutral arbiter would decide the issue of

damages. An Arbitration Decision and Award was entered against VO and in

favor of Ms. Tibbe for approximately $1.2 million, and a state court later entered

judgment against VO pursuant to the settlement agreement. Also as part of the

settlement agreement, Ms. Tibbe agreed not to execute on the judgment against

VO and, in return, VO assigned Ms. Tibbe its claims for breach of contract and

bad faith breach of an insurance contract against Landmark.

B.    The Declaratory Judgment Action

      On May 29, 2013, Landmark filed the instant action seeking a declaration

that it has no duty to defend or indemnify VO in the Underlying Lawsuit. 1 Aplt.

App. 11–18.

      Landmark’s complaint contained a number of factual allegations not

contained in Ms. Tibbe’s complaint. Among other things, Landmark alleged (1)

VO used a vehicle to transport the Stairmaster to Ms. Tibbe’s residence and (2)

Ms. Tibbe “requested that VO REMARKETING deliver the Stairmaster to the

second story loft of her residence.” 

VO admitted the first of these

allegations and, as to the second, admitted only that “its employees delivered the

Stairmaster into Tibbe’s residence and that after the Stairmaster was inside of the

residence, two employees of VO attempted to maneuver the Stairmaster to the

second story loft of Tibbe’s residence.” 

Along with its answer, VO

                                         -5-
asserted counterclaims against Landmark for breach of contract, bad faith breach

of an insurance contract, and statutory violations under Colorado law.

      Landmark later filed its Rule 12(c) motion for judgment on the pleadings,

arguing that the Auto Exclusion barred coverage for the claims asserted by Ms.

Tibbe. 

Specifically, Landmark contended that the Stairmaster had

not reached its place of final delivery under both the plain language of the Policy

and Colorado’s “complete operation” doctrine; thus, the process of “unloading”

was not yet complete when the accident occurred. VO opposed the motion and

later, in May 2014, filed a motion to amend its counterclaims.

      On June 13, 2014, the district court granted Landmark’s motion for

judgment on the pleadings. Landmark Am. Ins. Co. v. VO Remarketing Corp.,

No. 13–cv–1386–WJM–KMT, 

(D. Colo. June 13, 2014). The

court rejected VO’s argument that the phrase “loading or unloading” was

ambiguous and must be construed in VO’s favor. Thereafter, citing the Policy’s

language and the “complete operation” doctrine, the court agreed with Landmark

that “the accident occurred before the conclusion of the loading and unloading” of

VO’s vehicle. 

There being no disputed issues of material fact, the

court held that Landmark had no duty to defend or indemnify VO. Additionally,

and because Landmark had no duty to defend or indemnify VO, the court

dismissed VO’s counterclaims and denied its motion to amend those claims. 

VO challenges both decisions.

                                         -6-
                                     Discussion

      We review de novo the district court’s decision to grant a motion under

Fed. R. Civ. P. 12(c). Aspenwood Inv. Co. v. Martinez, 

, 1259

(10th Cir. 2004). A motion under Rule 12(c) is reviewed under the same standard

applicable to a motion under Rule 12(b)(6). 

“accept all facts

pleaded by the non-moving party as true and grant all reasonable inferences from

the pleadings in favor of the same.” Colony Ins. Co. v. Burke, 

,

1228 (10th Cir. 2012) (internal quotation marks and citation omitted). Granting a

motion for judgment on the pleadings requires the movant to establish an absence

of any issue of material fact and entitlement to judgment as a matter of law. 

Law

      1.     Duty to Defend and the Complaint Rule

      Under Colorado law, the duty to defend is broader than the duty to

indemnify. Hecla Mining Co. v. N.H. Ins. Co., 

, 1089 (Colo. 1991)

(en banc). The former duty “arises when the underlying complaint . . . alleges

any facts that might fall within the coverage of the policy.” 

seeking to defeat the duty to defend “bears the burden of establishing that the

allegations in the complaint are solely and entirely within the exclusions in the

insurance policy and that any exceptions to the exclusions do not restore

coverage.” Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 

, 829

(Colo. 2004) (en banc) (internal quotation marks and citation omitted). In other

                                         -7-
words, the “insurer must establish that there is no factual or legal basis on which

the insurer might eventually be held liable to indemnify the insured.” 

marks omitted).

      “[W]hen an insurer refuses to defend its insured, the determination of the

insurer’s duty to defend is separate from the determination of the duty to

indemnify, and is based solely on factual allegations contained in the underlying

complaint.” 

Instead of incentivizing insurers to litigate the duty to

defend, the “complaint rule” encourages insurers to provide a defense up front

and later seek reimbursement, should it turn out that no coverage exists. 

. The strictness of the rule also promotes other policies. First,

“it protects an insured’s reasonable expectation of a defense.” 

; see Pompa v. Am. Family Mut. Ins. Co., 

, 1146 (10th Cir.

2008) (“That is, the insured should not have to bear the burden of advancing the

costs of defense just because there is a possibility that future developments in the

case will establish that there is no insurance coverage.”). Second, it “prevents the

insurer from evading coverage by filing a declaratory judgment action when the

complaint against the insured is framed in terms of liability coverage

contemplated by the insurance policy.” 

. In this way, it

“prevents the insured’s defense in the underlying action from being compromised

by a declaratory-judgment action,” because the insured may be forced “to produce

evidence in the declaratory-judgment action that would subject it to liability in

                                         -8-
the underlying action.” 

.

      The insurer gets the benefit of a more lenient rule, however, when it

provides a defense under a reservation of rights and later seeks reimbursement

should it turn out there was no coverage. 

(citing 

). Under those circumstances, Colorado courts “allow[] insurers

. . . to rely on facts outside of the complaint to determine whether they could

recover costs of defense from the insured.” 

Exception

      “[T]his court has twice predicted that the Colorado Supreme Court would

recognize narrow exceptions to [the complaint] rule.” United Fire & Cas. Co. v.

Boulder Plaza Residential, LLC, 

, 960 (10th Cir. 2011) (citing

AIMCO v. Nutmeg Ins. Co., 

(10th Cir. 2010), and Pompa, 

). Only the Pompa exception is relevant in this appeal.

      In Pompa, the insured caused the death of another man and later pleaded

guilty to criminally negligent 

. The decedent’s heirs

subsequently named the insured, Mr. Pompa, as the defendant in a wrongful death

action. 

tendered the defense to his homeowner’s insurer, AFM.

to defend, however, citing the criminal-conviction exclusion in

Mr. Pompa’s policy. 

Pompa’s subsequent suit against AFM, he argued

the complaint rule “precluded the court [and AFM] from considering his

conviction for negligent homicide because the wrongful-death complaint did not

                                         -9-
allege that he had been convicted of any crime.” 

      After noting Colorado’s adherence to the complaint rule and the policy

reasons for doing so, we observed that a number of courts and commentators

recognized certain exceptions to the complaint rule:

      One widely recognized exception states that an insurer should not
      have a duty to defend an insured when the facts alleged in the
      complaint ostensibly bring the case within the policy’s coverage, but
      other facts that are not reflected in the complaint and are unrelated to
      the merits of the plaintiff’s action plainly take the case outside the
      policy coverage.

(internal quotation marks and citation omitted).

      While this exception had not been adopted by the Colorado Supreme Court,

we expressed our view that it would embrace such an exception if faced with

similar facts, so long as the policy reasons behind the complaint rule were not

undermined. Id.; see United 

. We concluded that we could

consider Mr. Pompa’s conviction, a fact extrinsic to the underlying complaint,

because it was “an indisputable fact that is not an element of either the cause of

action or a defense in the underlying litigation.” 

.

Importantly, we found that consideration of this fact would neither defeat Mr.

Pompa’s “legitimate expectations of . . . a defense,” nor prejudice his defense in

the underlying wrongful death suit. 

–48. With respect to Mr. Pompa’s

expectation of a defense, we noted that “an insured can have no reasonable

expectation of a defense when an indisputable fact, known to all parties, removes


                                        -10-
the act in question from coverage.” 

      More recently, in United Fire, we refused to broaden the scope of the

exceptions to the complaint rule. Noting that neither the Colorado Supreme Court

nor lower Colorado courts had ratified either of the exceptions recognized by this

court, we concluded that further expansion of those exceptions was unwarranted.

United 

. We therefore rejected a party’s request to expand

the exceptions “to include consideration of extrinsic evidence not necessarily

contained in another complaint, as long as the insurer had knowledge of such

evidence when it denied coverage.” 

marks omitted).

B.    Analysis

      1.      Landmark’s Motion for Judgment on the Pleadings

      This case turns on whether Landmark can establish, within the limitations

of Colorado law, that the Policy’s Auto Exclusion precludes coverage for Ms.

Tibbe’s injuries. This, in turn, requires Landmark to establish that the unloading

process was not complete at the time of the accident, because the Stairmaster was

being “moved from an . . . ‘auto’ to the place where it [was to be] finally

delivered.”

      The district court concluded that Landmark met its burden of establishing

that the Stairmaster had not been finally delivered when the accident occurred. In

reaching this conclusion, it relied on the fact that “Tibbe requested that the VO

employees deliver the Stairmaster to her second story loft.” Landmark, 2014 WL

                                         -11-
2673593, at *4. Additionally, the court relied on the “uncontested fact . . . that

VO had not finished handling the Stairmaster at the time of the [a]ccident.” 

then considered these facts in light of Colorado’s “complete operation”

doctrine, which holds that “unloading” “embraces the entire process involved in

the movement of goods from the time they are given in to the insured’s

possession until the insured has completed delivery thereof.” Titan Constr. Co. v.

Nolf, 

, 1125 (Colo. 1973) (en banc) (emphasis added). In the

district court’s view, no genuine issue of material fact existed because, when

applied to the facts above, the “complete operation” doctrine required a finding

that delivery was not yet complete when the accident occurred.

      VO challenges the district court’s conclusion on a number of grounds. Its

primary argument is that the district court failed to faithfully apply the complaint

rule. VO contends that, when the allegations of the underlying complaint are

taken as true, and only those allegations are considered, Landmark cannot prove

application of the Auto Exclusion. Aplt. Br. 16. Further, VO contends that the

district court’s application of the “complete operation” doctrine was inconsistent

with Colorado precedent. Finally, VO argues that the phrase “loading or

unloading” is ambiguous and therefore must be construed in its favor. We

address each argument below, keeping in mind that the facts must be construed in

the light most favorable to VO, and Landmark bears the burden of establishing

the Auto Exclusion’s application.

                                         -12-
      Neither party disputes that Landmark, because it refused to defend in the

Underlying Lawsuit, is bound by the facts alleged in the underlying complaint.

Seizing on this limitation, VO contends there are insufficient facts in Ms. Tibbe’s

complaint to establish the applicability of the Auto Exclusion, even under the

“complete operation” doctrine. First, VO argues that the underlying complaint

does not even allege the use of an “auto,” and therefore that element of the

exclusion cannot be shown. Second, and more important, VO contends that the

factual allegations do not establish that delivery was still in progress at the time

of the accident.

      VO’s first argument—that the district court improperly looked outside of

the complaint to determine that an “auto” was used—fails for two reasons. As an

initial matter, VO forfeited this argument by failing to properly raise it in the

district court. Richison v. Ernest Grp., Inc., 

, 1127–28 (10th Cir.

2011). The first, and only, time VO mentioned this argument was in a single

sentence in its reply brief in support of its motion to amend counterclaims. VO

never raised this argument in response to Landmark’s Rule 12(c) motion and, in

any event, has made no attempt to demonstrate plain error. See 

said, because it is Landmark’s burden to establish that the Auto

Exclusion applies, we note that even if this argument was properly before us, it

would fail. In Landmark’s complaint, it alleged that VO used a vehicle to

transport the Stairmaster to Ms. Tibbe’s home, and VO admitted that fact in its

                                         -13-
answer. For that matter, VO has never disputed that it used a vehicle to transport

the Stairmaster. It is clear to us, then, that the fact of VO’s automobile use is “an

indisputable fact that is not an element of either the cause of action or a defense

in the underlying litigation,” falling clearly within the Pompa 

. The district court’s consideration of this fact does not disturb any

reasonable expectation of a defense because VO—as operator of the

vehicle—would have known that the Auto Exclusion might apply. Additionally,

VO’s defense in the Underlying Lawsuit is not prejudiced by consideration of this

fact because the use of an automobile has no bearing on the merits of Ms. Tibbe’s

negligence claims. Thus, although the underlying complaint did not allege the

use of an automobile, the Pompa exception permitted the district court to look

outside the four corners of the complaint. 2

      VO next argues that when the allegations in the underlying complaint are

taken as true, Landmark cannot establish that delivery was still in progress when

the accident occurred. At a minimum, VO says, the facts in the complaint are

insufficient—even when coupled with the “complete operation” doctrine—to


      2
         We acknowledge, as VO points out, that no Colorado court has
recognized or ratified the exception we embraced in Pompa. See United 

(making same observation). However, unless and until some
Colorado authority disavows our holding in Pompa, we think the prudent course is
to continue to apply the exception in the narrow circumstances where it fits and
exercise caution when it comes to expanding this exception (as we did in United
Fire). In short, we reject VO’s contention that “the continued vitality of Pompa is
questionable in light of United Fire.” Aplt. Rep. Br. 15.

                                         -14-
establish that delivery was in progress. We disagree.

         VO places much emphasis on the fact that Ms. Tibbe’s complaint

repeatedly alleged that the Stairmaster had already been “delivered” when the VO

employees began to carry it up the stairs. Indeed, Ms. Tibbe’s complaint alleges

three times that VO’s employees attempted to maneuver the Stairmaster up the

stairs after the equipment “had been delivered.” In VO’s view, the district court

was required to accept this “factual allegation” and, had it done so, there would

have been no basis to conclude that delivery was ongoing. But VO’s argument is

mistaken. A court determining whether an insurer’s duty to defend has been

triggered must accept as true all facts alleged in the underlying complaint.

; 

. The same is not true of legal

conclusions. See Carolina Cas. Ins. Co. v. Pinnacol Assurance, 

, 929

(10th Cir. 2005) (“The facts alleged in a complaint, not the complaint’s legal

characterization of those facts, ordinarily control coverage.”); Gerrity Co. v.

Cigna Prop. & Cas. Ins. Co., 

, 608 (Colo. App. 1993). Here, the

district court’s task was to compare the complaint’s factual allegations against the

Auto Exclusion to determine whether those facts fell within the exclusion. A

complaint’s bare legal conclusions cannot and do not take that task away from the

court.

         We also reject VO’s assertion that there were insufficient facts in the

complaint upon which the district court could conclude that delivery had not yet

                                           -15-
been completed. VO raises two points: (1) the district court improperly relied on

extrinsic evidence to determine that Ms. Tibbe requested the Stairmaster be

delivered to the second-story loft; and (2) the underlying complaint contains no

allegations regarding the terms of delivery, the parties’ understanding of those

terms, or whether delivery and installation were separately negotiated, as two

distinct services. Aplt. Br. 15–17. We need not address whether it was proper for

the district court to consider extrinsic evidence concerning Ms. Tibbe’s request,

however, because we believe the complaint alleges sufficient facts to establish

that delivery was not yet complete under the “complete operation” doctrine.

      In Titan Construction Co. v. Nolf, 

, 1125 (Colo. 1973) (en

banc), the Colorado Supreme court adopted the “complete operation” doctrine.

As a functional matter, the rule operates to demarcate the point at which coverage

under an automobile policy ends and coverage under a general liability policy

begins. This is so because, as the cases illustrate, automobile policies usually

include coverage for damages arising out of accidents that occur during the course

of the “loading or unloading” of a vehicle, while general liability policies most

often exclude coverage for damages arising out of the “loading or unloading” of a

vehicle. Thus, to determine whether there is coverage under an automobile

policy, the inquiry under Colorado law is whether the accident occurred “during

the entire process of loading or unloading the insured vehicle from the time of

commencement of such operation until its completion.” Colo. Farm Bureau Mut.

                                        -16-
Ins. Co. v. W. Am. Ins. Co., 

, 1114 (Colo. App. 1975); see 

. Significantly, the Colorado Supreme Court adopted this

approach over a different unloading doctrine, the “coming to rest” doctrine.

. Under that doctrine, “‘unloading’ comprises only the

actual removing or lifting of the article from the loaded vehicle to the moment

when it again comes to rest.” 

Policy’s definition of “loading or unloading” includes “the

handling of property . . . [w]hile it is being moved from an . . . ‘auto’ to the place

where it is finally delivered.” 1 Aplt. App. 211. This is, in essence, an express

codification of the “complete operation” doctrine. Our inquiry, therefore, is the

same under either the Policy’s plain language or the “complete operation”

doctrine. And in this case, the facts alleged in the underlying complaint establish

that the “operation” of unloading was not complete at the time VO’s employees

lost control of the Stairmaster. The complaint’s legal conclusions aside, the facts

show that VO brought a Stairmaster to Ms. Tibbe’s home and then began the

process of maneuvering the Stairmaster to the second-story loft. It is also clear

that two VO employees were in the process of handling the Stairmaster when they

lost control of it, injuring Ms. Tibbe. On these facts, we agree with Landmark

that the complaint’s factual allegations contradict its mere legal conclusion that

the Stairmaster reached the “place where it is finally delivered.” Under both the

plain language of the Policy and the “complete operation” doctrine, the process of

                                          -17-
unloading was not complete at the time the accident occurred because VO had not

“completed delivery thereof.” 

.

      VO contends, however, that the complaint lacks sufficient information upon

which the district court or this court could conclude that delivery was not yet

complete at the time of the accident. Specifically, VO argues that the complaint

was silent as to the terms of delivery, the parties’ intent with regard to delivery,

or even the potential existence of a separate installation agreement. But merely

asserting the hypothetical existence of certain facts is insufficient to overcome a

motion for judgment on the pleadings. Once Landmark satisfied its burden under

Rule 12(c), it was incumbent on VO to point to something that tended to show an

actual dispute of fact. Perhaps VO could have accomplished that by alleging, in

response to Landmark’s complaint, the existence of a separate agreement or a VO

policy of delivering only to the front door. Instead of doing so, however, VO

either admitted all of Landmark’s material allegations or countered with the same

legal conclusion asserted in the underlying complaint. Thus, as we explained just

above, there were sufficient facts on which the district court could conclude that

delivery was still in progress, and VO did nothing to counter that conclusion.

      We also find no merit in VO’s remaining arguments. The gravamen of

VO’s next argument is that the “complete operation” doctrine is only used to

expand coverage, not to foreclose it. While some cases, like Titan, have applied

the doctrine to afford coverage under an automobile insurance policy, the

                                         -18-
doctrine’s role is not to blindly expand insurance coverage in every occasion. As

explained above, the doctrine distinguishes between coverage under an auto

policy and coverage under a general liability policy. For example, in Colorado

Farm Bureau, application of the doctrine meant that coverage was afforded under

the insured’s auto policy but, by virtue of that finding, coverage was excluded

under the “loading and unloading” clause of the insured’s homeowner’s 

.

      Finally, we reject VO’s argument that the phrase “loading or unloading” is

ambiguous and therefore must be construed in its favor. First, Colorado’s

adoption of the “complete operation” doctrine—borne of an interpretation of

“loading or unloading”—functions to negate any ambiguity that might have

otherwise existed in the phrase. Indeed, none of Colorado’s “complete operation”

cases that have addressed that phrase have suggested that it is ambiguous. 3

Second, the Policy further defines “loading or unloading” to include “the handling


      3
         Although agreeing that “our unloading inquiry is the same under either
the Policy’s definition of ‘loading or unloading’ or the ‘complete operation’
doctrine,” the dissent criticizes our conclusion that the “complete operation”
doctrine negates any ambiguity that might have otherwise existed in Policy’s
relevant language. But the rule is the product of the Colorado Supreme Court’s
interpretation of the phrase “loading or unloading,” see 

,
and it would be strange indeed to conclude that the interpretation itself is
ambiguous. Moreover, the phrase ought to applied in a functional manner, rather
than by seeking ambiguities. This functional approach is warranted by the rule,
which clearly embraces “the entire process of loading or unloading . . . from the
time of commencement of such operation until its completion.” Colorado Farm

.

                                        -19-
of property . . . [w]hile it is being moved from an aircraft, watercraft or ‘auto’ to

the place where it is finally delivered.” 1 Aplt. App. 211. Common definitions of

“final” include “coming at the end,” “being the last in a series, process, or

progress,” and “of or relating to the ultimate purpose or result of a process.”

Final, Merriam Webster Online Dictionary, http://www.merriam-

webster.com/dictionary/final (last visited June 10, 2015). These definitions

comport with the common understanding of the word “final,” an understanding

that is inconsistent with VO’s theory of ambiguity.

      Accordingly, we agree with the district court that Landmark was entitled to

judgment on the pleadings. 4

      2.     Dismissal of VO’s Counterclaims & Denial of Motion to Amend

      The district court also dismissed VO’s counterclaims against Landmark for

breach of contract, bad faith breach of an insurance contract, and violations of

Colorado statute. It similarly denied VO’s motion to amend those counterclaims.

The court reasoned that, because there was no duty to defend or indemnify,

Landmark could not have breached its contractual obligations or acted in bad


      4
         The dissent concedes that its alternative ground for reversing the district
court—that there was no casual connection between the use of an auto and Ms.
Tibbe’s injuries—was not raised in either the district court or on appeal. Of
course, arguments not raised below ordinarily will not be addressed in the first
instance on appeal. Richison, 

, 1127–28 (10th Cir. 2011).
Moreover, a party is responsible for establishing plain error in such
circumstances. 

Suffice it to say that we find no special
circumstances that would warrant an exception to these rules.

                                         -20-
faith. Landmark, 

, at *5 (citing Berry & Murphy, P.C. v.

Carolina Cas. Ins. Co., 

, 815 (10th Cir. 2009)).

      VO’s sole argument here is that, should this court reverse the district court

on the Rule 12(c) motion, it should also reverse on the amendment issue. Aplt.

Br. 25. Because we now affirm the district court’s decision to grant Landmark’s

motion for judgment on the pleadings, we also affirm its decisions to dismiss

VO’s counterclaims and deny its motion to amend such claims.

      AFFIRMED.


                                       Entered for the Court


                                       Paul J. Kelly, Jr.
                                       Circuit Judge




                                        -21-
Landmark Ins. v. VO Remarketing, No. 14-1270

EBEL, J., dissenting

       I agree with the majority in many respects. For instance, I agree that this case

turns on whether Landmark can establish that the Policy’s auto exclusion applies—i.e.,

whether Landmark can establish that the unloading process was not complete at the time

of the accident because the Stairmaster was still “being moved from . . . an ‘auto’ to the

place where it [was to be] finally delivered.” Maj. Order 11. I also agree that the district

court did not violate the complaint rule, 

that Colorado’s “complete

operation” doctrine is not limited to cases where its application would expand coverage,

and that our unloading inquiry is the same under either the Policy’s

definition of “loading or unloading” or the “complete operation” doctrine, 

       Despite these many points of agreement, I nonetheless write separately because I

disagree with the majority’s dispositive conclusion that Landmark met its burden of

establishing that the allegations in Ms. Tibbe’s underlying complaint are solely and

entirely within the auto exclusion because the unloading process was not complete at the

time of the accident. 

Unlike the majority, I think Landmark failed to

establish that Ms. Tibbe’s injuries fall exclusively within the auto exclusion because the

terms “place” and “finally delivered”—which appear in the Policy’s definition of

“loading or unloading”—are ambiguous and therefore must be construed in favor of VO.

1 Aplt. App. 211. When so construed, it is possible that the unloading process was

complete at the time of Ms. Tibbe’s accident, which would render the Policy’s auto
exclusion inapplicable. Because the mere possibility of coverage is sufficient to defeat

Landmark’s motion for judgment on the pleadings, I would reverse on this basis alone.

       However, even if the unloading process was not complete at the time of the

accident, as the majority concludes, I think reversal is warranted for yet another reason—

i.e., the absence of a causal relationship between VO’s “use” of an auto and Ms. Tibbe’s

injuries. For the Policy’s auto exclusion to apply, Landmark must demonstrate not only

that an auto was in “use” in the sense that the unloading process was not complete, but

also that Ms. Tibbe’s injuries “ar[ose] out of” that use. 

. To satisfy this

causation standard under Colorado law, Landmark must demonstrate both a “but for”

connection between the use of an auto and Ms. Tibbe’s injuries, and an unbroken causal

chain between the use and the injuries. In my view, VO’s attempt to maneuver the

Stairmaster up the stairs of Ms. Tibbe’s home broke the causal chain, rendering the

Policy’s auto exclusion inapplicable. Accordingly, I would reverse for the additional

reason that causation is lacking.

                                        I. Discussion

       At the highest level of generality, this appeal is about whether the district court

correctly concluded that Landmark—an insurer—is entitled to judgment on the

pleadings. We review the district court’s grant of a motion for judgment on the pleadings

de novo, accepting “all facts pleaded by the non-moving party as true and grant[ing] all

reasonable inferences from the pleadings in favor of the same.” Colony Ins. Co. v.

Burke, 

, 1228 (10th Cir. 2012). “A motion for judgment on the pleadings

should not be granted unless the moving party has clearly established that no material
                                              2
issue of fact remains to be resolved and the party is entitled to judgment as a matter of

law.” 

and quotation marks omitted).


       Importantly, in determining whether Landmark, as the moving party, is entitled to

judgment as a matter of law, we must take into account the “heavy burden” that

Landmark bears under Colorado law as an insurer seeking to avoid its duty to defend.

United Fire & Cas. Co. v. Boulder Plaza Residential, LLC, 

, 957 (10th Cir.

2011) (quoting Hecla Min. Co. v. N.H. Ins. Co., 

, 1089 (Colo. 1991)). As

we have previously explained, the “actual liability of the insured to the claimant is not the

criterion which places upon the insurance company the obligation to defend.” 

“insurer has a duty to defend unless the insurer can establish that the

allegations in the [underlying] complaint are solely and entirely within the exclusions in

the insurance policy.” 

       Thus, Landmark is not excused from its duty to defend VO—and therefore is not

entitled to judgment on the pleadings—unless Landmark can establish that “there is no

factual or legal basis” upon which it “might eventually be held liable to indemnify” VO.

(further explaining that an insurer must accept the defense of a

claim when the underlying complaint against the insurer alleges any facts that might fall

within the coverage of the policy). Unlike the majority, I believe that Landmark failed to

establish that the allegations in Ms. Tibbe’s complaint fall exclusively within the auto

exclusion for two reasons, either one of which warrants reversal.




                                             3
          a. In light of the factual allegations in Ms. Tibbe’s underlying complaint,
             it is possible that the unloading process was complete at the time of the
             accident because the Policy’s terms “place” and “finally delivered” are
             susceptible to more than one reasonable interpretation.


       In order for Landmark to meet its burden of establishing that the allegations in Ms.

Tibbe’s underlying complaint fall exclusively within the auto exclusion, Landmark must

establish that, among other things, see infra 7–8, an auto was in “use” at the time of the

accident. This requirement flows directly from the language of the Policy, which

provides that Landmark has no duty to defend VO against suits seeking damages for

bodily injury or property damage “arising out of” the “use” of any “auto” operated by any

insured. 1 Aplt. App. 201. The Policy defines “use” to include “loading or unloading,”

and it further defines “loading or unloading” to include “the handling” of property . . .

[w]hile it is being moved from an . . . ‘auto’ to the place where it is finally delivered.” 

, 211. The Policy does not define “place” or “finally delivered.”


       Emphasizing that Ms. Tibbe’s underlying complaint alleged that the VO

employees “were in the process of handling the Stairmaster when they lost control of it,”

the majority concludes that “the process of unloading was not complete at the time of the

accident” because “VO had not completed delivery” of the machine. Maj. Order 17–18

(internal quotation marks omitted). The problem with this analysis, however, is that it

improperly assumes the process of unloading the Stairmaster was necessarily not

complete so long as the machine was being handled by VO. Such an assumption,

however, fails to address the Policy’s definition of “loading or unloading,” which treats

“the handling of property” as a condition precedent that triggers the definition of “loading
                                              4
or unloading” if such handling also occurs “While [the property] is being moved from

an . . . ‘auto’ to the place where it is finally delivered.” 1 Aplt. App. 211 (emphasis

added).


       Thus, to conclude, as the majority does, that the unloading process was not

complete at the time of the accident, VO’s handling of the Stairmaster must have

occurred before the machine reached the “place” where it was to be “finally delivered.”

To determine whether VO’s handling occurred in this way, we must construe the

meaning of the terms “place” and “finally delivered,” which are not defined in the Policy.

See Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 

, 819–20 (Colo.

2004) (explaining that courts apply principles of contract interpretation when construing

insurance policies and specifying that where, as here, there is no evidence that the parties

intended something different at the time of drafting, courts should give words their plain

and ordinary meaning).


       Webster’s defines “place” to mean a “specific locality,” Webster’s Third

International Dictionary 1727 (3d. ed. 1986), and “locality” is itself defined as “a

particular spot, situation, or location.” 

Webster’s further defines “finally” to

mean “the last act or occurrence in a series,” 

and “deliver” to mean “give,

transfer: yield possession or control of,” 

“Control” is itself defined as “have

power over” or “power or authority to guide or manage.” 

Reading these

definitions together and in the context of this case, the terms “place” and “finally




                                              5
delivered” are ambiguous because they are susceptible to more than one reasonable

interpretation.1 See 

.


       On the one hand, these terms could reasonably be understood to mean that the

process of unloading the Stairmaster was not complete at the time of the accident

because: (1) the machine fell before it reached the second-story loft of Ms. Tibbe’s home,

the “specific locality” or “particular spot” to which the machine was to be finally

delivered; and (2) VO had physical “power over” the machine immediately before it fell,

meaning that VO had not yet yielded control of the machine. On the other hand,

however, these terms could also reasonably be understood to mean that the process of

unloading the Stairmaster was complete at the time of the accident because: (1) the

machine fell after arriving inside Ms. Tibbe’s home, the “particular location” to which

1
  The majority reaches the opposite conclusion, emphasizing that (1) the mere existence
of the “complete operation” doctrine “functions to negate any ambiguity that might have
otherwise existed in the phrase,” and (2) common definitions of “final” comport with “the
common understanding of the word ‘final.’” Maj. Order 19–20, 19 n.3. I find both of
these points unpersuasive. With respect to the first point, although the majority
accurately notes that the Colorado Supreme Court interpreted the phrase “loading and
unloading” when it adopted the complete operation doctrine in Titan Construction Co. v.
Nolf, the Titan court did not explain what it meant for an insured to have “completed
delivery” of goods under that doctrine. See 

, 1124–25 (Colo. 1973)
(rejecting the court of appeals’ conclusion that unloading was completed when cement
came to rest in the hopper even though more cement was to be unloaded from the truck
and explaining that unloading had not ceased under either the complete operation
doctrine or the coming to rest doctrine). Because the Titan court did not substantively
address the “completed delivery” language it used to describe the complete operation
doctrine, language which tracks the Policy’s “finally delivered” language, it is unclear
how Titan sheds any additional light on the Policy terms at issue here. And, with respect
to the second point, it is unclear why the majority’s observation regarding the word
“final” itself establishes the absence of ambiguity when the phrase at issue here contains
two other operative words (e.g., “place” and “delivered”).

                                             6
the machine was to be finally delivered; and (2) Ms. Tibbe had “authority to guide or

manage” how and where VO maneuvered the machine once it arrived inside her home,

meaning that VO had yielded control of the machine.


       Because the language in the Policy is susceptible to more than one reasonable

interpretation, it “must be construed in favor of the insured and against the insurer who

drafted the policy.” 

Construing this language in favor of VO, I would

conclude that it is possible that the unloading process was already complete at the time of

the accident, thereby rendering the Policy’s auto exclusion inapplicable. Because the

mere possibility of coverage is sufficient to defeat Landmark’s motion for judgment on

the pleadings, United 

(explaining that an insurer seeking to avoid its

duty to defend must establish that there is no factual or legal basis upon which it might

eventually be liable), I would reverse.


          b. Ms. Tibbe’s injuries did not “aris[e] out of” the “use” of an “auto”
             because VO broke the causal chain when it attempted to maneuver the
             Stairmaster up the stairs.


       Even assuming that the unloading process was not yet complete at the time of the

accident, as the majority concludes, I would reverse for yet another reason—i.e., the

absence of a causal relationship between the auto VO used to transport the Stairmaster

and the injuries Ms. Tibbe sustained inside her home. Importantly, the Policy’s auto

exclusion does not operate indiscriminately to bar coverage for all injuries sustained

within spitting distance of an auto; rather, it bars coverage for injuries only arising out of

the use of an auto. 1 Aplt. App. 201. Thus, to meet its burden of proving that Ms.

                                              7
Tibbe’s injuries fall entirely within the Policy’s auto exclusion, Landmark must

demonstrate not only that an auto was in “use” at the time of the accident in the sense that

the unloading process was not complete, but also that Ms. Tibbe’s injuries were causally

related to that use.


       Although the Policy does not define “arising out of,” binding Colorado case law

does. In Titan Construction Co. v. Nolf, the Colorado Supreme Court considered

whether injuries a driver sustained while discharging cement from a cement-truck were

covered by an automobile insurance policy that contained similar “arising out of”

language. 

, 1124 (Colo. 1973). Concluding that the driver’s injuries were

indeed causally related to the cement truck, the court adopted a but-for test of causation

that “is satisfied if the accident would not have occurred except for the unloading of the

insured vehicle.” 

Since Titan, the Colorado Supreme Court has adhered to

this but-for test and further clarified that its precedents interpreting the phrase “arising

out of the use” in many different settings require “not only a ‘but for’ connection between

the ‘use’ of the vehicle and the claimant’s injury, but also an unbroken causal chain

between that use and the injury.” State Farm Mut. Auto. Ins. Co. v. Kastner, 

, 1260–61, 1264 & n.4 (Colo. 2003) (emphasis added). Thus, even where but-for

causation exists, the causal chain between the use of the vehicle and the injury may be

broken by an “independent significant act or non-use of the vehicle.” 

       In light of this controlling Colorado law, I would conclude that the requisite causal

connection is lacking here. Evening assuming that there is a “but for” connection linking

                                               8
VO’s “use” of an auto (which, per the Policy, encompasses the unloading process) to the

injuries Ms. Tibbe sustained inside her home, causation is nonetheless lacking because

the causal chain was broken the moment that the two VO employees began the

“independent significant act” of maneuvering the Stairmaster up the stairs of Ms. Tibbe’s

home. This act—which would have been performed in the same manner whether VO had

used an auto to transport the Stairmaster to Ms. Tibbe’s home or a Radio Flyer wagon—

renders the auto exclusion inapplicable.2


       Admittedly, VO did not argue lack of causation either before the district court or

on appeal. And although we typically will not raise sua sponte such arguments, see

United States v. Abdenbi, 

, 1290 (10th Cir. 2004), I would be inclined to

exercise our discretion to do so here, see Singleton v. Wulff, 

, 121 (1976).

As the insurer seeking to avoid its duty to defend, Landmark bears the burden of

establishing that the allegations in Ms. Tibbe’s underlying complaint fall solely and

entirely within the Policy’s auto exclusion. Because the phrase “arising out of” requires

an unbroken causal chain between VO’s use of an auto and Ms. Tibbe’s injuries,

2
  By concluding that Landmark established that the auto exclusion bars coverage of Ms.
Tibbe’s injuries, the majority not only fails to acknowledge the Policy’s causation
requirement or to explain why this requirement is met, but also overlooks the reasonable
expectations of insureds. See Bailey v. Lincoln Gen. Ins. Co., 

, 1048–49
(Colo. 2011) (explaining that “the reasonable expectations of insureds” can succeed over
exclusionary policy language “where an ordinary, objectively reasonable person would,
based on the language of the policy, fail to understand that he or she is not entitled to the
coverage at issue”). In my view, an objectively reasonable person would fail to
understand that the Policy’s auto exclusion bars from coverage bodily injury and property
damage that (1) was sustained inside a home, and (2) would have occurred in precisely
the same manner regardless of whether an auto was used. See 

simply cannot satisfy its heavy burden. This case thus presents one of those

unique circumstances where we would be “justified in resolving an issue not passed on

below” because “injustice” to VO will surely result where, as here, Landmark’s failure to

satisfy its heavy burden “is beyond any doubt.”3 

       Contrary to the majority, I do not think Landmark has met its heavy burden of

establishing that it is entitled to judgment on the pleadings. Accordingly, I would reverse

the district court’s order granting Landmark’s motion for judgment on the pleadings and

remand for further proceedings.4




3
  Of course, I recognize how unusual it is for this Court to address an argument not raised
by a party. Doing so here, even if in a dissent, ensures that future litigants, unaware that
VO failed to challenge causation, do not misinterpret the majority’s analysis as reading
the causation requirement out of policies that, like the Policy here, tether coverage or
exclusions from coverage to injuries “arising out of” specific circumstances.
4
  It follows that I would also reverse the district court’s summary denial of Appellants’
motion to amend counterclaims.

                                            10