Green Earth Wellness Ctr., LLC v. Atain Specialty Ins. Co.

Brief Fact Summary.

Plaintiffs had a commercial insurance agreement with Defendants. Plaintiffs made a claim with Defendants, due to the damage to its marijuana plants used in Plaintiff’s business. Defendant’s denied the claim on the grounds that the insurance policy excluded coverage of contraband.

Synopsis of Rule of Law.

To survive a motion for summary judgment on the grounds that a claim is a violation of both state and federal law, the moving party must prove that there is no genuine issue of material fact that the claim is in violation of both laws.

Facts.

Green Earth, a retail medical marijuana business in Colorado Springs, attained commercial insurance for its business from Atain, which became effective on June 29, 2012.  On June 23, a wildfire started just outside of Colorado Springs. Several days later, the wildfire advanced toward Green Earth. Although the wildfire did not directly affect Green Earth, Green Earth contends that the smoke and ash that derived from the fire cause damage to its ventilation system, eventually damaging its plants. November 2012, Green Earth made a claim under the insurance policy to Atain. Atain denied the claim on the grounds that the policy expressly excluded coverage for contraband and it was void as against public policy. Attain moves for summary judgment.

Issue.

Whether, in light of both federal and state law, Atain’s denial of Green Earth’s claim can survive a motion for summary judgment for a breach of contract.

Held.

No, Attain’s denial of Green Earth’s claim, under both federal and state law, cannot survive a breach of contract claim under a motion for summary judgment.

Discussion.

The insurance policy at hand, between Green Earth and Atain, excludes coverage of “[c]ontraband, or property in the course of illegal transportation or trade.†Although the policy does not define “contraband,†the court found that the ordinary meaning of the term is “goods or merchandise whose importation, exportation, or possession is forbidden.†Moreover, the court agrees with Atain that possession of marijuana for distribution is a federal crime. However, Atain solely points to the federal statute and does not assert whether Green Earth’s operation violates Colorado law. Therefore, due to Atain neglect to assert that Green Earth’s operation was a violation of Colorado law, the court finds that there is a genuine issue of material fact and denies Atain’s motion for summary judgment.