                                                                     FILED
                                                         United States Court of Appeals
                               PUBLISH                           Tenth Circuit

               UNITED STATES COURT OF APPEALS                   May 22, 2018

                                                            Elisabeth A. Shumaker
                     FOR THE TENTH CIRCUIT                      Clerk of Court
                   _________________________________

EVANSTON INSURANCE
COMPANY,

      Plaintiff-Appellee,

v.                                              No. 16-1464

LAW OFFICE OF MICHAEL P.
MEDVED, P.C.; MICHAEL P.
MEDVED,

      Defendants-Appellants.
                  _________________________________

             Appeal from the United States District Court
                     for the District of Colorado
                   (D.C. No. 1:14-CV-02905-NYW)
                  _________________________________

Damian J. Arguello, Colorado Insurance Law Center, Westminster,
Colorado (Bradley A. Levin, Levin Sitcoff PC, Denver, Colorado, with him
on the briefs), for Defendants-Appellants.

M. Courtney Koger, Kutak Rock LLP, Kansas City, Missouri (Elayna Fiene
and Linda J. Knight, Wilson Elser Moskowitz Edelman & Dicker, Denver
Colorado, on the brief), for Plaintiff-Appellee.
                    _________________________________

Before TYMKOVICH, Chief Judge, BACHARACH, and MORITZ,
Circuit Judges.
                _________________________________

BACHARACH, Circuit Judge.
               _________________________________
      This appeal involves the extent of a duty to defend under a

“professional services” policy of liability insurance issued to a law firm

(The Law Office of Michael P. Medved, P.C.). The extent of this duty came

into play when the law firm was confronted with allegations of overbilling.

The insurer (Evanston Insurance Company) defended the law firm under a

reservation of rights but ultimately concluded that the allegations of

overbilling fell outside the law firm’s coverage for professional services.

The law firm disagrees with this conclusion; the district court agreed with

the insurer, and we do too.

1.    The Medved firm faced allegations of overbilling.

      Mr. Michael Medved is a Colorado attorney who has handled

foreclosures. When foreclosing on properties, he billed his attorney fees

and costs to his firm’s clients, which were lenders and investors.

Ultimately, however, the attorney fees and costs were passed on to the

property owners (or buyers, if the property was resold).

      In 2012, the Colorado Attorney General began investigating Mr.

Medved and other foreclosure attorneys, questioning whether they had

overbilled. When the investigation became public, a group of property

owners brought a class action against Mr. Medved and his law firm for

overbilling.




                                      2
2.   Mr. Medved submitted a claim under his liability policy.

     At the time, the Medved firm had a liability policy with Evanston

that covered professional services. Based on this policy, Mr. Medved

informed Evanston that he and his firm had been sued in a class action, and

Evanston assumed defense of the suit “subject to a reservation of rights.”

Appellants’ App’x at 319. But Evanston waited roughly ten more months to

explain why it was reserving its rights to contest coverage. With this

eventual explanation, Evanston continued to defend Mr. Medved and his

firm until they settled with the property owners.

     While the class action was being litigated, Mr. Medved periodically

updated Evanston on the Colorado Attorney General’s investigation. These

updates informed Evanston that the Colorado Attorney General had twice

subpoenaed Mr. Medved. Aware of the subpoenas, Evanston declined to

decide whether a potential suit by the Colorado Attorney General would be

covered, viewing such a decision as premature until Mr. Medved received a

complaint.

     The investigation culminated with the Colorado Attorney General’s

initiation of a suit against Mr. Medved and his firm. Following the

provision of a draft complaint, Evanston agreed to defend under a

reservation of rights. But Mr. Medved settled with the Colorado Attorney

General for $1 million, obviating any need for a defense.



                                      3
3.    Evanston obtained summary judgment.

      Evanston sued Mr. Medved and his firm for

           declaratory relief, stating that the Medved firm’s professional-
            services policy did not cover either the class action or the
            Colorado Attorney General’s investigation and

           reimbursement of attorney fees and costs incurred in defending
            the class action.

Mr. Medved and his firm filed counterclaims against Evanston for breach

of the insurance contract and bad faith.

      Evanston moved for summary judgment on all claims and

counterclaims. The district court granted the motion, concluding that

           Evanston had no duty to defend the class action because the
            allegations had pertained only to billing practices, which were
            not “professional services,”

           Evanston was not estopped from asserting coverage defenses
            for the class action because estoppel cannot create insurance
            coverage,

           Evanston had no duty to defend the Colorado Attorney
            General’s investigation because (1) no “claim” could arise until
            Mr. Medved or his firm had received a written demand for
            monetary damages and (2) the allegations had pertained only to
            billing practices,

           Mr. Medved and his firm’s counterclaims for bad faith failed
            because there was no coverage under the policy, and

           Evanston was entitled to reimbursement of defense fees and
            costs.

      Mr. Medved and his firm appeal, arguing that the district court erred

on four issues:

                                      4
     1.    Did the class action and Colorado Attorney General’s
           investigation arise from alleged wrongful acts or omissions in
           the performance of “professional services”?

     2.    Had Evanston incurred a duty to defend against the Colorado
           Attorney General’s investigation before Mr. Medved received a
           draft complaint?

     3.    Was Evanston estopped from asserting coverage defenses for
           the class action?

     4.    Would Mr. Medved and his firm’s bad-faith counterclaims fail
           as a matter of law if there was no coverage under the policy?

4.   Standard of Review

     We review de novo the district court’s grant of summary judgment.

Dullmaier v. Xanterra Parks & Resorts, 883 F.3d 1278, 1283 (10th Cir.

2018). Summary judgment is appropriate if “there is no genuine dispute as

to any material fact” and the party moving for summary judgment is

“entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

     We consider the availability of summary judgment against the

backdrop of the forum state’s substantive law. See Pepsi-Cola Bottling Co.

of Pittsburg, Inc. v. PepsiCo, Inc., 431 F.3d 1241, 1255 (10th Cir. 2005).

Because the suit was filed in the District of Colorado, we apply Colorado’s

substantive law. If the Colorado Supreme Court has not decided an issue,

“our task is to predict how it would rule.” United States v. Badger, 818

F.3d 563, 568 (10th Cir. 2016).




                                      5
5.    Evanston had no duty to defend Mr. Medved or his firm.

      Mr. Medved and his firm argue that the policy required Evanston to

defend against the class action and the Colorado Attorney General’s

investigation. We disagree. The policy did not create a duty to defend

because the allegations had arisen from billing practices, not professional

services.

      A.    Focus on the Claimants’ Allegations

      “An insurer’s duty to defend arises when the underlying complaint

against the insurer alleges any facts that might fall within the coverage of

the policy.” Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1089 (Colo.

1991) (en banc). To determine whether Evanston had a duty to defend, we

consider whether the property owners and Colorado Attorney General

“state[d] a claim which [was] potentially or arguably within the policy

coverage.” Id. (quoting City of Willoughby Hills v. Cincinnati Ins. Co., 458

N.E.2d 555, 558 (Ohio 1984)). If so, the insurer incurred a duty to defend

Mr. Medved and his firm. See id.

      B.    The Policy Language and Allegations of Overbilling

      The policy covered damages arising from a claim only if it pertained

to “Professional Services.” Appellants’ App’x at 95. “Professional

Services” are defined as “those services performed by the ‘Insured’ for

others . . . as a lawyer . . . .” Id. at 97–98. The district court determined



                                        6
that the policy definition of “Professional Services” had not covered the

allegations of overbilling. We agree.

      We considered a similar issue in Zurich American Insurance Co. v.

O’Hara Regional Center for Rehabilitation, 529 F.3d 916 (10th Cir. 2008).

There we applied Colorado law and held that a medical provider’s billing

practices did not fall within an insurance policy’s coverage for

professional services. O’Hara, 529 F.3d at 920, 924–26; see also Cohen v.

Empire Cas. Co., 771 P.2d 29, 31 (Colo. App. 1989) (holding that an

attorney’s failure to pay business expenses does not fall within an

insurance policy’s coverage for professional services).

      Mr. Medved and his firm argue that the allegations involved not only

billing practices but also “an integral part of [the Medved firm’s]

Professional Services to lender clients to enforce their contractual right of

recovery.” Appellants’ Opening Br. at 27. For this argument, Mr. Medved

and his firm point to the rights of lenders and investors to obtain

reimbursement for what they had paid the Medved firm. According to Mr.

Medved and his firm, their billings provided lenders and investors with the

documentation required for reimbursement.

      Mr. Medved and his firm forfeited this argument by failing to raise it

in district court. See Ave. Capital Mgmt. II, L.P. v. Schaden, 843 F.3d 876,

884–85 (10th Cir. 2016). We have discretion to consider forfeited

arguments under the plain-error standard; but Mr. Medved and his firm

                                        7
have not requested plain-error review, which “surely marks the end of the

road” for the new argument. Richison v. Ernest Grp., Inc., 634 F.3d 1123,

1131 (10th Cir. 2011).

      Even if we were to consider the new argument, it would fail as a

matter of law. In the class action and Colorado Attorney General’s

investigation, the alleged “wrongful act” consisted only of billing too

much; there were no allegations that the Medved firm had impaired the

rights of lenders and investors to reimbursement. Consequently, the

allegations arose solely from billing practices, which are not “professional

services.”

      Mr. Medved stated under oath that all of the claims in the class

action related to overbilling:

      Q.     . . . . Irrespective of the title of the cause of action, is it
             your understanding that [the claims in the class-action]
             all relate to this same alleged overbilling practice?

      A.     Yeah. Practices, I guess. Yeah.

      Q.     There weren’t other allegations of something you might
             have done improperly?

      A.     No. They’re all related to charges.

Appellants’ App’x at 264; see also id. at 231–32 (Mr. Medved’s testimony

that “overall their allegation [in the class action] was is [sic] that we

overcharged for fees”); id. at 222–23 (Mr. Medved’s testimony that “[a]ll

that [the plaintiffs in the class action] complained about was the amount


                                        8
that we were charging”). Similarly, Mr. Medved acknowledged under oath

that the Colorado Attorney General’s allegations involved “overcharging.”

Id. at 252; see also id. at 236 (Mr. Medved acknowledging that the

Colorado Attorney General’s allegations involved “an overbilling issue”).

      C.    The Effect of the Policy Phrase “By Reason Of”

      Mr. Medved and his firm also argue that the insurance policy

broadened coverage to include billing practices by using the phrase “by

reason of,” which required only “basic, direct causation and nothing

more.” Appellants’ Opening Br. at 28. But even if this interpretation were

correct, the policy would not have covered the overbilling allegations.

      The policy covered any damages incurred “as a result of a ‘Claim’

. . . by reason of a ‘Wrongful Act’ in the performance of or failure to

perform ‘Professional Services’ by the ‘Insured.’” Appellants’ App’x at 95

(emphasis added). The phrase “by reason of” connects the “Claim” to the

“Wrongful Act.” But coverage was absent because

           the alleged wrongful act (overbilling) lacked the required
            connection to professional services rather than the claim itself,
            and

           the “by reason of” phrase does not create a connection between
            the wrongful act and the professional services.

Therefore, it does not matter how a court interprets the phrase “by reason

of.” However this phrase is interpreted, the claims in the class action and




                                      9
Colorado Attorney General’s investigation would have related only to

billing practices, which are not professional services.

      Mr. Medved and his firm downplay the lack of a connection between

the claims and professional services, treating the phrase “by reason of” as

the equivalent of the phrase “arising out of.” Under this approach, the

overbilling claims arose out of the professional service of documenting the

fees and costs for foreclosure.

      This approach was rejected in Cohen v. Empire Casualty Co., 771

P.2d 29 (Colo. App. 1989). There an insurance policy covered claims

“‘arising out of’” an attorney’s professional services. Cohen, 771 P.2d at

30 (quoting the insurance policy). Interpreting the policy, the Colorado

Court of Appeals held that a claim involving a failure to pay the fees of

another attorney had not arisen out of professional services. Id. at 31. For

this holding, the court reasoned that an attorney’s expenses are incidental

to the attorney’s “business” and do not involve “legal advice or assistance

to others in his professional capacity as a lawyer.” Id. (emphasis in

original).

      Cohen was issued by the state’s intermediate appellate court rather

than the state’s highest court. But when we apply state law, we follow the

opinions of an intermediate state appellate court unless “‘convinced by

other persuasive data that the highest court of the state would decide

otherwise.’” Dullmaier v. Xanterra Parks & Resorts, 883 F.3d 1278, 1283–

                                     10
84 (10th Cir. 2018) (quoting Stickley v. State Farm Mut. Auto. Ins. Co.,

505 F.3d 1070, 1077 (10th Cir. 2007)).

         We would expect the Colorado Supreme Court to follow the approach

set out in Cohen. Under this approach, the claims against Mr. Medved and

his firm arose out of their billing practices, not their professional services.

The policy therefore did not cover either the class action or the Colorado

Attorney General’s investigation, and Evanston had no duty to defend in

either of these matters. 1

    6.   Evanston is not estopped from denying a duty to defend.

         Mr. Medved and his firm also contend that Evanston’s failure to

make an effective reservation of rights estopped Evanston from asserting

coverage defenses for the class action. We reject this contention based on

the absence of prejudice.




1
     Mr. Medved and his firm make two other arguments relating to the
Colorado Attorney General’s investigation:

         1.   The district court erred in concluding that Evanston had not
              incurred a duty to defend before Mr. Medved received the draft
              complaint.

         2.   The district court also erred because the Colorado Attorney
              General’s investigation and the class action had been
              intertwined.

We need not address these arguments because the insurance policy did not
otherwise cover either the investigation or the class action. Accordingly,
Evanston had no duty to defend in either matter.
                                       11
     An insurer must raise or reserve “all defenses within a reasonable

time after learning of such defenses, or those defenses may be deemed

waived or the insurer may be estopped from raising them.” U.S. Fidelity &

Guar. Co. v. Budget Rent-A-Car Sys., Inc., 842 P.2d 208, 210 n.3 (Colo.

1992) (en banc) (dicta). But estoppel usually cannot create coverage for

risks falling outside of the insurance policy. Hartford Live Stock Ins. Co.

v. Phillips, 372 P.2d 740, 742 (Colo. 1962). An exception to this limitation

on estoppel exists upon proof of three facts:

     1.    The insurer knew of the noncoverage.

     2.    The insurer assumed defense of the action without a reservation
           of rights.

     3.    The insured relied to its detriment on the insurer’s defense.

Mgmt. Specialists, Inc. v. Northfield Ins. Co., 117 P.3d 32, 37–38 (Colo.

App. 2004). Mr. Medved and his firm argue that these requirements are met

here, estopping Evanston from denying a duty to defend the class action.

We disagree. Even if Evanston had failed to reserve its rights when

assuming the defense, there was no evidence of prejudice.

     In urging prejudice, Mr. Medved and his firm contend that they could

have settled earlier or used a different attorney if they had known that

Evanston would assert coverage defenses. These contentions rest on

speculation.




                                     12
      Evanston initially agreed to defend under a “reservation of rights”

without explaining the reasons for the reservation. Appellants’ App’x at

319. Over nine months later, Evanston sent Mr. Medved a reservation-of-

rights letter that supplied these reasons. In light of this delay, Mr. Medved

and his firm contend that Evanston failed to properly reserve its rights.

Even if we were to credit this contention, the initial reservation-of-rights

letter had disclosed that Evanston was preserving its right to challenge the

existence of a duty to defend.

      Mr. Medved and his firm suggest that this disclosure had been

useless without an explanation. But Mr. Medved and his firm obtained that

explanation from the second, more detailed reservation-of-rights letter

months before the start of any settlement talks. Following the second

letter, the property owners initially offered to settle for $1.2 million,

which Mr. Medved admittedly would have rejected. Roughly two months

later, the property owners lowered their offer to $300,000, which Mr.

Medved also admittedly would have rejected. The case settled roughly

eight months later for $16,250.

      All settlement negotiations occurred after Mr. Medved knew the

details of Evanston’s coverage position, and there is no evidence that the

parties could have agreed on a settlement amount before Mr. Medved

obtained Evanston’s explanation for its reservation of rights. Thus, Mr.

Medved and his firm failed to create a genuine issue of material fact

                                      13
regarding prejudice from the inability to secure an earlier settlement. See

St. Paul Mercury Ins. Co. v. Am Bank Holdings, Inc., 819 F.3d 728, 739

(4th Cir. 2016) (holding as a matter of law that the insured did not show

prejudice because its alleged loss of a settlement opportunity was

speculative).

     Mr. Medved and his firm also contend that they might have hired

different counsel if they had known the reasons for Evanston’s reservation

of rights. But the undisputed evidence shows that Mr. Medved was

satisfied with the counsel hired by Evanston. And Mr. Medved and his firm

have pointed to nothing that another attorney would have done differently.

Therefore, Mr. Medved and his firm have not presented evidence of

prejudice from a lost opportunity to retain different counsel.

     In the alternative, Mr. Medved and his firm argue that prejudice is

established as a matter of law when an insurer accepts a defense without a

reservation of rights. We reject this argument based on Management

Specialists, Inc. v. Northfield Insurance Co., 117 P.3d 32 (Colo. App.

2004). There the Colorado Court of Appeals concluded that

          “no presumption of prejudice arises where the insurer disclaims
           coverage prior to trial” and

          estoppel arises only if the insured had detrimentally relied on
           the insurer’s defense.

Mgmt. Specialists, 117 P.3d at 38. The court ultimately held that an

insurance company, which had defended the insured for five months
                                     14
without a reservation of rights, was not estopped from asserting coverage

defenses in light of the insured’s inability to show prejudice. Id.

      Mr. Medved and his firm point to three Tenth Circuit opinions

applying other states’ laws for the proposition that prejudice is not

required: Pendleton v. Pan American Fire & Casualty Co., 317 F.2d 96

(10th Cir. 1963) (applying New Mexico law), Braun v. Annesley, 936 F.2d

1105 (10th Cir. 1991) (applying Oklahoma law), and Cornhusker Casualty

Co. v. Skaj, 786 F.3d 842 (10th Cir. 2015) (applying Wyoming law). But

these opinions applied the states’ general estoppel principles in the

absence of more specific guidance, and here we have an opinion of the

state’s intermediate court of appeals on the issue. See Pendleton, 317 F.2d

at 100–01; Braun, 936 F.2d at 1110–11; Cornhusker, 786 F.3d at 852–54.

      We would not expect the Colorado Supreme Court to jettison the

approach of its intermediate appellate court based on the opinions in

Pendleton, Braun, and Cornhusker. See p. 10, above (discussing the

importance of opinions by a state’s intermediate appellate court when

predicting how the state’s highest court would decide). And Colorado’s

intermediate appellate court concluded that an insured must show prejudice

when the insurer had failed to disclaim coverage prior to trial. See pp. 14–

15, above.

      This conclusion does not clearly conflict with Pendleton, Braun, or

Cornhusker. For example, in Pendleton, the underlying case settled after

                                      15
two weeks of trial. 317 F.2d at 98. Braun involved an insurer attempting to

disclaim coverage after an unfavorable verdict. 936 F.2d at 1107. And

Cornhusker involved an insurer that had failed to tell the insured of a

forthcoming withdrawal of the defense, resulting in a default judgment

against the insured. 786 F.3d at 847–48. It is unclear whether Management

Specialists would require a showing of prejudice in these situations.

Without a clear conflict, Pendleton, Braun, and Cornhusker do not provide

persuasive data that the Colorado Supreme Court would decline to follow

Management Specialists. And our case is factually distinguishable from

Pendleton, Braun, and Cornhusker because Evanston sent an effective

reservation-of-rights letter prior to the start of a trial or settlement talks.

                                      * * *

      Evanston could be estopped from asserting coverage defenses only if

Mr. Medved and his firm had shown prejudice. No such evidence was

presented, and Evanston is not estopped from denying a duty to defend.

7.    Mr. Medved and his firm forfeited their current arguments on the
      bad-faith claims.

      Mr. Medved and his firm argue on appeal that their counterclaims for

bad faith should have survived summary judgment even in the absence of a

duty to defend. Mr. Medved and his firm forfeited this argument by failing

to raise it in district court.




                                       16
       Evanston moved for summary judgment on all claims and

counterclaims, including the bad-faith counterclaims. In its motion,

Evanston presented evidence and cited legal authority in denying any bad

faith. In response, Mr. Medved and his firm presented no argument,

evidence, or legal authority to support the counterclaims for bad faith.

These omissions resulted in forfeiture of the appellate argument by Mr.

Medved and his firm. See p. 7, above.

       On appeal, Mr. Medved and his firm argue that they preserved the

issue by urging coverage and, alternatively, that they did not need to

preserve the issue under Peden v. State Farm Mutual Automobile Insurance

Co., 841 F.3d 887 (10th Cir. 2016). These arguments are unpersuasive. The

first argument fails because an argument not presented to the district court

is forfeited even if it relates to an argument that was preserved.

Ecclesiastes 9:10-11-12, Inc. v. LMC Holding Co., 497 F.3d 1135, 1141

(10th Cir. 2007). The second argument also fails. Peden addressed an

insurer’s alleged bad faith but did not excuse the failure to preserve an

appellate argument involving a bad-faith claim. See generally 841 F.3d

887.

       Mr. Medved and his firm forfeited their appellate arguments on the

bad-faith claim. Because Mr. Medved and his firm have not requested

plain-error review, we decline to consider their newly presented argument.

See pp. 7–8, above.

                                      17
8.   Conclusion

     Evanston had a duty to defend claims incurred by reason of wrongful

acts in performing professional services. This duty did not extend to the

class action or the Colorado Attorney General’s investigation because the

underlying allegations had arisen from billing practices, which are not

professional services. In addition, Evanston was not estopped from denying

a duty to defend the class action. Finally, Mr. Medved and his firm

forfeited their appellate arguments opposing summary judgment on their

bad-faith claims. Therefore, we affirm the district court’s grant of

summary judgment to Evanston on all claims and counterclaims.




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