FILED
                                                                 United States Court of Appeals
                                     PUBLISH                             Tenth Circuit

                     UNITED STATES COURT OF APPEALS                   February 6, 2014

                                                                     Elisabeth A. Shumaker
                                 TENTH CIRCUIT                           Clerk of Court



 CITY CENTER WEST, LP, a Colorado
 limited partnership,

       Plaintiff - Appellant,

 v.                                                  No. 12-1343
 AMERICAN MODERN HOME
 INSURANCE COMPANY, an Ohio
 corporation,

       Defendant - Appellee.



          APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF COLORADO
                     (D.C. No. 1:12-CV-01370-RPM)


Adam F. Aldrich (Kenneth R. Bennington with him on the briefs), Bennington Johnson
Biermann & Craigmile, LLC, Denver, Colorado for Plaintiff - Appellant.

Christopher J. Shannon (Patrick Q. Hustead with him on the brief), The Hustead Law
Firm, Denver, Colorado, for Defendant - Appellee.



Before HARTZ, HOLLOWAY, and HOLMES, Circuit Judges.


HARTZ, Circuit Judge.
      A bank obtained insurance on a commercial property mortgaged to it by a

borrower. The policy prohibited an assignment “of this Policy” without the insurer’s

consent. J. App. at 36. But after the property was damaged, the bank assigned its loss

claim to the borrower. The insurer refused to pay the borrower’s claim because of the

nonassignment provision, and the borrower sued. The district court held that the suit was

barred and awarded judgment for the insurer. On appeal the parties primarily argue about

whether a provision prohibiting assignment of postloss claims is enforceable. In our

view, however, the provision here does not apply to the assignment of a postloss claim,

so we do not need to determine the enforceability of a provision prohibiting such

assignments. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse and remand for

further proceedings.

I.    BACKGROUND

      City Center West LP (City Center), a Colorado limited partnership, owned a

commercial property in Greeley, Colorado, subject to a mortgage held by Summit Bank

& Trust (Summit Bank). When Summit Bank learned that City Center had failed to

insure the property, the bank’s parent company, Heartland Financial USA, Inc.

(Heartland Financial), obtained coverage for the property through its blanket insurance

policy (the Policy) with American Modern Home Insurance Company (American

Modern), an Ohio corporation. The Policy identified Heartland Financial and its

branches, including Summit Bank, as the “Named Insured Mortgagee.” J. App. at 56. It

provided that losses be paid to the Named Insured Mortgagee to the extent of its interest
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and that any benefits payable in excess of that interest “shall be paid to the mortgagor”

(which was City Center). 

Liability was limited to the interest in the property of

the mortgagee and the mortgagor. The Policy was excess insurance—that is, it paid out

only if there was no other insurance policy that would cover the claim. It included a

nonassignment provision that stated: “Assignment of this Policy shall not be valid unless

we [American Modern] give our written consent.” 

       On September 23, 2011, the property was damaged by vandalism and a burglary.

City Center estimated that the cost of repair would exceed $3.5 million. On October 10,

City Center notified American Modern of the loss; and four months later it requested

payment. American Modern refused to pay the amount requested, but tendered a

$321,069 check to Summit Bank. (The record does not indicate the rationale for that

amount.) On May 7, 2012, Heartland Financial and Summit Bank assigned to City

Center all their rights with respect to the claim. American Modern never consented to the

assignment. On May 25, City Center filed its complaint against American Modern in the

United States District Court for the District of Colorado. It asserted claims for bad-faith

breach of insurance contract, breach of contract, and violations of Colorado insurance

statutes. American Modern filed a motion to dismiss on the grounds that the assignment

to City Center was prohibited by the Policy’s nonassignment provision and City Center

was not a third-party beneficiary. The district court granted the motion.




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II.    DISCUSSION

       We review de novo a district court’s dismissal of a complaint under Fed. R. Civ.

P. 12(b)(6). See Jordan-Arapahoe, LLP v. Bd. of Cnty. Comm’rs, 

, 1025

(10th Cir. 2011). The parties agree that Colorado law applies to the interpretation of the

insurance contract in this diversity case. In Colorado an insurance policy’s terms are

construed “according to principles of contract interpretation.” Thompson v. Md. Cas.

Co., 

, 501 (Colo. 2004). The terms in the policy “should be assigned their

plain and ordinary meaning” so that we “give effect to the intent and reasonable

expectations of the parties.” 

should not employ “a strained construction” to

change the effect of unambiguous language. Parrish Chiropractic Ctrs., P.C. v.

Progressive Cas. Ins. Co., 

, 1055 (Colo. 1994). “[A]mbiguous terms,”

however, “are construed against the insurer.” 

.

       The issue before us is whether the Policy’s restriction on assignment of “this

Policy” forbids the assignment of a postloss claim under the Policy. It is undisputed that

the entire policy was not assigned to City Center. Perhaps the nonassignment provision

could preclude assignments of divisible portions of the Policy—such as coverage with

respect to one particular piece of property or one particular mortgagor; after all, the

Policy was a blanket policy that substituted for individual policies for particular banks,

particular mortgagors, and particular pieces of property. But that was not the type of

assignment to City Center. The assignment was only the assignment of one claim for a


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specific piece of property. Any other claims regarding the property still belonged to

Heartland Financial and Summit Bank.

         We do not agree with American Modern that the nonassignment provision

precludes the assignment of a postloss claim under the Policy. American Modern argues

that the term Policy necessarily captures any rights that “flow directly from the policy

and would not exist absent the policy.” Aplee. Br. at 8–9. But the weight of authority is

that assignment of a postloss claim under an insurance policy is not an assignment of the

policy. A leading treatise states: “[T]he great majority of courts adhere to the rule that

general stipulations in policies prohibiting assignments of the policy, except with the

consent of the insurer, apply only to assignments before loss, and do not prevent an

assignment after loss . . . .” 3 Steven Plitt et al., Couch on Insurance § 35:8 (3d ed.

2013); see, e.g., In re Katrina Canal Breaches Litig., 

, 963 (La. 2011)

(“Post-loss assignment of claims arising under the policy is not equivalent to the

assignment of the policy itself . . . .”); Windey v. N. Star Farmers Mut. Ins. Co.,

, 102 (Minn. 1950) (“Assignment, after loss, of the proceeds of insurance

does not constitute an assignment of the policy, but only of a claim or right of action on

the policy.”). Indeed, American Modern cites no case to the contrary, and we have found

none.1


1
 Couch on Insurance cites as contrary authority a case in which a court enforced a
nonassignment provision against a postloss claim when the provision said, “any
assignment of this policy or of any of the benefits thereunder shall be void and of no
                                                                              Continued . . .
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       Of particular importance, Colorado has recognized that there is a difference

between an assignment of a contract and an assignment of a claim under a contract. Long

ago, in Metropolitan Life Ins. Co. v. Lanigan, 

, 403 (Colo. 1924), the state

supreme court held that the assignment of a claim for benefits under a life-insurance

policy after the insured’s death did not forfeit the coverage despite a prohibition on

assignment of the policy.2 And more recently that court, in considering the validity of an

assignment of payment owed under a contract, wrote, “Under the law of assignments, it is

a well settled principle that the right to receive money due or to become due under an

existing contract may be assigned even though the contract itself may not be assignable.”

Farmers Acceptance Corp. v. DeLozier, 

, 1017 (Colo. 1972); see Interbank

Invs., LLC v. Vail Valley Consol. Water Dist., 

, 1228 (Colo. App. 2000)

(following Farmers Acceptance). The distinction between assigning a contract and

assigning a claim for money due under that contract has particular force in the insurance

context. There is very good reason to forbid preloss assignment of a policy, because the

insurer’s risk can be greatly altered by a change in the insured. There is ordinarily no




effect.” Tyler v. Nat’l Life & Accident Ins. Co., 

(Ga. Ct. App. 1934)
(emphasis added) (internal quotation marks omitted); see 3 Steven Plitt et al., Couch on
Insurance § 35:8. The case is not truly contrary because the nonassignment provision
included more than a general prohibition against assigning the policy; it explicitly
prohibited assigning benefits under the policy.
2
 The decision in Parrish did not overrule Lanigan in this respect. See 

n.8.

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such change in risk once the loss has occurred. That context must be considered in

interpreting the nonassignment clause.

       Moreover, even if it were ambiguous whether the nonassignment provision

precluded assignment of a postloss claim, “ambiguous terms in an insurance policy are

construed against the insurer.” 

. It is “incumbent on insurers to

include clear and unambiguous language in their policies” if they intend to prohibit

postloss assignments. In re Katrina Canal Breaches 

. American

Modern’s policy could have barred assignment of postloss claims by simply saying that

such assignments were barred. Or, at least in Colorado, it could have used more general

language. For example, the Colorado Supreme Court has held that a provision stating

that “[i]nterest in this policy may not be assigned without our written consent” prohibited

postloss assignment of a claim for medical care under a no-fault automobile policy.

(emphasis and internal quotation marks omitted). But

American Modern did not use such language and we will not give the language it did use

“a strained construction” to broaden its effect. 

We can leave for another day,

and likely another court, whether a provision barring assignment of a postloss claim in

commercial-property coverage is enforceable or contrary to Colorado public policy.

III.   CONCLUSION

       We REVERSE the judgment of the district court and REMAND for further

proceedings consistent with this opinion.


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