MARCIA S. KRIEGER, District Judge.
It appears that the material facts are undisputed, and resolution of this motion requires only interpretation and application of the terms of an insurance contract. In or about 2003, the Neenan Company ("Neenan") constructed several steel buildings on the grounds of the Larimer County Fairground Complex. It appears to be undisputed by the parties that those buildings suffered from latent construction defects relating to the design of the roof system, but that no patent defects existed when Neenan turned over the buildings to Larimer County.
In December 2006, a series of heavy snowfalls resulted in damage to several buildings at the Fairground Complex. As a result of snow loading on the roof, the Exhibition Hall, experienced a partial collapse. Larimer County promptly filed a claim regarding that damage with Travelers, who provided coverage to Larimer County under an all-risk policy. Travelers accepted and paid the claim for damage to the Exhibition Hall.
At some later point in time, Larimer County observed displacement of the purlins
Travelers denied coverage for the major components
Travelers then commenced this action seeking a declaratory judgment that the policy does not provide coverage for amended claims relating to the additional buildings. Larimer County has responded with counterclaims alleging, among other things, Travelers' breach of the insurance policy by failing to pay benefits. Both parties have moved
Rule 56 of the Federal Rules of Civil Procedure facilitates the entry of a judgment only if no trial is necessary. See White v. York Intern. Corp., 45 F.3d 357, 360 (10
If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed. R. Civ. P. 56(c)(1)(A). Once the moving party has met its burden, to avoid summary judgment the responding party must present sufficient, competent, contradictory evidence to establish a genuine factual dispute. See Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10
If the moving party does not have the burden of proof at trial, it must point to an absence of sufficient evidence to establish the claim or defense that the non-movant is obligated to prove. If the respondent comes forward with sufficient competent evidence to establish a prima facie claim or defense, a trial is required. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, the claim or defense must be dismissed as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
This case involves cross-motions for summary judgment. "Because the determination of whether there is a genuine dispute as to a material factual issue turns upon who has the burden of proof, the standard of proof and whether adequate evidence has been submitted to support a prima facie case or to establish a genuine dispute as to material fact, cross motions must be evaluated independently." In re Ribozyme Pharmaceuticals, Inc., Securities Litig., 209 F.Supp.2d 1106, 1112 (D. Colo. 2002); see also Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10
Because this Court's subject-matter jurisdiction arises due to the diversity of citizenship of the parties, the Court applies Colorado's substantive law governing the interpretation of insurance policy language. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 426-27 (1996). Under Colorado law, insurance policies are construed under the same traditional principles that govern the interpretation of any contract. Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo. 1999).
When attempting to construe language in an insurance policy, the Court's ultimate goal is to ascertain and give effect to the reasonable expectations of the parties to the policy. Pompa v. American Family Mut. Ins. Co., 520 F.3d 1139, 1143 (10
When terms in a policy are susceptible to more than one reasonable interpretation, the Court must construe the ambiguous term against the drafter — the insurer — and in a manner that would promote, rather than deny, coverage. Blackhawk-Central City Sanitation Dist. v. American Guarantee & Liab. Ins. Co., 214 F.3d 1183, 1191 (10
For all practical purposes, the parties agree that the buildings in question were defectively designed and/or constructed, but that those defects remained latent and undiscovered for several years. The deficiencies became patent due to the weight of the snow on the roofs of the buildings as a result of the December 2006 storm. The weight of the snow on the roofs caused the defects to become manifest, most obviously through the displacement of the purlins. Larimer County seeks coverage for the required repairs to the buildings.
The Court begins by examining the operative language of Larimer County's policy with Travelers. That policy provides that Travelers "will pay for direct physical loss or damage" to the property if that damage is "caused by or resulting from a Covered Cause of Loss." There is no dispute that the buildings in question are property covered by the policy, and that those buildings suffered a "physical loss or damage." The dispute centers on whether that loss was the result of a "Covered Cause of Loss."
The policy defines a "Covered Cause of Loss" to mean "risks of direct physical loss unless that loss is excluded" by other provisions in the policy. Although this language appears circular, this provision effectively provides that Travelers will pay for physical loss or damage to covered property resulting from
Travelers begins with the "defective construction" exclusion. Section D, paragraph 3 of the policy provides that "The Company will not pay for loss or damage caused by or resulting from . . . faulty, inadequate, or defective . . . design [or] construction" (hereafter, "the exclusion"). This exclusion, however, is itself subject to an exception which states that "in the event that an excluded cause of loss . . . results in a Covered Cause of Loss, the Company will be liable only for such resulting loss or damage" (hereafter, "the exception"). This exception language forms the core of the Larimer County's argument that the damage is covered by the policy: Larimer County contends that even if Neenan's construction was defective, the weight of snow on the roofs constituted a separate "Covered Cause of Loss" that brings the claim within policy coverage.
Having carefully examined the policy language and the parties' arguments, the Court finds that the policy language unambiguously excludes coverage of the damage to the purlins. The critical language provides that where "an excluded cause of loss" — here, defective construction — "
As noted above, a "Covered Cause of Loss" is defined as a "risk[ ] of . . . loss," rather than a loss itself. Thus, a "Covered Cause of Loss" is a phrase that describes the
In the circumstances here, the defective construction of the roof may have acted as a causal agent (coupled with a second causal agent, the snow loading) to damage the purlins, but the purlins themselves have not become a "Covered Cause of Loss" that has resulted in additional property damage. Put differently, the damage to the purlins is the
This construction gives meaning to all of the applicable provisions of the Policy and is consistent with cases cited by Larimer County. For example, Larimer County cites to RK Mechanical, Inc. v. Travelers Property Cas. Co., 2011 WL 2394921 (D.Colo. Aug. 1, 2011) (slip op.), a case involving effectively identical policy language. There, the plaintiff had installed plumbing work using flanges from a particular manufacturer. Some of those flanges failed due to manufacturing defect, causing water to leak from the plumbing and damage lower floors of the construction. After discovering the defective flanges, the plaintiff was forced to replace the flanges and redo much of the plumbing work, incurring additional cost and expense. The plaintiff sought coverage from Travelers on an insurance policy with a similar language as that at issue here. The parties apparently agreed that "the costs to remediate and repair covered property damaged by the water which escaped the plumbing system . . . falls within the [exception to the construction defect exclusion]," and Travelers paid benefits to the plaintiff for those damages. Id. at *6. But the court found that the costs to remediate the defective flanges themselves were not covered by the policy, as "the cost of making good on faulty work or defective products is not contemplated nor covered by the policy at issue." Id. The court stated that the exception language
Larimer County's interpretation of the Policy suffers from several flaws. Most notably, it requires that the word "Cause" be read out of the phrase "Covered Cause of Loss" — in Larimer County's argument, if the defective construction "results in . . . loss," the exception applies. It also disregards the temporal sequence suggested by the exception's use of variants of the word "result" in two separate places: the exception applies when the excluded cause "results in" a cause, and that cause brings about "resulting loss or damage." This describes a temporal sequence with at least two events occurring successively once the construction defect manifests itself (e.g. in the example above, the defect
Larimer County also argues that its construction of the policy language comports with the testimony of Traveler's corporate representative during his deposition. A witness' interpretation of policy language would be relevant, if at all, only if that language was somehow ambiguous, a situation this Court finds is not present here. See Fort Lyon Canal Co. v. High Plains A & M, LLC, 167 P.3d 726, 728-29 (Colo.2007). But even assuming that Travelers' corporate representative's interpretation of the policy was relevant here, the Court finds that the deposition exchange does not clearly support Larimer County's position. The representative was asked about the exception to the defective construction exclusion in the following exchange:
Putting aside the fact that the representative's answer is itself conditional, the question posed to the representative was not phrased in such a way that an affirmative response necessary indicates agreement with Larimer County's position. As discussed above, the Court's interpretation of the policy language permits hypothetical situations in which defective construction does result in damage that falls within the policy's coverage. The question posed to the representative is susceptible to an interpretation in which precisely this situation is being described: defective construction results in a piece of the building failing, and that failing portion of the building in turn causes further physical damage, thus "automatically" becoming a covered cause of loss. Because the deposition exchange, even if relevant, is not necessarily inconsistent with the policy interpretation described above, the Court finds that this exchange does not aid Larimer County.
Accordingly, the Court finds that the damage to the buildings is not covered by the policy as a result of the defective construction exclusion.
It is not clear to the Court whether a finding that the policy's "defective construction" exclusion operates to preclude coverage here is sufficient to dispose of the question of coverage presented by the parties, or whether it is necessary for the Court to also find that coverage is similarly excluded under the "building collapse" and "ordinance or law" exclusions as well. Neither party has briefed the issue of whether the Court must simply find that
It appears to the Court that the other exclusions are offered as alternative theories to justify a limit in coverage. Neither party has argued that their interpretation is essential to or would negate the provisions of the contract that have been analyzed. Thus, it does not appear necessary to explore the meaning of other possibly applicable exclusions. Similarly, because the Court has found that, based on the undisputed facts herein, Travelers has no obligation to cover the repair costs for the displaced purlins in the additional buildings, the Court need not reach Larimer County's counterclaims that are predicated upon Travelers' failure to pay benefits provided by the Policy. Thus, it appears that there are no remaining disputes between the parties that survive.
For the foregoing reasons, Larimer County's Motion for Partial Summary Judgment