MARCIA S. KRIEGER, Chief District Judge.
The operative facts of the case are largely undisputed. Paros was the owner of a commercial building located in Boulder, Colorado. It had insured that building with a policy with CCIC. In September 2013, Boulder experienced unprecedented rainfall, causing extensive flooding, and either during the evening of September 12, 2013 or in the early morning of the following day, a violent flow of water, mud, rocks, trees, and other debris traveled down a nearby hillside, striking Paros' building. The impact of the flow knocked down a wall of the building, causing the building to partially collapse.
The CCIC policy at issue contains a "Water Exclusion Endorsement" (the "Water Exclusion"). This exclusion provides that the policy does not cover damage resulting from "flood [or] surface water," "mudslide or mudflow," or "waterborne material carried or otherwise moved by" such water. However, the Water Exclusion contains an exception: if any of these perils "results in . . . explosion," then the policy provides coverage.
Paros essentially concedes that, in ordinary circumstances, the flow of water and debris that caused the damage would fall within the Water Exclusion in the policy, resulting in a lack of coverage. But Paros contends that, in the circumstances presented here, the force of the impact with the building was so abrupt and strong, and the damage so immediately catastrophic that the impact can fairly be described as an "explosion," thus resulting in a restoration of coverage. Based on that theory, Paros filed a claim under the policy.
CCIC denied the claim, citing to the Water Exclusion. Paros then commenced this suit, asserting claims for breach of insurance contract and statutory and common-law bad faith breach of contract. Paros moves
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 (10th Cir. 1995). Summary adjudication is authorized when there is no genuine dispute as to any material fact and a party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Substantive law governs what facts are material and what issues must be determined. It also specifies the elements that must be proved for a given claim or defense, sets the standard of proof and identifies the party with the burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Kaiser-Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563, 565 (10th Cir. 1989). A factual dispute is Agenuine@ and summary judgment is precluded if the evidence presented in support of and opposition to the motion is so contradictory that, if presented at trial, a judgment could enter for either party. See Anderson, 477 U.S. at 248. When considering a summary judgment motion, a court views all evidence in the light most favorable to the non-moving party, thereby favoring the right to a trial. See Garrett v. Hewlett Packard Co., 305 F.3d 1210, 1213 (10th Cir. 2002).
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 (10th Cir. 1991); Perry v. Woodward, 199 F.3d 1126, 1131 (10th Cir. 1999). If there is a genuine dispute as to a material fact, a trial is required. If there is no genuine dispute as to any material fact, no trial is required. The court then applies the law to the undisputed facts and enters judgment.
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, then the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
This case involves what are essentially cross-motions for summary judgment. Ordinarily, 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. Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000); Buell Cabinet Co. v. Sudduth, 608 F.2d 431, 433 (10th Cir. 1979).
Here, the material facts are not in dispute. The issue is a legal one, requiring interpretation and application of the terms of the contract. Because the Court ultimately concludes that CCIC is entitled to summary judgment in its favor, it is expeditious to begin with that motion.
Under Colorado law, insurance polices are interpreted like any other contract. Thompson v. Maryland Cas. Co., 84 P.3d 496, 501 (Colo. 2004). The Court should attempt to give full effect to the intentions of the parties. Id. In the absence of clear indications of a contrary intention by the parties, the Court will typically interpret the words of the policy according to the plain and ordinary meanings. Greystone Constr., Inc. v. National Fire & Marine Ins. Co., 661 F.3d 1272, 1283-84 (10th Cir. 2011). The Court must also strive to read the policy as a whole, rather than reading words in isolation; should avoid adding to or deleting from provisions; and must avoid attempting to rewrite the policy in the guise of interpreting it. Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 299 (Colo. 2003). Ultimately, if the Court finds that a term is ambiguous and is otherwise unable to reasonably construe it through other means, the Court should construe the term in favor of providing coverage. Id.
Here, there is essentially no dispute that the damage to Paros' building was the result of "flood [or] surface water," a "mudslide or mudflow," or "waterborne material carried or otherwise moved by" floodwaters or mudflow.
That leaves the question of whether the "explosion" exception to that exclusion applies to restore coverage, and that question, in turn, requires an interpretation of the term "explosion." The contract offers no definition.
CCIC contends that the term "explosion" should be defined as either "a release of chemical or nuclear energy in a sudden and violent manner with the generation of high temperature and with the release of gasses" or "a violent bursting as the result of the buildup of internal pressure within a closed environment." Paros posits that the plain meaning of the term "explosion" is "a sudden and violent breaking apart of something accompanied by noise."
CCIC's position is closer to the mark — that an "explosion" necessarily requires "a bursting" of something due to a buildup of pressure within it. That definition is supported by numerous dictionaries. The most appropriate definition in the
The key to this definition is that the force is internal causing the object to expand outward, as compared to an implosion, where an external force causes something to collapse. Indeed, Paros' own brief lists ten different definitions for the term "explosion" or its cognates, and nine of those ten incorporate the concept of "bursting" — a term that itself implies a
Paros' definition — which deems an explosion to be a "violent breaking apart" describes only a result, not the force that caused the result. Consequently, it suffers from several problems. First, Paros' recitation of the definition of the term "explosion" in various dictionaries makes clear that its chosen definition omits the commonly-reoccurring themes of "expansion" and "bursting" found in those definitions. Second, because Paros' definition focuses only on result, not cause, it is inconsistent with how the word "explosion" is commonly used and understood and is over inclusive. A building destroyed by a rockslide or avalanche falling down on top of it certainly "breaks apart" violently, but few people would choose to describe such an act as an "explosion"; more likely, we would describe that building as being "crushed" or "buried." A building that is pushed laterally off its foundation and collapsed, such as when hit by a vehicle or other lateral force could certainly break apart violently in the process, but few would say that the building "exploded"; more likely, it would be described as having been "knocked over" or "knocked down" by the force. In common use, the term "explosion" describes a very specific kind of "breaking apart" — one in which the force causing the breaking is one that emerges from within the thing being broken, causing the thing to burst and the force to be expelled in all directions simultaneously.
CCIC cites to various cases that have construed the term "explosion" and, again, all define the term as having some component of outward, expansive force. See e.g. Curley v. Old Reliable Cas. Co., 155 S.W.3d 711, 712 (Ark.App. 2004) ("[e]xplosion is normally understood to involve . . . rapid combustion of material [and] the
Having thus construed the policy term "explosion," all that remains is to ascertain whether Paros can come forward with sufficient evidence to demonstrate that the building at issue was destroyed by an internally-emerging force that caused it to expand and violently burst. The record does not support such a contention. Mr. Fronapfel, Paros' expert, describes the process that led to the destruction of the building as "[t]he debris laden flow
Admittedly, Mr. Fronapfel's report does attempt to describe the incident has being "consistent with an explosion." Mr. Fronapfel does not undertake to expressly set forth how he chooses to define the word "explosion," but he does explain that his conclusion that "the response of the structure is consistent with an explosion due to the: (1) energy transfer mechanism, (2) short duration, and (3) hazard level that were all present due to the Storm Event." This passage suggests that Mr. Fronapfel defines the term "explosion" to arise when an "energy transfer mechanism" includes an external impact causing lateral forces on the object and when that energy is delivered to the object in a "short duration" (and apparently with some degree of "hazard level," by which Mr. Fronapfel appears to mean "catastrophic damage"). Needless to say, Mr. Fronapfel's definition of "explosion" is inconsistent with that established herein, and thus, Mr. Fronapfel's characterization of the damage as being "consistent with an explosion" under his own definition of that term is of no evidentiary significance. It is patently clear that the forces exerted on the building did not come from within the building, that the building did not expand in response to those forces, and that it did not violently burst open as a result of such internal forces.
Accordingly, CCIC is entitled to summary judgment on Paros' claim of breach of insurance contract.
Paros also argues that, under Colorado law, a claim based on an insurer's bad faith handling or investigation of an insurance claim can lie even where the Court ultimately concludes that the policy provides no coverage. See Dunn v. American Family Ins., 251 P.3d 1232, 1235 (Colo.App. 2010). For example, an insurer can, at least theoretically, be liable in bad faith for engaging in an unreasonable refusal to investigate a claim or gather facts, even if there is ultimately no coverage for the underlying claim. See e.g. Brodeur v. American Home Assur. Co., 169 P.3d 139, 147 n. 7 (Colo. 2007). However, the Court finds here that Paros has not demonstrated any conduct by CCIC that could constitute bad faith in the investigation or handling of Paros' claim. The crux of Paros' argument is that CCIC gave inadequate consideration to Paros' contention that coverage was available under the "explosion" exception in the policy: that it did not investigate the property to ascertain whether the damage could be said to result from an "explosion," and did not obtain a legal opinion as to whether a claim premised on the "explosion" exception was colorable. The Court finds that, as a matter of law, these acts do not constitute bad faith. The definition of the word "explosion" is so well-understood and in common use that no reasonable insurer would have entertained the notion that a building destroyed in a mudslide could nevertheless be said to be covered under an "explosion" exception.
Accordingly, CCIC is entitled to summary judgment on Paros' claims in their entirety. The Court need not reach Paros' motion.
For the foregoing reasons, Paros' Motion For Declaratory Judgment
Iit is notable that in the Paros' expert, Edward Fronapfel, states merely that "the flow volume draining towards [Paros'] property
In any event, even if the Court were to conclude that the building was damaged by an "explosion," the Court agrees with