Colorado Casualty Insurance Company v. Brock USA, LLC et al
Filing
91
ORDER denying 83 Motion for Reconsideration by Judge David M. Ebel on 08/28/13.(jjhsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Case No. 11-cv-02527-DME-KMT
COLORADO CASUALTY INSURANCE COMPANY,
Plaintiff,
v.
BROCK USA LLC,
Defendant.
ORDER DENYING BROCK USA LLC’S MOTION FOR RECONSIDERATION
Before the Court is a Motion for Reconsideration (“Motion”) (Doc. 83), filed by
Defendant Brock USA LLC (“Brock”) in response to the Court’s order granting summary
judgment to Plaintiff Colorado Casualty Insurance Company (“Colorado Casualty”)
(Doc. 79). Although the Court previously indicated to the parties that it anticipated a
hearing would be necessary to resolve the issues Brock raises in its Motion, on further
consideration, the Court has determined that a hearing would not materially assist it in
resolving the dispute. For the reasons discussed below, the Court DENIES Brock’s
Motion.
I.
STANDARD OF REVIEW
The Court’s Order Granting Summary Judgment on Plaintiff’s Claim and on Two
of Three of Defendant’s Counterclaims (the “Order”) was a non-final ruling because it
did not dispose of all of Brock’s counterclaims. See Rodeman v. Foster, 767 F. Supp. 2d
1176, 1188 (D. Colo. 2011). When addressing a motion for reconsideration in this
procedural posture, the Court is “not bound by the strict standards for altering or
amending a judgment encompassed in Federal Rules of Civil Procedure 59(e) and 60(b).”
Id. (quoting Fye v. Okla Corp. Comm’n, 516 F.3d 1217, 1224 n. 2 (10th Cir. 2008)); see
also Fed. R. Civ. P. 54(b) (“[A]ny order . . . that adjudicates fewer than all the claims . . .
does not end the action as to any of the claims . . . and may be revised at any time before
the entry of a judgment adjudicating all the claims . . . .”). Instead, Brock’s Motion
“invok[es] the district court’s general discretionary authority to review and revise
interlocutory rulings prior to entry of final judgment.” Wagoner v. Wagoner, 938 F.2d
1120, 1122 n.1 (10th Cir. 1991).
Nevertheless, even in the interlocutory-order context, “[a] party’s failure to present
his strongest case in the first instance does not entitle him to a second chance in the form
of a motion [for reconsideration].” Renfro v. City of Emporia, Kan., 732 F. Supp. 1116,
1117 (D. Kan. 1990) (internal quotation marks omitted). Indeed, although judges are
“not necessarily required to do so,” they commonly circumscribe “their broad discretion
to revisit interlocutory orders . . . by incorporating . . . analyses” from Rules 59 and 60
and the law of the case doctrine. United Fire & Cas. Co. v. Boulder Plaza Residential,
LLC, No. 06-CV-00037-PAB-CBS, 2010 WL 420046, at *3 (D. Colo. Feb. 1, 2010)
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(unreported), aff’d, 633 F.3d 951 (10th Cir. 2011); accord Beat v. United States, 081267-JTM, 2011 WL 1375290, at *7 (D. Kan. Apr. 12, 2011) (unreported) (same).
Mindful of these principles, this Court will not alter its previous Order unless
“new evidence or legal authority has emerged or . . . the prior ruling was clearly in error.”
Rodeman, 767 F. Supp. 2d at 1189; accord Servants of Paraclete v. Does, 204 F.3d 1005,
1012 (10th Cir. 2000) (holding that, under a Rule 59(e) motion, relief is only “appropriate
where the court has misapprehended the facts, a party’s position, or the controlling law”;
such a motion is not a vehicle “to revisit issues already addressed or advance arguments
that could have been raised in prior briefing”).
II.
DISCUSSION
In its earlier Order, this Court ruled (1) that in the underlying civil action between
the City of Coquitlam, British Columbia (the “City”) and Brock, et. al (the “Athletica
Action”), the City’s allegations in the final three amended versions of its complaint (the
“Complaint”) potentially stated a claim that Brock was liable for “property damage”
caused by an “occurrence” as those terms are defined under four materially identical
commercial general liability (“CGL”) policies (the “Policy”) that Colorado Casualty
issued to Brock; and (2) that standing alone, those allegations would have been sufficient
to trigger Colorado Casualty’s duty to defend Brock in the Athletica Action; but (3) that
the “Products-Completed Operations Hazard Exclusion” (the “PCOH Exclusion” or
“Exclusion”) applied to bar coverage, and so Colorado Casualty had no duty to defend
Brock in the Athletica Action.
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In its Motion, Brock advances two arguments in support of its claim that the Court
erred when it concluded that the PCOH Exclusion obviated coverage in this case. First,
Brock argues that “the pleadings contain allegations that Brock was involved in the
installation of the Brockpad,” and that “such allegations, coupled with allegations that the
damage occurred prior to the field’s completion, trigger the exception to the Products
Completed Operations Hazard Exclusion for ‘work that has not yet been completed or
abandoned.’” Doc. 83 at 2. Second, Brock claims that “the real property exception to the
definition of ‘your product’ applies and prevents coverage from being defeated by the
Products Completed Operations Hazard Exclusion.” Id. The Court addresses each
argument in turn.
1.
The Court declines to consider Brock’s first argument, which Brock
did not raise before the Court issued its Order
In their cross-motions for summary judgment, Brock and Colorado Casualty hotly
disputed the applicability of the PCOH Exclusion to the facts of this case. To reiterate,
the Exclusion states that “[t]his insurance does not apply to ‘bodily injury’ or ‘property
damage’ included within the ‘products-completed operations hazard.’” Doc. 8-4 at 34.
The “products-completed operations hazard” is defined in relevant part to
[i]nclude[] all . . . “property damage” occurring away from premises you
own or rent and arising out of “your product” or “your work” except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned [with
additional explanation of what may constitute completion or abandonment].
Work that may need service, maintenance, correction, repair or
replacement, but which is otherwise complete will be treated as completed.
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Id. at 30, Sec. V, ¶ 16(a).
In response to the arguments raised in the parties’ cross-motions, which focused
exclusively on the PCOH Exclusion’s “your product” prong, the Court determined that
the allegations in the Complaint,
if true, establish that any property damage occurred in Coquitlam, away
from Brock’s premises, that the property damage arose out of the
Brockpad, which is Brock’s “product,” and that the Brockpad was not in
Brock’s physical possession, but rather was in the possession of Wilco and
the other defendants who actually constructed the field. Therefore, the
“Products-Completed Operations Hazard Exclusion” bars coverage of the
City’s claim against Brock.
Order at 14. Brock now argues that in addition to alleging “property damage” arising out
of “your product,” the Complaint “contains allegations that Brock was involved in the
installation of the Brockpad at Percy Perry Field, not merely for providing a defective
product.” Doc. 83 at 5 (emphasis added). Therefore, Brock claims, the Complaint
alleged “property damage” arising out of “[your] work” as “the project was nearing
completion,” and the “Court [was] obligated to consider these allegations in determining
whether Colorado Casualty had a duty to defend.” Id. at 6 (emphasis added).
Regardless of any potential merit to Brock’s argument that the Complaint alleged
“property damage” arising out of “your work” that triggered the exception restoring
coverage for “[w]ork that has not yet been completed,” Brock never raised such a claim
before the Court issued its Order, and so the Court declines to consider it now. See
Servants of Paraclete, 204 F.3d at 1012 (admonishing that a motion for reconsideration is
not the appropriate forum to first “advance arguments that could have been raised in prior
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briefing”). Indeed, while it was Colorado Casualty’s “heavy burden” to “establish that
the allegations in the complaint are solely and entirely within the exclusions in the
insurance policy,” Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1089-90 (Colo.
1991), that burden did not absolve Brock of the responsibility to refute Colorado
Casualty’s viable arguments that the Exclusion obviated coverage. To rule otherwise
would effectively place the onus on the Court to imagine scenarios that might fall outside
of the exclusion to coverage that Colorado Casualty invoked. And “[i]t is not this court’s
task to comb through” the Policy and the Complaint “in an effort . . . to construct
Plaintiff’s arguments for him.” See Barcikowski v. Sun Microsystems, Inc., 420 F. Supp.
2d 1163, 1179 (D. Colo. 2006); accord Mitchell v. City of Moore, 218 F.3d 1190, 1199
(10th Cir. 2000) (“To do so would not only consume an inordinate amount of time, but
would result in [this Court’s] abandoning [its] neutrality and becoming [an] advocate[] in
the adversarial process.”).
Brock claims that it did argue, “at pages 29-30 of its Consolidated Reply,” that
“th[e] exception [for ‘work that has not yet been completed’] applied” to restore coverage
in this case. Doc. 83 at 6 n.4; accord Doc. 89 at 5. To reiterate, where the complaint
alleges “property damage” arising out of “your product” or “your work” and occurring
away from “premises you own or rent,” there are two exceptions to the Exclusion which,
if applicable, result in coverage: First, coverage applies where the property damage
alleged arises out of “your product,” and “your product” is still in “your physical
possession”; and second, coverage applies where the property damage alleged arises out
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of “your work,” and “your work” is “[w]ork that has not yet been completed.” Doc. 8-4
at 30, Sec. V, ¶ 16(a).
Based on the context in which Brock’s claim appeared, however, the Court
reasonably understood Brock’s argument to be that even if the Court determined that the
Brockpad qualified as “your product,” the exception for “[w]ork that has not yet been
completed” applied to restore coverage because the field had not yet been completed.
The Court rightly rejected that argument: the structure of the PCOH Exclusion makes
clear that the exception restoring coverage for “[w]ork that has not yet been completed”
applies only to allegations in a complaint implicating the “your work” prong of the
Exclusion. In the portion of Brock’s Consolidated Reply cited, Brock never suggested
that the Complaint alleged “property damage” arising out of “your work,” as would have
been necessary to trigger the exception. See Doc. 75 at 29-30; see also id. at 23 n.10
(“[T]he underlying complaints do not unambiguously allege that Brock was responsible
for the installation. Indeed it was not. The [Complaint] alleges that Wilco agreed to
install the Brockpad . . . and that it breached its agreement by negligently installing the
Brockpad.” (emphasis added)).
In sum, because Brock never previously raised the argument that the Complaint
alleged damages arising out of “your work” that fell within the corresponding exception
to the PCOH Exclusion, the Court’s “prior ruling was [not] clearly in error,” see
Rodeman, 767 F. Supp. 2d at 1189, and the Court declines to consider the merits of that
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claim, which easily “could have been raised in prior briefing,” 1 Servants of Paraclete, 204
F.3d at 1012.
2.
The Brockpad does not fall within the “real property” exception to the
definition of “your product” for purposes of the PCOH Exclusion
The Policy’s PCOH Exclusion obviates coverage for off-premises “property
damage” arising out of “your product” which has left “your physical possession.” Doc.
8-4 at 30, Sec. V, ¶ 16(a). In turn, the Policy defines “your product” as “[a]ny goods or
products, other than real property, manufactured, sold, handled, distributed or disposed of
by . . . [y]ou . . . [or o]thers trading under your name.” Id. Sec. V, ¶ 21(a) (emphasis
added). In this case, the Complaint alleges that “as a result of,” inter alia, defects in the
Brockpad, 2 the field was damaged. See Doc. 68-3 at 29, ¶¶ 51-52. But Brock argues that
“the [PCOH] Exclusion does not apply because the Brockpad became part of real
1
The Court also notes incidentally that Colorado Casualty expressly denied that
the Complaint contained allegations implicating “[Brock’s] work” in its Reply in Support
of Cross-Motion for Summary Judgment. See Doc. 78 at 8. More than three months
passed between when Colorado Casualty submitted its Reply and when this Court issued
its Order, which gave Brock “plenty of opportunity to seek leave of the court to file a
surreply” refuting that argument, but Brock “never attempted to do so” until now. See
Pippin v. Burlington Res. Oil And Gas Co., 440 F.3d 1186, 1192 (10th Cir. 2006).
2
The Brockpad material is “[Brock’s] product.” Order at 14-15 (observing that
allegations in the Complaint established that the Brockpad fell within the Policy’s
definition of “your product” because Brock “distributed” the Brockpad and licensed it to
“[o]thers trading under [Brock’s] name”); accord Bituminous Cas. Corp. v. St. Clair Lime
Co., No. 94-6436, 1995 U.S. App. LEXIS 30948, at *14 (10th Cir. Oct. 27, 1995) (noting
that courts have traditionally defined “products” for purposes of PCOH provisions as the
“goods or services which the insured deals in as his stock or trade”).
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property once it was incorporated into the field and thus falls outside the definition of
‘your product.’” 3 Doc. 83 at 7. This argument lacks merit.
The text of the PCOH Exclusion, which obviates coverage for “property damage”
arising out of “your product” after it leaves “your physical possession,” Doc. 8-4 at 30,
Sec. V, ¶ 16(a), reflects the parties’ intent to addresses “the risk that the product . . . , if
defective, may cause bodily injury or damage to property of others after it leaves the
insured’s hands,” Baker v. Nat’l Interstate Ins. Co., 103 Cal. Rptr. 3d 565, 579 (2009)
(internal quotation marks omitted) (emphasis added), or the hands of “others trading
under [the insured’s] name,” see 58 A.L.R.3d 12 n.3. Here, Brock opted not to insure
against that risk, and it thereby avoided incurring “an additional hefty premium, [by way
of] products-completed operations hazard coverage.” See Baker, 103 Cal. Rptr. 3d at 579
(internal quotation marks omitted) (emphasis added). Instead, the Policy expressly
excludes such coverage by way of the PCOH Exclusion.
Nevertheless, Brock seeks to circumvent its coverage choice by construing the
PCOH Exclusion to create a sort of long-term coverage: Brock effectively argues that the
PCOH Exclusion obviated coverage only for the brief time between when the Brockpad
left Brock’s (or its licensee’s) physical possession and when the Brockpad was installed
in the field. This construction of the PCOH Exclusion is inconsistent with its text, which
obviates coverage for off-premises “property damage” arising out of “your product”
3
Brock also advanced this argument in its Consolidated Reply, see Doc. 75 at 2729, but the Court did not address it directly. Nothing about the following discussion
alters the Court’s earlier ruling.
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which has left “your physical possession.” Such a construction does not comport with
“the intent and reasonable expectations of the parties,” Berry & Murphy, P.C. v. Carolina
Cas. Ins. Co., 586 F.3d 803, 808 (10th Cir. 2009), and the Court rejects it.
The cases Brock cites in support of its claim counsel no different conclusion.
Each of those cases analyzes a different CGL provision, which excludes from coverage
“‘property damage’ to ‘your product’ arising out of it or any part of it.” Auto-Owners
Ins. Co. v. Am. Bldg. Materials, Inc., 820 F. Supp. 2d 1265, 1272 (M.D. Fla. 2011)
(alteration omitted) (emphasis added); accord Stuart v. Weisflog’s Showroom Gallery,
Inc., 753 N.W.2d 448, 463 (Wis. 2008); Cincinnati Ins. Co. v. Fab Tech, Inc., No.
CIV.03-CV-410-SM, 2005 WL 1492377, *5 (D.N.H. June 24, 2005); Scottsdale Ins. Co.
v. Tri-State Ins. Co. of MN., 302 F. Supp. 2d 1100, 1104 (D.N.D. 2004); Wanzek Const.,
Inc. v. Emp’rs Ins. of Wausau, 679 N.W.2d 322, 326-28 (Minn. 2004). These cases
collectively stand for the proposition that once materials that were once “your product”
have been incorporated into real property, damage to the resultant real property does not
constitute damage to “your product.” See, e.g., Auto-Owners Ins. Co., 820 F. Supp. 2d at
1272 (“[B]ecause the ABM drywall became ‘real property’ once it was installed, it is not
within the definition of ‘your product’ under the policy.”).
Importantly, unlike the damages discussed in the cases Brock cites, the alleged
defects in the Brockpad existed before the Brockpad became real property, when the
Brockpad was indisputably “[Brock’s] product.” Thus, the damages alleged in the
Complaint “ar[ose] out of” “[Brock’s] product.”
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III.
REMAINING ISSUE
The Court notes that there is one remaining issue in this case for bad faith breach
of contract. There is at least a possibility that the court’s rulings to date might impact
upon that issue. The parties have indicated that they may jointly ask for an order of
certification from the Court’s rulings. The parties are asked to consider whether it would
be more expeditious for them to agree jointly to a disposition of this remaining claim, so
that any appeal will present to the appellate court the entire case.
IV.
CONCLUSION
For the foregoing reasons, the Court DENIES Brock’s Motion for
Reconsideration.
DATED: this 28th day of August, 2013.
BY THE COURT:
s/ David M. Ebel
David M. Ebel
United States Circuit Judge
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