Colorado Casualty Insurance Company v. Infinity Land Corporation et al

Filing 227

ORDERED that the Infinity Defendants Motion for Relief from August 26, 2015 Order Pursuant to F.R.C.P. 60(b)(6) ECF No. 203 is GRANTED. The portion of my August 26, 2015 Order that addressed Colorado Casualtys duty to defend the Infinity Defendan ts in connection with the Neighbors counterclaims in the Underlying Action is REVERSED. The Final Judgment is amended to reflect that the Infinity Defendants are entitled to judgment as a matter of law that Colorado Casualty was required to defend them in connection with the Neighbors counterclaims in the Underlying Action. It is FURTHER ORDERED that the Infinity Defendants Motion for Reconsideration of Order Granting Plaintiff Colorado Casualty Insurance Companys Motion for Summary Judgment ECF No. 186 is DENIED AS MOOT. It is FURTHER ORDERED that Plaintiff Colorado Casualty Insurance Companys Motion to Clarify Order ECF No. 184 is DENIED, by Judge Wiley Y. Daniel on 3/28/2016.(evana, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Senior Judge Wiley Y. Daniel
Civil Action No. 12-cv-02748-WYD-NYW
COLORADO CASUALTY INSURANCE COMPANY, a New Hampshire corporation,
Plaintiff,
v.
INFINITY LAND CORPORATION, a dissolved Colorado corporation;
H2 LAND CO, LLC, a dissolved Colorado limited liability company;
HOWARD FAMILY INVESTMENTS, LLC, a dissolved Colorado limited liability
company;
JONATHAN HOWARD;
PAUL HOWARD;
KF 103 CV, LLC, a Colorado limited liability company;
WILLIAM MARCHANT;
MAUREEN M. MARCHANT;
MARILYN J. HOWELL, as Trustee of the MARILYN J. HOWELL TRUST;
C. ARLENE NANCE; and
WILLIAM PECK,
Defendants.

ORDER

THIS MATTER is before the court on the following motions: (1) the Infinity
Defendants’ Motion for Relief from August 26, 2015 Order Pursuant to F.R.C.P. 60(b)(6)
(ECF No. 203); (2) the Infinity Defendants’ Motion for Reconsideration of Order Granting
Plaintiff Colorado Casualty Insurance Company’s Motion for Summary Judgment (ECF
No. 186); and (3) Plaintiff Colorado Casualty Insurance Company’s Motion to Clarify
Order (ECF No. 184). For reasons stated below, the motions are granted in part and
denied in part.

I.

BACKGROUND
This case involves a dispute regarding coverage under the business owners

insurance policy (“Policy”) issued by Plaintiff Colorado Casualty Insurance Company
(“Plaintiff” or “Colorado Casualty”). The facts of this case have been recounted in detail
in a previous order. (ECF No. 182). For the sake of these motions, Plaintiff Colorado
Casualty, faced with claims for coverage under the Policy, filed this action seeking a
declaratory judgment stating that it owed no duties to defend or indemnify the claimants,
who were certain parties involved in the development of the Cumbre Vista subdivision in
northern Colorado Springs in connection with an underlying lawsuit. The underlying
case involved a dispute over easements between property owners and the developers
of the adjacent Cumbre Vista subdivision.
On September 11, 2014, Colorado Casualty filed its Motion for Summary
Judgment, arguing that it did not have a duty to defend developers Infinity Land or the
Howards (the “Infinity Defendants”) in the underlying action. On April 15, 2015, the
Infinity Defendants filed their Cross Motion for Partial Summary Judgment, claiming that
the underlying complaints did trigger the defense obligations of Colorado Casualty.
On August 26, 2015, after holding an evidentiary hearing, I found that Colorado
Casualty did not have a duty to defend Infinity Land or the Howards against the claims
asserted by property developer KF 103-CV, LLC (“KF 103") or the claims asserted by
the third-party plaintiff neighbors (the “Neighbors”) in El Paso County District Court
Case No. 2008cv4553 (the “Underlying Action”). I specifically found that after reviewing
all of the allegations, “the Neighbors collectively alleged that Infinity destroyed their
access to the Easement that provided them access to their homes. However, damage
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to an easement is not “property damage” under the Policy.” (Order at 18). I further
found that
[e]ven if there was an allegation of property damage, I believe the
underlying complaints fail to contain any allegation that such damage was
the result of an occurrence under the Policy. I find that the allegations that
Infinity intentionally acted to construct roads and intersections cannot be
read as including allegations of an accident or unanticipated
consequences. The allegations assert intentional conduct and cannot
trigger coverage for an “occurrence” under the Policy. Accordingly, I find
that insurance coverage was not triggered because the underlying
complaints did not allege property damage resulting from an "occurrence."
(Order at 19). I also found that no claim of personal injury was alleged by the
Neighbors. On August 27, 2016, final judgment was entered in favor of Colorado
Casualty.
II.

DISCUSSION
A.

Infinity Defendants’ Motion for Relief from August 26, 2015 Order
Pursuant to F.R.C.P. 60(b)(6) (ECF No. 203)

On November 9, 2015, the Infinity Defendants filed their motion for relief from
judgment pursuant to Fed. R. Civ. P. 60(b)(6) following the decision of the Tenth Circuit
Court of Appeals in KF 103-CV, LLC v. American Family Mut. Ins. Co., No. 14-1403,
2015 WL 6517782 (10th Cir. Oct. 29, 2015).
The Federal Rules of Civil Procedure do not specifically provide for motions for
reconsideration. See Hatfield v. Bd. of County Comm'rs for Converse County, 52 F.3d
858, 861 (10th Cir.1995). Where, after judgment has entered in a case, a party files a
motion for reconsideration, courts generally construe such a motion as invoking Federal
Rules of Civil Procedure 59(e) or 60(b). See Hatfield, 52 F.3d at 861. Rule 60(b) relief
is “extraordinary and may only be granted in exceptional circumstances.” The Servants

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of the Paraclete v. John Does, 204 F.3d 1005, 1009 (10th Cir. 2000). Parties seeking
relief under Rule 60(b) have a higher hurdle to overcome because such a motion is not
a substitute for an appeal, Zurich N. Am. v. Matrix Serv., Inc., 426 F.3d 1281, 1289
(10th Cir. 2005), but instead a “grand reservoir of equitable power to do justice in a
particular case.” Pierce v. Cook & Co., Inc., 518 F.2d 720, 722 (10th Cir. 1975) (en
banc) (citation omitted).
Under Rule 60(b)(6), the Court may relieve a party or its legal representative
from a final judgment for “any other reason that justifies relief.” Fed. R. Civ. P. 60(b)(6).
Relief under Rule 60(b)(6) is appropriate when circumstances are so “unusual or
compelling” that extraordinary relief is warranted or when it “offends justice” to deny
such relief. Cashner v. Freedom Stores, Inc., 98 F.3d 572, 580 (10th Cir. 1996). Courts
have granted relief under Rule 60(b)(6) when there has been a post-judgment change in
the law “arising out of the same accident as that in which the plaintiffs ... were injured.”
Pierce, 518 F.2d at 723.
On October 29, 2015, approximately two months after I issued my order in this
case finding no duty to defend on the part of Colorado Casualty, the Tenth Circuit Court
of Appeals issued an opinion which addresses an insurer’s obligation to defend an
identically situated co-defendant in the same Underlying Action and analyzes the same
pleadings and insurance policy language that are at issue here. Specifically, the Tenth
Circuit held that American Family Mutual Insurance Company (“American Family”) was
obligated to defend KF 103 in connection with the same Underlying Action, reversing

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the decision of District Court Judge Richard P. Matsch.1 After examining the same
counterclaims filed by the Neighbors that are at issue in this case,2 the Tenth Circuit
held that they “can be read to allege an occurrence.” KF 103-CV, LLC., 2015 WL
6517782, at *4. Relevant to this case, the Tenth Circuit went on to explain that “[i]n
addition to alleging an occurrence, the neighbors’ counterclaims must allege facts which
could constitute property damage within the meaning of KF 103's policy.” Id. at *7.
After interpreting insurance policy language that is identical to the Policy language at
issue in this case, the Tenth Circuit held that “the damages alleged by the neighbors
arguably fall within the policy language, and American Family therefore had a duty to
defend KF 103 against each of the four counterclaims at issue.” Id.
I find that a portion of my August 26, 2015 Order granting summary judgment in
favor of Colorado Casualty must be reversed in light of the Tenth Circuit’s October 29,
2015 opinion, KF 103-CV, LLC v. American Family Mut. Ins. Co., No. 14-1403.3 That
opinion involves the same issues, Underlying Action, pleadings, and policy language
that are at issue in the instant case. Accordingly, based on the Tenth Circuit’s detailed
reasoning, I now find that the Neighbors’ July 2012 amended pleadings arguably allege

1

I note that at the August 12, 2015 evidentiary hearing, Judge Matsch’s decision
was discussed and referenced at length.
2

These counterclaims include: (1) Peck’s 2011 trespass counterclaim; (2)
Nance’s 2012 trespass counterclaim; (3) the Marchants’ and Nance’s 2012 negligence
misrepresentation counterclaim, and (4) the Marchants’ and Nance’s 2011 and 2012
negligence counterclaims.
3

While I recognize that the Tenth Circuit’s opinion is unpublished, I cite it for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1, which I
believe to be extremely high as applied to this analogous case.
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physical damage to, or loss of use of, tangible property caused by an occurrence that
does not fall solely within the “expected or intended” exclusion from coverage.
Therefore, pursuant to Fed. R. Civ. P. 60(b), I conclude as a matter of law that Colorado
Casualty does have a duty to defend the Infinity Defendants in connection with the
Neighbors’ counterclaims in the Underlying Action. The Final Judgment is amended to
reflect that the Infinity Defendants are entitled to judgment as a matter of law that
Colorado Casualty was required to defend them in connection with the Neighbors’
counterclaims in the Underlying Action. In accordance therewith, the portion of my
order granting Colorado Casualty’s motion for summary judgment and denying the
Infinity Defendant’s motion on this duty to defend issue is reversed.
B.

Infinity Defendants’ Motion for Reconsideration of Order Granting Plaintiff
Colorado Casualty Insurance Company’s Motion for Summary Judgment
(ECF No. 186)

On September 9, 2015, the Infinity Defendants filed their motion for
reconsideration (ECF No. 186) on the limited issue of whether the Neighbors’ pleadings
alleged a claim that was arguably covered by the Personal Injury provisions of the
Policy. In light of the fact that I have reversed my ruling as to Colorado Casualty’s duty
to defend the Infinity Defendants in connection with the Neighbors’ counterclaims, this
motion is denied as moot.
C.

Plaintiff Colorado Casualty Insurance Company’s Motion to Clarify Order
(ECF No. 184)

On September 9, 2016, Colorado Casualty filed this motion seeking clarification
that I “found in favor of Colorado Casualty on all counts and that Colorado Casualty is
entitled not only to its costs in this proceeding, proceeding, but it is also entitled to

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recoup the $169,412.13 in defense fees and costs paid in connection with the
underlying litigation from Defendant Infinity Land Corporation, and from Defendants
Paul Howard and Jonathan Howard as principals of Infinity Land Corporation.” (ECF
No. 184 at 3). However, since I have found that a portion of my August 26, 2015 Order
granting summary judgment in favor of Colorado Casualty must be reversed in favor of
the Infinity Defendants and the Final Judgment amended accordingly, I cannot grant
Colorado Casualty its requested relief.
III.

CONCLUSION
Based upon the foregoing, it is
ORDERED that the Infinity Defendants’ Motion for Relief from August 26, 2015

Order Pursuant to F.R.C.P. 60(b)(6) (ECF No. 203) is GRANTED. The portion of my
August 26, 2015 Order that addressed Colorado Casualty’s duty to defend the Infinity
Defendants in connection with the Neighbors’ counterclaims in the Underlying Action is
REVERSED. The Final Judgment is amended to reflect that the Infinity Defendants are
entitled to judgment as a matter of law that Colorado Casualty was required to defend
them in connection with the Neighbors’ counterclaims in the Underlying Action. It is
FURTHER ORDERED that the Infinity Defendants’ Motion for Reconsideration of
Order Granting Plaintiff Colorado Casualty Insurance Company’s Motion for Summary
Judgment (ECF No. 186) is DENIED AS MOOT. It is
FURTHER ORDERED that Plaintiff Colorado Casualty Insurance Company’s
Motion to Clarify Order (ECF No. 184) is DENIED.

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Dated: March 28, 2016

BY THE COURT:

s/ Wiley Y. Daniel
Wiley Y. Daniel
Senior United States District Judge

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