Indian Harbor Insurance Company v. Houston Casualty Company
Filing
58
REPORT AND RECOMMENDATION ON INDIAN HARBOR INSURANCE COMPANY'S PARTIAL MOTION FOR SUMMARY JUDGMENT (Dkt. # 26 ) and HOUSTON CASUALTY COMPANY'S CROSS-MOTION FOR SUMMARY JUDGMENT (Dkt. # 38 ) by Magistrate Judge N. Reid Neureiter on 5 July 2022. It is hereby RECOMMENDED that Indian Harbor Insurance Company's Partial Motion for Summary Judgment (Dkt. #26) be DENIED and Houston Casualty Company's Cross-Motion for Summary Judgment (Dkt. #38) be GRANTED. (cmadr, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 21-cv-02404-RMR-NRN
INDIAN HARBOR INSURANCE COMPANY, a Delaware corporation,
Plaintiff,
v.
HOUSTON CASUALTY COMPANY, a Texas corporation,
Defendant.
REPORT AND RECOMMENDATION ON INDIAN HARBOR INSURANCE
COMPANY’S PARTIAL MOTION FOR SUMMARY JUDGMENT (Dkt. #26)
and
HOUSTON CASUALTY COMPANY’S CROSS-MOTION FOR SUMMARY JUDGMENT
(Dkt. #38)
N. Reid Neureiter
United States Magistrate Judge
This matter is before the Court on Indian Harbor Insurance Company’s (“Indian
Harbor”) Partial Motion for Summary Judgment (Dkt. #26) and Houston Casualty
Company’s (HCC) Cross-Motion for Summary Judgment (Dkt. #38), referred to the
Court by Judge Regina M. Rodriguez. (Dkt. ## 31 & 47.) The Court has carefully
considered the motions, the responses (Dkt. ##35 & 46), replies (Dkt. ## 45 & 49), and
Indian Harbor’s surreply. (Dkt. #56.) The Court heard oral argument from the parties on
March 17, 2022. (Dkt. #65.) Now, being fully informed and for the reasons set forth
below, it is hereby RECOMMENDED that and Indian Harbor’s motion for partial
summary judgment be DENIED and HCC’s cross-motion for summary judgement be
GRANTED.
1
BACKGROUND
This case arises from an insurance coverage dispute because of damage
resulting after a subcontractor failed to properly install balconies at an apartment
complex. The defective installation of certain balcony components damaged other,
nondefective portions of the balcony. Apparently, repairs to the defective components of
the balcony necessarily resulted in damage and replacement to the nondefective
components. The crucial question before the Court is whether such damage is covered
under the commercial general liability (“CGL”) policy provided by HCC. When HCC
declined coverage, the subcontractor default insurer, Indian Harbor, stepped in to pay
for the repairs. Indian Harbor then filed this suit to receive reimbursement from HCC for
the costs of repair, investigative costs, and other fees, arguing that the damage should
have been covered in the first instance by the CGL policy. HCC, however, maintains
that there is no coverage for the repairs to the defective balconies because such
damage does not qualify as “property damage” under the CGL policy or Colorado law.
So, according to HCC, it owes Indian Harbor nothing.
The following facts are undisputed unless attributed to a specific party or
otherwise noted.
A. The Project and Defective Balconies
FMFPE LLC (the “Owner”) engaged The Weitz Company (“Weitz”) as general
contractor for the construction of an apartment complex in Fort Collins, Colorado. (Dkt.
#26 at 4, ¶ 1.) Weitz retained Tripp Construction (“Tripp” or the “Subcontractor”) to
construct the balconies for the project, among other work. (Id., ¶ 2.)
2
HCC issued policy number H16PC30658-00, a commercial general liability
policy, to the Owner. (Dkt. #38 at 3, ¶ 3.) This policy provides coverage for “those sums
that the insured becomes legally obligated to pay as damages because of ‘bodily injury’
or ‘property damage’ to which this insurance applies.” (Id.; Dkt. #26-2, HCC CGL
policy). The HCC CGL policy endorsement eliminates standard “your work” and
“business risk” exclusions (exclusions j., k., and l. of the policy). (Dkt. #26 at 4, ¶ 6; Dkt.
#26-2 at 55–56.) The HCC CGL policy also extends to certain enrolled contractors. (Dkt.
#26 at 4, ¶ 5.) Weitz was an enrolled contractor under the HCC policy, as was Tripp. (Id.
at 5, ¶¶ 7–8.)
Separately, Indian Harbor issued a Subcontractor Default Insurance policy to
Weitz. This policy provides for indemnification of “Loss,” defined as “costs and
expenses paid by [Weitz] to the extent caused by a Default of Performance of a
Subcontractor/Supplier under the terms of a Covered Subcontract.” (Dkt. #38 at 3, ¶ 2.)
On March 21, 2019, the Owner issued to Weitz a Notice of Claim pursuant to
Colo. Rev. Stat. § 13-20-801. (Dkt. #26 at 5, ¶ 11; see also Dkt. #26-3, Notice of Claim.)
The Notice of Claim explains: “On or about March 18, 2019 [Owner] discovered defects
in certain balconies” at the subject property. It continues:
While the cause of the defects is currently unknown, Weitz . . . may have
failed to install flashing on balconies in accordance with the plans and
specifications and also may have failed to meet the applicable standard of
care in its construction of the balconies. The improperly installed flashing
has apparently allowed water to penetrate the first layer of the balcony deck
and caused water to collect between the first and second layers of the deck.
This water intrusion has resulted in degradation to balcony decks . . . .
The aforementioned defects and deficiencies have caused and will continue
to cause resultant and consequential property and other damages to
Claimant, as well as monetary damages related to associated with
remediation efforts.
3
(Dkt. #26-3 at 1.)
In light of the Notice of Claim, on or about June 25, 2019, Weitz tendered its
claim under the HCC policy. (Dkt. #26 at 6, ¶ 15.)1
On July 3, 2019, the Owner issued a Colo. R. Evid. 408 Settlement
Communication to Weitz, which Weitz then provided to HCC. (Dkt. #26 at 6, ¶¶ 17–18.)
The Owner’s Rule 408 notice included a letter from its expert, Vertex. Vertex provided
preliminary observations about the issues it noted on two of the defective balconies.
(Dkt. #38 at 4, ¶¶ 8–9 (citing Dkt. #27, June 28, 2019 Vertex Letter. at 3–4).)2 This initial
Vertex letter, dated June 28, 2019, identified four “as-built” issues with the balconies: (1)
the fascia boards were not sealed at abutting members, (2) a gap at the bottom of the
fascia boards and the metal flashing was, however, sealed, trapping matter that had
migrated behind the fascia boards, (3) the self-adhering flashing membrane was
reverse lapped, (4) the lag screws securing the balcony to the framing were not properly
sealed. Vertex also found “separations, staining and soffit damage” at other balconies.
Network Adjusters, HCC’s claims adjuster, responded to the Rule 408 Notice on
August 21, 2019, and advised that it would be retaining defense counsel for Weitz. (Id.
at ¶ 19.) However, on October 21, 2019, HCC denied coverage for Weitz’s claim
because there is no “property damage,” which would be required for payment under the
1
There is some dispute whether HCC actually received this Notice of Claim,
because no one from HCC or Network Adjusters, HCC’s claims adjuster, was copied on
the tender. (Dkt. #35 at 3, ¶ 15.) Ultimately, whether HCC actually received this claim
contemporaneously on June 25, 2019 is irrelevant to this motion for summary judgment.
2
This document is filed under restriction.
4
policy. The claimed damage was only to defective work itself. (Dkt. #26 at 6, ¶ 22; Dkt.
#26-9 at 14.)3
On January 9, 2020, Vertex issued another report. (See Dkt. #26-13; Dkt. #35-4;
Dkt. #38-4.)4 This report found the following problems with the balcony: (1) “the
construction of the exterior claddings, balcony toppings and associated flashings at the
balcony-to-wall intersections . . . was defective,” (2) “the installation of the main waterresistive barrier of the balcony deck . . . was not properly integrated with the waterresistive barrier of the exterior wall of the building,” (3) “the installation of the selfadhered flexible flashing at the balcony corners was not installed as specified in the
Architectural plans,” and (4) “the construction of the edge flashing for the balcony
topping was inadequate.” (Id. at 13–14.)
In June 2021, the Owner reported additional issues with the balconies, and Weitz
notified HCC. (Dkt. #26 at 7, ¶¶ 23–24.) Indian Harbor claims that the additional
damage included “damage to the underside of the balconies, soffits, traffic coating.” (Id.
at ¶ 25.) HCC argues that this statement does not provide any evidence of additional
3
Separately, by letter dated September 13, 2019, HCC’s counsel denied
coverage on the Owner’s claim. (Id. at ¶ 20; Dkt. #26-7 Coverage Denial Letter to
Owner.)
4
Indian Harbor argues that the January 9, 2020 Vertex report is not
authenticated and thus inadmissible. (See Dkt. #45 at 4; Dkt. #46 at 4.) This objection is
disingenuous as Indian Harbor itself attached and then cited the January 9, 2020 Vertex
report to its Motion for Summary Judgment. (See Dkt. #26-13; Dkt. #26 at 10–11). Thus,
the Court will consider this document when ruling on the cross-motions for summary
judgment. The Court notes that Indian Harbor also objected to HCC’s Settlement
Agreement between the Owner and Weitz. (Dkt. #36.) HCC has entirely failed to
authenticate this document, and, unlike the January 2020 Vertex report, Indian Harbor
does attach it to or rely on it in its own briefing. Thus the Court will not consider the
Settlement Agreement. See Fed. R. Civ. P. 56(c); see also Bell v. City of Topeka, Kan.,
496 F. Supp. 2d 1182, 1184 (D. Kan. 2007) (citations omitted), aff'd sub nom. Bell v.
City of Topeka, Kan., 279 F. App’x 689 (10th Cir. 2008).
5
alleged damage. HCC again denied coverage to Weitz. (Dkt. #26 at 7, ¶ 26; Dkt. #2611.)
Indian Harbor moves for partial summary judgment, requesting that the Court
hold as a matter of law that (1) the HCC’s CGL policy covers “property damage” caused
by an “occurrence”, which extends to all damages resulting from faulty work, including
damage to the insured’s work and rip/tear; (2) that HCC had a duty to defend Weitz in
response to the Notice of Claim issued by the Owner pursuant to the Colorado
Construction Defect Action Reform Act (“CDARA”); and (3) that the subcontractor
default policy issued by Indian Harbor is excess to the policy issued by HCC. As to the
first issue, Indian Harbor argues that damage to the defective work itself is “property
damage.” Indian Harbor further argues that the entire balcony is not rendered defective
simply because one building component (i.e., the flashing) was defectively installed.
HCC moved for cross-summary judgment on this first issue as well, arguing that
the defectively installed balconies and subsequent damage to the defective work is not
“property damage” under Colorado law. Contrary to Indian Harbor’s position, HCC
argues that the Court should not parse between different components of the balcony but
instead treat the balcony as a whole. Thus, according to HCC, because the balcony was
defective, all damage was to already defective property.
LEGAL STANDARDS
A. Summary Judgment
The purpose of a motion for summary judgment pursuant to Fed. R. Civ. P. 56 is
to assess whether trial is necessary. See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Under Fed. R. Civ. P. 56(c), summary judgment shall be granted if “the
6
pleadings, the discovery and disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” An issue is genuine if the evidence is such that a
reasonable jury could resolve the issue in favor of the nonmoving party. Anderson v.
Liberty Lobby, Inc., 277 U.S. 242, 248 (1986). A fact is material if it might affect the
outcome of the case under the governing substantive law. Id. The factual record and
reasonable inferences therefrom are viewed in the light most favorable to the party
opposing summary judgment. Concrete Works, Inc., v. City & Cnty. of Denver, 36 F.3d
1513, 1517 (10th Cir. 1994).
“The burden of showing that no genuine issue of material fact exists is borne by
the moving party.” Adamson v. Multi. Cmty. Diversified Servs., Inc., 514 F.3d 1136,
1145 (10th Cir. 2008) (citations omitted). If the moving party does not bear the ultimate
burden of persuasion at trial, it may satisfy this burden by identifying “a lack of evidence
for the nonmovant on an essential element of the nonmovant's claim.” Id. (citation and
internal quotations omitted).
When faced with cross-motions for summary judgment, the Court is “entitled to
assume that no evidence needs to be considered other than that filed by the parties, but
summary judgment is nevertheless inappropriate if disputes remain as to material facts.”
Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000)
(internal citations and quotations omitted). Further, “[b]ecause 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
7
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 Atl.
Richfield Co., 226 F.3d at 1148; Buell Cabinet Co. v. Sudduth, 608 F.2d 431, 433 (10th
Cir. 1979) (“Cross-motions for summary judgment are to be treated separately; the
denial of one does not require the grant of another.”).
ANALYSIS
In Colorado, the interpretation of an insurance policy is a matter of law. AutoOwners Ins. Co. v. High Country Coatings, Inc., 388 F. Supp. 3d 1328, 1333 (D. Colo.
2019) (referencing Thompson v. Md. Cas. Co., 84 P.3d 496, 501 (Colo. 2004)). Since
the interpretation of an insurance policy presents a question of law, it is appropriate for
summary judgment. Mt. Hawley Ins. Co. v. Casson Duncan Constr., Inc., 409 P.3d 619,
621 (Colo. App. 2016). Courts “construe insurance policies using general principles of
contract interpretation.” Greystone Const., Inc. v. Nat'l Fire & Marine Ins. Co., 661 F.3d
1272, 1283 (10th Cir. 2011), as amended on reh’g in part (Dec. 23, 2011) (citations
omitted). Absent ambiguity, the Court construes a policy’s language according to its
plain meaning. Ambiguous provisions are construed against the insurer in favor of
providing coverage to the insured. Id. That said, “Courts should read policy provisions
as a whole rather than in isolation and may not ‘extend coverage beyond that
contracted for, nor delete [provisions] to limit coverage.’” Peerless Indem. Ins. Co. v.
Colclasure, No. 16-cv-424-WJM-CBS, 2017 WL 633046, at *3 (D. Colo. Feb. 16, 2017)
(quoting Cyprus Amax Mins. Co. v. Lexington Ins. Co., 74 P.3d 294, 298 (Colo. 2003)).
As District Judge William J. Martinez has explained:
Under a commercial general liability (“CGL”) policy . . . the initial burden is
upon the insured to show that the loss sustained comes within the terms of
8
the insurance policy; in other words, the insured has the burden to prove a
material issue of fact exists concerning their entitlement to recovery under
the insurance policy. See Rodriguez v. Safeco Ins. Co., 821 P.2d 849, 853
(Colo. App. 1991). Then, once the insured claims a loss covered by the
policy, the burden is on the insurer to prove that the policy excludes the
proximate cause of the loss. Leprino Foods Co. v. Factory Mut. Ins. Co.,
453 F.3d 1281, 1287 (10th Cir. 2006); see also 17A Steven Plitt et al.,
Couch on Insurance § 254:52 (3d ed., Dec. 2016 update) (discussing
burden of proof in the context of general liability insurance).
Because Indian Harbor seeks reimbursement for funds it paid out when HCC
denied coverage under the CGL policy, Indian Harbor stands in the shoes of the insured
and bears the burden to demonstrate that the claimed loss comes within the terms of
HCC’s CGL policy.
Resolution of the cross-motions for summary judgment turns first on whether the
installation of the defective balconies constitutes “property damage” under the HCC
CGL policy and Colorado law. If the damage in this case is not “property damage,” there
is no coverage and no duty to defend. See Greystone Const., Inc., 661 F.3d at 1287
n.10 (“[T]he existence of property damage is a threshold issue. Without property
damage, it is irrelevant whether there was an ‘occurrence’ or ‘accident.’”).
The Court briefly addresses Indian Harbor’s contention that the CDARA resolves
this issue. The CDARA, enacted in 2010, provides:
In interpreting a liability insurance policy issued to a construction
professional, a court shall presume that the work of a construction
professional that results in property damage, including damage to the work
itself or other work, is an accident unless the property damage is intended
and expected by the insured. Nothing in this subsection (3):
(a) Requires coverage for damage to an insured's own work unless
otherwise provided in the insurance policy; or
(b) Creates insurance coverage that is not included in the insurance
policy.
9
Colo. Rev. Stat. § 13-20-808(3). Thus, Indian Harbor argues, “work that results in
property damage, including damage to the work itself, is an accident unless the property
damage was expected or intended by the insured.” (Dkt. #26 at 10 (emphasis in
original).) But asking whether there was an accident without considering whether there
is “property damage” misses the point. Where there is no “property damage,” it is
irrelevant whether there was an “accident” or “occurrence.”
A. “Property Damage” under Colorado Law
HCC’s CGL Policy provides coverage for “those sums that the insured becomes
legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to
which this insurance applies.” (Dkt. #26-2 at 15.) In relevant part, HCC’s CGL policy
defines “property damage” as “[p]hysical injury to tangible property, including all
resulting loss of use of that property.” (Id. at 32.)
Importantly, and fatal to Indian Harbor’s case, a subcontractor’s defective work
and damage to its own defective work product are not “property damage” under the
policy and Colorado law. First, the Court notes that “deficient performance by a
subcontractor [is] not in itself an event triggering application of a CGL policy.” Greystone
Const., Inc., 661 F.3d at 1286 n.10 (citing Adair Group, Inc. v. St. Paul Fire & Marine
Ins. Co., 477 F.3d 1186, 1188 (10th Cir. 2007). Instead, to trigger coverage under a
CGL policy, the deficient performance must result in damage to nondefective third-party
work product. Put differently, “injuries flowing from improper or faulty workmanship
constitute an ‘occurrence’ so long as the resulting damage is to nondefective property . .
. .” Id. at 1284.
10
In Colorado Pool Systems, Inc. v. Scottsdale Insurance Co., 317 P.3d 1262
(Colo. App. 2012), the insurer refused to indemnify a general contractor for losses
resulting from demolishing and replacing an improperly constructed pool. See id. at
1265. Applying Greystone, the Colorado Court of Appeals found that there were two
types of property damage: (1) the cost of replacing the defective pool, and (2)
consequential, or “rip and tear,” damage to nondefective third-party work. Id. at 1271.
The court found that the policy did not cover the first category of damages—damage
incurred in demolishing and replacing the pool itself. “This damage resulted solely from
[the general contractor’s] obligation—necessarily expected—to replace defective work
product.” Id. (citing Greystone Const., Inc., 661 F.3d at 1286). The second category of
damages, however, was covered. Id. Put differently, “‘property damage’ does not
include costs of repair or replacement of defective workmanship, but does include
consequential damage to other parts of the property.” Peerless Indem. Ins. Co. v.
Colclasure, No. 16-cv-424-WJM-CBS, 2017 WL 633046, at *6 (D. Colo. Feb. 16, 2017)
(applying Colorado Pools and finding that damage for repair and replacement of
defective arena roof was not “property damage”).
Indian Harbor correctly notes the Colorado Court of Appeals found that CDARA
did not apply to the policy at issue in that case, but cites the court’s dicta, which
explained: “If we were to apply [CDARA], we would presume that the CGL policy
covered damage that resulted from [the general contractor’s] defective workmanship,
including the cost of demolishing and replacing the pool.” 317 P.2d at 1268. Relying on
this language, Indian Harbor states “It seems that the Colorado Court of Appeals’ view
is that if there is damage, under the Statute, there is coverage, which is exactly what is
11
alleged here.” (Dkt. #45 at 8.) The Court gives some weight to a state court of appeals
decision but need not treat it as binding authority. See Clark v. State Farm Mut. Auto.
Ins., 319 F.3d 1234, 1240–41 (10th Cir. 2003) (explaining that a federal district court is
“not bound by a lower state court decision,” but may consider such decisions when
interpreting Colorado law). The Court does not afford this language great weight. It is
not only dicta, but it presupposes, without explanation, the existence of property
damage. The Court agrees that CDARA creates a presumption, but the presumption is
that property damage is an accident, not that all damage is “property damage.”
B. “Property Damage” at the Project
The next question, then, is whether the work here resulted in “property damage.”
There is no dispute that in June 2019 (1) the fascia boards were not sealed at abutting
members, (2) a gap at the bottom of the of the fascia boards and the metal flashing
was, however, sealed, trapping matter that had migrated behind the fascia boards, (3)
the self-adhering flashing membrane was reverse lapped, (4) the lag screws securing
the balcony to the framing were not properly sealed. (See Dkt. #38 at 4, ¶¶ 8–9.) There
is also no dispute that, in January 2020, Vertex found (1) “the construction of the
exterior claddings, balcony toppings and associated flashings at the balcony-to-wall
intersections . . . was [sic] defective,” (2) “the installation of the main water-resistive
barrier of the balcony deck . . . was not properly integrated with the water-resistive
barrier of the exterior wall of the building,” (3) “the installation of the self-adhered flexible
flashing at the balcony corners was not installed as specified in the Architectural plans,”
and (4) “the construction of the edge flashing for the balcony topping was inadequate.”
(Dkt. #26-13 at 13–14.)
12
Though Indian Harbor admits the existence of the issues with the balcony
installation, it argues that a defective component does not render the entire balcony
defective. At oral argument, for example, Indian Harbor argued that there was nothing
defective about the soffits of the balcony, but that such soffits had or will have to be
replaced as part of the repair to the defective work. Thus, according to Indian Harbor,
because the soffits (and potentially other components) are nondefective property, there
has been “property damage.”
The Court does not agree.
Such a labored analysis of individual components is not required by Colorado
precedent. In Colorado Pools, the pool was defective because some of the rebar frame
of the concrete shell was too close to the surface of the pool. 317 P.3d at 1266. The
court found that the cost of demolishing and replacing the pool was not “property
damage” and thus not covered by the CGL policy. It did not parse out the various
components of contractor’s work on the pool itself. Instead, as previously articulated,
only rip and tear damage to nondefective third-party work—damage to the deck,
sidewalk, etc.—was covered.
In Peerless, the defendant improperly repaired and replaced a roofing system
that had been damaged by hail. The court found that the CGL policy did not “provide
coverage for the cost to repair or replace the arena roof because such damages do not
constitute ‘property damages’ under Colorado law.” 2017 WL 633046, at *5. Again, the
court did not parse out the individual components of the roof that the subcontractor
installed. Because the damage to the arena roof was not damage to nondefective thirdparty work, it was not covered by the CGL policy.
13
Applying the analysis of Colorado Pools and Peerless, the Court finds that the
subcontractor must fix its defective work product, even though not every aspect or
component of its installation was deficient, and that the CGL does not provide coverage
for those repairs. The mere fact that the soffits on the balcony are not defective but
must be replaced as part of remedying other defects does not bring the damage within
the coverage of the CGL policy. Surely, in Peerless, not every component of the roof
that the contractor installed, down to each individual nail, was defective when the roof
had to be replaced due to faulty workmanship. Nonetheless, there was no coverage
when the contractor had to fix damage to its own defective work.
The appropriate inquiry is whether there is damage to nondefective third-party
work. Here, Indian Harbor can point to no evidence of consequential damage to support
a finding in its favor as a matter of law (or to overcome HCC’s argument that there is no
evidence of consequential damage, and thus no genuine dispute of material fact.), such
as damage to the doors from the apartments into the balcony, exterior paint, etc.5
Based on the undisputed facts, the Court finds that all damage to the defective
balconies, including damage suffered as a result of remediation or repair efforts, is
simply damage to the subcontractor’s own defective work. Indian Harbor’s reliance on
mere allegations and conclusory statements of consequential and rip/tear damages in
the Notice of Claim are insufficient to create a genuine dispute of material fact as to this
issue. (See, e.g., Dkt. #46 at 13, 17.) Indian Harbor had an opportunity to demonstrate
5
Indian Harbor argues that the January 9, 2020 Vertex report evidences rip/tear
damage. (See Dkt. #46 at 17.) However, even Indian Harbor characterizes this as
evidence of rip/tear to “components of the balcony other than the flashing.” (Id.
(emphasis added).) There is no suggestion that it is damage to nondefective third-party
work, so it is not “property damage” under Colorado law.
14
damage to nondefective third-party work or at least show a genuine dispute of material
fact concerning this issue, but it failed to do so. Thus, Indian Harbor has not met its
burden of establishing “property damage”—a threshold question and essential element
of its claim. Without “property damage,” the Court cannot find that HCC had a duty to
defend, nor that the Indian Harbor subcontractor default policy is excess to the HCC
CGL policy. Accordingly, Indian Harbor’s motion for partial summary judgment should
be denied in its entirety.
With respect to HCC’s cross-motion for summary judgment, the Court finds that
HCC, who does not bear the burden of persuasion at trial, has met its burden at
summary judgment to establish an absence of a genuine dispute of material fact as to
the existence of “property damage.” See Adamson, 514 F.3d at 1145. To prevent the
grant of summary judgment, Indian Harbor needed to set forth admissible evidence
establishing the existence of “property damage.” It failed to do so. Because there is no
coverage when there is no property damage, and Indian Harbor’s four claims are
premised on a finding that coverage exists, HCC’s motion for summary judgment should
be granted.
CONCLUSION
In light of the foregoing, it is hereby RECOMMENDED that Indian Harbor
Insurance Company’s Partial Motion for Summary Judgment (Dkt. #26) be DENIED and
Houston Casualty Company’s Cross-Motion for Summary Judgment (Dkt. #38) be
GRANTED.
NOTICE: Pursuant to 28 U.S.C. § 636(b)(1)(C) and Fed. R. Civ. P. 72(b)(2),
the parties have fourteen (14) days after service of this recommendation to serve
15
and file specific written objections to the above recommendation with the District
Judge assigned to the case. A party may respond to another party’s objections
within fourteen (14) days after being served with a copy. The District Judge need
not consider frivolous, conclusive, or general objections. A party’s failure to file
and serve such written, specific objections waives de novo review of the
recommendation by the District Judge, Thomas v. Arn, 474 U.S. 140, 148– 53
(1985), and also waives appellate review of both factual and legal questions.
Makin v. Colo. Dep ’t of Corrs., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v.
Hesse, 91 F.3d 1411, 1412-13 (10th Cir. 1996).
Date: July 5, 2022
______________________
N. Reid Neureiter
United States Magistrate Judge
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