HB Construction, Inc. v. Travelers Property Casualty Company of America
Filing
51
MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson DENYING 34 Plaintiff's Opposed Motion for Partial Summary Judgment; GRANTING 38 Defendant's Motion for Summary Judgment. (mag)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
__________________
HB CONSTRUCTION, INC.,
Plaintiff,
vs.
1:17-cv-01132-WJ-SMV
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA,
Defendant.
MEMORANDUM OPINION AND ORDER
DENYING PLAINTIFF’S PARTIAL MOTION FOR SUMMARY JUDGMENT AND
GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
THIS MATTER is before the Court upon Plaintiff’s Motion for Partial Summary
Judgment, filed October 3, 2018 (Doc. 34), and Defendant’s Motion for Summary Judgment,
filed on November 2, 2018 (Doc. 38). Having reviewed the parties’ pleadings and applicable
law, the Court finds that Plaintiff’s motion is not well-taken and therefore, is DENIED. The
Court further finds that Defendant’s motion is well-taken and therefore, is GRANTED.
BACKGROUND
This is an insurance case about whether certain amounts claimed as losses by HB
Construction, Inc. (“Plaintiff”), and denied by Travelers Property Casualty Company of America
(“Defendant”), fall within the scope of coverage. Plaintiff contracted with Defendant to insure a
luxury condominium building it was constructing, the Carlisle. As the building was nearing
completion, David Hickman burned it down and set a number of other buildings in Albuquerque
on fire. David Hickman was convicted and sentenced in this district court for arson.
Plaintiff was reimbursed approximately $5,772,484.36.
At issue is $567,828.00 in
expenses claimed by Plaintiff but denied in part by Travelers (the “denied amount”). Although
Defendant paid $100,000 under the “soft cost” coverage extension, it denied more than
$400,000. It reasoned that the denied amounts either (1) were soft costs exceeding the soft costs
sublimit, or (2) did not fall under the coverage provisions of the Builder’s Risk policy because
they accrued before the fire. See Doc. 38-5, p. 4 (“the majority of those costs were incurred prior
to the date of loss and thus those costs would be considered as part of the original project
budget.”)
The parties cross-moved for summary judgment on the breach of contract claim, focusing
primarily on whether the denied amounts fall under coverage provisions or are otherwise
excluded as soft costs. Defendant also moved for summary judgment on the remaining claims,
arguing that they must fail as a matter of law if there was no breach of the policy.
LEGAL STANDARD
A motion for summary judgment may be granted only when “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a).
Summary judgment is appropriate if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact. Munoz v. St. Mary Kirwan Hosp., 221 F.3d 1160, 1164
(10th Cir. 2000). When applying this standard, the court examines the record and makes all
reasonable inferences in the light most favorable to the non-moving party. Id. The movant bears
the initial burden of establishing that no genuine issue exists as to any material fact. See Adickes
v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). Where the record taken as a whole could not lead
a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.
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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat’l
Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
UNDISPUTED FACTS
The parties stipulated to the majority of the facts below.
Defendant also asserted
additional facts, which Plaintiff did not dispute.
Defendant issued Policy Number QT-66-3E977885-TIL-16 to Plaintiff with policy period
11/18/2016 to 02/28/2017 (“the Policy”). Plaintiff was the general contractor for a condominium
complex known as the Carlisle at 3600 Central Boulevard SE, Albuquerque, New Mexico 87113.
A fire occurred at the Carlisle on November 23, 2016. Plaintiff submitted a claim to Defendant
for the loss on November 23, 2016. The Policy’s insuring agreement provides:
A. COVERAGE
We will pay for direct physical loss of or damage to Covered Property caused by or
resulting from a Covered Cause of Loss.
1. Covered Property
Covered Property, as used in this Coverage Form, means the following types of property
you own or for which you are legally liable, the value of which is included in the
estimated "total project value" shown in the Declarations:
a. Permanent Works
Materials, equipment, machinery, supplies and property of a similar nature that will
become a permanent part of the project described in the Declarations during completion
of such project or that will be used or expended in the completion of such project.
Completion of the project includes site preparation (including demolition of existing
buildings or structures), fabrication, assembly, installation, erection, alteration,
renovation and similar construction activities.
b. Temporary Works
Cofferdams, construction forms, cribbing, falsework, hoarding, scaffolds, fencing, signs,
office trailers (and their "contents") and similar temporary buildings or structures
incidental to completion of the project described in the Declarations.
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The Policy specifically excludes “soft costs” beyond the Limits of Insurance shown on
the Policy’s Declaration page:
B. EXCLUSIONS
2. We will not pay for loss or damage caused by or resulting from any of the
following:
a. Consequential Loss
(1) Delay, loss of use, or loss of market; or
(2) Loss of income, soft costs or extra expenses except as specifically provided in
this coverage part.
Limited coverage for “soft costs” is provided by the Coverage Extensions in Section
A(4)(d) of the Policy:
4. Coverage Extensions
d. Soft Costs
We will pay your “Soft Costs” during the “period of delay in completion”. Such
“soft costs” must result from direct physical loss of or damage to Covered
Property caused by or resulting from a Covered Cause of Loss which delays the
completion of the applicable project described in the “Declarations” beyond the
“planned completion date".
The Soft Costs Limit of Insurance is the most we will pay in any one occurrence
under this Coverage Extension.
The Policy Declarations specifies a limit of $100,000.00 for soft costs. The Policy
defines “soft costs” as follows:
F. DEFINITIONS
10. "Soft Costs" means your actual and necessary business costs in excess of your
budgeted amount for the project consisting only of:
a. Advertising and promotional expenses.
b. Architect, engineer, designer and consultant fees.
c. Costs resulting from the renegotiation of your sales contract, leases or
construction loans.
d. General overhead and administrative expenses, other than legal, accounting and
professional fees.
e. Insurance premiums.
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f. Interest on money borrowed to finance construction.
g. Legal and accounting fees and other costs to renegotiate and prepare revised
contracts and other documents.
h. Permit and Inspection Fees.
i. Realty taxes and realty assessments.
In the same section, the Policy provides the following definitions of the Policy terms “period of
delay in completion” and “planned completion date”:
6. “Period of delay in completion” means the period of time that:
a. Begins with the “planned completion date” or after any applicable Soft
Costs Waiting Period shown in the Declarations from the “planned completion
date”, whichever is later; and
b. Ends on the date when Covered Property should be completed using
reasonable speed and similar quality.
7. “Planned completion date” means the date the applicable project described in
the Declarations would be put into operation or use for its intended purpose in the
normal course of construction if loss of or damage to Covered Property from any
of the Covered Causes of Loss had not occurred.
Plaintiff demanded payment of $567,828.00, on or about February 9, 2017. Defendant
retained Madsen Kneppers & Associates to assist with damage determination and the projected
costs to rebuild the project.
On March 3, 2017, Defendant provided a copy of Madsen Kneppers’ repair estimate
analysis. The Madsen Kneppers’ repair spreadsheet attached to Defendant’s March 3, 2017
email identified 12 categories of claimed expenses, across 13 line items, that Defendant
identified as “soft costs.” (Id.) These costs are located at lines 140-152 of the Madsen Kneppers’
estimate and include: (1) management fees; (2) design and architecture fees; (3) land planning
and surveying costs; (4) marketing expenses; (5) appraisal expenses; (6) interest costs on HB
Construction’s first mortgage; (7) interest costs on HB Construction’s second mortgage; (8)
accounting and bookkeeping expenses; (9) legal expenses; (10) bank charges; (11) building
permit expenses; and (12) property taxes.
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Defendant’s March 3, 2017 email explained “Your policy includes as part of the core
coverage a ‘Soft Cost’ coverage extension with a limit of $100,000. . . .As your total incurred
‘Soft Costs’ are in excess of the $100,000 limit I have included that limit as part of the Builders
Risk loss adjustment as listed on the attached Statement of Loss.” And, on March 3, 2017,
Defendant, through its agent Dean Aliberti, denied payment of $567,828.00.
Plaintiff responded to Defendant in a letter dated April 25, 2017. Plaintiff contended that
the soft costs were costs incurred within the budgeted amount for the project and were therefore
not included within the Policy’s definition of soft costs.
Defendant responded via a letter dated May 3, 2017 and reaffirmed its decision to
advance the $100,000 sublimit for the claimed soft costs. Defendant asserted in the letter that the
Policy excludes coverage for soft costs outside of the coverage extension. Defendant further
explained its position that the disputed costs were largely incurred before the November 23, 2016
loss or were part of the original project budget, but that it anticipated Plaintiff incurring soft costs
exceeding the sublimit and therefore tendered $100,000 on March 6, 2017.
Defendant issued payment to Plaintiff in the amount of $5,672,484.36 for the
reconstruction of The Carlisle. Defendant has also tendered entire $100,000 Soft Costs sublimit
to Plaintiff. Plaintiff filed suit on September 8, 2017.
DISCUSSION
I.
New Mexico Insurance and Contract Law.
The construction of an insurance policy is a matter of law which can be decided on
summary judgment. Adams–Arapahoe Joint School Dist. v. Continental Ins. Co., 891 F.2d 772,
774 (10th Cir. 1989); Quaker State Minit–Lube, Inc. v. Fireman's Fund Ins. Co., 868 F.Supp.
1278, 1287 (D.Utah 1994), aff'd, 52 F.3d 1522 (10th Cir. 1995). Absent any ambiguity, the
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construction of a contract is a question of law, and whether an agreement contains an ambiguity
is also a question of law. Boatwright v. Howard, 102 N.M. 262, 263 (1985) (citing Schaefer v.
Hinkle, 93 N.M. 129, 597 P.2d 314 (1979) (“It is the role of the courts to interpret and enforce a
contract as written by the parties.”). When the insurance policy is unambiguous, a court must
enforce its terms. Sanchez v. Herrera, 109 N.M. 155, 159 (1989).
Because this is a diversity case based on New Mexico law, this Court must ascertain and
apply New Mexico law in construing the insurance policy. In doing so, the Court must either
follow the decisions of the New Mexico Supreme Court or attempt to predict what the New
Mexico Supreme Court would do. Coll v. First Am. Title Ins. Co., 642 F.3d 876, 886 (10th Cir.
2011); Federated Serv. Ins. Co. v. Martinez, 529 F. App'x 954, 957 (10th Cir. 2013) (if no
controlling state supreme court case, district court must predict how such court would rule based
on intermediate appellate decisions, decisions of other states, federal decisions, and general
weight and trend of authority).
“New Mexico law treats an insurance policy as an ordinary contract to be construed
according to customary principles of contract interpretation.”
Carolina Cas. Ins. Co. v.
Nanodetex Corp., 733 F.3d 1018, 1022 (10th Cir. 2013), citing Rummel v. Lexington Ins. Co.,
123 N.M. 752, 945 P.2d 970, 976 (1997). The policy should be construed as a complete and
harmonious instrument. See Erwin v. United Benefit Life Ins. Co., 70 N.M. 138 (1962); Safeco
Ins. Co. of Am., Inc., v. Mckenna, 565 P.2d 1033, 1037 (N.M. 1977) (insurance policies “must be
construed as intended to be a complete and harmonious instrument designed to accomplish a
reasonable end.”). The Court should construe a policy so as to give effect to every part. Id.
Where a clause “read alone is clear and unambiguous . . . it is not necessary to read the coverages
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together,” because “there is a risk of creating, rather than identifying, ambiguity.” Battishill v.
Farmers Alliance Ins. Co., 2006–NMSC–004, ¶ 16, 139 N.M. 24.
II.
Breach of Contract Claim.
Plaintiff argues that Defendant breached the policy by denying coverage for certain
amounts. These denied amounts include management fees, marketing expenses, interest on
mortgages, accounting, bookkeeping, and legal fees, and property taxes, amongst others. The
parties appear to agree that these claimed expenses were generally incurred before the date of the
fire or were part of the original project budget.1
A.
Builder’s Risk Policies
The policy at issue is a builder’s risk policy. Doc. 40-1, p. 11. “ ‘Builder[’]s risk'
insurance is a unique form of property insurance that typically covers only projects under
construction, renovation, or repair and insures against accidental losses, damages or destruction
of property for which the insured has an insurable interest.... The purpose of builder's risk
insurance is to compensate for loss due to physical damage or destruction caused to the
construction project itself.” Fireman's Fund v. Structural Sys. Tech., Inc., 426 F.Supp.2d 1009,
1025 (D. Neb. 2006), quoted in One Place Condo., LLC v. Travelers Prop. Cas. Co. of Am.,
2015 WL 2226202, at *3 (N.D. Ill. Apr. 22, 2015).
B.
Denied amounts are not “soft costs” under the policy.
Plaintiff argues that the denied amounts are not excluded from coverage as “soft costs,”
because they (1) were budgeted in the project and (2) were not incurred because of any delay
caused by the fire. Defendant argues in part that the denied amounts are “soft costs” and were
1
Plaintiff has not asserted any undisputed fact or any evidence in the record that the denied amounts occurred after
the date of fire, or that they were incurred as a result of the fire. Rather, Plaintiff appears to admit that the denied
amounts were within the “total project budget” and therefore would have been incurred whether or not the fire
occurred.
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appropriately denied because the applicable $100,000 sublimit had been reached. The Court
agrees that these denied amounts do not fall under any soft cost exclusion or sublimit.
There are two main provisions governing “soft costs” under the policy. One provision
excludes soft costs from coverage, unless a coverage extension is purchased. See Doc. 40-1, p.
27 (“We will not pay for loss or damage caused by or resulting from any of the following: (a)
Consequential Loss… soft costs or extra expenses except as specifically provided in this
Coverage Part.”). Plaintiff purchased a coverage extension for soft costs. Id., p. 20 (“We will
pay your “soft costs” during the period of delay in completion. Such “soft costs” must result
from direct physical loss of or damage to the Covered Property caused by or resulting from a
Covered Cause of Loss which delay the completion of the applicable project described in the
Declarations beyond the ‘planned completion date.’”). The limit for that coverage extension is
$100,000. Id., p. 13.
However, the policy defines “soft costs” as “your actual and necessary business costs in
excess of your budgeted amount for the project, consisting only of…”
Doc. 40-1, p. 36
(emphasis added). The policy then enumerates certain costs and expenses which qualify as “soft
costs.”
Id.
The denied amounts would generally fall under these enumerated categories.
However, the parties appear to agree that the denied amounts were not “in excess of [the]
budgeted amount for the project.” Id. Therefore, the denied amounts are not “soft costs” under
the policy and are not excluded from coverage.
C.
Denied amounts are not within scope of coverage.
However, as Defendant argues, Plaintiff’s breach of contract claim fails because the
denied amounts do not fall under any coverage provision. Generally, the plaintiff bears the
burden to show that the denied amounts fall within the coverage grant. Leafland Group-II,
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Montgomery Towers Ltd. Partnership v. Insurance Co. of Am., 881 P.2d 26, 29 (N.M. 1994)
(“while insurance policies may in some circumstances be construed against the insurer, the
insured must still show that its claim falls within the coverage provided by the policy.”).
Plaintiff fails to show that these denied amounts fall under any coverage provision or the
coverage grant.
Plaintiff argues that the denied amounts fall under a broad coverage grant. The Coverage
provision begins: “we will pay for physical loss of or damage to the Covered Property caused by
or resulting from a Covered Cause of loss.” Doc. 40-1, p. 18 (emphasis added). The parties
agree that the Covered Property is the Carlisle, and the Covered Cause of Loss is the fire.
The above general coverage provision, by its express terms, only covers losses or damage
that are caused by, or result from, the fire. Id., p. 18. The Seventh Circuit interpreted a similar
Travelers provision the same way, concluding that this General Coverage Provision in a
Travelers’ Builder’s Risk policy applied to repair the damage to the property. See Indianapolis
Airport Auth. v. Travelers Prop. Cas. Co. of Am., 849 F.3d 355, 361–62 (7th Cir. 2017) (in
interpreting similar Travelers contract, concluding soft costs do not fall under “direct physical
loss”).
Here, Plaintiff necessarily proceeds on the theory that the denied amounts were part of
the total project budget or accrued before the date of the fire.2 Otherwise, the denied amounts
would clearly fall under the soft cost provision and be barred. See Doc. 40-1, p. 36 (listing types
of soft costs). Moreover, because Plaintiff admits that these expenses were within the original
budget, it appears to admit that they were not incurred as a result of the fire. Therefore, it
appears these denied amounts would have been incurred whether or not the fire occurred. Since
Plaintiff also did not contest Defendant’s assertion in the May 3, 2017 letter and in briefing in this case that the
denied amounts were generally incurred before the date of loss. See, e.g., Doc 38-5, p. 4; Doc. 37, Doc. 47.
2
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Plaintiff makes no attempt to show that the denied amounts were losses caused by the fire, its
claim must necessarily fail.3
To the extent Plaintiff argues that some of the denied amounts in fact accrued after the
fire but before the planned completion date, Plaintiff failed to assert any undisputed facts
supporting that argument. Therefore, as an alternative ground for denial, Plaintiff failed to carry
its summary judgment burden by failing to present any undisputed facts on the nature of the
denied amounts. Even if Plaintiff did properly assert such facts, it appears that the fire would not
have caused those costs to accrue, as they were already budgeted.
Plaintiff also argues that, when read as a whole, the policy was intended to provide
coverage for these denied amounts. The Court disagrees. Rather, the intent of the parties was to
cover damages or losses caused by the fire. For example, the valuation provision – a provision
that determines how to calculate the amount of loss – omits any reference to the denied amounts.
Doc. 40-1, p. 34-35. See Indianapolis Airport Auth. v. Travelers Prop. Cas. Co. of Am., 849
F.3d 355, 362 (7th Cir. 2017) (district court appropriately considered the Valuation Condition in
similar Travelers’ policy to determine scope of loss). Rather, the valuation provision generally
looks to the cost to replace the property, with certain limitations. The valuation provision
considers general and specific overhead as part of the value of the Covered Property “only as
related directly to the repair or replacement of the covered property.”
Doc. 40-1, p. 35.
Therefore, the clear purpose of the policy is to provide Plaintiff with at least some
reimbursement for repairing or replacing the damaged property. Here, Plaintiff admits the
denied amounts were within the total project budget, and therefore would have been incurred
whether or not the fire occurred.
3
Plaintiff summarily argues that Defendant did not provide this basis for denying the disputed amounts in its May 3,
2017 letter. The Court disagrees. Travelers recited this exact reasoning in that letter. See Doc. 38-5, p. 4.
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Therefore, Plaintiff failed to meet its burden that the claimed loss falls within the policy’s
coverage, and its breach of contract claim fails. See Leafland Group-II, Montgomery Towers Ltd.
Partnership v. Insurance Co. of Am., 881 P.2d 26, 29 (N.M. 1994) (“while insurance policies
may in some circumstances be construed against the insurer, the insured must still show that its
claim falls within the coverage provided by the policy.”); Chronister v. State Farm Mut. Auto.
Ins. Co., 381 P.2d 673, 675 (N.M. 1963) (“The burden of proof is on the plaintiff to establish the
policy’s coverage of the injurious event.”); Barey v. Rice Ins. Servs. Co., LLC, 2016 WL
3638527, at *7 (D.N.M. 2016) (insured must show that its claim falls within coverage provided
by policy).
D.
Plaintiff’s arguments are unavailing.
Plaintiff argues that the broad grant of coverage for “direct physical loss or damage…
caused by or as a result of a Covered Cause of Loss” is ambiguous as to what types of loss are
covered. Doc. 40-1, p. 18. The Court disagrees. As explained above, the coverage grant is clear
that it only covers losses that result from or are caused by the fire. See United Nuclear Corp. v.
Allstate Ins. Co., 285 P.3d 644, 647–48 (N.M. 2012) (reviewing courts should not “create
ambiguity where none exists, and an ambiguity does not exist merely because the parties hold
competing interpretations” about the meaning of a policy provision); see also Safeco Ins. Co. of
Am., Inc. v. McKenna, 90 N.M. 516, 520 (1977) (“Resort will not be made to a strained
construction for the purpose of creating an ambiguity when no ambiguity in fact exists.”). The
remaining provisions in the policy support this interpretation.
For example, the valuation
provision includes overhead “only as related directly to the repair or replacement of the Covered
Property.” Doc. 40-1, p. 35. Therefore, the Court concludes that the policy is not ambiguous.
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Plaintiff alternatively argues that the denied amounts must be included in the scope of
coverage, because they are not specifically excluded from coverage, while “soft costs” are
excluded. The Court disagrees. Here, there was no need to exclude the denied amounts because
they never fell within a coverage provision. See, e.g., Vision One, LLC v. Philadelphia Indem.
Ins. Co., 276 P.3d 300, 311 (Wash. 2012) (“Vision’s argument fails because it wrongly assumes
the policy covered financial losses in the first instance. While Vision’s policy was an all-risk
policy, coverage extended only to ‘physical’ losses to covered ‘property.’ It is of no consequence
that soft costs were not specifically enumerated under the delay-and-consequential-loss
exclusion. Because the policy did not cover soft costs, there was no need to exclude them.”).
Soft costs, however, fall within the coverage grant because they occurred as a result of the fire,
and therefore required an exclusion.
III.
Remaining claims are dismissed.
Because the breach of contract claim fails, the remaining claims predicated on that breach
must also be dismissed. The remaining claims include the following: bad faith, Unfair Practices
Act, unfair trade practices, negligence, negligence per se, and breach of the implied covenant of
Good Faith and Fair Dealing. See, e.g., Jackson Natl. Life Ins. Co. v. Receconi, 827 P.2d 118,
134 (N.M. 1992) (bad faith requires unfounded refusal to pay); American Employers’ Ins. Co. v.
Crawford, 533 P.2d 1203, 1209 (N.M. 1975) (“Since Crawford had no coverage, we fail to
understand how the Company acted negligently, or displayed bad faith in refusing to pay $
100,000 which it had no duty to pay.”); Aztec Abstract & Title Ins., Inc. v. Maxum Specialty
Grp., 302 F.Supp.3d 1274, 1286 (D.N.M. 2018) (“[A] court should dismiss bad faith and New
Mexico Insurance Practices Act claims if there is ... no right to indemnification under an
insurance policy.”); New Mem'l Assocs. v. Credit Gen. Ins. Corp., 973 F. Supp. 1027, 1031
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(D.N.M. 1997) (dismissing insured's extra-contractual statutory claims upon finding that insurers
had properly denied coverage); Delgado v. Liberty Mut. Fire Ins. Co., 2017 WL 6375623, at *9
(D.N.M., 2017) (insurer entitled to summary judgment on bad faith claim because it had no
contractual duty to pay insured benefits under policy); United Rentals Nw., Inc. v. Federated
Mut. Ins. Co., 2009 WL 10666372, at *3 (D.N.M. June 5, 2009) (“Because Federated did not
have a contractual duty to pay United Rentals under an insurance policy, Federated cannot be
held liable for an unfair claims practice.”); New Memorial Assocs. v. Credit Gen. Ins. Corp., 973
F. Supp. 1027, 1031 (D.N.M. 1997) (dismissing insured’s claims for violation of New Mexico
Unfair Practices Act and New Mexico Insurance Practices Act based on finding that insurers
had properly denied coverage). See also Barey v. Rice Ins. Servs. Co., LLC, 2016 WL 3638527,
at *10 (D.N.M. Mar. 31, 2016) (after finding there was no coverage and dismissing breach of
contract claim, dismissing remaining claims, including UPA claim and bad faith claim). Plaintiff
does not appear to contest dismissal of these claims. See Doc. 45, 47.
CONCLUSION
Although Plaintiff is correct that the denied amounts are not “soft costs” excluded under
the policy, Plaintiff failed to show that the denied amounts fall within the coverage provided by
the policy. Therefore, the breach of contract claim and the remaining claims must be dismissed.4
A separate judgment in favor of Defendant against Plaintiff shall be issued.
IT IS THEREFORE ORDERED that Plaintiff’s Partial Motion for Summary Judgment
(Doc. 34) is hereby DENIED for reasons described in this Memorandum Opinion and Order.
4
To the extent Plaintiff objects that the Court is granting Defendant summary judgment on a basis not raised in its
motion, the Court disagrees. Defendant specifically raised this argument as a reason to grant summary judgment in
its motion. See Doc. 38, p. 18 (“But even if they were not expressly excluded from coverage, these costs would not
be covered because they are not direct physical loss of or damage to the Covered Property.”). Moreover, Defendant
extensively argued this position in its response to Plaintiff’s Motion, Doc. 37, and therefore Plaintiff had sufficient
notice to address it.
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IT IS FURTHER ORDERED that Defendant’s Motion for Summary Judgment (Doc.
38) is hereby GRANTED for reasons described in this Memorandum Opinion and Order.
______________________________________
CHIEF UNITED STATES DISTRICT JUDGE
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