Brookshire Downs at Heatherridge Condo. Ass'n, Inc. v. Owners Ins. Co.

• Decision Date: 31 July 2018
• Docket Number: Civil Action No. 17-cv-0871-WJM-MJW
• Citation: 324 F.Supp.3d 1201
• Parties: BROOKSHIRE DOWNS AT HEATHERRIDGE CONDOMINIUM ASSOCIATION, INC., a Colorado corporation, Plaintiff, v. OWNERS INSURANCE COMPANY, a foreign corporation, Defendant.
• Court: U.S. District Court — District of Colorado

324 F.Supp.3d 1201

BROOKSHIRE DOWNS AT HEATHERRIDGE CONDOMINIUM ASSOCIATION, INC., a Colorado corporation, Plaintiff,

v.OWNERS INSURANCE COMPANY, a foreign corporation, Defendant.

Civil Action No. 17-cv-0871-WJM-MJW

United States District Court, D. Colorado.

Signed July 31, 2018

David Jeffrey Furtado, Matthew Wayne Hamblin, Nathanael Thomas Archuleta, Rodney Joseph Monheit, Furtado Law PC, David Matthew Strachan, Giometti & Mereness, PC, Denver, CO, John Kenneth Joyner, Joyner Law Firm, PLLC, Colorado Springs, CO, for Plaintiff.

Gregory R. Giometti, Gregory R. Giometti & Associates, P.C., Michael D. Bellamy, Giometti & Mereness, PC, Denver, CO, for Defendant.

ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND ORDERING PLAINTIFF TO SHOW CAUSE WHY SUMMARY JUDGMENT SHOULD NOT ENTER IN DEFENDANT'S FAVOR

William J. Martinez, United States District Judge

Plaintiff Brookshire Downs at Heatherridge Condominium Association, Inc. ("Plaintiff") sues Defendant Owners Insurance Company ("Defendant") for breach of insurance contract and unreasonable delay or denial of insurance benefits. (See ECF No. 1.) Currently before the Court is Plaintiff's Motion for Partial Summary Judgment (ECF No. 36), which seeks summary judgment against Defendant's second affirmative defense. That defense asserts that Plaintiff failed to file this lawsuit within a two-year limitations period established by contract. (See ECF No. 16 at 9.) According to Plaintiff, however, a Colorado statute nullifies that contractual limitations period, so the statutory limitations period for contract claims (three years) applies.

For the reasons explained below, the Court disagrees and therefore must deny Plaintiff's motion. In addition, the Court will order Plaintiff to show cause why summary judgment should not enter in Defendant's favor on Defendant's second affirmative defense.

I. LEGAL STANDARD

Summary judgment is warranted under Federal Rule of Civil Procedure 56"if the movant shows that 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) ; see also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if, under the relevant substantive law, it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc. , 259 F.3d 1226, 1231-32 (10th Cir. 2001). An issue is "genuine" if the evidence is such that it might lead a reasonable trier of fact to return a verdict for the nonmoving party. Allen v. Muskogee , 119 F.3d 837, 839 (10th Cir. 1997).

In analyzing a motion for summary judgment, a court must view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc. , 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ). In addition, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. See Houston v. Nat'l Gen. Ins. Co. , 817 F.2d 83, 85 (10th Cir. 1987).

II. FACTS

The following facts are undisputed unless attributed to a party or otherwise noted.

Plaintiff represents itself to be a condominium association comprised of individual unit owners. (ECF No. 36 at 2, ¶ 1.)¹ On January 14, 2014, Defendant issued to Plaintiff an insurance policy ("Policy") that "consist[ed] of the following coverage part(s)": (1) "commercial property coverage," (2) "commercial general liability coverage," and (3) "commercial crime coverage." (ECF No. 36-4 at 3.) The Policy contains the following contractual statute of limitations: "No one may bring a legal action against us under this Coverage Part [i.e. , the commercial property coverage] unless * * * [t]he action is brought within 2 years after the date on which the direct physical loss or damage occurred." (Id. at 108.)

The insured property is zoned for residential use, and the various individual condominium units are restricted to residential use. (ECF No. 36 at 3, ¶¶ 2-3.) Plaintiff claims that its governing documents also forbid business activities on any portion of the property. (Id. ¶ 4.)

Plaintiff alleges that hail and wind caused damage to Plaintiff's property on September 29, 2014. (ECF No. 1 ¶ 7.) Plaintiff further asserts that it filed a claim under the Policy in June 2015. (Id. ¶ 8.) Plaintiff became dissatisfied with Defendant's handling of the claim. (Id. ¶¶ 27-32.) Plaintiff filed this lawsuit on April 7, 2017-more than two years but less than three years from the date of the wind and hail damage. (See ECF No. 1.)

III. ANALYSIS

The Court has diversity jurisdiction over this lawsuit (see ECF No. 1 ¶¶ 2-4), and thus applies Colorado law.² Colorado law sets forth a three-year statute of limitations for "[a]ll contract actions." Colo. Rev. Stat. § 13-80-101(1)(a). If this limitations period applies, Plaintiff's lawsuit is timely. But, as noted, the Policy specifies a two-year period. If that limitations period applies, Plaintiff's lawsuit is untimely.

The Colorado Court of Appeals holds that a contractual limitations period may override a statutory limitations period so long as such contractual clauses are not "prohibited by statute." Grant Family Farms, Inc. v. Colo. Farm Bureau Mut. Ins. Co. , 155 P.3d 537, 538 (Colo. App. 2006).³ Plaintiff claims that the Policy's two-year period is prohibited by the following statute:

(a) Notwithstanding any provision of a homeowner's insurance policy that requires the policyholder to file suit against the insurer, in the case of any dispute, within a period of time that is shorter than required by the applicable statute of limitations provided by law, a homeowner may file such a suit within the period of time allowed by the applicable statute of limitations; except that this paragraph (a):

(I) Does not revive a cause of action that, as of May 10, 2013 [the date the governor signed the bill enacting this subsection], has already been barred by contract; and

(II) Applies only to a cause of action that, as of May 10, 2013, has not been barred by contract.

(b) On and after January 1, 2014, an insurer shall not issue or renew a homeowner's insurance policy that requires the policyholder to file suit against the insurer, in the case of any dispute, within a period of time that is shorter than required by the applicable statute of limitations provided by law.

Colo. Rev. Stat. § 10-4-110.8(12). Plaintiff, however, argues exclusively from paragraph (b), completely ignoring paragraph (a). Plaintiff's argument runs as follows:

• "Homeowners insurance" is defined as "insurance that covers damage or loss to all types of homes." Colo. Rev. Stat. § 10-4-110.6.

• The Policy covers damage or loss to condominiums, which are a type of "home."

• The Policy is therefore a "homeowner's insurance policy" within the meaning of paragraph (b).

• The Policy, issued after January 1, 2014, contains the sort of contractual limitations period that paragraph (b) prohibits.

• "Insurance policy clauses that are contrary to a provision of a statute are void as against public policy." Aetna Cas. & Sur. Co. v. McMichael , 906 P.2d 92, 100 (Colo. 1995).

• The Policy's two-year limitations period is therefore void.

(See ECF No. 36 at 4-5.)

In response, Defendant argues exclusively from the language of paragraph (a), completely ignoring paragraph (b). (See ECF No. 41 at 3-9.) Defendant emphasizes paragraph (a)'s authorization that "a homeowner may file such a suit within the period of time allowed by the applicable statute of limitations" (emphasis added), and argues that Defendant is clearly not a homeowner. Defendant also points to Pinewood Townhome Association, Inc. v. Auto Owners Insurance Co. , 2017 WL 590294, at *2-3 (D. Colo. Feb. 13, 2017), in which United States District Judge Christine M. Arguello held that paragraph (a) does not govern the sort of commercial insurance policies issued to homeowners associations.

Plaintiff's reply emphasizes that it never argued from paragraph (a), but only from paragraph (b), which contains no similar "homeowner" qualification. (ECF No. 44 at 1- 2.) In Plaintiff's view,

the relevant inquiry [under paragraph (b) ] is not whether [Plaintiff] is a homeowner. The relevant inquiry is whether the insurance policy is, or is not, ‘homeowner's insurance’ as that term is defined [by the statute]. Notably, the statutory definition...makes no reference to the term ‘homeowner,’ and focuses instead on the type of property insured.

(Id. at 4.) As for Judge Arguello's Pinewood decision, Plaintiff notes that Judge Arguello likewise focused on paragraph (a), not (b), so "the legal argument made in [Plaintiff's] motion is new and distinct from the arguments made in Pinewood ." (Id. at 5.)

The Colorado Supreme Court has never construed paragraph (a) or (b). In these circumstances, this Court "must attempt to predict what the [Colorado Supreme Court] would do." Wade v. EMCASCO Ins. Co. , 483 F.3d 657, 666 (10th Cir. 2007) (internal quotation marks omitted). Under Colorado law, "[i]f the plain language of the statute is clear and unambiguous, [a court must] interpret the statute according to its plain meaning." Hernandez v. People , 176 P.3d 746, 751 (Colo. 2008). But the "whole of [an enactment] must be read and construed in context. Only by so doing can a consistent, harmonious, and sensible effect be given to all its parts." Travelers Indem. Co. v. Barnes , 191 Colo. 278, 552 P.2d 300, 303 (1976) (internal quotation marks omitted); see also Union Pac. R.R. Co. v. Martin , 209 P.3d 185, 189-90 (Colo. 2009) (analyzing a statutory provision in comparison to other closely related sections and grounding its holding in the statute "construed in context").

Paragraphs (a) and (b) comprise subsection (12) of § 10-4-110.8. Subsection (12) was added to § 10-4-110.8 by the Homeowner's Insurance Reform Act of 2013. See 2013 Colo. Legis....