Cyprus Amax Minerals Co. v. LEXINGTON INS.
| Decision Date | 28 February 2002 |
| Docket Number | No. 01CA0208.,01CA0208. |
| Citation | 55 P.3d 200 |
| Parties | CYPRUS AMAX MINERALS COMPANY, a Delaware corporation, Plaintiff-Appellant, v. LEXINGTON INSURANCE COMPANY, a Delaware corporation; Zurich Specialties London Limited, a Swiss corporation; and Gerling-Konzern Allgemeine Versicherungs-AG, a German corporation, Defendants-Appellees. |
| Court | Colorado Court of Appeals |
Fognani Guibord Homsy & Roberts, LLP, John D. Fognani, R. Kirk Mueller, Denver, Colorado, for Plaintiff-Appellant.
White & Steele, P.C., Michael Anderson, Kurt A. Horton, Frederick W. Klann, Denver, Colorado, for Defendants-Appellees. Opinion by Judge MARQUEZ.
In this action for reimbursement of costs it paid to investigate, defend, and settle a lawsuit, plaintiff, Cyprus Amax Minerals Company, appeals the summary judgment entered in favor of defendants, Lexington Insurance Company, Zurich Specialties London Limited, and Gerling-Konzern Allgemeine Versicherungs-AG (insurers). We affirm.
Insurers each issued a claims made excess liability insurance policy to Cyprus providing excess coverage for liability imposed upon or assumed by Cyprus for, among other things, damages on account of "property damage" resulting from a "loss" as defined in the policies.
In 1993, Cyprus conveyed its majority interest in a mine to Coeur d'Alene Mines Corporation (Coeur) through a stock purchase agreement. Three years later, Coeur sued Cyprus, alleging it had learned that portions of the slope at the mine site were sustaining subsurface movement. According to Coeur's second amended complaint, this ground movement required substantial remediation and rendered the property worthless as an operating mine.
In its lawsuit against Cyprus, Coeur asserted claims for violation of the Idaho and Colorado securities acts, intentional or reckless misrepresentation in violation of the Idaho and Colorado securities acts, fraud, and rescission, all based on Cyprus' alleged failure to disclose information regarding frequent and pervasive incidents of ground instability at the mine. Coeur sought return of the purchase price of the mine together with interest, costs, attorney fees, and expenses it had incurred as a result of Cyprus' misrepresentations and omissions, and also rescission of the stock purchase agreement.
The litigation between Coeur and Cyprus was resolved by a settlement agreement, and Cyprus then requested indemnification from insurers for its defense and liability costs. Insurers denied Cyprus' claim on the basis that Cyprus' liability was not covered by their policies, and Cyprus filed this suit against insurers, alleging claims for breach of contract, breach of the covenant of good faith and fair dealing, and unfair trade acts and practices.
The trial court granted insurers' motions for summary judgment, determining that Cyprus' alleged losses were not covered by the policies issued by insurers.
Summary judgment is appropriate only when the pleadings and supporting documents demonstrate that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. Our review of a summary judgment is de novo. Vail/Arrowhead, Inc. v. District Court, 954 P.2d 608, 611 (Colo. 1998); Hyden v. Farmers Ins. Exch., 20 P.3d 1222, 1224 (Colo.App.2000).
Cyprus first contends that the trial court erred in failing to apply the plain language of the insurance policies and ignoring Colorado case law governing the construction of insurance contracts. We disagree.
An insurance policy is a contract and should be interpreted consistently with the well-settled principles of contract interpretation. The interpretation of an insurance contract is a matter of law, which we review de novo. Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo.1999).
The language of an insurance policy should be enforced according to its plain terms if they are clear and unambiguous. Tynan's Nissan, Inc. v. American Hardware Mut. Ins. Co., 917 P.2d 321, 323 (Colo.App. 1995).
The insurance policies at issue here provide in pertinent part that the underwriters will indemnify the insured by reason of the liability "(a) imposed upon the Insured by law, or (b) assumed by the Insured under contract or agreement, for damages on account of ... Property Damage ... resulting from each Loss, but only such ... Property Damage ... neither expected nor intended by the Insured."
The policies define "property damage" as "(a) physical injury to or destruction of tangible property, including the loss of use thereof resulting therefrom; (b) loss of use of tangible property which has not been physically injured or destroyed." The term "loss" is defined as "an accident, including continuous or repeated exposure to the same general harmful conditions." This definition of "loss" is similar to the definition of "occurrence" often used in comprehensive general liability policies. See Hecla Mining Co. v. New Hampshire Ins. Co., 811 P.2d 1083 (Colo. 1991).
In its order granting summary judgment, the trial court concluded that "[a]ll six claims in ... [Coeur's] Second Amended Complaint are based upon allegations that Cyprus negligently, recklessly, or intentionally failed to disclose to Coeur material facts about the Mine, which [a]ffected the value of the transaction between Coeur and Cyprus," and "[t]hese allegations are not allegations of `property damages' under that definition in the policy."
The allegations of Coeur's second amended complaint support this determination because that complaint did not allege liability for "property damage." Coeur's complaint sought to hold Cyprus liable for fraud and misrepresentations in connection with the sale of the mine. These claims did not expose Cyprus to liability for causing damage to the property, but rather for economic losses resulting from the alleged misrepresentation of the value of the mine. Such damages are not "property damage" within the meaning of insurers' policies. See M.L. Foss, Inc. v. Liberty Mut. Ins. Co., 885 P.2d 284 (Colo.App.1994)(damages for difference between actual value of property and value of property as represented by insured in connection with sale are not property damages); see also Safeco Ins. Co. v. Andrews, 915 F.2d 500 (9th Cir.1990)(economic losses resulting from failure to disclose facts relevant to the property's value are not property damages); State Farm Fire & Cas. Co. v. Brewer, 914 F.Supp. 140 (S.D.Miss.1996)(claims of negligent and intentional misrepresentation and fraud are pecuniary in nature); Bush v. Beal, 26 Kan.App.2d 183, 987 P.2d 1103 (1999)(economic losses sustained by misrepresentations are not property damage); Qualman v. Bruckmoser, 163 Wis.2d 361, 471 N.W.2d 282 (Ct.App.1991)(damages for claims of breach of contract and misrepresentation are pecuniary in nature and do not constitute property damages).
We also reject Cyprus' contention that the language in the insurance policies does not support the "causal nexus" analysis urged by insurers. As insurers contend, the policy language requiring that the alleged "property damage" result from a "loss" creates a requirement for a causal connection between the "property damage" and Cyprus' alleged misrepresentations.
Here, although the physical damage sustained by the mine was described in Coeur's complaint, nothing in that complaint alleged that Cyprus' misrepresentations caused any damage to the mine. Rather, Coeur alleged that the misrepresentations led it to purchase the mine and subsequently incur the cost of remediating damage to the mine site and closing the mine. Thus, there is no causal connection between the alleged misrepresentations and the physical damage; the only causal connection is between Cyprus' misrepresentations and Coeur's economic losses. See Martin v. State Farm Fire & Cas. Co., 146 Or.App. 270, 932 P.2d 1207 (1997)(no causal connection between misrepresentations and physical damage); State Farm Lloyds v. Kessler, 932 S.W.2d 732 (Tex.App.1996)(alleged misrepresentations did not expose insured to liability for damage to tangible property); see also Safeco Ins. Co. v. Andrews, supra (); State Farm Fire & Cas. Co. v. Brewer, supra (); Bush v. Beal, supra ().
Nor are we persuaded that Compass Insurance Co. v. City of Littleton, supra, upon which Cyprus relies, requires a different result. The supreme court in Compass held that if the insurers had intended the term "damages" to have only a limited, technical meaning, they had the opportunity to indicate this limitation clearly in their policies, but did not do so. Cyprus reasons that insurers could have stated in their policies that coverage was not intended for monetary claims based on intentional or negligent misrepresentations of an insured, rather than relying on a causal nexus analysis. However, the absence of such a provision here is not controlling. Rather, Cyprus' claim fails because Coeur sought recovery for economic losses, not property damage, and because there was no causal connection between the alleged misrepresentations and the physical damage.
Cyprus also contends that the trial court erred in concluding that its claim is barred from insurance coverage by the holding in M.L. Foss, supra. We disagree.
In M.L. Foss, the insured sold property to a purchaser, who later learned that the property was contaminated and that the Environmental Protection Agency had instituted a cleanup plan. The purchaser sued the insured on claims including breach of contract and fraud and sought damages resulting from the difference between the value of the property as represented by the insured and the value in light of the contamination...
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Cyprus Amax Minerals v. Lexington Ins.
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