Cyprus Amax Minerals v. Lexington Ins., 02SC247.

• Decision Date: 16 June 2003
• Docket Number: No. 02SC247.,02SC247.
• Parties: CYPRUS AMAX MINERALS COMPANY, Petitioner, v. LEXINGTON INSURANCE COMPANY; Zurich Specialities London Limited; and Gerling-Konzern Allgemeine Versicherungs-AG, Respondents.
• Court: Colorado Supreme Court

74 P.3d 294

CYPRUS AMAX MINERALS COMPANY, Petitioner, v. LEXINGTON INSURANCE COMPANY; Zurich Specialities London Limited; and Gerling-Konzern Allgemeine Versicherungs-AG, Respondents.

No. 02SC247.

Supreme Court of Colorado, En Banc.

June 16, 2003.

Rehearing Denied August 18, 2003.

Fognani Guiboard Homsy & Roberts, LLP, John D. Fognani, R. Kirk Mueller, Denver, Colorado, Attorneys for Petitioner.

White and Steele, P.C., Franz Hardy, Frederick W. Klann, Denver, Colorado, Attorneys for Respondent.

Roberts Levin & Patterson, P.C., Bradley A. Levin, Christine K. Wilkinson, Michael J. Rosenberg, Denver, Colorado, Amicus Curiae for the Trial Lawyers Association.

Campbell, Latiolais & Ruebel, P.C., Brian E. Martin, Jeffrey Clay Ruebel, Denver, Colorado, Amicus Curiae for Colorado Defense Lawyer's Association.

Justice KOURLIS delivered the Opinion of the Court.

I. Introduction

This is a case in which an insured is seeking indemnification from its insurers. The insured, Cyprus Amax Minerals Company ("Cyprus"), sold the Golden Cross Mine to Coeur d'Alene Mines Corporation ("Coeur"). Two years after the sale, the Mine experienced substantial damage, eventually leading to its close, stemming from a landslide deep below ground. After years of litigation, Cyprus and Coeur settled their claims and Cyprus sought indemnification from its insurers. The insurers refused, and Cyprus sued. The trial court granted summary judgment in favor of the insurers and the court of appeals affirmed. Cyprus Amax Minerals Co. v. Lexington Ins. Co., 55 P.3d 200 (Colo.App.2002). We granted certiorari on three issues, relating both generally and specifically to the insurers' indemnification obligation.¹

We now hold as follows. First, we explore the difference between an insurer's duty to defend its insured and an insurer's duty to indemnify its insured. We note that the rule directing a trial court to examine the underlying complaint in order to determine whether the insurer has a duty to defend its insured against the claims asserted is a rule designed to cast a broad net in favor of coverage. To interpret that rule in a way that narrows coverage when applied to a duty to indemnify would be inconsistent with our precedent. Accordingly, we hold that in determining the possibility of indemnity coverage, the trial court must examine the nature of the facts alleged and claims pled in the complaint or amended complaint liberally with a view toward affording the greatest possible protection to the insured. If, when read liberally, such document can colorably support a conclusion that coverage may attach, then the court may consider such additional evidence as will buttress or defeat coverage. Second, we hold that "property damage" was at issue in the lawsuit between Coeur and Cyprus, because "property damage" under the language of these policies can include the costs of repairing the Mine and the costs incurred by Coeur in loss of use of the Mine after the landslide. Third, we hold that the landslide was a "loss" or "accident" that could trigger the possibility of coverage under the terms of these policies and that no further causal connection was required by the policies.

We therefore conclude that there are genuine issues of material fact in dispute. Accordingly, we overturn the entry of summary judgment and remand this case for resolution of the factual issue of whether some portion of the settlement amount is compensable property damage attributable to physical injury to or destruction of the Mine including the loss of use of the Mine arising out of the landslide.

II. Facts and Procedural History

In April of 1993, Cyprus sold the Golden Cross Mine in Auckland, New Zealand to Coeur through a stock purchase agreement for nearly $54 million. Coeur operated the Mine successfully for almost two years, until the Mine experienced significant damage as a result of deep-seated ground movement. Coeur made efforts to repair the damage caused by the subsidence at the Mine, but eventually closed the Mine.

In 1996, litigation ensued between the parties, centering on the damaged Mine. Cyprus initiated suit by filing a declaratory judgment action against Coeur in Federal District Court in Colorado. Shortly thereafter, Coeur filed an action in its home state of Idaho (the "underlying litigation").² In its Second Amended Complaint, Coeur alleged that Cyprus negligently, recklessly, or deliberately failed to disclose material facts regarding conditions at the Mine, which ultimately resulted in the subsidence. Coeur brought claims under the Idaho and Colorado Securities Acts, common law fraud, and common law rescission. Three years into litigation, the underlying litigation settled for approximately $31 million.

Cyprus maintained excess liability insurance policies through Lexington Insurance Company, Zurich Specialities London Limited, and Gerling-Konzern Allgemeine Versicherungs-AG ("Insurers"). Each policy provided in pertinent part that the Insurers would indemnify the Insured for a loss (defined as an accident, including continuous or repeated exposure to the same general harmful conditions) imposed upon the Insured by law or assumed by contract for damages on account of personal injury, property damage or advertising injury. "Property damage" is defined as physical injury to or destruction of tangible property, including the loss of use thereof.

After Cyprus and Coeur settled the underlying suit, Cyprus then sought indemnification for the amount of the settlement. The Insurers denied the claim and refused to indemnify Cyprus, claiming that Cyprus' liability in the underlying suit was not covered by the policies.

Cyprus subsequently commenced a civil action against the Insurers in Denver District Court claiming breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair trade acts and practices. The Insurers filed a motion for summary judgment, arguing that Cyprus' claim was not covered because the underlying litigation did not include "property damage," for which the Insurers would be liable. Rather, the Insurers contended that the claims were based entirely on fraud and other intentional acts by Cyprus and involved only economic damages, not property damage as would be covered by the policies. The district court granted summary judgment in favor of the Insurers, disagreeing with the Insurers' argument that the claims were based on intentional acts, but agreeing that Coeur did not allege property damage in the Second Amended Complaint. Additionally, the district court found that no material issue of fact was in dispute and that the "loss" suffered by Coeur focused solely on monetary damages not covered by the policies.

The court of appeals affirmed the judgment of the district court, concluding that the Second Amended Complaint did not allege property damage, but rather only economic damages resulting from fraud and misrepresentation. The court determined that because the duty to defend is broader than the duty to indemnify and because Insurers' obligation to defend arises from the four corners of the complaint, there can be no duty to indemnify where the complaint does not allege facts that would impose liability. Finally, the court also noted that irrespective of Coeur's descriptions in the Second Amended Complaint of the property damage at the Mine, no causal connection existed between any alleged misrepresentations and the property damage.

III. Standard of Review

As a starting point for this analysis, it is important to remember that, "summary judgment is a drastic remedy and should only be granted if there is a clear showing that no genuine issue as to any material fact exists and the moving party is entitled to judgment as a matter of law." AviComm, Inc. v. Colo. Pub. Utils. Comm'n, 955 P.2d 1023, 1029 (Colo.1998); see also Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo.1999). Courts grant the nonmoving party all favorable inferences that may be drawn from uncontested facts, and resolve any doubt as to whether a triable issue of material fact exists against the moving party. See Compass, 984 P.2d at 613. This court reviews grants of summary judgment de novo.

IV. Principles of Insurance Contract Interpretation

An insurance policy is merely a contract that courts should interpret in line with well-settled principles of contract interpretation. See Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo.1999); Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748, 750 (Colo.1990). In undertaking the interpretation of an insurance contract, courts should be wary of rewriting provisions, and should give the words contained in the contract their plain and ordinary meaning, unless contrary intent is evidenced in the policy. Chacon, 788 P.2d at 750. Courts should read the provisions of the policy as a whole, rather than reading them in isolation. Simon v. Shelter Gen. Ins. Co., 842 P.2d 236, 239 (Colo.1992). Courts may neither add provisions to extend coverage beyond that contracted for, nor delete them to limit coverage. However, because of the unique nature of insurance contracts and the relationship between the insurer and insured, courts do construe ambiguous provisions against the insurer and in favor of providing coverage to the insured. Chacon, 788 P.2d at 750. A court's interpretation of an insurance contract is a matter of law, subject to de novo review. Compass, 984 P.2d at 613.

V. Duty to Indemnify

We must begin by deciding what a court may review in resolving whether an insured is entitled to indemnification of its loss. The trial court and the court of appeals began by looking to the underlying complaint itself and concluded that the Insurers had no obligation to indemnify Cyprus for liability stemming from the negotiated settlement with Coeur because the Second Amended Complaint contained no claim for covered losses. We agree that the Complaint serves as the starting...