High St. Lofts Condo. Ass'n, Inc. v. American Family Mut. Ins. Co.

• Decision Date: 26 September 2011
• Docket Number: Civil Action No. 10–cv–02484–MSK–BNB.
• Citation: 821 F.Supp.2d 1235
• Parties: HIGH STREET LOFTS CONDOMINIUM ASSOCIATION, INC., Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Colorado

821 F.Supp.2d 1235

HIGH STREET LOFTS CONDOMINIUM ASSOCIATION, INC., Plaintiff,

v.AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant.

Civil Action No. 10–cv–02484–MSK–BNB.

United States District Court, D. Colorado.

Sept. 26, 2011.

Cameron W. Tyler, Cameron W. Tyler & Associates, P.C., Boulder, C.O., for Plaintiff.

Lelia Kathleen Chaney, Sara Cantrick Van Deusen, Lambdin & Chaney, LLP, Denver, C.O., for Defendant.

OPINION AND ORDER DENYING MOTION FOR SUMMARY JUDGMENT

MARCIA S. KRIEGER, District Judge.

THIS MATTER comes before the Court pursuant to the parties' Joint Motion to Bifurcate (# 12); and Defendant American Family Mutual Insurance Company's (“American Family”) Motion for Summary Judgment (# 21), Plaintiff High Street Lofts Condominium Association, Inc.'s (“High Street”) response (# 24), and American Family's reply (# 31).

FACTS

In May 2009, the City of Boulder began performing road repair work on Broadway near High Street's property, some of which involved the use of a vibrating compactor to compact and set the roadbed. Shortly after work began, representatives of High Street noticed damage to High Street's building and associated structures, such as cracks in walls, sloping of floors, and separation of porches from the building itself. Believing that such damage was the result of construction activities on Broadway, High Street contacted the City of Boulder, who, in turn, forwarded the complaint on to Concrete Express, Inc., the city's contractor on the road repair project. On July 9, 2009, High Street filed a formal Notice of Claim against Concrete Express, alleging that “due to defective work performed by Concrete Express, [High Street's building] has suffered structural and non structural damage including, but not limited to, foundation movement resulting in potential health and safety issues.”

In or about late July 2009, High Street filed a claim with American Family, who had issued a business insurance policy to High Street. On September 2, 2009, American Family denied High Street's claim. American Family pointed to an opinion letter provided by engineer Glenn Frank, submitted by High Street as part of its claim. That letter appeared to indicate that the damage was the result of “soil consolidation/settlement,” in response to the construction activities.¹ American Family also pointed to the opinion of Bill Hawkins, an expert retained by American Family to assess the claim. Mr. Hawkins concluded that the original foundation of the building was insufficient to “resist lateral loading conditions” that resulted from “the lateral shaking of the rubble foundations during the vibratory compaction of the roadway project.” From this, American Family concluded that the “settlement” observed by Mr. Frank and the “lateral loading” (or “differential movement”) observed by Mr. Hawkins “is a result of earth movement as a result of the construction activities.” American Family pointed to two major policy terms that supported its conclusion. First, it noted policy language that excluded from coverage damages caused by “earth sinking ... or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations.” Second, it pointed to language, described by High Street in its brief as the “anti-concurrent cause” (or “ACC”) term, that stated that “loss or damage [excluded by the language quoted above] is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Thus, although American Family acknowledged that “the City's street construction activities started in motion ... damage to the building,” it apparently concluded that “earth ... shifting” was one of the causes of the damage and, by application of the anti-concurrent cause term, none of the damage was therefore covered.

In late September 2009, High Street commenced suit against Concrete Express in the Colorado District Court for Boulder County, alleging various claims sounding in the general common-law tort of negligence. That suit alleged that “equipment used by Concrete Express caused extensive vibrations to travel through the ground and into the building,” causing damage. American Family points out that High Street expressly endorsed Mr. Hawkins—the engineer retained by American Family with regard to High Street's claim—as High Street's expert in the litigation. High Street's brief speaks of the Boulder litigation in the past tense, suggesting that it has been resolved, but the record does not indicate how, if at all, that litigation was concluded, other than High Street's statement that the suit did not result in “a verdict.”

Thereafter, High Street commenced this action against American Family. It alleges ___ claims for relief: (i) a request for a declaratory judgment addressing the question over policy coverage for the damage; (ii) breach of insurance contract; and (iii) violation of C.R.S. § 10–3–1115 et seq. , in that American Family unreasonably delayed or denied payment of benefits.

American Family moves for summary judgment (# 21) on each of High Street's claims, arguing that based on the undisputed facts in this case—namely, the position High Street has taken in the Boulder lawsuit—the property damage is not covered under the terms of the policy. The Court will address the parties' arguments with regard to this issue as part of its analysis. Separately, the parties have moved (assuming the case survives American Family's motion) to bifurcate (# 12) the declaratory judgment claim from the breach claims, explaining that “a determination of whether there is coverage in the first instance under the American Family policy is necessary before the parties and the Court can determine whether and to what extent Plaintiff's remaining claims may proceed.”

ANALYSIS

A. Standard of review

Rule 56 of the Federal Rules of Civil Procedure facilitates the entry of a judgment only if no trial is necessary. See White v. York Intern. Corp., 45 F.3d 357, 360 (10th Cir.1995). Summary adjudication is authorized when there is no genuine dispute as to any material fact and a party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Substantive law governs what facts are material and what issues must be determined. It also specifies the elements that must be proved for a given claim or defense, sets the standard of proof and identifies the party with the burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Kaiser–Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563, 565 (10th Cir.1989). A factual dispute is “genuine” and summary judgment is precluded if the evidence presented in support of and opposition to the motion is so contradictory that, if presented at trial, a judgment could enter for either party. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505. When considering a summary judgment motion, a court views all evidence in the light most favorable to the non-moving party, thereby favoring the right to a trial. See Garrett v. Hewlett–Packard Co., 305 F.3d 1210, 1213 (10th Cir.2002).

If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed.R.Civ.P. 56(c)(1)(A). Once the moving party has met its burden, to avoid summary judgment the responding party must present sufficient, competent, contradictory evidence to establish a genuine factual dispute. See Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991); Perry v. Woodward, 199 F.3d 1126, 1131 (10th Cir.1999). If there is a genuine dispute as to a material fact, a trial is required. If there is no genuine dispute as to any material fact, no trial is required. The court then applies the law to the undisputed facts and enters judgment.

If the moving party does not have the burden of proof at trial, it must point to an absence of sufficient evidence to establish the claim or defense that the non-movant is obligated to prove. If the respondent comes forward with sufficient competent evidence to establish a prima facie claim or defense, a trial is required. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, the claim or defense must be dismissed as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

B. Merits

1. Factual issues

The crux of American Family's argument is that High Street's claims in the Boulder lawsuit expressly rely upon and adopt Mr. Hawkins' opinion that the damage to the property was caused by “earth movement as a result of the construction activities.” Under these circumstances, American Family argues, the combination of the exclusion from coverage for earth movement and the anti-concurrent cause language result in the damage falling outside the policy's coverage.²

High Street offers several arguments in response. First, it contends that there is a genuine dispute of fact regarding the cause of the damage to the building. It contends that there is an unsettled factual question as to whether “vibration from activities of Concrete Express alone caused any of the damage to the building, including ... differential movement of the building versus the surrounding earth.” It cites to the affidavit of High Street's principal, Mr. Burke, who “observed excessive vibration of the building itself and damage to numerous other buildings along Broadway,” leading High Street to argue that “there is substantial evidence that some of the damage was caused purely by vibration of the building with no earth movement involved.”

The Court confesses that it does not completely follow this particular argument. High Street contends that there was “vibration of the building” but “no earth movement.” The parties appear to agree that High Street's theory is that Concrete Express was the ostensible source of any vibration. Thus,...