Hiland Hills Townhouse Owners Ass'n, Inc. v. Owners Ins. Co.
| Decision Date | 18 September 2018 |
| Docket Number | Civil Action No. 17-CV-1773-MSK-MEH |
| Parties | HILAND HILLS TOWNHOUSE OWNERS ASSOCIATION, INC., Plaintiff, v. OWNERS INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Colorado |
AMENDED1 OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT
THIS MATTER comes before the Court upon the Defendant's Motion for Summary Judgment (# 23), the Plaintiff's response (# 42), and the Defendant's reply (# 44). For the reasons that follow, the Motion is denied.
The Court exercises jurisdiction under 28 U.S.C. § 1332.
Plaintiff Hiland Hills Townhouse Owners Association ("Hiland Hills") owns a multi-unit housing complex in Denver, Colorado. From November 2014 to November 2015, that propertywas covered by a casualty insurance policy ("the Policy") issued by Defendant Owners Insurance Co. ("Owners").
On June 24, 2015, a severe hail storm occurred over Hiland Hills' property. Hiland Hills' property manager and a roofing contractor examined the roof systems of the buildings after the storm, but neither observed any visible hail damage at that time. As a result, Hiland Hills did not make any immediate claim upon Owners under the Policy.
In June 2016, Hiland Hills undertook an unrelated project to replace the roof of one of its buildings, and observed that the roof's membrane exhibited "star fractures" which Hiland Hills believed evidenced hail-caused damage. Thereafter, on November 7, 2016 - some 17 months from the initial incident -- Hiland Hills filed a claim with Owners, contending that the June 2015 hail storm caused property damage that was covered by the Policy.
Owners retained a company called Envista Forensics ("Envista"), and its Engineer Amber Prom, to conduct inspections and evaluate Hiland Hills' claim and to answer two questions: (i) "[i]f the . . . roofing located atop Buildings F, H, I, J, and K was hail-damaged. . . ." and (ii) "[t]he most probable date in which the hail damage occurred." This second question was based on the fact that, on May 24, 2016 -- after the Policy had lapsed, but before Hiland Hills made its claim -- a second hail storm struck the Hiland Hills property. Hiland Hills contends that this storm produced hailstones that were "very soft and splattered with ease" upon impact with surfaces and rejects the notion that the May 2016 storm was the cause of any property damage.
On August 2, 2017, Envista issued its report. Ms. Prom concluded that: (i) hail was a possible cause of the damage to the roof membranes of the buildings in question, but (ii) "[e]ither the June 24, 2015 or the May 24, 2016 hail storms had the potential to have caused theobserved hail damage, with the maximum damage having been caused by the storm with the largest hailstones, that being the May 24, 2016 hail storm."
Based on Envista's report, on September 1, 2017, Owners wrote to Hiland Hills, informing it that it was rejecting the Proof of Loss. Owners gave a variety of reasons for that decision, including: (i) Hiland Hills' failure to give prompt notice of the loss to Owners and that the passage of time, intervening repairs, and additional storms in the interim prejudiced Owners' ability to investigate the claim; and (ii)) Envista's report concluded that the predominant damage to the property was caused by the May 2016 hailstorm, at a time when the Policy was not in effect.
As framed in the Amended Complaint (# 9), the operative pleading in this case, Hiland Hills asserts four claims: (i) a claim for a declaratory judgment that Owners must abide by the Policy's provisions for conducting an independent appraisal of the claimed loss; (ii) common-law breach of contract, presumably under Colorado law, in that Owners breached the Policy by "failing to properly and timely adjust the loss" and "by failing to pay all benefits due and owing under the Policy"; (iii) common-law bad faith, presumably under Colorado law, in that Owners "committed unfair claim settlement practices," such as "failing to acknowledge and act properly upon communications" relating to the Policy, "failing to adopt and implement reasonable standards for the prompt investigation of claims," and "refusing to pay claims without conducting a reasonable investigation," among others; and (iv) violation of C.R.S. § 103-1115 and -1116, in that Owners delayed or denied payment of the claim in violation of "objective industry standards for claim handling and payment."
Within a few months of the commencement of the case, Owners filed the instant Motion for Summary Judgment (# 23). The motion seeks judgment on all four claims based on a singleargument applicable to all four claims - that Hiland Hills' failure to give prompt notice of the claim operates to excuse Owners from any further obligations under the Policy. Hiland Hills' response raises two issues: (i) a legal argument that, under Colorado law, an insurer may not deny a claim as untimely absent a showing that it has suffered some prejudice as a result of the late notice of claim, and (ii) a factual argument that Ms. Prom's inability to trace the roof damage to one of the two hailstorms does not demonstrate prejudice to Owners because there is, at least, a genuine dispute of fact as to whether the May 2016 hailstorm was sufficient to cause the observed damage. Thus, the Court limits its analysis to those two issues.
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 Int'l 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 (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. 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, then the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
Owners relies upon a provision in the Policy that states that Hiland Hills "must . . . give [Owners] prompt notice of the loss or damage" following an occurrence. The Policy does not otherwise define the term "prompt."
Under Colorado law, insurance contracts are construed according to their plain and ordinary meaning. Metro Wastewater Reclamation Dist. v. Fireman's Fund Ins. Co., 35 Fed.Appx. 839, 842 (10th Cir. 2002). A requirement that an insured give "prompt" notice of aloss to the insurer requires that the insured report the loss "within a reasonable length of time under all the facts and circumstances of each particular case." The purpose of such a requirement is "to give the insurer an opportunity to make a timely and adequate investigation of all the circumstances," and to avoid "the possible removal or lapse of memory on the part of witnesses, the loss of opportunity for examination of the physical surroundings . . . and the possible operation of fraud [or] collusion." The question of whether notice was given sufficiently promptly is ordinarily a question of fact, but where the facts are undisputed and only one inference can be drawn therefrom, the Court may resolve the question of promptness as a matter of law. Certified Indem. Co. v. Thun, 439 P.2d 28, 30 (Colo. 1968).
The limited facts presented here are, effectively, undisputed. Immediately after the June 2015 hail storm, Hiland Hills' Property Manager, Robert Smock, received complaints from residents about leaking roofs. Mr. Smock's inspections - the extent of which are not described in the record - attributed those problems to gutters and roof drains clogged with foliage dislodged by the storm. Mr. Smock also reports that Hiland Hills "dispatched a roofing contractor, Weathersure, to investigate and repair the reported roof leaks." Although Weathersure "promptly fixed the roof leaks, [it] did not advise of any visible hail-caused damages" either. It was not until June 10, 2016, a year later and "during...
To continue reading
Request your trial