Union Ins. Co. v. Hottenstein

Decision Date04 December 2003
Docket NumberNo. 02CA2255.,02CA2255.
Citation83 P.3d 1196
PartiesUNION INSURANCE COMPANY, a Nebraska corporation, Plaintiff-Appellee, v. Evelyn HOTTENSTEIN, Defendant-Appellant.
CourtColorado Court of Appeals

Retherford, Mullen, Johnson & Bruce, LLC, Jerry A. Retherford, Debra P. DeRee, Neil C. Bruce, Colorado Springs, Colorado, for Plaintiff-Appellee.

Campbell Bohn Killin Brittan & Ray, LLC, Michael G. Bohn, Daniel P. Queen, Denver, Colorado, for Defendant-Appellant. Opinion by Judge MARQUEZ.

In this action for declaratory relief involving a commercial general liability insurance policy, defendant, Evelyn Hottenstein, appeals the summary judgment in favor of plaintiff, Union Insurance Company. We affirm.

In 1998, Hottenstein filed a complaint against a construction company and its owner, alleging several claims, including breach of a contract to remodel her home and negligence. In 1999, pursuant to a provision in the construction contract, Hottenstein and the construction company arbitrated the dispute. The arbitrator awarded damages to Hottenstein in the amount of $80,165 calculated as follows:

A. Benefit of the Bargain Damages

1. Costs to complete contract $35,800 2. Costs to remedy defects (includes damages to repair inadequate work and to replace or repair personal property) + 34,017 3. Unpaid balance of contract price a. Contract price 44,137 b. Progress payments paid - 34,745 (Subtract b. from a. to calculate unpaid balance of contract price) (9,392) 4. Damages for lost business income + 4,125 5. Damages for lost rental income + 2,700 [(1 + 2 - 3] + 4 + 5 = total benefit of the bargain damages 67,250 B. Damages for Negligent Performance (i.e., damage to existing roof) 9,915 C. Damages for loss of enjoyment 3,000 Total Damages 80,165

Hottenstein later had the award reduced to a judgment.

The construction company was covered by Union under a commercial general liability policy. Union defended the construction company in the arbitration under a reservation of rights.

In July 2000, Union commenced this action for declaratory relief. Union admitted liability for the $9,915 negligence award, but sought a declaration that it had no duty to indemnify the construction company for the balance of the arbitration award.

After Union filed a motion for summary judgment, the trial court granted Hottenstein an enlargement of time until September 24, 2002 in which to respond to the motion. However, the court granted Union's motion on September 20, 2002. The trial court held that Union had no duty to indemnify the construction company for the damages of $67,250 for breach of contract and $3,000 for loss of enjoyment.

On September 24, 2002, Hottenstein filed her response to the motion for summary judgment, her cross-motion for summary judgment, and her motion for reconsideration, but the trial court summarily denied the motions.


Hottenstein contends that the trial court erred by granting the motion for summary judgment without giving her an opportunity to oppose it as required by C.R.C.P. 56(c) and 121 § 1-15. We agree, but find the error to be harmless. Our review of a summary judgment is de novo. Aspen Wilderness Workshop, Inc. v. Colo. Water Conservation Bd., 901 P.2d 1251 (Colo.1995).

C.R.C.P. 56 contemplates that opposing parties will be provided an opportunity to respond to authority cited in support of a motion for summary judgment. Antelope Co. v. Mobil Rocky Mtn., Inc., 51 P.3d 995 (Colo. App.2001). C.R.C.P. 56(c) provides that the party opposing a summary judgment motion "may file and serve opposing affidavits within the time allowed for the responsive brief." However, judgment "shall be rendered forthwith" if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, show that no genuine issue exists as to any material fact and that the moving party is entitled to a judgment as a matter of law. See also Civil Serv. Comm'n v. Pinder, 812 P.2d 645 (Colo.1991).

Under C.R.C.P. 121 § 1-15(1), a trial court must allow fifteen days or such time as the court otherwise allows for a nonmoving party to file responses or objections to motions involving contested issues of law. Ogawa v. Riley, 949 P.2d 118 (Colo.App.1997)(motion for judgment against surety). Failure to allow a party to respond within the allotted time constitutes an abuse of discretion. Weatherly v. Roth, 743 P.2d 453 (Colo.App.1987)(motion to dismiss); Lanes v. Scott, 688 P.2d 251 (Colo.App.1984)(motion to dismiss).

However, we disregard errors or defects in the proceeding that do not affect the substantial rights of the parties. C.R.C.P. 61. A party's substantial right is one that relates to the subject matter and not to a matter of procedure or form. Sowder v. Inhelder, 119 Colo. 196, 201 P.2d 533 (1948); Cobbin v. City & County of Denver, 735 P.2d 214 (Colo.App.1987).

Here, the trial court erroneously granted summary judgment in favor of Union four days before Hottenstein's response was due. However, Hottenstein's response, cross-motion, and related briefs are available in the record for our de novo review. On that review, we conclude that summary judgment was nonetheless proper, as discussed in the following sections.


Hottenstein contends that the trial court both misapplied the law and misconstrued the facts when it determined that the insurance policy established no duty for Union to indemnify the construction company for the arbitration award. We disagree.


We first reject Hottenstein's contention that the trial court overlooked certain ambiguities and conflicting terms in the insurance contract that are material to the interpretation of the contract and give rise to issues of material fact.

Hottenstein's response and motions included only one affidavit, that of counsel stating that further discovery is necessary as to (1) Union's decision to deny indemnity and custom and practice in paying similar claims, and (2) the intent of Union and the owner of the construction company at the time they entered into the insurance contract.

However, the intent of the parties should be determined from the language of the contract itself. Extrinsic evidence is not admissible until the contract has been found to be ambiguous. Whether a contract is ambiguous is a question of law that we review de novo. Antelope Co. v. Mobil Rocky Mtn., Inc., supra.

Therefore, we review the contract to determine whether it is ambiguous and conclude that it is not. Thus, counsel's request for further discovery was properly denied in any event.


Language is ambiguous if it is susceptible of more than one reasonable interpretation. Dupre v. Allstate Ins. Co., 62 P.3d 1024 (Colo.App.2002). A mere potential for more than one meaning does not create an ambiguity. Allstate Ins. Co. v. Juniel, 931 P.2d 511 (Colo.App.1996). Here, the contract provides a general grant of coverage for "property damage liability."

1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of ... "property damage" to which this insurance applies.
b. This insurance applies to ... "property damage" only if:
(1) The ... "property damage" is caused by an "occurrence" that takes place in the "coverage territory."

The policy includes several exclusions and exceptions to the exclusions, including:

2. Exclusions
This insurance does not apply to:
a. Expected or Intended Injury
"[P]roperty damage" expected or intended from the standpoint of the insured....
b. Contractual Liability
"[P]roperty damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:
(1) Assumed in a contract or agreement that is an "insured contract," provided the ... "property damage" occurs subsequent to the execution of the contract or agreement; or
(2) That the insured would have in the absence of the contract or agreement.
j. Damage to Property
(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; or
(6) That particular part of any property that must be restored, repaired, or replaced because "your work" was incorrectly performed on it.
Paragraph (6) of this exclusion does not apply to "property damage" included in the "products-completed operations hazard."

(Emphasis supplied.)

The policy defines the terms used. An "insured contract" means a "contract for lease of property." The definitions for "your product" and "your work" are separate but identical.

"Your product" and "your work" include:
a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance, or use of "your product/work."
"Your work" means:
a. Work or operations performed by you or on your behalf; and
b. Materials, parts or equipment furnished in connection with such work or operations.
"Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
"Products-completed operations hazard" includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned.

The contract between Hottenstein and the construction company states: "All work is to be completed in a workmanlike manner according to standard practices."

Hottenstein asserts alternatively that the warranty is an "insured contract" within the meaning of the insurance policy or that, consistent with Lembke Plumbing & Heating v. Hayutin, 148 Colo. 334, 366 P.2d 673 (1961), the construction company had a common law duty apart from the contract to provide...

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