Mt. Hawley Insurance Company, a Illinois corporation, Plaintiff-Appellant,
Casson Duncan Construction, Inc., a Colorado corporation, Defendant-Appellee.
County District Court No. 14CV32329 Honorable Charles M.
White, LLP, David A. Laird, James Belgum, Denver, Colorado;
Quilling, Selander, Lownds, Winslett & Moser, PC, Greg K.
Winslett, Dallas, Texas, for Plaintiff-Appellant
Markusson, Green & Jarvis, H. Keith Jarvis, Daniel R.
Coombe, Denver, Colorado; BatesCarey, LLP, John E. Rodewald,
Chicago, Illinois, for Defendant-Appellee
1 In this insurance dispute, plaintiff, Mt. Hawley Insurance
Co. (Mt. Hawley), appeals the district court's entry of
partial summary judgment in favor of defendant, Casson Duncan
Construction, Inc. (Casson Duncan). We affirm.
2 A homeowners association (HOA) sued developer Mountain View
Homes III (MVH III) and general contractor Casson Duncan on
claims concerning defective construction of a condominium
project. In ensuing arbitration proceedings, MVH III's
insurer, Mt. Hawley, defended MVH III under a reservation of
rights. The arbitration proceedings resulted in awards of
damages and taxable costs to the HOA. Casson Duncan paid the
$1.2 million costs award, for which it and MVH III were
jointly liable, and thereafter sought contribution from MVH
III and its insurer, Mt. Hawley.
3 Mt. Hawley initiated the present action against its
insured, MVH III, the HOA, and Casson Duncan, requesting a
declaration that there was no coverage under its commercial
general liability policies with MVH III for either the
damages or costs awarded in the arbitration proceedings. As
pertinent here, Casson Duncan filed a counterclaim for
declaratory and monetary relief against Mt. Hawley for
payment of MVH III's portion of the costs award.
4 The parties filed cross-motions for summary judgment as to
"coverage" issues. The district court denied
summary judgment on all but one of those issues. Based on the
language in the insurance policies, however, the district
court determined that Mt. Hawley was, as a matter of law,
responsible for paying MVH III's portion of the cost
award, regardless of whether it was also responsible for
paying MVH III's portion of the damages award.
Consequently, the district court entered partial summary
judgment for Casson Duncan on its counterclaim.
5 The district court certified its partial summary judgment
ruling under C.R.C.P. 54(b) as "final" for purposes
of permitting appellate review at this time.
6 Mt. Hawley contends that the district court erroneously
granted Casson Duncan a partial summary judgment because,
contrary to the court's ruling, Mt. Hawley's
responsibility for payment of costs was, under the policies,
inextricably linked to the question whether the policies
provided MVH III with coverage for the HOA's claims.
Because the "coverage" issues had not been
determined, Mt. Hawley asserts, the "costs" issue
could not be determined either. We are not persuaded.
Mt. Hawley's Settlement with the HOA
7 Subsequent to the court's summary judgment rulings, Mt.
Hawley agreed to pay the HOA an undisclosed amount to settle
MVH III's liability in connection with the claims
adjudicated in the arbitration proceeding. Initially, Casson
Duncan asserted that the settlement removed the coverage
issues from the case, and, consequently, "Mt. Hawley has
not [established], and never will be able to establish"
the premise upon which it refuses to pay MVH III's part
of "taxable" costs. In other words, that Mt. Hawley
had "no indemnity obligation in this case." We are
8 Following a settlement, coverage issues can still be
determined between an insurer and its insured or a judgment
creditor of the insured. See Nikolai v. Farmers All. Mut.
Ins. Co., 830 P.2d 1070, 1073 (Colo.App. 1991) ("An
insurer . . . does not ordinarily waive its policy defenses
by payment of settlement proceeds to a claimant. . . . Here,
Alliance did not waive its policy defenses when it settled
the claims after issuing a reservation of rights
letter."); seealso Bohrer v. Church Mut.
Ins. Co., 965 P.2d 1258, 1261-67 & n.7 (Colo. 1998)
(declaratory judgments and garnishment proceedings are
appropriate contexts for resolving coverage issues in
third-party victim insurance cases); Ho ...