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Center for Excellence in Higher Education, Inc. v. Travelers Property Casualty Company of America

United States District Court, D. Colorado

February 16, 2018



          Marcia S. Krieger Chief United States District Judge

         THIS MATTER comes before the Court pursuant to the Defendant's (“Travelers”)

         Motion for Summary Judgment (# 49), the Plaintiff's (“Center”) response (# 52), and Travelers' reply (# 53).


         The pertinent facts in this case are simple and largely undisputed. Beginning in 2003, Center leased commercial property located in Colorado Springs, CO, from a Landlord. The terms of Center's lease with the Landlord provided that Center would be “responsible for maintaining the Property in good order and repair, and for maintaining, repairing, and, as necessary, replacing the HVAC systems [and roof].” In 2012, the region experienced multiple, significant hailstorms. It is undisputed that these hailstorms damaged the roof and HVAC system at the property. However, it does not appear that Center made a claim against its casualty insurer, Travelers, at this time.[1]

         In 2014, Center brought suit against the Landlord for breaches of the real estate lease that are irrelevant here. In response, the Landlord asserted a counterclaim against Center, sounding in breach of contract and alleging that Center had not repaired the damage to the roof and HVAC system caused by the hail storms. Center tendered the counterclaim to Travelers, requesting that Travelers defend and indemnify Center in the underlying lawsuit (or, at the very least, the counterclaim). Travelers refused both defense and indemnification, contending that the counterclaim was not an “occurrence” under the terms of the insurance policies and did not allege “property damage” sufficient to trigger coverage. Center proceeded to trial on the counterclaim at its own expense and, ultimately, prevailed on that counterclaim.

         Center then commenced the instant action against Travelers, seeking to recover the costs it incurred in defending itself against the Landlord's counterclaim. Center asserts (# 47) claims for breach of contract, common-law bad faith breach of contract, and breach of the duty of good faith and fair dealing, all under Colorado law.[2] Travelers now moves (# 49) for summary judgment in its favor on all claims, arguing that the counterclaim did not trigger any duty to defend under the terms of its policies.


         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 (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).

         B. Merits

         Under Colorado law, an insurer has the duty to tender a defense in any circumstance where the insured is subjected to a claim by another that “alleges any facts that might fall within the coverage of the policy.” KF 103-CV, LLC v. American Family Mut. Ins. Co., 630 Fed.Appx. 826, 830 (10th Cir. 2015), citing Thompson v. Maryland Cas. Co., 84 P.3d 496, 502 (Colo. 2004). That assessment is made based on the factual allegations in the underlying complaint, not on the legal theory that is asserted based on those allegations. Gerrity Co. v. CIGNA Property & Cas. Co., 860 P.2d 606, 607 (Colo.App. 1993). If the allegations ‚Äústate a claim which is potentially or arguably within the policy coverage, or there is some doubt ...

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