United States District Court, D. Colorado
ORDER ON DEFENDANT'S MOTION FOR SUMMARY
Brooke Jackson United States District Judge
matter is before the Court on defendant, Liberty Insurance
Corporation (Liberty)'s motion for summary judgment. ECF
No. 26. For the reasons stated herein, the defendant's
motion is GRANTED.
Leon K. Jaimes, is the owner of the real property and house
located at 3027 Marion Street, Denver, CO 80205. ECF No. 4 at
¶6. He carried Liberty homeowner's insurance on that
property. Id. at ¶7. Mr. Jaimes is a citizen
and resident of Alaska, and he rented this property to
tenants. Id. at ¶l, 10. This case arises out of
Liberty's denial of coverage for Mr. Jaimes's two
property insurance claims for cracking and bulging of an
exterior wall of that property ("first claim") and
the subsequent collapse of that wall ("second
August 28, 2015 Mr. Jaimes learned of a crack in the south
wall of his home when a local friend who assisted him in
managing the property told him about the issue and sent
pictures of the wall to him. ECF No. 26 at 4; ECF No. 27 at
2. On September 1, 2015 Mr. Jaimes hired Anchor Engineering,
which sent Stephen McSpadden to the property to perform a
site observation. ECF No. 26-4 (McSpadden letter). Mr.
McSpadden "assess[ed] the foundation, interior floor of
the main level and the south masonry bearing wall."
Id. He observed "a major bulge in the south
wall of the main level," noting that "[t]he bulge
in the south wall is so severe that the wall is actually
broken under the stairway and there is a major separation
between the exterior wall and interior walls."
Id. He also noted several problems with
deterioration in different aspects of the basement.
Id. The letter conveyed that the "structure of
the house is regarded as unstable and dangerous" and
made recommendations for repair.
September 22, 2015, Mr. Jaimes filed a claim with Liberty,
seeking coverage under the policy. Liberty denied this claim,
stating that the damage to the south brick wall was not
covered under the policy because it "was a result of
deterioration of the wall and possibly also a result of
settling." Liberty stated that Mr. Jaimes's
homeowner's policy does not cover "wear and tear or
deterioration of materials; or settling of walls, floors or
roofs." ECF No. 4 at ¶16.
this denial, Mr. Jaimes obtained bids to repair the house and
investigated other options, including demolishing the house
and building a new one. Id. at ¶18. On November
17, 2015, while Mr. Jaimes was in the process of finding a
solution, the south wall of his home collapsed. Id.
at ¶19. Mr. Jaimes submitted a second claim with Liberty
seeking coverage under the policy. Id. at 20. The
next day, the City and County of Denver ("the
City") issued an emergency demolition order because the
structure was unsafe, and because the gas meter had been
damaged when the house collapsed. Id. at 21.
Mr. Jaimes filed the second claim, Liberty retained a
professional engineer, Mark Orr with EFI Global, who
inspected the property. ECF No. 26 at 6. EFI Global issued a
report that, like the McSpadden letter, observed
deterioration of floor joists, a wood bearing plate, and
mortar. ECF No. 26-10. Liberty also denied this claim.
Liberty asserted that the collapse was not covered because it
"was the result of deterioration of the wall, settling
of the home, failure to protect the property from further
damage." ECF No. 4 at ¶24, ECF No. 26-10. Liberty
stated that the policy does not cover "wear and tear,
marring, deterioration, settling, shrinking, bulging or
expansion, including resultant cracking, of pavements,
patios, foundations, walls, floors, roofs or ceilings."
Id. Between November 2015 and February 2016 the City
demolished Mr. Jaimes's house and removed it from the
property. Complaint at ¶27.
Jaimes filed suit against Liberty raising three claims: (1)
breach of contract; (2) bad faith breach of contract; and (3)
violation of Colo. Rev. Stat. §§10-3-1115; 1116.
Mr. Jaimes asserts that the collapse of the south wall of his
home was due to "hidden decay" and is therefore
covered under the following policy language:
Section I - Perils Insured Against.
We insure against risk of direct loss to property described
in coverages A and B only if that loss is a physical loss to
property. We do not insure, however, for loss:
1. Involving collapse, other than as provided in Additional
Coverage 8.; 2. Caused by: . . .
e. Any of the following:
(1) Wear and tear, marring, ...