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Bethel v. Berkshire Hathaway Homestate Insurance Co.

United States District Court, D. Colorado

January 28, 2019




         This matter is before the Court on Plaintiff Michael Bethel's Motion for Partial Summary Judgment (Doc. # 55) and Defendant Berkshire Hathaway Homestate Insurance Company's Motion for Summary Judgment (Doc. # 63). Both motions have been fully briefed. (Doc. ## 64, 81, 82, 89.) Having thoroughly reviewed the underlying briefing, pertinent record, and applicable law, the Court grants Defendant's Motion and denies Plaintiff's Motion for the following reasons.

         I. BACKGROUND

         This property insurance dispute arises from a fire that occurred at 701 Sycamore Ave. in Rocky Ford, Colorado on December 18, 2016. (Doc. # 55 at 1.) The property (“Covered Property”) was insured by Defendant, and the policy (“Policy”) was in effect at the time of the fire. Defendant investigated the incident and determined that the fire was accidental in nature and that the Covered Property suffered a total loss which was covered by the Policy.

         Plaintiff had purchased the Covered Property for $100, 000 in May 2016 from a friend who had loaned the money to him for the transaction. (Doc. # 63 at 1; Doc. # 65 at 3-4.) The Policy was an “Actual Cash Value” policy with a limit of $407, 000. After the fire, Defendant retained a certified real estate appraiser who determined that the market value of the Covered Property was $109, 000 at the time of the December 18, 2016 fire. (Doc. # 63 at 1-5.)

         Based upon the appraisal, Defendant determined that the value of the of the Covered Property was $109, 000 at the time of the loss. By a letter dated April 3, 2017, Defendant issued payment to Plaintiff for $79, 000, which represented the value of the Covered Property less the $30, 000 advance Defendant had paid Plaintiff on March 1, 2017, while the appraisal process was being completed. (Id.)

         The April 3 letter also advised Plaintiff of the terms of the debris removal coverage available under the Policy, including the requirement that such expenses be reported to Defendant within 180 days of the date of loss. The letter noted that Plaintiff had previously submitted a bid he had received for debris removal but no actual invoices. Defendant requested that Plaintiff send “the invoices, evidence of payment, and any other applicable documentation for the debris removal expense associated with the Claim.” (Doc. # 63-1 at 186.) Thereafter, Plaintiff did not submit evidence of payment for any debris removal expenses, and as of June 13, 2018, Plaintiff had not begun debris removal work at the Covered Property.

         Plaintiff subsequently initiated the instant action, claiming that he is entitled to the policy limit of $407, 000 rather than the Covered Property's market value of $109, 000.


         Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it is essential to the proper disposition of the claim under the relevant substantive law. Wright v. Abbot Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). A dispute is “genuine” if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, Okl., 118 F.3d 837, 839 (10th Cir. 1997). When reviewing motions for summary judgment, a court may not resolve issues of credibility, and must view the evidence in the light most favorable to the nonmoving party-including all reasonable inferences from that evidence. Id. However, conclusory statements based merely on conjecture, speculation, or subjective belief do not constitute competent summary judgment evidence. Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004).

         The moving party bears the initial burden of demonstrating an absence of a genuine dispute of material fact and entitlement to judgment as a matter of law. Id. In attempting to meet this standard, a movant who does not bear the ultimate burden of persuasion at trial does not need to disprove the other party's claims; rather, the movant need simply point the court to a lack of evidence for the other party on an essential element of that party's claim. Adler v. Wal-Mart Stores, Inc., 144 F.3d 644, 671 (10th Cir. 1998) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

         Once the movant meets its initial burden, the burden then shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby Inc., 477 U.S. 242, 256 (1986). The nonmoving party may not simply rest upon its pleadings to satisfy this burden. Id. Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence from which a rational trier of fact could find for the nonmoving party.” Adler, 144 F.3d at 671. “To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.” Id. Ultimately, the Court's inquiry on summary judgment is whether the facts and evidence identified by the parties present “a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52.

         III. ANALYSIS

         Insurance policies are interpreted as a matter of law by the Court. Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo. 2002); Smith v. State Farm Mut. Auto. Ins. Co., 2017 COA 6, ¶ 6. Additionally, under Colorado law, courts “construe insurance policies according to principles of contract interpretation.” MarkWest Energy Partners, L.P. v. Zurich Am. Ins. Co., 2016 COA 110, ¶ 13 (citing Shelter Mut. Ins. Co. v. Mid-Century Ins. Co., 214 P.3d 489, 492 (Colo.App. 2008), aff'd, 246 P.3d 651 (Colo. 2011)). Therefore, courts enforce the plain language of the policy unless it is ambiguous. Hoang v. Assurance Co. of Am., 149 P.3d 798, 801 (Colo. 2007). Moreover, in the absence of ambiguity, the intent of the parties is to be determined by the language of the policies themselves, not by extrinsic evidence. Radiology Prof'l Corp. v. Trinidad Area Health Ass'n, Inc., 577 P.2d 748, 750 (Colo. 1978); DTC Energy Grp., No. 17-cv-01718-PAB-KLM, 2018 WL 305733, at *3 (D. Colo. Jan. 4, 2018).

         Plaintiff raises three claims for relief: breach of contract; unreasonable delay or denial of an insurance claim; and common law bad faith. (Doc. # 1 at 3-4.) The Court will consider each claim in turn.


         In order to prevail on a breach of contract claim, a plaintiff must prove that the parties entered into a contract; the defendant failed to perform its obligations under the contract; and the plaintiff substantially complied with its obligations. Children's Hosp. Colo. v. Digisonics, Inc., No. 16-cv-00011-RBJ, 2017 WL 2778521, at *3, (D. Colo. June 27, 2017) (citing W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992)). Plaintiff argues that Defendant breached its contractual obligations by “failing to perform its obligations under the contract, including failing to pay [Plaintiff] the actual cash value of his [p]roperty, and failing to pay him other benefits owed to him under the Policy, including but not limited to debris removal benefits.” (Doc. # 1 at 3.) Defendant, by contrast, argues Plaintiff cannot prove a breach of contract claim with respect to (1) the building coverage or (2) the debris removal coverage. (Doc. # 63 at 6, 14.)

         1. Building Coverage

         The Policy contains a Building and Personal Property Coverage Form which indicates Defendant “will pay for direct physical loss of or damage to Covered Property . . . caused by or resulting from any Covered Cause of Loss.” (Doc. # 63-1 at 26.) The coverage is subject to various conditions. (Id. at 33.) Specifically, the Policy indicates:

         a. In the event of loss or damage covered by this Coverage Form, at our option, we will either:

(1) Pay the value of lost or damaged property;
(2) Pay the cost of repairing or replacing the lost or damaged property . . .;
(3) Take all or any part of the property at an agreed or appraised value; or
(4) Repair, rebuild or replace the property with other property of like kind and quality . . . .

         d. We will not pay you more than your financial interest in the Covered Property.

         (Id. at 35) (emphasis added). Thus, the plain language of the Policy provides Defendant with the option to, inter alia, pay insureds either the value of the property or the cost of repairing or replacing the property, subject to the limit of the insured's financial interest in the property. With respect to the method of valuation, the Policy indicates that Defendant will ‚Äúdetermine the value of Covered Property in ...

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