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Praetorian Insurance Co. v. Axia Contracting, LLC

United States District Court, D. Colorado

March 1, 2019

PRAETORIAN INSURANCE COMPANY, Plaintiff,
v.
AXIA CONTRACTING, LLC, and 255 BLACKHAWK HOSPITALITY, LLP, Defendants.

          ORDER GRANTING SUMMARY JUDGMENT

          William J. Martínez United States District Judge

         Plaintiff Praetorian Insurance Company (“Praetorian”) brought this lawsuit seeking a declaratory judgment that it has no obligation to pay insurance benefits under a builder's risk policy (the “Policy”) issued to Defendants Axia Contracting LLC (“Axia”) and 255 Blackhawk Hospitality LLP (“Blackhawk”) (together, “Defendants”).

         On summary judgment, the parties seek clarity from this Court on whether, under the Policy, Defendants' failure to maintain a protective device, a six-foot fence enclosing the entire job site, which was listed in an endorsement and schedule attached to the contract, relieves Praetorian of its obligation to pay for Defendants' losses due to fire. (ECF No. 50.) Plaintiff also seeks summary judgment on Defendants' counterclaims. For the reasons discussed below, the Court will grant Praetorian's Motion for Summary Judgment (“the Motion”), direct entry of judgment, and terminate this case.

         I. BACKGROUND

         A. Factual Background

         The facts are fairly straightforward and undisputed. Citations to docketed materials are to the page number in the CM/ECF header rather than to any internal pagination.

         On June 19, 2017, Defendants were in the process of constructing a hotel (the “Project”) at 255 Blackhawk Street, Aurora, Colorado (the “Property”). Blackhawk owned the Property and Axia was the general contractor for the Project. Early in the morning on June 19, 2017, a fire occurred at the Property damaging the unfinished hotel structure.

         The City of Aurora Fire Department investigated the fire and a fire investigator concluded that it was “the result of an intentional and direct human act” and classified the fire as “incendiary . . . that is deliberately set with the intent to cause the fire.” (ECF No. 50-1 at 10 (emphasis in original).) Based on information provided by Axia, the City of Aurora Fire Department estimated the property and structural damage to be approximately $3, 000, 000.

         At the time of the fire, Praetorian had issued to Defendants the Policy covering “perils during the course of construction, subject to the terms and conditions of the Policy, ” including the terms of the Builders' Risk Coverage as well as any endorsements and schedules identified on the schedule of coverages. (ECF No. 50 at 3-4, ¶¶ 7-8; see ECF No. 50-2.) Under the Policy, Praetorian is responsible for “risks of direct physical loss or damage unless the loss is limited or caused by a peril that is excluded.” (ECF No. 50-2 at 20.)

         The Policy includes a “Protective Devices Schedule” and a “Protective Devices Endorsement” (“PDE”). (ECF No. 50-2 at 50-51.) The Protective Devices Schedule lists the following protective devices or services (together, “Protective Safeguards”):

Site will be protected with chain link fencing, or other similar security fencing, at least 6 ft. in height completely enclosing the jobsite.
All entrance and access gates shall remain securely locked during non-working hours.
Jobsite will be fully illuminated each night with lights continuously from sunset to sunrise.

(Id. at 50.) The PDE added both “other conditions” and “perils excluded.” Under “other conditions, ” the PDE stated:

Protective Devices - “You” are required to maintain, at all times during the policy period, the protective devices and services described on the Protective Devices Schedule.

(ECF No. 50-2 at 51.) Under “perils excluded, ” the PDE added the following language:

         The following exclusion is added . . . under Perils Excluded [of the Builders' Risk Coverage] and applies only when a device or service, shown on the ...


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