United States District Court, D. Colorado
ORDER DENYING AS MOOT DEFENDANT'S FIRST MOTION TO
DISMISS AND DENYING DEFENDANT'S SECOND MOTION TO
DISMISS
William J. Martínez United States District Judge
In this
action, Plaintiffs Joel Scott and Caron Scott
(“Plaintiffs”) bring various claims against
Defendant The Buckner Company, Inc.
(“Defendant”). (ECF No. 24.) Before the Court are
Defendant's (1) Motion to Dismiss for Improper Venue
(“First Motion to Dismiss”; ECF No. 14); and (2)
Reasserted Motion to Dismiss for Improper Venue in Response
to Plaintiffs' First Amended Complaint (“Second
Motion to Dismiss”; ECF No. 39). For the reasons set
forth below, the Court denies as moot the First Motion to
Dismiss and denies the Second Motion to Dismiss.
I.
BACKGROUND
Plaintiffs are residents of Colorado. (ECF No. 24 at 1,
¶ 1.) Defendant is a Utah corporation in the business of
procuring insurance, and whose principal place of business is
in Salt Lake City, Utah. (ECF Nos. 24 at 1, ¶ 2 & 14
at 2.) Silverhawk Enterprises, Inc.
(“Silverhawk”), is a Utah corporation that builds
custom homes, and whose principal place of business is
located in Utah. (ECF Nos. 24 at 2-3, ¶¶ 6, 9 &
37 at 2.)
In
2012, Plaintiffs hired Silverhawk to build an approximately
$800, 000 home in Salida, Colorado (the “Home”).
(ECF No. 24 at 2, ¶ 6.) Before construction commenced,
Silverhawk contacted Defendant's employee, Beat
Koszinowski (“Koszinowski”), to obtain liability
insurance for the project. (Id. at 3, ¶ 9.)
Koszinowski had been Silverhawk's insurance agent for
several years. (Id.)
Since
the Home was to be built outside of Utah, the state where
Silverhawk is based and most of its construction projects
occur, Silverhawk's principal, Thomas Hasleton
(“Hasleton”), allegedly “approached
Koszinowski for the express purpose of ensuring that the work
on the [Home] would be covered by liability insurance.”
(Id.) In doing so, Hasleton allegedly described the
project to Koszinowski, advised him that the Home would be
built in Colorado, and expressly directed him to acquire full
coverage for the project. (Id.) Koszinowski then
procured for Silverhawk liability insurance policies from
Mid-Continent Casualty Company (“Mid-Continent”).
(Id. at 2, ¶¶ 7-8.)
Sometime
after Koszinowski had procured the initial insurance policy,
Silverhawk's lender wanted proof that the project was
insured. (Id. at 3, ¶ 10.) Thus, the lender
requested that Silverhawk have Defendant complete two
Evidence of Property Insurance (“EOI”) forms with
respect to the coverage Defendant had procured for Silverhawk
for the project. (Id.) In the first EOI, Defendant
stated that Silverhawk was covered by an
“Installation/Builders Risk/Course of Construction
Coverage” policy issued by Great American Insurance
Group (who is apparently Mid-Continent's parent company)
for a period of one-year starting on November 3, 2011.
(Id.; see also ECF No. 38-1 at 1.) In
addition, the first EOI stated that the “project
location” was in Salida, Colorado. (ECF No. 24 at 3,
¶ 10; see also ECF No. 38-1 at 1.)
In the
second EOI, Defendant stated that Silverhawk was covered by a
policy issued by Great American Insurance Group for
“[b]lanket builders risk/course of construction of
residential 1-6 family dwellings within the States of Utah,
Wyoming and Colorado.” (ECF No. 24 at 3, ¶ 10;
see also ECF No. 38-1 at 2.) Additionally, the
second EOI stated that the property was located in Salida,
Colorado. (ECF No. 24 at 3, ¶ 10; see also ECF
No. 38-1 at 2.) Plaintiffs claim that Defendant also
“issued Certificates of Liability Insurance for each of
the years that the [H]ome was being constructed, indicating
that Silverhawk was insured under the Mid-Continent Policies
for work on the [H]ome.” (ECF No. 24 at 3, ¶ 10.)
According
to Plaintiffs, as a result of Defendant's alleged
representations to Silverhawk that the project was covered by
liability insurance, Silverhawk in turn informed Plaintiffs
that the project was insured. (Id. at 3-4,
¶¶ 9, 11.) Plaintiffs allege that they
“relied on the existence of liability insurance in
deciding to move forward with the construction of their home
by Silverhawk.” (Id. at 4, ¶ 11.)
Construction
began near the end of 2012 and the Home was substantially
completed by the end of 2014. (Id. at 2, 4,
¶¶ 6, 12.) After the Plaintiffs moved into the
Home, they discovered several defects in the property that
they believed were caused by Silverhawk and its
subcontractors. (Id. at 4, ¶ 12; see
also ECF No. 37 at 3.) Plaintiffs claim that they spent
approximately $260, 000 correcting the defects and repairing
the damage. (Id.)
On
September 28, 2015, Plaintiffs brought action against
Silverhawk, Hasleton, and others in the Chaffee County
District Court in Salida, Colorado (the “state
action”). (Id. at 4, ¶ 14.) In that
lawsuit, Plaintiffs sought reimbursement for the expenses
they incurred in correcting the construction defects.
(Id.) After Silverhawk informed Koszinowski of the
claims against it, Defendant reported the state action to
Mid-Continent. (Id. at 4, ¶ 15.) Mid-Continent,
however, denied coverage to Silverhawk for the claims made
against it by the Plaintiffs. (Id.) In particular,
Mid-Continent denied Silverhawk's “request for a
defense and indemnity because each of its Policies [with
Mid-Continent] contained endorsements that eliminated
coverage for liability arising out of Silverhawk's
ongoing or completed construction operations performed in the
State of Colorado.” (Id. at 4-5, ¶ 15.)
Thus, Plaintiffs allege that Defendant “acquired no
liability coverage at all for Silverhawk for the construction
of the [Home].” (Id. at 5, ¶ 15.)
After
being denied insurance coverage, Silverhawk and Hasleton
expended approximately $90, 000 over the next three years
defending themselves in the state action. (Id. at 5,
¶ 16; see also ECF No. 37 at 4.) In August
2018, the parties to the state action reached a settlement,
whereby Silverhawk and Hasleton agreed to pay $97, 500 as
partial reimbursement for the expenses Plaintiffs incurred to
correct the construction defects. (Id.)
“Silverhawk and Hasleton subsequently assigned their
rights and claims against [Defendant] under Utah law to the
[Plaintiffs].” (ECF No. 37 at 4; see also ECF
No. 24 at 5, ¶ 20.) This lawsuit followed. (ECF No. 1.)
II.
PROCEDURAL HISTORY
On
January 18, 2019, Plaintiffs filed this action against
Defendant. (Id.) In the Amended Complaint,
Plaintiffs assert four claims against Defendant. Three of
these claims-negligent failure to procure, breach of contract
to procure insurance, and negligent misrepresentation-were
assigned to Plaintiffs by Silverhawk and Hasleton and are
brought under Utah law. (ECF No. 37 at 4; see also
ECF No. 24 at 7-9.) While the fourth and final claim is also
one for negligent misrepresentation, this claim is asserted
against Defendant under Colorado law. (ECF No. 37 at 4;
see also ECF No. 24 at 6.)
On
March 1, 2019, Defendant filed its First Motion to Dismiss.
(ECF No. 14.) In that motion, Defendant asks the Court to
dismiss Plaintiffs' Complaint “and/or change venue
to the U.S. District Court for the District of Utah pursuant
to Fed.R.Civ.P. 12(b)(3).” (Id. at 1.) On
March 12, 2019, Plaintiffs filed an Amended Complaint while
Defendant's First Motion to Dismiss was still pending
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