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Munroe v. CSAA General Insurance Co.

United States District Court, D. Colorado

August 26, 2019




         This matter is before me on Plaintiffs' Motion for Declaratory Judgment or in the Alternative for Partial Summary Judgment. Doc. 16. For the reasons stated below, I interpret the motion solely as one for partial summary judgment and find summary judgment inappropriate. Accordingly, Plaintiffs' motion is denied.


         Plaintiffs Peter and Leticia Munroe (“Plaintiffs”) own a home in Monument, Colorado, which they purchased in April 2015 and insured through CSAA General Insurance Company (“Defendant”). Compl. at ¶ 4; Pls.' Ex. 1 at ¶¶ 2-3. On or around May 16, 2018, water began to leak from the roof near a skylight after a series of heavy rainstorms. Compl. at ¶ 5; Doc. 16 at 1; Pls.' Ex. 1 at ¶¶ 5-6. Plaintiffs retained Campbell Roofing on May 18 to identify and caulk the leak. Compl. at ¶ 6; Doc. 16 at 1-2; Pls.' Ex. 1 at ¶ 7. They submitted a claim to Defendant on May 21. Compl. at ¶ 7; Doc. 16 at 2; Pls.' Ex. 1 at ¶ 7; Pls.' Ex. 2. Ultimately, Defendant determined that the damage to the roof was not covered because it was considered “wear and tear, ” but the resulting water damage would be covered. Pls.' Ex. 5.

         Plaintiffs hired Top Gun Restoration to dry the ceiling while Plaintiffs were away on a fifteen-day trip. Compl. at ¶ 8; Def. Ex. B at 1. While Plaintiffs were out of town, Top Gun notified them that the ceiling was not drying properly. Compl. at ¶ 9; Def. Ex. B at 1. Plaintiffs returned home at the end of their trip to find that Top Gun failed to dry out the ceiling and removed its equipment from Plaintiffs' home with no explanation. Def. Ex. B at 1.

         Shortly thereafter, Plaintiffs noticed a new leak in the master bedroom, which had evidently existed for a while given there were stains on the ceiling near the source of the leak and on the carpet below. Id. Plaintiffs attempted to contact Top Gun about it but did not receive an answer. Id. They then contacted Servpro, another home-repair contractor. Id.

         Servpro inspected Plaintiffs' home on June 12, 2018 and determined that the ceiling was at risk of collapse if the wet insulation was not dried properly. Id. Servpro planned to remove the master bedroom closet and living room ceilings and set up drying equipment by July 5. Id. at 2, 4. Campbell Roofing was still repairing the roof and expected to be done by June 27. Id. at 4. It was around this time that Plaintiffs decided to move to a hotel pending completion of all repairs. Id. at 5; Compl. at ¶ 12; Doc. 16 at 2; Pls.' Ex. 1 at ¶ 10.

         LTS Resource, LLC, an environmental testing corporation, inspected the home on July 3. See Pls.' Ex. 3. It is not clear from the record who hired LTS Resource or why, but its investigation found visual evidence of mold growth and a dangerous level of spores in the air. Id. at 3-4; Doc. 16 at 2; Pls.' Ex. 1 at ¶ 11. On August 15, Defendant informed Plaintiffs that it would cover up to $10, 000 of any mold-remediation costs subject to the policy's mold-coverage limit. Pls.' Ex. 6 at 1. Defendant also offered to cover all additional living expenses accrued while the mold was being removed. Id. In conveying this offer, Defendant included a report from Gardner Roofing that found there was old water damage around the skylight and that the roof lacked any ventilation, which “possibly caused long term moisture issues in the ceiling joint cavities as evidenced by the damages seen after the drywall ceilings and insulation were removed inside the home.” Def. Ex. A.

         It appears that Defendant has paid Plaintiffs $31, 915.90 up to this point. It sent a $7, 927.62 check to cover Servpro's work in drying out the ceiling. Def. Ex. C at 2; Def. Ex. D at 1. Defendant paid out the entire mold-remediation limit in two checks-one for $625.00 to cover the mold testing done on July 3 and another for $9, 375.00 to cover the balance of the policy limit. Def. Ex. H; Def. Ex. I. Finally, Defendant sent Plaintiffs a check for $13, 988.28 on October 12 to cover all of Plaintiffs' hotel bills incurred up to that point. Def. Ex. C at 1; Def. Ex. E.

         Defendant has not provided any compensation for living expenses besides the hotel bills because it allegedly has questions regarding how much more Plaintiffs were spending than normal. Doc. 20 at 4; Def. Ex. C at 1; Def. Ex. D at 1. It also has not paid hotel bills or other living expenses incurred after October 2018 because Plaintiffs have failed to provide the necessary documentation. See Def. Ex. G at 2 (identifying hotel receipts dated only through October 16, 2018 and living expense receipts through October 29, 2018 in Plaintiffs' initial disclosures). Plaintiffs are currently living in an apartment because there are still nearly $17, 000 worth of repairs to complete before they may return home. Compl. at ¶ 2; Doc. 16 at 2; Pls.' Ex. 1 at ¶¶ 12, 15.


         Plaintiffs move for a declaratory judgment or, in the alternative, partial summary judgment. Doc. 16. In their words, they “are asking the Court to declare that the expenses and repairs are covered under their insurance policy so that they can be reimbursed for their out of pocket and ongoing expenses, and complete repairs so that they can finally move back into their home.” Id. at 3. As the Advisory Committee noted in promulgating Federal Rule of Civil Procedure 57:

A declaratory judgment is appropriate when it will ‘terminate the controversy' giving rise to the proceeding. Inasmuch as it often involves only an issue of law on undisputed or relatively undisputed facts, it operates frequently as a summary proceeding, justifying docketing the case for early hearing as on a motion.

Fed. R. Civ. P. 57. Plaintiffs ask for a determination of what they perceive to be undisputed material facts- the scope of the insurance policy. Because of the nature of a declaratory judgment and the remedy Plaintiffs seek, I interpret their motion as one exclusively for partial summary judgment.

         Summary judgment is only appropriate if the “movant shows that there is no genuine dispute as to any material fact” and that it is “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it could influence the determination of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Adler v. Wal-Mart Stores, Inc., 144 F.3d 665, 670 (10th Cir. 1998). An issue is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.” Adler, 114 F.3d at 670.

         The moving party bears the initial burden of making a prima facie demonstration of the absence of any genuine issues as to any material fact and entitlement to judgment as a matter of law. Id. at 670-71; Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991). If the movant meets this initial threshold, the burden shifts to the nonmoving party to “go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). In applying this standard, a trial court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party, which is the Defendant here. Adler, 114 F.3d at 670.

         Plaintiffs' motion focuses almost entirely on how their insurance policy should be interpreted. Courts should interpret the terms of an insurance policy by “their plain meaning according to common usage.” Shean v. Farmers Ins. Exch., 934 P.2d 835, 837 (Colo.App. 1996). If there are provisions that conflict with one another, the court should construe the provisions in favor of the insured. Id. However, courts should not attempt to rewrite insurance policy provisions that are clear and unambiguous. Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 299 (Colo.App. 2003). If an insurer seeks to limit or exclude coverage under the terms of the policy, it has “the burden of proving that a particular loss falls within an exclusion in the contract.” Colo. Intergovernmental Risk Sharing Agency v. Northfield Ins. Co., 207 P.3d 839, 842 (Colo.App. 2008).


         Plaintiffs have two major arguments-first, the plain language of the policy unambiguously provides them with unlimited mold-remediation coverage, and second, the efficient proximate cause doctrine nonetheless requires complete coverage. Defendant, on the other hand, argues that the policy unambiguously excludes Plaintiffs' mold damage from any coverage, and it made nothing more than a business decision in offering them any money for the mold remediation or additional living expenses. Doc. 20 at 11.

         Plaintiffs offer two possible readings of the policy that would provide for complete coverage of the mold remediation. I do not find either reading to be persuasive. Their first argument is that any damages resulting from wear and tear are covered under an exception to the policy; because the mold was caused by wear and tear to the roof, it should be covered in full. Doc. 16 at 5-6. The policy unambiguously excludes wear and tear from coverage. Pls.' Ex. 7 at 34. Plaintiffs are correct that the policy covers some damages that ...

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