Pinon Sun Condominium Association, Inc. v. Atain Specialty Insurance Co.

          ORDER GRANTING IN PART AND DENYING IN PART MOTIONS FOR SUMMARY JUDGMENT

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court upon four motions for summary judgment:

1. Third-Party Defendants Shalz Construction LLC and Bradley Shalz’s (together, “Shalz”) Corrected Motion for Summary Judgment (Doc. # 204);

2. Third-Party Defendant Claim Solutions LLC and Scott Benglen’s (together, “Claim Solutions”) Motion for Summary Judgment (Doc. # 241);

3. Plaintiff/Counter Defendant Pinon Sun Condominium Association, Inc.’s (“Pinon Sun”) Motion for Summary Judgment (Doc. # 246); and

4. Defendant/Third-Party Plaintiff Great Lakes Insurance, SE’s (“Great Lakes”) Motion for Summary Judgment (Doc. # 240).

         For the reasons discussed herein, the Court grants Shalz’s, Claim Solutions’, and Pinon Sun’s Motions for Summary Judgment and grants in part and denies in part Great Lakes’ Motion for Summary Judgment.

         I. BACKGROUND

         The Court meticulously recited the factual and procedural background of this knotty dispute in its October 26, 2018 Order (Doc. # 189) and more recently in its September 25, 2019 Order (Doc. # 287). That background information, as well as that laid out by United States Magistrate Judge N. Reid Neureiter in his January 9, 2019 Recommendation (Doc. # 237), is incorporated herein by reference. This Order will recount only what is necessary to address the Motions for Summary Judgment.

         Pinon Sun is the homeowners’ association for a multi-family condominium property in Colorado Springs, Colorado. (Doc. # 43 at 2–3.) It sought and obtained an insurance policy (the “Policy”) from Great Lakes on its property for the period of August 15, 2015, to August 15, 2016. See (Doc. # 71-3). Great Lakes was the primary insurer of the Policy, covering up to $10, 000, 000.00 for any given incident. (Doc. # 43 at 25.) Defendant Atain Specialty Insurance Company (“Atain”) and Defendant Indian Harbor Insurance Company (“Indian Harbor”) were the excess carriers under the Policy. (Id.); see also (Doc. # 49 at 2.)

         Pinon Sun filed a claim under the Policy after its properties allegedly sustained hail and wind damage on July 28, 2016, (Doc. # 43 at 4), and retained Claim Solutions^[1]as its public adjuster for the claims process (Doc. # 49 at 8). Pinon Sun and Claim Solutions engaged in a year-long dispute with Great Lakes over the value of alleged hail damage and the cost of allegedly necessary repairs. See, e.g., (id. at 4–25.) At some point over the course of that year, Pinon Sun and Claim Solutions hired Shalz^[2] to repair the roofs, siding, and decks of its properties. See (id. at 15; Doc. # 49 at 15.) The estimates for and invoices from Shalz’s work were central to Great Lake’s ensuing claim investigation and dispute with Pinon Sun and Claim Solutions. See (Doc. # 43 at 4–25.)

         It is undisputed that Great Lakes made two actual cash value (“ACV”) payments to Pinon Sun pursuant to the Policy: (1) a payment of $134, 681.80 on September 14, 2016, and (2) a payment of $554, 536.75 on September 30, 2016. (Doc. # 244 at 152, 159); see, e.g., (Doc. # 241 at 9; Doc. # 262 at 7.) These are the only payments Great Lakes has made under the Policy. It is also undisputed that Great Lakes’ ACV payments were “based upon estimates prepared by [Jim Black Construction Company (“JBC”)], a large, well-established contractor specializing in property restoration” that was retained by the Great Lakes, Atain, and Indian Harbor’s claim adjusting agent, the Claims Adjusting Group. (Doc. # 240 at 4, 18.) Great Lakes did not rely on any information provided by Pinon Sun, Claim Solutions, or Shalz in making the two ACV payments. (Doc. # 204 at 7; Doc. # 229 at 6.)

         Pinon Sun initiated this action on June 30, 2017 (Doc. # 1), and filed the operative Complaint against Great Lakes, Atain, and Indian Harbor (together, the “Insurers”) on September 25, 2017 (Doc. # 43). Pinon Sun asserts the following claims:

1. Breach of contract, against Great Lakes;

2. Breach of contract, against Atain;

3. Breach of contract, against Indian Harbor;

4. Violation of Colo. Rev. Stat. §§ 10-3-1115, -1116, for unreasonable delay or denial of payment of a claim for benefits, against Great Lakes;

5. Breach of the covenant of good faith and fair dealing, against Great Lakes; and

6. Violation of the Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. § 6-1-101, et seq., against Great Lakes.

(Id. at 25–34; Doc. # 234 at 2.)

         Great Lakes answered the Complaint on October 17, 2017, and asserts counterclaims and third-party claims against Pinon Sun, Claim Solutions, and Shalz:

1. Breach of contract, against Pinon Sun;

2. Fraud and misrepresentation; against Pinon Sun, Claim Solutions, and Shalz;

3. Insurance fraud, against Pinon Sun, Claim Solutions, and Shalz;

4. Civil conspiracy, against Pinon Sun, Claim Solutions, and Shalz;

5. Civil theft, against Pinon Sun, Claim Solutions, and Shalz;

6. Violation of the Colorado Organized Crime Control Act (“COCCA”), Colo. Rev. Stat. § 18-17-104, et seq., against Pinon Sun, Claim Solutions, and Shalz;

7. Violation of the federal Racketeer Influenced and Corrupt Organizations statute (“RICO”), 18 U.S.C. § 1962, against Pinon Sun, Claim Solutions, and Shalz; and

8. A claim for declaratory judgment resolving the parties’ contractual issues and declaring that the actions of Pinon Sun, Claim Solutions, and Shalz “during the claim process” “constitute fraud, misrepresentation and concealment.”

(Doc. # 49 at 14–21.) Atain and Indian Harbor jointly answered Plaintiff Pinon Sun’s Complaint on October 21, 2017, and asserted the same eight counterclaims and third-party claims as Great Lakes against Pinon Sun, Claim Solutions, and Shalz. (Doc. # 51.)

         Pinon Sun, Claim Solutions, and Shalz together moved to dismiss the Insurers’ counterclaims and third-party claims against them on October 31, 2017, and November 7, 2017. (Doc. ## 52, 64.) On June 29, 2018, United States Magistrate Judge Michael J. Watanabe recommended that the Insurers’ COCCA and RICO claims be dismissed. (Doc. # 167.) No. party objected to the Magistrate Judge’s Recommendation, and this Court affirmed and adopted the Recommendation on July 18, 2018. (Doc. # 174.) Accordingly, the Insurers’ COCCA and RICO claims were dismissed. (Id.)

         On October 31, 2018, Pinon Sun and Claim Solutions filed a Joint Motion to Amend Answer to Add Counterclaims Against Defendants, seeking to add claims of abuse of process and malicious prosecution against the Insurers. (Doc. # 190.) Atain and Indian Harbor subsequently withdrew all of their remaining counterclaims and third-party claims. See (Doc. ## 225, 228, 230, 234.) The Court denied Pinon Sun and Claim Solutions’ request for leave to assert these additional claims on September 25, 2019. (Doc. # 287.)

         On December 27, 2018, all parties to this action jointly filed a Status Report regarding the remaining claims. (Doc. # 234.) The following claims remain:

         Pinon Sun’s claims:

1. Breach of contract, against Great Lakes;

2. Breach of contract, against Atain;

3. Breach of contract, against Indian Harbor;

4. Violation of Colo. Rev. Stat. §§ 10-3-1115, -1116, for unreasonable delay or denial of payment of a claim for benefits, against Great Lakes;

5. Breach of the covenant of good faith and fair dealing, against Great Lakes; and

6. Violation of the Colorado Consumer Protection Act, Colo. Rev. Stat. § 6-1-101, et seq., against Great Lakes.

         Great Lakes’ claims:

1. Breach of contract, against Pinon Sun;

2. Fraud and misrepresentation; against Pinon Sun, Claim Solutions, and Shalz;

3. Insurance fraud, against Pinon Sun, Claim Solutions, and ...