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Canyon Springs at Soaring Eagles Townhome Owners Association, Inc. v. Country Mutual Insurance Co.

United States District Court, D. Colorado

October 10, 2019

CANYON SPRINGS AT SOARING EAGLES TOWNHOME OWNERS ASSOCIATION, INC., a Colorado corporation, Plaintiff,
v.
COUNTRY MUTUAL INSURANCE COMPANY, Defendant.

          ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, GRANTING DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT, AND TERMINATING CASE

          WILLIAM J. MARTÍNEZ JUDGE

         This is a dispute between a homeowners association and its property and casualty insurer over whether the insurer has properly calculated the amount of loss flowing from a severe hail storm. Plaintiff Canyon Springs at Soaring Eagles Townhome Owners Association, Inc. (“Canyon Springs”), sues Defendant Country Mutual Insurance Company (“Country Mutual”) for breach of insurance contract, bad faith breach of insurance contract, and unreasonable delay or denial of insurance benefits in violation of Colorado Revised Statutes §§ 10-3-1115 and -1116. (ECF No. 1.)[1]

         Currently before the Court is Canyon Springs's Motion for Partial Summary Judgment (ECF No. 19) and Country Mutual's Cross Motion for Summary Judgment (ECF No. 20). Canyon Springs argues that the contractual amount-of-loss question must be resolved in its favor as a matter of law, leaving only bad faith and unreasonable delay/denial for trial. Country Mutual argues that the contractual amount-of-loss question must be resolved in its favor as a matter of law, and that bad faith and unreasonable delay/denial necessarily fail as a result.

         For the reasons explained below, the Court finds that Country Mutual has the better argument. Moreover, Canyon Springs concedes that its other claims fail if Country Mutual has no coverage obligation. Accordingly, Canyon Springs's motion will be denied, Country Mutual's motion will be granted, and this case will be terminated.

         I. LEGAL STANDARD

         Summary judgment is warranted under Federal Rule of Civil Procedure 56 “if 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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). A fact is “material” if, under the relevant substantive law, it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). An issue is “genuine” if the evidence is such that it might lead a reasonable trier of fact to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).

         In analyzing a motion for summary judgment, a court must view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. See Houston v. Nat'l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).

         II. FACTS

         The relevant facts are straightforward and generally undisputed.

         As of June 2016, Country Mutual insured thirty-one townhome buildings managed by Canyon Springs. (ECF No. 19 at 2-3, ¶¶ 1-2.) On June 28, 2016, a hailstorm damaged those buildings. (Id. at 3, ¶ 2.) Country Mutual estimated that the total replacement cost for all hail-damaged property would be $1, 031, 295.13 (“Comprehensive Estimate”). (Id. ¶ 3.) Of that estimate, the largest line item was the expected cost of roof repairs, estimated at $758, 634.45 (“Roof Estimate”). (Id. ¶ 7.)

         Canyon Springs paid to repair the roofs only, not the other items within the Comprehensive Estimate. (Id. ¶ 8; see also id. at 8 (“Canyon [Springs] did not actually repair the damaged gutters or damaged siding”).) The actual cost of roof repairs turned out to be $761, 911.74-less than the applicable deductible under the circumstances, which was $789, 291.12. (Id. at 3, ¶¶ 4, 8.) Canyon Springs nonetheless claimed that Country Mutual owed a “holdback depreciation” payment (discussed below), which Country Mutual denied. (Id. ¶ 9.) Canyon Springs claims the holdback depreciation payment amounts to $128, 907.25. (Id. ¶ 6.) The parties' dispute centers on whether the insurance policy requires Country Mutual to make that payment, and, if so, whether Country Mutual's failure to make the payment amounts to bad faith or unreasonable delay/denial of insurance benefits. (ECF No. 20 at 4, ¶ 11.)

         III. ANALYSIS

         A. Breach of the Insurance Policy

         The parties' dispute requires the Court to construe the following language from the insurance policy's Replacement Cost Endorsement, which ...


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