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Downs v. Owners Insurance Co.

United States District Court, D. Colorado

July 31, 2018

OWNERS INSURANCE COMPANY, a foreign corporation, Defendant.


          William J. Martinez United States District Judge.

         Plaintiff Brookshire Downs at Heatherridge Condominium Association, Inc. (“Plaintiff”) sues Defendant Owners Insurance Company (“Defendant”) for breach of insurance contract and unreasonable delay or denial of insurance benefits. (See ECF No. 1.) Currently before the Court is Plaintiff's Motion for Partial Summary Judgment (ECF No. 36), which seeks summary judgment against Defendant's second affirmative defense. That defense asserts that Plaintiff failed to file this lawsuit within a two-year limitations period established by contract. (See ECF No. 16 at 9.) According to Plaintiff, however, a Colorado statute nullifies that contractual limitations period, so the statutory limitations period for contract claims (three years) applies.

         For the reasons explained below, the Court disagrees and therefore must deny Plaintiff's motion. In addition, the Court will order Plaintiff to show cause why summary judgment should not enter in Defendant's favor on Defendant's second affirmative defense.


         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., Ltd. 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 following facts are undisputed unless attributed to a party or otherwise noted.

         Plaintiff represents itself to be a condominium association comprised of individual unit owners. (ECF No. 36 at 2, ¶ 1.)[1] On January 14, 2014, Defendant issued to Plaintiff an insurance policy (“Policy”) that “consist[ed] of the following coverage part(s)”: (1) “commercial property coverage, ” (2) “commercial general liability coverage, ” and (3) “commercial crime coverage.” (ECF No. 36-4 at 3.) The Policy contains the following contractual statute of limitations: “No one may bring a legal action against us under this Coverage Part [i.e., the commercial property coverage] unless * * * [t]he action is brought within 2 years after the date on which the direct physical loss or damage occurred.” (Id. at 108.)

         The insured property is zoned for residential use, and the various individual condominium units are restricted to residential use. (ECF No. 36 at 3, ¶¶ 2-3.) Plaintiff claims that its governing documents also forbid business activities on any portion of the property. (Id. ¶ 4.)

         Plaintiff alleges that hail and wind caused damage to Plaintiff's property on September 29, 2014. (ECF No. 1 ¶ 7.) Plaintiff further asserts that it filed a claim under the Policy in June 2015. (Id. ¶ 8.) Plaintiff became dissatisfied with Defendant's handling of the claim. (Id. ¶¶ 27-32.) Plaintiff filed this lawsuit on April 7, 2017-more than two years but less than three years from the date of the wind and hail damage. (See ECF No. 1.)

         III. ANALYSIS

         The Court has diversity jurisdiction over this lawsuit (see ECF No. 1 ¶¶ 2-4), and thus applies Colorado law.[2] Colorado law sets forth a three-year statute of limitations for “[a]ll contract actions.” Colo. Rev. Stat. § 13-80-101(1)(a). If this limitations period applies, Plaintiff's lawsuit is timely. But, as noted, the Policy specifies a two-year period. If that limitations period applies, Plaintiff's lawsuit is untimely.

         The Colorado Court of Appeals holds that a contractual limitations period may override a statutory limitations period so long as such contractual clauses are not “prohibited by statute.” Grant Family Farms, Inc. v. Colo. Farm Bureau Mut. Ins. Co., 155 P.3d 537, 538 (Colo.App. 2006).[3] Plaintiff claims that the Policy's two-year period is prohibited by the following statute:

(a) Notwithstanding any provision of a homeowner's insurance policy that requires the policyholder to file suit against the insurer, in the case of any dispute, within a period of time that is shorter than required by the applicable statute of limitations provided by law, a homeowner may file such a suit within the period of time ...

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