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Curtis Park Group v. Allied World Specialty Insurance Group
This dispute arose when Curtis Park Group, a subsidiary of a Colorado-based real estate developer, encountered a major problem during the construction of a new development.
Curtis park hired MW Residential LLC as the general contractor to construct it in accordance with the designs Curtis Park provided.
Over a year after construction began, in December 2017, Curtis Park discovered that the concrete slab in the construction was slagging.
Curtis Park, after hiring a consultant, told MW that it was rejecting the slab and that repairing it would cost over $2.85 million. MW was obligated to front the repair costs per its contract. MW then withheld payment from its concrete subcontractor, All Phase. All Phase sued MW, and the parties ultimately settled, according to the opinion.
Curtis Park insured itself during the construction process with a builder’s risk insurance policy from Allied World.
In March 2018, Curtis Park gave notice to Allied World of a claim for the cost of repairing the slab. It sought more than $2.85 million in hard costs—the cost of repairing the slab— and nearly $1 million in soft costs, which were incurred because of the delay in construction. Curtis Park did not disclose the report prepared by the consultant when it filed the claim.
In August 2019, after conducting its own investigation, Allied World denied coverage, determining that the sagging was caused by a construction defect and was therefore not covered under the insurance policy.
In December 2019, Curtis Park and MW entered into a project close-out agreement in which they agreed to work together to pursue a claim against Allied World under Curtis Park’s insurance policy, according to the opinion.
One month after entering into the close-out agreement, Curtis Park sued Allied World for breach of contract, common-law bad faith and statutory bad faith.
Allied World obtained a copy of the consultant report through a third-party subpoena and learned that Curtis Park hadn’t disclosed the report when it initially submitted its claim. Allied World then amended its denial of Curtis Park’s claim, adding that it was also rejecting the claim because Curtis Park violated the policy’s prohibition on willful misrepresentation.
Allied World later discovered through a motion to compel that Curtis Park had entered into the close-out agreement with MW before filing suit.
After learning that Curtis Park had not paid and will not ever pay the hard costs of the repair, Allied World filed a motion in limine to exclude from trial any evidence of the hard-costs portion of Curtis Park’s claim. The district court denied the motion.
At trial, the jury found in favor of Curtis Park on its breach-of-contract and statutory bad-faith claims, but not on its common-law bad-faith claim. Allied World filed a motion for a new trial and renewed a prior motion for judgment as a matter of law. The district court denied both motions.
The 10th Circuit Court of Appeals concluded that the text of the policy makes clear that Curtis Park cannot recover for another party’s losses and must suffer an actual loss to receive coverage. The court also found that Curtis Park and the district court had interpreted the policy too broadly.
The 10th Circuit also found that Curtis Park was not entitled to recover on its claim for hard costs, as the close-out agreement eliminated any obligation for Curtis Park to pay anyone for the hard costs of repair.
The 10th Circuit also found that the district court erroneously instructed the jury and that its misconceptions about the governing law may have affected some evidentiary rulings.
The 10th Circuit reversed the judgment with respect to hard costs and remanded for entry of judgment in favor of Allied World on that claim. WIth respect to the remainder of the judgment, the 10th Circuit vacated and remanded for a new trial consistent with the opinion.