Colorado Supreme Court Upholds $2.5 Million Construction Defect Award
On Monday, May 25th, the Colorado Supreme Court ruled not to set aside a lower court’s decision that Auto-Owners Insurance Co. cannot intercede in a construction defect case to challenge the Bolt Factory Lofts homeowner association’s uncontested $2.5 million judgment against the Sierra Glass Co.
In a 4-3 ruling, the majority said the insurance company was not hurt by the glass company’s pretrial agreement with the homeowner’s association in the construction defect suit. Justice Monica M. Márquez wrote in her opinion that the insurance company can still protect its interests in a lawsuit for separate coverage.
“The Colorado Supreme Court continued to correctly strike the balance between insurance companies and their policyholders. In Colorado, when an insurer breaches its duty of good faith to its policyholder by choosing not to protect the insured from a judgment exceeding coverage, the insured can enter a protective settlement with the injured party. That’s what happened here.
In the leading case, Nunn v. Mid-Century, the parties stipulated to damages. Here, they chose to put on evidence in a post-settlement damages trial. The insured decided not to defend. When the insurer learned the post-settlement proceeding would be one-sided, it tried to intervene to protect its ‘rights.’ But after the insurer breached the contract, its rights were protected in its separate declaratory judgment action. So it suffered no prejudice and had no interest that would be or was impaired in the district court.
The court’s ruling preserved the right of a policyholder to avoid the harm of an insurer’s bad faith by entering a protective settlement agreement. Allowing the insurer to intervene would have done the opposite and compounded the harm to the insured.
Burg Simpson trial attorneys and shareholders Thomas Henderson, Mari Perczak, Ronald Sandgrund, Brian Matise, and Joseph Smith, all contributed to this great win.”
One of America’s foremost plaintiff trial firms, Burg Simpson Eldredge Hersh & Jardine, has a reputation for fighting relentlessly and successfully for victims of negligence, malfeasance, malpractice, and abuse. Burg Simpson has secured more than $1 billion in verdicts, settlements, and judgments in practice areas spanning catastrophic personal injury, mass tort and class actions regarding dangerous pharmaceutical drugs and devices, medical malpractice, complex commercial and business litigation, construction defects, and workers’ compensation. The firm’s success has also included more than 200 recoveries in excess of $1 million.