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HB Construction, Inc. v. Travelers Property Casualty Company of America

United States District Court, D. New Mexico

August 1, 2019



         THIS MATTER is before the Court upon Plaintiff's Motion for Partial Summary Judgment, filed October 3, 2018 (Doc. 34), and Defendant's Motion for Summary Judgment, filed on November 2, 2018 (Doc. 38). Having reviewed the parties' pleadings and applicable law, the Court finds that Plaintiff's motion is not well-taken and therefore, is DENIED. The Court further finds that Defendant's motion is well-taken and therefore, is GRANTED.


         This is an insurance case about whether certain amounts claimed as losses by HB Construction, Inc. (“Plaintiff”), and denied by Travelers Property Casualty Company of America (“Defendant”), fall within the scope of coverage. Plaintiff contracted with Defendant to insure a luxury condominium building it was constructing, the Carlisle. As the building was nearing completion, David Hickman burned it down and set a number of other buildings in Albuquerque on fire. David Hickman was convicted and sentenced in this district court for arson.

         Plaintiff was reimbursed approximately $5, 772, 484.36. At issue is $567, 828.00 in expenses claimed by Plaintiff but denied in part by Travelers (the “denied amount”). Although Defendant paid $100, 000 under the “soft cost” coverage extension, it denied more than $400, 000. It reasoned that the denied amounts either (1) were soft costs exceeding the soft costs sublimit, or (2) did not fall under the coverage provisions of the Builder's Risk policy because they accrued before the fire. See Doc. 38-5, p. 4 (“the majority of those costs were incurred prior to the date of loss and thus those costs would be considered as part of the original project budget.”)

         The parties cross-moved for summary judgment on the breach of contract claim, focusing primarily on whether the denied amounts fall under coverage provisions or are otherwise excluded as soft costs. Defendant also moved for summary judgment on the remaining claims, arguing that they must fail as a matter of law if there was no breach of the policy.


         A motion for summary judgment may be granted only when “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). Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact. Munoz v. St. Mary Kirwan Hosp., 221 F.3d 1160, 1164 (10th Cir. 2000). When applying this standard, the court examines the record and makes all reasonable inferences in the light most favorable to the non-moving party. Id. The movant bears the initial burden of establishing that no genuine issue exists as to any material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).


         The parties stipulated to the majority of the facts below. Defendant also asserted additional facts, which Plaintiff did not dispute.

         Defendant issued Policy Number QT-66-3E977885-TIL-16 to Plaintiff with policy period 11/18/2016 to 02/28/2017 (“the Policy”). Plaintiff was the general contractor for a condominium complex known as the Carlisle at 3600 Central Boulevard SE, Albuquerque, New Mexico 87113. A fire occurred at the Carlisle on November 23, 2016. Plaintiff submitted a claim to Defendant for the loss on November 23, 2016. The Policy's insuring agreement provides:

         A. COVERAGE

We will pay for direct physical loss of or damage to Covered Property caused by or resulting from a Covered Cause of Loss.

         1. Covered Property

Covered Property, as used in this Coverage Form, means the following types of property you own or for which you are legally liable, the value of which is included in the estimated "total project value" shown in the Declarations:

         a. Permanent Works

Materials, equipment, machinery, supplies and property of a similar nature that will become a permanent part of the project described in the Declarations during completion of such project or that will be used or expended in the completion of such project.
Completion of the project includes site preparation (including demolition of existing buildings or structures), fabrication, assembly, installation, erection, alteration, renovation and similar construction activities.

         b. Temporary Works

Cofferdams, construction forms, cribbing, falsework, hoarding, scaffolds, fencing, signs, office trailers (and their "contents") and similar temporary buildings or structures incidental to completion of the project described in the Declarations.

         The Policy specifically excludes “soft costs” beyond the Limits of Insurance shown on the Policy's Declaration page:

         B. EXCLUSIONS

         2. We will not pay for loss or damage caused by or resulting from any of the following:

         a. Consequential Loss

(1) Delay, loss of use, or loss of market; or
(2) Loss of income, soft costs or extra expenses except as specifically provided in this ...

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