Under a blue autumn sky in Colorado, a Federal Judge was asked to apply a Colorado State Statute in Sterling Construction Mgt., LLC v. Steadfast Insurance Co., 2011 WL 3903974 (D. Colo. September 6, 2011). The party asking the Federal Judge to apply the State Statute had previously acted as the general contractor on a project "to construct a pipeline form [sic] Laramie, Wyoming to Sterling, Colorado." It asked the Court to declare that when an irrigation canal was breached during construction and damage flowed through the canal, onto "nearby properties, and [onto] the pipeline work being performed," the defendant Steadfast Insurance Company should cover the damage.
It appears that Sterling was making its claims to coverage under a Liability Insurance Policy, or Commercial General Liability ("CGL") Policy, because Steadfast contested coverage for Bodily Injury, Property Damage, or an Occurrence, id. at *10, for example, which are terms ordinarily appearing only in CGL and other Liability -- or Third-Party -- Insurance Policies. However, this may be uncertain, because the precise nature of Steadfast's Policy is not mentioned by the Court in the 21 pages of its opinion published in its totality by Westlaw in this case.
More precisely, Sterling Construction Management sued Steadfast for coverage for, among other things, Sterling's contractual indemnity payments to Overland Pass Pipeline Company which had hired Sterling as the general for the pipeline project. (When the canal broke and the damages oozed forth, Sterling paid indemnity to Overland on account of the results.) The case involved many different claims by Sterling for covered damages of many kinds. The Federal Court's treatment of these claims covers (no pun intended) some 10 pages in Westlaw. Id. at *3 - *12.
The Sterling claim that is addressed in this post is that when Sterling claimed coverage for contractual indemnity payments it had made to Overland, it, Sterling, was thereby endowed with standing to sue Steadfast under a First-Party Bad Faith Statute. Sterling asked the Federal Court to apply Colorado Revised Statute § 10-3-1116, which is available to "a first-party claimant" who shows that its "claim for payment of benefits has been unreasonably delayed." When the requisite showing has been made by the First-Party-Insured Plaintiff invoking the statute, the Plaintiff is entitled to an award of doubled benefits. "Sterling is the named insured on the policy, seeking benefits payable directly to itself." Therefore, said the Federal Judge in Colorado, Sterling was pursuing a First-Party claim and not a Third-Party claim. Id. at *12.
The Federal Court also held that Sterling in this case appropriately fit the description of a "first-party claimant" capable of enforcing Section 10-3-1116 under Colorado law, specifically, the definition of "first-party claimant" in C.R.S. § 10-3-1115(b)(1): "'First-party claimant'" means an individual, corporation, association, partnership, or other legal entity asserting an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy."
There apparently was no verdict nor any judgment in this situation entitling Overland to damages from Sterling. There appears to have been only Sterling's voluntary agreement to pay contractual indemnity to Overland, i.e., a settlement without a verdict or judgment. Sterling's statutory "unreasonable delay" claim survived these impediments, however (in stark contrast to similar impediments to a claim under a similar State Statute in Georgia, discussed in the post here on Sunday, September 18, 2011).
The links provided to Colorado Statutes are to the 2008 Session Laws of the Colorado General Assembly in which the statutes were enacted.
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