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Supreme Court of Colorado
April 25, 2016, Decided
Supreme Court Case No. 13SC815
[**141] en banc
Opinion modified, and as modified, petition for rehearing DENIED. EN BANC.
[*1] Travelers petitioned for review of the court of appeals' judgment affirming the district court's denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon. Much as the district court had done, the appellate court rejected Travelers' contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that this court's opinion in Friedland v. Travelers Indemnity Co., 105 P.3d 639 (Colo. 2005), permitting the insured in that case an opportunity to demonstrate a lack of prejudice from its failure to comply with a notice requirement of its insurance contract, had [***4] effectively overruled our prior "no voluntary payments" jurisprudence to the contrary and given Stresscon a similar opportunity.
[*2] Because our adoption of a notice-prejudice rule in Friedland did not overrule any existing "no voluntary payments" jurisprudence in this jurisdiction, and because we decline to extend our notice-prejudice reasoning in Friedlandd to Stresscon's voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers, the judgment of the court of appeals is reversed.
[*3] Stresscon Corporation, a subcontracting concrete company, filed suit against Travelers Property Casualty Company of America, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon's claims for relief arose from a serious construction accident in July 2007, which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon's general contractor, Mortenson, sought damages from Stresscon, asserting Stresson's [***5] contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers.
[*4] Although there was much dispute over the factual and legal import of Travelers' reservation of rights and other of its communications with both Stresscon and Mortenson concerning Mortenson's claim, there was no dispute that by December 31, 2008, Travelers had not paid the damages asserted by Mortenson. There was also no dispute that on December 31, 2008, despite Mortenson's failure to bring a lawsuit or seek arbitration against Stresscon, Mortenson and Stresscon entered into a settlement agreement without consulting Travelers. The agreement settled, without differentiation as to amount, this accident-related claim, along with other unrelated and concededly uncovered Mortenson claims against Stresscon. In March 2009, also without prior notice of the settlement agreement, Stresscon filed suit against several entities, including Travelers, the subcontracting crane company, and various other insurers; and with regard to Travelers, it [**142] ultimately prevailed, winning a verdict for bad faith breach of the insurance contract and an award of the statutory amount, costs, and [***6] attorney fees.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2016 CO 22M *; 370 P.3d 140 **; 2016 Colo. LEXIS 1307 ***
Petitioner: Travelers Property Casualty Company of America, a Connecticut company, v. Respondent: Stresscon Corporation, a Colorado corporation.
Subsequent History: [***1] AS MODIFIED May 23, 2016.
Prior History: Certiorari to the Colorado Court of Appeals. Court of Appeals Case Nos. 11CA1239 and 11CA1582.
Travelers Prop. Cas. Co. of Am. v. Stresscon Corp., 2016 Colo. LEXIS 419, 2016 CO 22 (Apr. 25, 2016)
Disposition: Judgment Reversed. Opinion modified, and as modified, petition for rehearing DENIED. EN BANC.
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Insurance Law, Claims Made Policies, Notice Requirements, Notice Prejudice, Claim, Contract & Practice Issues, Subrogation, Voluntary Payments, Policy Interpretation, Ambiguous Terms, Unambiguous Terms, Liability & Performance Standards, Bad Faith & Extracontractual Liability, Settlements, Third Party Claims, Contracts Law, Defenses, Public Policy Violations