Updates on Insurance Coverage, Construction Defect
and Commercial Auto Law Developments
in Colorado and Utah
Greetings from Evans & Co. Counselors and Litigators, with another Case Notes series. We write this month with updates on insurance, construction defect, and commercial auto law in the states of Colorado and Utah. We would have written about Wyoming law too but but the courts there have not graced us with any opinions in these areas of law.
Past Case Notes are archived at and we would be pleased to bring current the decisions on which we've reported previously, at your request.
The Colorado Supreme Court adopts a new rule that when an employer admits the employee-defendant was acting within the course and scope of employment, a plaintiff's direct negligence claims against the employer are barred but the employer remains responsible for all the fault attributed to the negligent employee. This is a step in preventing redundant claims from being asserted against an employer. Of course, the battle is waged because plaintiff’s counsel would prefer multiple claims against the employer, in the hope that some will prevail.  Now they get only one crack at the employer.
The Colorado Court of Appeals clarifies that in the absence of a suit and a judgment in that suit, there is no right to prejudgment interest.  This case should be referenced whenever settlement negotiations include such a demand, as they often do.
UM/UIM insurers will groan at the Court of Appeals decision in a bad faith claim, that upheld an award of twice the coverage limits, even where the limits of the coverage had been paid before the judgment – thus giving plaintiff three times what he was rightfully entitled to (but which was not timely paid by the insurer).  The $118,000 attorney’s fees award against the insurer smarts a little too. 
We also digest a case in which a “surface water” exclusion was upheld to deny a property loss due to intrusion of rainwater, and a case where double insurance lead to the determination that two “excess” “other insurance” clauses were mutually repugnant and lead to court-imposed proration by policy limits.
A 10th Circuit Court of Appeals decision, applying Colorado law, finds that under a Builder’s Risk policy, damage caused to other property adjacent to the property under construction, is not a covered loss. Presumably this presents the opportunity to sell both Builders’ Risk and CGL policies to contractors, or spot unmanaged risk where only Builder’s Risk terms are purchased.
In an aviation policy, we again have a ruling upholding the approved pilot warranty and declaring no coverage for a fatal crash where the pilot/owner, in the forward pilot’s seat and found to be flying the airplane, was not an authorized pilot under policy terms. The contrary argument is that a fully authorized and qualified pilot was in the rear seat of the aircraft, who may have been flying the aircraft. The rear seat pilot had access to all primary flight controls but not 22 controls which were apparently found to be available to the owner only. (The court did not seem to understand that none of the 22 controls were in use, being changed, or had any causal relation to the crash, nor could the manipulation of any of them prevented the crash.) If the court had found that the instructor pilot in the rear seat had access to all controls needed to fly the airplane in the flight envelope it was in at the time of the crash (the three he did have) the result may have been different. Drop me a line if you would like to have an earful of what it takes to fly or to crash a Mustang (P51D), and more interesting facts about this case.
Turning to Utah law, the Court of Appeals considers how Utah statutes have modified the Utah common law doctrine of “sudden incapability” which is a defense to liability. Here, a commercial bus driver was suddenly incapacitated and arguments ranged from there being no liability imposed (because of the “sudden incapacity” common-law defense, to unlimited and strict liability. The court chose the middle path of strict liability but only to the limits of applicable insurance.
Click here for our Case Notes for both states. (20 pages)

here for Colorado only. (17 pages)

here for Utah only. (3 pages)

here to go to the Evans & Co. law firm website for firm information and access to prior case digests.

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