Dreyer v. Am. Natl. Prop. & Cas. Co. Or: Do Not Enter into Nunn-Agreements for Injuries that Occurred After Expiration of the Subject Insurance Policy

While Nunn-Agreements[1] may be appealing for both plaintiffs and defendants where an insurer unreasonably fails to defend a lawsuit, a recent opinion from The Honorable Marcia Krieger in the United States District Court of Colorado[2] (“Opinion”) demonstrates the importance of first confirming that there exists a viable insurance claim before proceeding with such a Nunn- Agreement.

The facts giving rise to the Opinion were as follows. In March 2015, a Homeowner couple (the “Homeowners”) suffered damages to their home resulting from a brushfire. Fortunately, the Homeowners were insured, they submitted their claim to their homeowners’ insurance carrier which was in effect at the time of the brushfire (the “Insurance Carrier”), and the Insurance Carrier paid the claim. Ostensibly as part of the Homeowners’ remediation efforts to their home they removed a large bush which left a hole in the ground.  After paying the claim, in August 2015 the Insurance Carrier cancelled or elected not to renew the Homeowners’ policy. In October 2015, a repairman working on the Home (the “Repairman”) was injured after his ladder fell over allegedly because of the hole in the ground caused by the bush that had been removed.

As a result of injuries caused by the fall from the ladder, the Repairman brought suit against the Homeowners. In response to the Repairman’s claim, the Homeowners again tendered to their Insurance Carrier. This time, however, the Insurance Carrier denied coverage on the basis that the Repairman’s injuries occurred after the expiration of the relevant policy. Without insurance coverage, the Homeowner’s entered into a Nunn-Agreement with the Repairman, conceding liability, and assigning any claims they might have had against the Insurance Carrier in lieu of execution of any judgment against the Homeowners.

The Repairman, as an assignee of the Homeowners, brought a number of claims predicated generally on breach of the relevant insurance contract against the Insurance Carrier. In turn, the Insurance Carrier moved to dismiss the action arguing that the injury occurred after the expiration of the relevant policy and thus was not a covered loss. 

With this background Judge Krieger was tasked with evaluating whether the fall from the ladder (which occurred after the expiration of the policy) or the brushfire (which occurred within the policy period) should constitute the “occurrence” under the insurance policy.

In making her determination, Judge Krieger noted that the policy provided coverage for injuries resulting from an “occurrence,” which the policy defined as “an accident. . . result[ing] in bodily injury or property damage during the policy period.” Judge Krieger further noted that the plain language of the contract made clear that the “occurrence” – the precipitating event that triggers coverage – is the “accident” that results in the injury. Because Judge Krieger concluded that the accident that resulted in the Repairman’s injury was him falling off the ladder, not the brushfire, Judge Krieger determined that there existed no insurance coverage and no viable claims for breach of the subject insurance contract. Based on the foregoing, Judge Krieger dismissed all of the Repairman’s claims.

In summary, careful practitioners should confirm there exists a viable insurance claim before proceeding with a Nunn-Agreement. 

For additional information regarding Nunn-Agreements or about construction defect litigation in Colorado, generally, you can reach Jean Meyer by telephone at (303) 987-9815 or by e-mail at meyer@hhmrlaw.com.

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[1] Nunn v. Mid-Century Ins. Co., 244 P.3d 116 (Colo. 2010).

[2] Dreyer v. Am. Natl. Prop. & Cas. Co., 18-CV-03334-MSK-SKC, 2019 WL 3002927 (D. Colo. July 10, 2019)