324 F. Supp. 3d 1201
D. Colo.2018Background
- Plaintiff Brookshire Downs Condominium Association (a Colorado HOA) held a commercial policy issued by Owners Insurance covering property damage; the policy required suit be filed within 2 years of the loss.
- Plaintiff alleges wind/hail damage on Sept. 29, 2014, filed an insurance claim in June 2015, and sued on April 7, 2017 (more than 2 years but less than 3 years after the loss).
- Colorado law generally provides a 3-year statute of limitations for contract actions.
- The Policy’s 2-year contractual limitations period is the basis of Defendant’s second affirmative defense.
- Plaintiff contends Colorado’s Homeowner’s Insurance Reform Act § 10-4-110.8(12)(b) (effective Jan. 1, 2014) prohibits insurers from issuing homeowner policies with shortened limitation periods and therefore voids the Policy’s 2-year clause; Plaintiff relies on the Act’s definition of "homeowner's insurance."
- Defendant argues subsection (12)(a) and its homeowner-focused language control and that the statute’s relief is directed to individual homeowners (not HOAs); the parties and court apply Colorado law in diversity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 10-4-110.8(12)(b) voids a 2-year contractual limitations clause in an HOA’s insurance policy | The Policy is "homeowner's insurance" under the statute’s property-focused definition, so subsection (12)(b) (effective Jan 1, 2014) prohibits the 2-year clause and the 3-year statutory period applies | Subsection (12)(a) shows the statute was directed to "homeowners"; HOA/commercial policies are not the intended target and (12)(b) should be read in light of (a) as applying to homeowner policyholders, not HOAs | The court predicts Colorado Supreme Court would construe subsection (12) as directed to homeowners; it rejects Plaintiff’s expansive reading of (12)(b) and concludes the statute does not nullify the Policy’s 2-year clause |
Key Cases Cited
- Grant Family Farms, Inc. v. Colo. Farm Bureau Mut. Ins. Co., 155 P.3d 537 (Colo. App. 2006) (contractual limitations can override statutory limitations unless prohibited by statute)
- Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92 (Colo. 1995) (statutory-conflicting insurance policy clauses are void as against public policy)
- Wade v. EMCASCO Ins. Co., 483 F.3d 657 (10th Cir. 2007) (federal court predicting state supreme court construction when state high court hasn’t spoken)
- Travelers Indem. Co. v. Barnes, 552 P.2d 300 (Colo. 1976) (statutes must be read in context to give consistent, sensible effect to all parts)
- Union Pac. R.R. Co. v. Martin, 209 P.3d 185 (Colo. 2009) (analyzing statutory provisions in comparison to related sections to determine legislative intent)