Higby Crane Services, LLC v. National Helium, LLC, 703 F. App'x 687

Background

Higby Crane Services (Higby) and DCP entered a 2001 Master Service Agreement (MSA) requiring Higby to carry CGL insurance and name DCP as an additional insured for work it performed under later work orders.
Higby obtained a CGL policy from National Interstate (National) effective Sept. 13, 2007; Higby also had a separate commercial inland marine (CIM) policy covering its crane and was paid under that policy after a fire.
In August 2008 Higby orally agreed to a work order to perform maintenance at DCP’s National Helium Plant; a flash fire caused by DCP’s conceded negligence damaged Higby’s crane.
National (subrogating through Higby) sued DCP to recover the amounts paid under the CIM policy; DCP moved for summary judgment asserting the anti-subrogation rule barred recovery because DCP was an additional insured under the CGL policy.
Plaintiffs argued Colorado’s Anti-Indemnification Statute, Colo. Rev. Stat. § 13-21-111.5(6), (effective July 2007) voids contract provisions requiring one construction party to insure another for the indemnitee’s own negligence, so the additional-insured promise in the 2008 work order is unenforceable.
The Tenth Circuit held the operative contract was the August 2008 work order (incorporating MSA terms), the work order is a "construction agreement," the statute invalidates the additional-insured promise as to DCP’s own negligence, and thus the anti-subrogation rule does not bar Plaintiffs’ recovery; the court reversed summary judgment for DCP and affirmed denial of DCP’s fee claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Anti-Indemnification Statute voids Higby’s promise to insure DCP for DCP’s own negligence	The 2008 work order (post-enactment) governs; statute voids any promise requiring a constructor to insure another for the indemnitee’s negligence	MSA (2001) is the operative contract predating the statute so statute is not retroactive to invalidate the additional-insured term	The 2008 work order is the operative contract; statute applies and the additional-insured promise is void as to DCP’s own negligence
Whether the anti-subrogation rule bars National’s suit against DCP	Anti-subrogation does not apply because the additional-insured promise is unenforceable and DCP is not covered under the CGL for this loss	Anti-subrogation bars suit because DCP was an additional insured under the CGL, which covers the loss	Anti-subrogation is inapplicable; DCP is not insured under the CGL for this loss, so Plaintiffs’ recovery is not barred
Whether Higby’s alleged breaches (waiver-of-subrogation and other-insurance provisions) justify DCP’s attorney’s fees	N/A (Plaintiffs argued breaches were not material or enforceable)	Higby breached MSA provisions causing DCP’s fees; DCP should recover fees	Any breaches would be immaterial because the core additional-insured provision is void as a matter of law; district court’s grant for Plaintiffs on fees affirmed
Whether remand is required to adjudicate Higby’s breach of MSA if reversal occurs	Plaintiffs: no remand required because the promise is void and courts do not enforce void contract terms	DCP: remand to permit litigation of alleged MSA breach for failure to procure coverage	No remand; because the insurance promise is void under Colorado law, Higby cannot be shown to have breached that unenforceable obligation

Key Cases Cited

DeHerrera v. Am. Family Mut. Ins. Co., 219 P.3d 346 (Colo. App. 2009) (describing anti-subrogation rule barring insurer recovery from its own insured)
Higby Crane Servs., LLC v. Nat’l Helium, LLC, 751 F.3d 1157 (10th Cir. 2014) (prior panel opinion in this litigation addressing related summary judgment issues)
Cornhusker Cas. Co. v. Skaj, 786 F.3d 842 (10th Cir. 2015) (standard of review for summary judgment stated)
Riley v. People, 828 P.2d 254 (Colo. 1992) (legislation presumed prospective absent contrary intent)
Bernhard v. Farmers Ins. Exch., 915 P.2d 1285 (Colo. 1996) (attorney’s fees contract-recovery principles)
Cont’l Divide Ins. Co. v. W. Skies Mgmt., Inc., 107 P.3d 1145 (Colo. App. 2004) (discussion of equitable subrogation)