1:09-cv-02224
D. Colo.Sep 6, 2011Background
- Overland contracted Sterling to construct a pipeline, with Sterling subcontracting Willbros for design and Chase for horizontal drilling.
- In January 2008, Chase’s drilling beneath the North Sterling Irrigation Canal ruptured the canal and damaged nearby property and pipeline work.
- Sterling indemnified Overland for losses arising from the canal breach, triggering disputes over insurance coverage and indemnification.
- Litigation involves Sterling against Steadfast (insurance coverage), Sterling against Chase (unpaid invoices), and Willbros (attorney’s fees) against Chase; third-party fault designations also arise.
- The court resolves numerous cross-motions for summary judgment, objections to designated non-parties at fault, and related bifurcation issues.
- Key questions focus on contract vs. tort duties, indemnification validity under Colorado law, and which damages are covered under Steadfast’s policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract vs. tort breach standard | Sterling asserts Chase breached contract by substandard canal drilling. | Chase argues Starling must prove breach with contract standard and specific causation. | Sterling's contract breach claim not proved; trial needed for standard. |
| Unpaid invoices amount and withholding rights | Sterling may withhold payment pending disputes under the Subcontract. | Chase contends Sterling must pay invoices unless undisputedly nonperforming. | Amount is undisputed liability; offset possible upon Sterling’s recovery; judgment contingent on offset. |
| Non-parties at fault designation under § 13-21-111.5 | Sterling challenges the strike of non-party at fault as inapplicable to contract claims. | Chase argues statute applies to tort-like duties within contract claims. | Statute can apply to contract claims with tort-like duties; designation reinstated. |
| Steadfast coverage for payments to Overland | Sterling seeks coverage for indemnity payments to Overland under the policy. | Steadfast argues indemnity to Overland is void or excluded under policy. | Indemnification to Overland not void; disputes on coverage remain; partial denial for some components. |
| Fees and costs for defense of Chase's counterclaims | Sterling asserts defense costs are covered as reasonable litigation expenses. | Steadfast contends these costs fall outside coverage or are for non-defensible claims. | Partial coverage denied for Willbros-related defense costs; other aspects unresolved. |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard requires no genuine issue of material fact)
- LaFarge North America, Inc. v. K.E.C.I. Colorado, Inc., 250 P.3d 682 (Colo. App. 2010) (indemnification for own-negligence considerations under § 13-21-111.5(6))
- Clark v. FDIC, 978 F.2d 1541 (10th Cir. 1992) (hybrid contract/tort duties; duties sounding in tort within contract)
- Hice v. Lott, 224 P.3d 139 (Colo. App. 2009) (establishing standard of care in professional contexts requires proof of standard)