Stresscon Corp. v. Travelers Property Casualty Co. of America
373 P.3d 615
Colo. Ct. App.2013Background
- Insurance company challenged no voluntary payment and notice-prejudice clauses in a construction-defect dispute.
- Case involved Stresscon Corp seeking coverage for delay damages paid to the general contractor and bad-faith claims under C.R.S. 10-3-1115/1116.
- Trial court bifurcated proceedings: first against crane team for liability; second against insurer(s) for coverage, bad faith, and fees.
- General contractor and concrete company settled the underlying liability before informing insurer, with unallocated settlement.
- Jury found crane-team liable; second jury allocated $546,899 as covered by policy; court reduced two-times penalty and denied fees-on-fees at first, then on appeal, reversed in part.
- Colorado Supreme Court opinion affirms most rulings, reverses denial of fees-on-fees, and remands to award fees-on-fees and appellate fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Friedland apply to no voluntary payment clauses? | Stresscon: Friedland applies; late notice after settlement creates prejudice presumption. | Travelers: no prejudice presumption; need actual prejudice. | Yes, Friedland applies; presumption of prejudice exists but may be rebutted. |
| Was the pre-suit settlement prejudicial or allocable affecting insurer’s duties? | Stresscon: settlement harmed insurer’s ability to protect interests. | Travelers: no automatic prejudice; settlement could be allocated later. | Prejudice not established as a matter of law; evidence supported jury finding of no prejudice. |
| Can recovery of fees-on-fees be awarded under § 10-8-1116(1)? | Stresscon: fees-on-fees are recoverable as damages/costs under remedial statute. | Travelers: fees-on-fees not recoverable; limited by damages/cost framework. | Fees-on-fees recoverable; remand to determine and award such fees. |
| Do exclusions for replacement/repair costs bar recovery for concrete-company repairs? | Stresscon: exclusions do not bar needed replacement costs. | Travelers: exclusions apply to property damage; policy is liability, not builder’s risk. | Exclusions apply; replacement costs barred for the concrete company’s own property. |
| Was collateral-source setoff proper and does the “other insurance” clause apply? | Stresscon: collateral-source benefits should not reduce recovery. | Travelers: other-insurance clause limits recovery and setoffs apply. | Setoff and allocation upheld; other-insurance clause bars double recovery. |
Key Cases Cited
- Friedland v. Travelers Indemnity Co., 105 P.3d 639 (Colo. 2005) (notice-prejudice rule applies to late-notice settlements.)
- Lauric v. USAA Cas. Ins. Co., 209 P.3d 190 (Colo.App. 2009) (consent-to-settle clauses treated under Friedland framework.)
- Clementi v. Nationwide Mut. Fire Ins. Co., 16 P.3d 223 (Colo. 2001) (burden-shifting approach for late notice in UIM context.)
- Roberts Oil Co. v. Transamerica Ins. Co., 833 P.2d 229 (Colo. App. 1992) (lection of prejudice under no-voluntary-payments clauses; rebuttable presumption.)
- Simpson v. U.S. Fid. & Guar. Co., 562 N.W.2d 627 (Iowa 1997) (presumption/rebuttal framework for prejudice in cooperation/voluntary-payment contexts.)
- JHP Dev., Inc. v. Columbia Mut. Ins. Co., 557 F.3d 207 (5th Cir. 2009) (construction exclusions limited to active construction and defective-work contexts.)
- Crossgrove v. Wal-Mart Stores, Inc., 276 P.3d 562 (Colo. 2012) (collateral-source rule evolution under Colorado law; related setoffs.)
- Mishkin v. Young, 198 P.3d 1269 (Colo. App. 2008) (fees-on-fees as remedial-costs under security deposit-like statutes.)
- Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981) (fees incurred in fee-related proceedings treated under remedial statutes.)