Tyson & Mendes Attorney Wins Appellate Ruling in Insurance Case

Attorney Michael Drews of Tyson & Mendes, a national firm with a Denver office, won a major Colorado Court of Appeals ruling in an insurance case involving a developer.

Drews, the northwest and central regional managing partner and managing partner of the firm’s Colorado office, defended Seneca Insurance Company in a case against Mojo Properties.

According to the March 16 unpublished opinion from the appeals court, in 2005 Mojo bought a vacant lot for future development. Working with a commercial lines producer, Mojo bought a general liability policy from Seneca to insure the vacant lot. 

Effective June 7, 2005, to June 7, 2006, the policy applied to the location as vacant land and included a warranty endorsement stating the policy became null and void if there was development on the land beyond the fence and pavement on the application. The commercial lines producer sent the final policy to Mojo, including the endorsement, and notified Mojo the policy only covered the vacant land so once the development started, the coverage would need to change.

A year later, Mojo renewed the policy extending coverage from June 7, 2006, to June 7, 2007. The commercial lines producer confirmed the renewal for the vacant land and reminded Mojo the policy was canceled once construction started. In August 2006, Mojo began demolition and concrete work for a condominium development. 

Mojo didn’t renew the policy the next summer. In the written confirmation that the policy was canceled flat, the commercial lines producer told Mojo the policy had only covered the vacant land and was null and void once development began. In 2008, Mojo completed the condominium development. 

In 2016, the condominiums homeowners’ association brought an action against Mojo, alleging construction defects. Mojo tendered a claim under the policy for defense and indemnity. Seneca defended Mojo under an express reservation of rights and contributed $100,000 to settle the HOA’s claims. At the time, there were issues with finding the actual policy.

“Despite advising Mojo in three separate reservations of rights letters, including two from separately retained coverage counsel, there was likely no coverage, Seneca still defended Mojo and even contributed to settlement,” Drews said in a press release.

Mojo then filed an action against Seneca, asserting claims for breach of contract, common law bad faith, statutory bad faith and declaratory relief. Seneca moved for summary judgment arguing the policy only covered only the vacant land and Mojo voided the policy when it began construction in August 2006. 

The district court granted summary judgment in favor of Seneca. 

“During the subsequent bad faith litigation, Seneca was able to locate the policy and its applicable terms, including that it covered only vacant land and would be null and void when any development began,” Drews said in a press release. “Based on this key information, we moved for summary judgment, convincing the trial court no genuine issue of material fact existed about the nature of the insurance coverage.”

On appeal, Mojo maintained the disputed issues of material fact precluded summary judgment and, alternatively, Seneca failed to provide an adequate reservation of rights and was estopped from denying coverage.

The appeals court disagreed, writing it’s undisputed Mojo began construction in 2006 and, by doing so, voided the policy. 

The appeals court also agreed with Seneca that Mojo’s appeal was frivolous, warranting an award of appellate attorney fees and double costs. The summary judgment was affirmed and the case was remanded to district court to determine and award Seneca appellate attorney fees and costs.

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