Village Homes of Colorado, Inc. v. Travelers Casualty & Surety Co.

Judge RUSSEL

dissenting.

The separate opinions of Judge Carparelli and Judge Roy constitute a majority decision as to the result. Because I would reach a different result, I respectfully dissent.

The majority opinions offer different explanations as to what lies below the surface of the supreme court’s decision in Browder v. United States Fidelity & Guaranty Co., 893 P.2d 132 (Colo.1995). That such explanations *303were thought necessary suggests that Browder should be revisited and, at the least, clarified.

The supreme court may revisit Browder when it decides Hoang v. Monterra Homes (Powderhorn) LLC, 129 P.3d 1028 (Colo.App.2005) (cert. granted Mar. 20, 2006, 2006 WL 1586645). Until Browder is abrogated or modified, however, the decision, as written, is binding precedent. I think Browder controls here, and I think it requires a result different from the one reached by the majority.

The issue is whether Travelers must cover claims for property damage that occurred during the policy period, even though the claimants had no interest in the homes during that period.

Village Homes contends that it should not make any difference whether the claimants owned the homes during the policy period. I acknowledge that its position has merit under the plain language of the policies. See Trs. of Tufts Univ. v. Commercial Union Ins. Co., 415 Mass. 844, 616 N.E.2d 68, 72 (1993) (construing similar language to find coverage where the claimant did not have an interest in the property during the policy period); see also Century Indem. Co. v. Hearrean, 98 Cal.App.4th 734, 120 Cal.Rptr.2d 66 (2002).

I conclude, however, that Village Homes’ position is defeated under Browder.

In Browder, a builder bought liability insurance to cover its activities during the construction and operation of a motel. On the day that the policy expired, the builder sold the motel, along with its rights under the insurance policy, to the plaintiffs. After discovering construction defects, the plaintiffs obtained a judgment against the builder. The plaintiffs then sued the insurance company as the builder’s subrogees to recover the amount of their judgment.

The supreme court held that the plaintiffs could not recover because they “did not experience any actual damage from the faulty construction until they purchased the property.” Browder v. U.S. Fid. & Guar. Co., supra, 893 P.2d at 134-35. The court recognized that the policy did not expressly require that a claimant own the property during the policy period, and it recognized that courts in other jurisdictions had allowed relief for claimants in similar situations. But the court concluded that, to trigger coverage, a claimant must have a legally cognizable interest in the property during the policy period:

We find the reasoning of [Trustees of Tufts University v. Commercial Union Insurance Co., supra] unpersuasive. Although the policy does not expressly require that the [claimants] own the property during the policy period, the [claimants] must have some legally recognizable injury to their interests during the policy period in order to recover. The [plaintiffs] sustained no injury to their interest until they owned the motel property.

Browder v. U.S. Fid. & Guar. Co., supra, 893 P.2d at 135.

Thus, under Browder, the claimant must have an interest in the property during the policy period in order to trigger coverage under a commercial general liability policy. See Hoang v. Monterra Homes (Powderhorn) LLC, supra, 129 P.3d at 1037; see also Globe Indem. Co. v. Travelers Indem. Co., 98 P.3d at 971 (Colo.App.2004); Leprino v. Nationwide Prop. & Cas. Ins. Co., 89 P.3d 487, 490 (Colo.App.2003); Union Pac. R.R. v. Certain Underwriters at Lloyd’s, London, 37 P.3d 524, 525 (Colo.App.2001). In other jurisdictions, Browder is recognized as authority for this proposition. See Spartan Petroleum Co. v. Federated Mut. Ins. Co., 162 F.3d 805, 810 n. 3 (4th Cir.1998); Century Indem. Co. v. Hearrean, supra, 120 Cal.Rptr.2d at 70 n. 2.

I recognize that there is a potentially important difference between Browder and this case, but I conclude that Village Homes is not entitled to relief on this basis.

In Browder, the plaintiffs were foreclosed on two grounds: (1) they could not trigger coverage by asserting their own claims for property damage because they had no interest in the property during the policy period; and (2) they could not trigger coverage by asserting claims as the subrogees of the original owner because they bought from the insured, an entity expressly precluded from *304asserting claims under the policy s owned property” exclusion. See Browder v. U.S. Fid. & Guar. Co., supra, 893 P.2d at 135-36 (distinguishing Garriott Crop Dusting Co. v. Superior Court, 221 Cal.App.3d 783, 270 Cal.Rptr. 678 (1990)).

Here, the claimants bought their homes, not from the insured builder, but from the original homeowners — third parties who suffered property damage during the policy period. Therefore, unlike the plaintiffs in Browder, the claimants could have triggered coverage under the policies by asserting claims as subrogees of the original owners.

However, the record indicates that the claimants did not sue Village Homes as sub-rogees of the original owners:

• The record contains the warranty deeds that conveyed the homes from the original owners to the claimants. The deeds contain only traditional language used to convey real property. None of the deeds purport to convey the right to sue for property damage. See Hoang v. Monterra Homes (Powderhorn) LLC, supra, 129 P.3d at 1037 (“We are aware of no Colorado authority holding that a subrogation or assignment of claims occurs as a matter of law upon the transfer of title to real property.”); Ford v. Summertree Lane Ltd. Liab. Co., 56 P.3d 1206 (Colo.App.2002) (a general warranty deed conveying real property does not convey tort or contract claims).
• The record also contains the complaints that the claimants filed against Village Homes. Although the claimants asserted various theories, they did not mention subrogation. The claims are based on the claimants’ own rights, not on the rights of their predecessors in interest. See Neb. Beef, Ltd. V.[v.] Universal Sur. Co., [9 Neb.App. 40,] 607 N.W.2d 227, 235 (Neb.Ct.App.2000) (“Ordinarily, one seeking subrogation must plead it and set forth the facts from which the right of subrogation arises.”).

I therefore conclude that the trial-court erred in ruling that Travelers must indemnify Village Homes for the property damage that occurred during the policy period. Accordingly, I would reverse the judgment.