The Tenth Circuit affirmed the District Court's determination that there was no coverage under the builder's risk policy. Gerald H. Phipps, Inc. v. Travelers Prop. Cas. Co. of Am., 2016 U.S. App. LEXIS 2764 (10th Cir. Feb. 16, 2017).
GH Phipps Construction Company (GHP) was hired to renovate and expand the University of Denver's library. GHP was completing installation of a new roof on the library when water from melting snow leaked into the building. The water damaged existing drywall and insulation in the stairwells and elevator shafts that GHP planned to preserve and update. Before the snow melt mishap, GHP had completed some preliminary work in the damaged areas to designate locations for future installation of mechanical, plumbing and electrical systems. But GHP had not yet installed any new materials, updated any lighting fixtures, or patched and painted any existing drywall in the damaged areas.
GHP submitted a claim with Travelers. Travelers initially advised GHP that the loss was covered.
After further review, however, Travelers determined that the loss was not covered because the damage was only to the existing building and not to GHP's work. Travelers explained it would only cover GHP's completed work if the water damaged material or items installed by GHP in the damaged areas. GHP sued. Travelers moved for summary judgment and prevailed.
The policy would pay for damage to "Covered Property," which was defined as "Builders' Risk." The policy defined "Builders' Risk" as:
Property described in the Declarations under "Builders' Risk" owned by [GHP] or for which [GHP is] legally liable consisting of:
a. Buildings or structures including temporary structures while being constructed, erected or fabricated at the "job site";
b. Property that will become a permanent part of the buildings or structures at the "job site":
(1) While in transit to the "job site" or temporary storage location;
(2) While at the "job site" or at a temporary storage location.
Therefore, the policy provided that Builder's Risk did not include "[b]uildings or structures that existed at the 'job site' prior to the inception of the policy."
GHP did not even attempt to argue that the damaged areas came within section (a) of the "Builders' Risk" definition as either a building or a structure. Even if GHP could demonstrate that section (a)'s plain language provided coverage for damaged areas, there was no question that the damaged areas already existed at the job site before the policy's inception.
Nor did GHP make a cogent argument that the damaged areas came within section (b) of the "Builders' Risk" definition. GHP argued that the policy did not define the term "structure" and therefore the damaged areas must constitute "[p]roperty that will become a permanent part of the buildings or structures at the 'job site.'" But section (b) provided coverage for personal property - i.e., fixtures or building materials - that would become part of the permanent buildings or structures "being constructed, erected or fabricated at the 'job site.'" Because GHP made no claim for damage to its personal property at the job site, the second basis for "Builders' Risk" coverage was also inapplicable.