Appeals court vacates developer’s win for repair cost coverage

The 10th U.S. Circuit Court of Appeals Monday reversed a jury verdict favoring a real estate developer, finding it could not seek insurance coverage for the $2.8 million a general contractor paid to repair a sagging concrete slab.

The three-judge panel said in Curtis Park Group LLC v. Allied World Specialty Insurance Co. that the repair costs did not constitute a covered loss because general contractor MW Residential LLC, not the developer, paid to fix the sagging slab.

The panel also said a new trial should be held on Curtis Park’s bad faith claims against Allied.

Curtis Park obtained a builders risk policy from Allied for the construction of S*Park, a development in Denver that included five commercial and residential buildings. Four of the buildings would be supported by a concrete slab.

Curtis Park and MW initially agreed that the contractor would front the initial construction costs as well as any potential repair costs, court records show.

Construction began in September 2016, and in December 2017 the developer discovered excessive sagging in the slab. A report prepared by consultant J.R. Harris & Co. Structural Engineers said the top layer of rebar in the slab was placed lower than designed and that the concrete was thinner than designed.

Curtis Park provided notice of the claim to Allied in March 2018, but the insurer denied coverage in August 2018 after concluding that the sagging was the result of defective construction, which was not covered by the policy, court records show.

The developer sued Allied in January 2020 for breach of contract and bad faith. After a trial, a jury found in favor of Curtis Park, and Allied appealed.

Representatives for the parties did not respond to requests for comment.