Colorado: Construction Defect Representation, Insurance Coverage, Conflicts of Interest

Chad Johnson, an associate at Higgins, Hopkins, McLain & Roswell, LLC – a Colorado construction litigation firm, offers insight into a recent decision. In the case of Weitz Co., LLC v. Ohio Cas. Ins. Co., attorneys representing a contractor in a construction defect claim were found by the U.S. District Court for the District of Colorado to not be in conflict of interest representing the same client in a coverage claim.

Weitz Company, LLC (“Weitz”) is a general contractor and defendant in an underlying construction defect suit which had concluded before the action bringing rise to this order. In the underlying action, Weitz made third-party claims against subcontractors, including NPW Contracting (“NPW”). Weitz was listed as an additional insured under NPW’s policies with both Ohio Casualty Insurance Company and Mountain States Mutual Casualty Company (collectively “the Carriers”). The Carriers accepted Weitz’s tender of defense under a reservation of rights. However, neither insurance carrier actually contributed to Weitz’s defense costs in the underlying action. At the conclusion of the construction defect action, the parties unsuccessfully attempted to apportion the attorney’s fees and costs. Eventually, Weitz brought suit against the recalcitrant carriers. The Lottner firm, which had previously represented Weitz in the underlying construction defect action, continued to represent Weitz in this coverage action. The Carriers moved to disqualify the Lottner firm, alleging the firm had a conflict of interest and that the attorneys were necessary witnesses.

According to Johnson, the court denied claims by the carriers that a conflict of interest existed, and denied a claim that the contractor’s counsel was a “necessary witness.”

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