UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

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PRAETORIAN INSURANCE 

COMPANY, 

Plaintiff Counter Defendant -

Appellee,

v.

AXIA CONTRACTING, LLC; 255 

BLACKHAWK HOSPITALITY, LLP, 

Defendant Counterclaimants -

Appellants.

No. 19-1113

(D.C. No. 1:17-CV-02034-WJM-SKC)

(D. Colo.)

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ORDER AND JUDGMENT*

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Before LUCERO, PHILLIPS, and MORITZ, Circuit Judges.

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Axia Contracting, LLC, (“Axia”) and 255 Blackhawk Hospitality, LLP, 

(“Blackhawk”) appeal a district court order granting summary judgment in favor of 

Praetorian Insurance Company (“Praetorian”). Exercising jurisdiction under 28 

U.S.C. § 1291, we reverse and remand for further proceedings. 

I

In 2017, defendants were engaged in a hotel construction project in Aurora, 

 * This order and judgment is not binding precedent, except under the doctrines 

of law of the case, res judicata, and collateral estoppel. It may be cited, however, for 

its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

FILED

United States Court of Appeals

Tenth Circuit

December 31, 2019

Elisabeth A. Shumaker

Clerk of Court
2

Colorado. Blackhawk was the owner of the property, and Axia was the general

contractor. On June 19, a fire occurred at the property resulting in extensive damage. 

The cause of the fire was determined to be arson.

At the time of the fire, a builder’s risk policy issued by Praetorian was in 

effect. The policy included a Protective Devices Endorsement (“PDE”) for which 

defendants received a 10% premium credit. Under the header “Other Conditions,” 

the PDE required that the insureds “maintain, at all times during the policy period, 

the protective devices and services described on the Protective Devices Schedule

[(“PDS”)].” The PDS required that the jobsite “will be protected with chain link 

fencing” and that “[a]ll entrance and access gates shall remain securely locked during 

non-working hours.” Coverage for losses caused by fire were excluded if, prior to 

the fire, the insureds (1) “had knowledge of any suspension or impairment in the 

protective device or service described on the [PDS] and did not notify” the insurer, or 

(2) “failed to maintain in complete working order, the fire protective device or 

service described on the [PDS] which [the insureds] control.” In addition, the policy 

excluded coverage for loss caused by theft if a “device or service, shown on the 

[PDS], provides theft protection” and the insureds failed to maintain the “theft 

protective device or service.”

Following the fire, defendants requested coverage under the policy. Praetorian 

denied coverage because the project jobsite was not enclosed by chain link fencing at 

the time of the fire and all entrance and access gates were not securely locked. In a 
3

letter from Praetorian’s counsel, the insurer indicated that the fencing requirement 

was a condition precedent to coverage and fell within the fire-protection exclusion.

Praetorian filed a declaratory judgment action seeking a declaration that the 

policy does not provide coverage for the fire. Axia responded with counterclaims for 

declaratory judgment, breach of contract, and bad faith. Praetorian moved for 

summary judgment, arguing that protective fencing was a condition of coverage and 

that the fire-protection exclusion barred coverage. After summary judgment briefing 

was complete, the district court sua sponte requested additional, simultaneous briefs 

on the question of whether the failure to maintain fencing was a material breach. The 

district court then granted summary judgment in favor of Praetorian on that basis. 

Axia and Blackhawk timely appealed.

II

We review a district court’s grant of summary judgment de novo. Genberg v. 

Porter, 882 F.3d 1249, 1253 (10th Cir. 2018). A party is entitled to summary 

judgment only if the evidence shows that there is no genuine issue as to any material 

fact and the moving party is entitled to judgment as a matter of law. Id. “Because 

the parties’ arguments assume that Colorado law applies, we will proceed under the 

same assumption.” Grynberg v. Total S.A., 538 F.3d 1336, 1346 (10th Cir. 2008).

Under Colorado law, the question of material breach is one of fact. Kaiser v. 

Mkt. Square Disc. Liquors, Inc., 992 P.2d 636, 640 (Colo. App. 1999). A material 

breach “goes to the root of the matter or essence of the contract and renders 

substantial performance under the contract impossible.” Interbank Invs., LLC v. Vail 
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Valley Consol. Water Dist., 12 P.3d 1224, 1229 (Colo. App. 2000) (quotations and 

citation omitted). If a material breach occurs, it “excuses further performance by the 

other party.” Kaiser, 992 P.2d at 640. “Materiality must be assessed in the context 

of the expectations of the parties at the time the contract was formed.” Coors v. Sec. 

Life of Denver Ins. Co., 112 P.3d 59, 64 (Colo. 2005).

“Employing general principles of contract interpretation, we give effect to the 

intent and reasonable expectations of the parties by enforcing the plain language of 

the contract.” Owners Ins. Co. v. Dakota Station II Condo. Ass’n, Inc., 443 P.3d 47, 

51 (Colo. 2019) (quotation omitted). “Accordingly, unless the parties intend 

otherwise, terms in an insurance policy should be assigned their plain and ordinary 

meaning.” Thompson v. Maryland Cas. Co., 84 P.3d 496, 501 (Colo. 2004). “[W]e 

read the provisions of the policy as a whole, construing the policy so that all 

provisions are harmonious and none is rendered meaningless.” Martinez v. Am. 

Fam. Mut. Ins. Co., 413 P.3d 201, 203 (Colo. App. 2017). “Exclusionary clauses 

designed to insulate particular conduct from general liability coverage provisions 

must be drafted in clear and specific language.” Am. Fam. Mut. Ins. Co. v. Johnson, 

816 P.2d 952, 953 (Colo. 1991).

Applying these principles, we must reject the district court’s conclusion that 

defendants’ failure to maintain fencing and secured access was a material breach. 

The policy sets forth specific consequences for failing to maintain fire or theft 

protective devices listed in the PDS: coverage is excluded for loss caused by fire or 

theft, respectively. This clear manifestation of the parties’ expectations controls. 
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See Coors, 112 P.3d at 64. In contrast, the district court’s material breach theory 

would have far greater consequences than those intended by the parties. A material 

breach excuses the other “party from performing its duties under a contract.” 

Converse v. Zinke, 635 P.2d 882, 887 (Colo. 1981); see also Kaiser, 992 P.2d at 640. 

As defendants argue, treating the failure to fence as a material breach could excuse 

Praetorian’s obligation to cover damage from a tornado. Such a result is clearly 

inconsistent with the parties’ expectations as indicated by the policy’s plain terms. 

Further, such a reading would render superfluous the specific consequences set forth 

in the PDE. Cf. Martinez, 413 P.3d at 203 (policy should be construed so that no 

provisions are “rendered meaningless”). 

Praetorian also urges us to affirm on alternative bases raised below but not 

considered by the district court. Under these circumstances, “proper judicial 

administration generally favors remand for the district court to examine the issue 

initially.” Pac. Frontier v. Pleasant Grove City, 414 F.3d 1221, 1238 (10th Cir.

2005). We elect to follow that path in the case at bar.

III

The district court’s grant of summary judgment is REVERSED and the case is 

REMANDED for further proceedings consistent with this order and judgment.

Entered for the Court

Carlos F. Lucero

Circuit Judge