UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

GERALD H. PHIPPS, INC., d/b/a GH 

Phipps Construction Company, a Colorado 

corporation, 

 Plaintiff - Appellant, 

v. 

TRAVELERS PROPERTY CASUALTY 

COMPANY OF AMERICA, a Connecticut 

corporation, 

 Defendant - Appellee. 

No. 16-1039 

(D.C. No. 1:14-CV-01642-PAB-KLM) 

(D. Colo.) 

_________________________________ 

ORDER AND JUDGMENT*

_________________________________ 

Before MATHESON, McKAY, and MORITZ, Circuit Judges. 

_________________________________ 

After water damaged a building it was renovating, Gerald H. Phipps, Inc., 

d/b/a GH Phipps Construction Company, (“GHP”) sought coverage under its 

builders’ risk insurance policy. GHP’s insurer, Travelers Property Casualty Company 

of America (“Travelers”), denied the claim, and GHP sued for breach of contract, 

common law bad faith, and statutory bad faith. GHP also sought a declaratory 

judgment regarding coverage. The district court granted summary judgment for 

 *

 This order and judgment isn’t binding precedent, except under the doctrines 

of law of the case, res judicata, and collateral estoppel. But it may be cited for its 

persuasive value. See Fed. R. App. P. 32.1; 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals

Tenth Circuit 

February 16, 2017

Elisabeth A. Shumaker 

Clerk of Court
2 

Travelers on all claims, and GHP appeals. Because we agree with the district court 

that GHP doesn’t seek damages for a loss to covered property, we affirm. 

BACKGROUND

The University of Denver hired GHP to renovate and expand the University’s 

library. Because the library contained asbestos, the University hired two companies—

Excel Environmental and Herron Enterprises—to perform environmental testing and 

asbestos mitigation in conjunction with the renovation. But the University wanted to 

avoid the cost of removing asbestos in two elevator shafts and four stairwells, so it 

limited the scope of GHP’s renovations in those areas. Specifically, GHP planned to 

remove and replace handrails in the stairwells; update lighting fixtures; repair 

existing concrete floors; patch and paint the existing drywall; and install new or 

reroute existing mechanical, plumbing, and electrical systems. 

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 (“the damaged areas”). Before the snowmelt 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 hadn’t yet 

installed any new materials, updated any lighting fixtures, or patched and painted any 

existing drywall in the damaged areas. 

GHP notified Travelers of the water damage and initiated a claim under its 

builders’ risk insurance policy (“the policy”). Following an initial inspection, 
3 

Travelers advised GHP the loss was covered. GHP then hired Excel and Herron to 

perform environmental testing and asbestos removal in the damaged areas, ultimately 

incurring $804,661.76 in costs to remove asbestos, remove and replace drywall, and 

install new fire-proofing materials in the damaged areas before it could proceed with 

its planned renovations in those areas. 

But after further review of the policy, Travelers notified GHP the loss wasn’t 

covered after all; it explained that “the damage was only to the existing building and 

not to [GHP’s] work.” App. vol. 1, 116. Citing the policy’s definition of “Builders’ 

Risk,” which expressly excludes “[b]uildings or structures that existed at the ‘job 

site’ prior to the inception of th[e] policy,” id., Travelers formally denied GHP’s 

claim. 

Almost one year later, GHP asked Travelers to reconsider its denial of 

coverage. In response, Travelers acknowledged that GHP had completed preliminary 

work in the damaged areas before the water damage occurred. But Travelers 

explained that the policy would cover GHP’s completed work only if “the water 

damaged material or items installed by GHP” in the damaged areas. App. vol. 4, 412. 

Because its investigation showed that the water instead damaged only “portions of 

the existing structure” and that GHP’s preliminary work didn’t include installing any 

new materials or items in the damaged areas, Travelers reaffirmed its initial decision 

to deny coverage. Id. at 404. 

GHP sued Travelers, seeking a declaratory judgment on coverage and also 

asserting claims for breach of contract, common law insurance bad faith, and 
4 

statutory insurance bad faith. Travelers moved for partial summary judgment on the 

statutory bad faith claim. The district court granted the motion, concluding that 

Colorado’s one-year statute of limitations barred the statutory claim. 

Travelers then moved for summary judgment on the remaining claims. The 

district granted that motion as well, concluding that GHP failed to demonstrate a loss 

to covered property. The court reasoned that GHP didn’t introduce evidence 

establishing (1) that the water damaged GHP’s own work in the damaged areas or (2) 

that GHP sought damages for the costs of redoing its own work in those areas. The 

court further reasoned that the damaged areas, as existing structures, were excluded 

from coverage under the policy’s definition of “Builders’ Risk.” App. vol. 5, 501. 

GHP appeals both summary judgment orders. 

DISCUSSION

We review the district court’s decision to grant summary judgment de novo, 

applying the same legal standard as the district court and viewing the record, and all 

reasonable inferences that might be drawn from it, in GHP’s favor. Forney Indus., 

Inc. v. Daco of Mo., Inc., 835 F.3d 1238, 1251 (10th Cir. 2016). Summary judgment 

is appropriate if “the movant shows that there is no genuine dispute as to any material 

fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

GHP first challenges the district court’s order granting summary judgment on 

its breach of contract, common law bad faith, and declaratory judgment claims, 

arguing that the district court incorrectly interpreted the policy. Thus, we begin our 

analysis by considering the policy’s plain language. See State Farm Mut. Auto. Ins. v. 
5 

Stein, 940 P.2d 384, 387 (Colo. 1997) (noting that Colorado courts enforce insurance 

policies as written, unless the policy language is ambiguous).1

 

The policy provides that Travelers “will pay for direct physical loss of or 

damage to Covered Property from any of the Covered Causes of Loss.” App. vol. 3, 

277. The policy defines “Covered Property” as “Builders’ Risk.” Id. The policy then 

defines “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. 

Id. at 293. 

Critically, the policy expressly provides that “‘Builders’ Risk’ does not 

include . . . [b]uildings or structures that existed at the ‘job site’ prior to the inception 

of th[e] policy.” Id. 

As the insured, GHP has the initial burden of demonstrating coverage. See 

Rodriguez ex rel. Rodriguez v. Safeco Ins. Co. of Am., 821 P.2d 849, 853 (Colo. App. 

1991). If GHP meets this burden, the burden shifts to Travelers to “establish the 

 1

 Colorado law applies in this diversity action. See Houston Gen. Ins. Co. v. 

Am. Fence Co., 115 F.3d 805, 806 (10th Cir. 1997) (“The interpretation of an 

insurance contract is governed by state law and, sitting in diversity, we look to the 

law of the forum state.”). 
6 

applicability of an exclusion from coverage.” Leprino Foods Co. v. Factory Mut. Ins. 

Co., 453 F.3d 1281, 1287 (10th Cir. 2006) (quoting Fire Ins. Exch. v. Bentley, 953 P.2d 

1297, 1301 (Colo. App. 1998)). And, if Travelers shows that an exclusion applies, the 

burden shifts back to GHP to show the applicability of an exception to the exclusion. See 

Rodriguez, 821 P.2d at 853. 

At the outset, we note that GHP doesn’t even attempt to argue in its opening 

brief that the damaged areas come within section (a) of the “Builders’ Risk” 

definition as either a building or structure that was “being constructed, erected or 

fabricated at the ‘job site.’” App. vol. 3, 293. Other than pointing out that the policy 

fails to define “structure,” GHP makes no discernible argument about this language. 

Aplt. Br. 25. In its reply brief, GHP argues that section (a)’s reference to a building 

“while being constructed” is broad enough to include a building under renovation. 

Aplt. Reply Br. 11. Thus, GHP argues, the policy necessarily covers the entire 

building while it is being renovated, not just “the specific component of the building 

that the contractor is working on or has worked on at the time of the loss.” Id.

Because GHP didn’t make this argument in its opening brief, we ordinarily would 

decline to address it. See Starkey ex rel. A.B. v. Boulder Cty. Soc. Servs., 569 F.3d 

1244, 1259 (10th Cir. 2009) (stating this court ordinarily declines to review new 

arguments made in reply brief). 

But, as Travelers argues, even assuming GHP could demonstrate that section (a)’s 

plain language provides coverage for the damaged areas, there’s no question that the 

damaged areas already existed at the job site before the policy’s inception. Thus, the 
7 

damaged areas would be excluded from coverage under the “Builders’ Risk” definition’s 

exclusionary language. And we aren’t persuaded by GHP’s argument that this 

exclusionary language wouldn’t apply because, in GHP’s view, the damaged areas are 

“merely building or structure components.” Aplt. Br. 25. As the district court reasoned, 

whether the damaged areas are either “structures[,] or components of a structure or 

building, the fact remains that [the damaged areas] . . . existed before the inception of the 

policy.” App. vol. 5, 501. 

 Next, we address the parties’ shared assumption that section (a) implicitly 

provides coverage for damage to GHP’s “work,” which, according to Travelers, 

means materials and items that GHP installs on existing structures or in the existing 

building during renovations. App. vol. 4, 412; see also Aplt. Br. 23 (asserting, 

“Travelers has admitted that coverage exists under its policy in the event that GHP 

worked on any of the walls damaged by water intrusion.”); Aplee. Br. 27 (“The plain 

language of the policy thus insures GHP’s work at the site . . . .”). Relying on that 

shared assumption, GHP argues that it raised a genuine dispute of material fact about 

the nature and scope of the preliminary work it performed in the damaged areas, thus 

precluding summary judgment. 

But even if we assume that (1) section (a) implicitly provides coverage for a 

loss to any materials or items GHP installed on or in the damaged areas, (2) the water 

damaged GHP’s preliminary work in those areas, and (3) GHP had to redo that 

preliminary work, these assumptions don’t advance GHP’s assertion that it seeks 

damages for a covered loss. Instead, GHP seeks the costs of removing existing 
8 

asbestos, replacing damaged insulation, and removing and replacing existing, 

damaged drywall.2

 Thus, GHP seeks recovery for the loss to the damaged areas 

themselves, not for any loss to its preliminary “work” in those areas. And, as we’ve 

discussed, the policy expressly excludes the damaged areas from coverage as 

“[b]uildings or structures that existed at the ‘job site’ prior to the inception of th[e] 

policy.” App. vol. 3, 293. 

Thus, whether GHP seeks coverage for the damaged areas under section (a)’s 

explicit language or under some shared assumption that section (a) implicitly covers 

GHP’s “work” to existing buildings or structures during a renovation project, the 

policy’s exclusionary language applies. 

Finally, GHP makes no cogent argument that the damaged areas come within 

section (b) of the “Builders’ Risk” definition. GHP points out that the policy doesn’t 

 2

 In attempting to establish that it seeks costs for redoing its preliminary work 

in the damaged areas, GHP directs us to three portions of the record: (1) a summary 

of damages attached to its proposed supplement to the civil scheduling order, (2) its 

entire response to Travelers’ summary judgment motion, and (3) testimony from 

GHP’s superintendent, Don Johnson, and GHP’s president, Kurt Klanderud. But 

those portions of the record don’t establish that GHP seeks anything other than 

restoration costs. First, GHP’s summary of damages only lists invoices GHP paid for 

water and asbestos mitigation, not for redoing any layout and penetration work. 

Second, while GHP fails to point us to a specific page or portion of its response to 

Travelers’ summary judgment motion, we did find a conclusory assertion that “GHP 

now seeks recovery of amounts expended to remove the drywall and perform the 

necessary abatement work, which was necessary to restore the [damaged areas] to 

their pre-water intrusion condition.” App. vol. 5, 430. But that statement supports our 

conclusion that GHP seeks restoration costs, not GHP’s assertion that it seeks costs 

for redoing its own work. Finally, Johnson and Klanderud both testified that GHP 

completed preliminary work in the damaged areas. But neither Johnson nor 

Klanderud testified that GHP incurred or sought costs for redoing that work. Thus, 

we agree with the district court’s conclusion that GHP doesn’t seek damages for the 

costs of redoing its own work. 
9 

define the term “structure” and argues that the damaged areas must therefore 

constitute “[p]roperty that will become a permanent part of the buildings or structures 

at the ‘job site.’” Aplt. Br. 25 (emphasis omitted) (quoting App. vol. 3, 293). It 

further argues that because the “Builders’ Risk” definition excludes existing 

“buildings or structures” but doesn’t exclude existing “property,” treating the 

damaged areas as “property” renders the exclusionary language inapplicable. Aplt. 

Br. 25-26. But we agree with Travelers that section (b) provides coverage for 

personal property—i.e., fixtures or building materials—that will become part of the 

permanent buildings or structures “being constructed, erected, or fabricated at the 

‘job site.’” App. vol. 3, 293. See, e.g., 5-50 New Appleman on Insurance Law 

Library Edition § 50.02[c][i] (2016) (“Property covered under a builders risk policy 

usually includes the structures on the construction site, as well as materials that have 

not yet been incorporated into the structure.”). Because, GHP makes no claim for 

damage to its personal property at the job site, the second basis for “Builders’ Risk” 

coverage is also inapplicable. 

In sum, because GHP doesn’t seek damages for a loss to covered property, we 

affirm the district court’s order granting summary judgment in favor of Travelers on 

GHP’s claims for breach of contract and common law bad faith, and on GHP’s 

request for a declaratory judgment on coverage. And this conclusion makes it 

unnecessary for us to resolve whether, as GHP argues, the district court erroneously 

concluded that GHP’s statutory bad faith claim was time-barred. Instead, we affirm 

the district court’s order granting summary judgment to Travelers on that claim 
10 

because—for the reasons discussed above—GHP failed to demonstrate a loss to 

covered property. See MarkWest Hydrocarbon, Inc. v. Liberty Mut. Ins. Co., 558 F.3d 

1184, 1193 (10th Cir. 2009) (“It is settled law in Colorado that a bad faith claim must 

fail if, as in the case here, coverage was properly denied and the plaintiff’s only 

claimed damages flowed from the denial of coverage.”); see also Richison v. Ernest 

Grp., Inc., 634 F.3d 1123, 1130 (10th Cir. 2011) (“We have long said that we may 

affirm on any basis supported by the record, even if it requires ruling on arguments 

not reached by the district court or even presented to us on appeal.”). 

Affirmed. 

Entered for the Court 

Nancy L. Moritz 

Circuit Judge