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The US Court of Appeals for the 10th Circuit has reinstated litigation filed by an insurer against its policyholder for settling a case without the insurer’s permission. The case is Auto-Owners Insurance Co. v. Bolt Factory Lofts Owners Assn., Inc.; Sierra Glass Co., Inc. D.C. No. 1:18-CV-01725-RBJ.

Bolt Factory Lofts Owners Association Inc., sued six of its contractors for alleged construction defects at a Denver condo development. Two of those contractors then brought third-party claims for negligence and breach of contract against three subcontractors, including Sierra Glass, which had a commercial general liability (CGL) policy through Auto-Owners, and a second CGL policy through AMCO. Per the insurance policies, both insurers agreed to defend and indemnify Sierra Glass for any damages covered under the policies. On the eve of the trial, Sierra Glass informed the court that it had agreed to pay Bolt Factory $350,000 and to essentially confess judgment by not presenting a defense at trial. Sierra Glass did so without Auto-Owner’s knowledge or consent.

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Hannah Smith

 

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