Hildebrand v. National Fire & Marine Insurance Company – A Good Break for the Plaintiffs

In an order by Judge Marcia Krieger, the homeowners in a recent construction defect case caught a lucky break.  By way of background, Mark A. and Mark L. Hildebrand were the plaintiffs in a construction defect lawsuit against their builder, New Vista, and one of its principals, Richard Reeves.  The claims against Mr. Reeves were dismissed by a motion for a directed verdict during trial.  Thereafter, the jury found in favor of the Hildebrands and against New Vista, and the trial court entered judgment against New Vista in the amount of $540,000.

The Hildebrands then instituted a declaratory relief action in Jefferson County District Court against National Fire, New Vista, and Mr. Reeves seeking 1) a declaration that National Fire was obligated to pay the jugement and 2) damages against National Fire for breach of contract for failing to pay the judgment in a timely fashion.  In April 2009, National Fire removed the action to the United States District Court of the District Court of Colorado. 

The purpose of this removal was probably because National Fire thought it would get a better outcome in U.S. District Court than in Jefferson County District Court.  As luck would have it, the Hildebrand case was assigned to Judge Krieger, the same judge who issued an order finding no coverage for construction defects in the Greystone v. National Fire case.  The only problem with National Fire’s strategy was that in order to properly remove the case to federal court, National Fire had to request that the court realign the parties so as to achieve complete diversity between them.

Unfortunately for National Fire, Judge Krieger declined to realign the parties and, therefore, found that the court had no subject matter jurisdiction based on diversity.  Because the court had no jurisdiction to hear the case, Judge Krieger remanded the case back to the Jefferson County District Court.  Unfortunately for the Hildebrands, Judge Krieger declined to award costs and attorneys fees associated with the remand.  It will be interesting to see how this issue shakes out in the state court system. 

If you would like to obtain a copy of the Hildebrand order, please contact David M. McLain by phone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.  For a more full explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.