Multi-Office Team Secures Summary Judgment in Federal Court on Issue of First Impression in New Mexico

November 2020

A Gordon Rees Scully Mansukhani multi-office team recently secured summary judgment on behalf of their insurance company client on an issue of first impression in New Mexico. Denver partners John Palmeri and Greg Hearing and Of Counsel Jack Mann along with Austin partner Ken Ferguson defended the lawsuit in the United States District Court for the District of New Mexico.

The plaintiff owned a large commercial building in Bloomfield, New Mexico.  In 2016, the water line serving the property fractured causing an underground water leak.  The plaintiff contended that, as a result of the water leak, it was necessary to complete over $3 million in repairs to the property. Additionally, the plaintiff sought extra-contractual damages. 

During the underlying claim, the insurance company learned the building had exhibited numerous signs of movement and shifting prior to the water line break.  Discovery in the case revealed the plaintiff began experiencing earth movement related problems with the building almost immediately after taking possession and, in fact, the plaintiff had filed a construction defect action against the builder.  Additionally, the plaintiff had retained a geotechnical engineer to investigate the building movement prior to the water line break.

Based upon the foregoing, the Gordon & Rees team moved for summary judgment arguing that the policy’s earth movement and anti-concurrent cause provisions barred the claim.  In a twenty-page order, Senior District Court Judge Robert Brack held, as a matter of first impression, that New Mexico courts would enforce the anti-concurrent cause provision and that the anti-concurrent cause provision, in conjunction with the earth movement exclusion, applied to bar coverage for the loss.  Accordingly, summary judgment was granted in favor of the firm's client and the plaintiff’s claims for breach of contract and extra-contractual damages were dismissed with prejudice.