Great American Insurance v. Ferndale Development Co.

The facts of this case are not in dispute. Ferndale Development Company owned certain property in Dillon, Colorado, that was adjacent to a city water line. Ferndale had been constructing condominiums on its property when a valve on the water line ruptured causing water to inundate the footings and foundations of Ferndale’s partially completed structures. Great American Insurance Company insured Ferndale’s property.

When Great American refused to reimburse Ferndale for its losses, Ferndale sought recovery in the district court under the insurance contract. Great American generally denied the…