                                                                                    FILED
                       UNITED STATES COURT OF APPEALS                   United States Court of Appeals
                                                                                Tenth Circuit
                             FOR THE TENTH CIRCUIT
                         _________________________________                    January 23, 2019

                                                                             Elisabeth A. Shumaker
 FIDELITY NATIONAL TITLE                                                         Clerk of Court
 INSURANCE COMPANY, a California
 corporation,

       Plaintiff - Appellee,

 v.                                                            No. 18-1128
                                                   (D.C. No. 1:12-CV-03077-RM-KLM)
 PITKIN COUNTY TITLE, INC.,                                     (D. Colo.)

       Defendant - Appellant.
                      _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

Before HOLMES, O’BRIEN, and CARSON, Circuit Judges.
                  _________________________________

       Pitkin County Title, Inc. (Pitkin) appeals from a summary judgment entered in

favor of Fidelity National Title Insurance Co. (Fidelity) on Fidelity’s breach of contract

claim. It also appeals from the denial of its motion to alter or amend the judgment under

Fed. R. Civ. P. 59(e). We affirm.1



       *
        After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
       1
           Our jurisdiction derives from 28 U.S.C. § 1291.
                                               I

       This case presents a title insurance dispute involving real property located in

Aspen, Colorado. The property was purchased by Preston and Betty Henn; title was

insured by a policy issued by Pitkin and underwritten by Fidelity. An agency agreement

authorized Pitkin to sell and issue Fidelity’s title insurance policies consistent with its

terms. Fidelity’s policies ordinarily excluded coverage for easements or claims of

easements, but the policy issued by Pitkin to the Henns deleted that and other exceptions.

Consequently, the Henns’ policy committed Fidelity to extended coverage for unrecorded

easements on the property.

       As it happens, the Henns became embroiled in a dispute over a neighbor’s use of a

footpath across their insured property. The neighbor brought a quiet title action against

the Henns in state court, resulting in a prescriptive easement on the property. Although

the Henns sought defense and indemnification from Fidelity, Fidelity denied coverage. It

later acknowledged that some of the neighbor’s claims were covered, but the Henns

rejected Fidelity’s partial coverage offer and commenced this suit in federal court,

asserting claims for breach of contract and bad faith failure to defend.

       Several months later, Fidelity filed a third-party complaint against Pitkin. Count

one claimed Pitkin was negligent in issuing the policy to the Henns with four exceptions

deleted, in particular the exception for unrecorded easements. Count two claimed Pitkin

breached its agency agreement with Fidelity by deleting the four exceptions from the

Henns’ policy without first obtaining written authorization from Fidelity, as required by

the agency agreement. The district court consolidated the cases, and the Henns

                                                   2
eventually settled with Fidelity, leaving Fidelity’s two claims against Pitkin. Fidelity

later stipulated to the dismissal of its negligence claim, leaving only its breach of contract

claim against Pitkin.

       On cross motions for summary judgment, the district judge decided Pitkin

breached the agency agreement and, moreover, it was liable to Fidelity for the full

amount of the loss because “Pitkin was negligent in its breach of the Agreement,” Aplt.

App., Vol. VI at 74. In allocating the full loss to Pitkin, the district court applied the

relevant provisions of the agency agreement, which required Pitkin to reimburse Fidelity

for the entire amount of a loss arising from Pitkin’s “negligent, willful or reckless

conduct.” Id., Vol. III at 90.

       In response, Pitkin moved to alter or amend its judgment under Fed. R. Civ. P.

59(e). Without disputing its breach of the agency agreement, it claimed the entire loss

ought not have been assigned to it because 1) Fidelity had already stipulated to the

dismissal of its negligence claim, 2) Fidelity neither pleaded nor established the elements

of negligence, and 3) the issue of negligence was barred by Colorado’s economic loss

rule, which generally bars tort claims for economic losses arising from contractual duties

absent an independent duty of care, see Town of Alma v. AZCO Constr., Inc., 10 P.3d

1256, 1264 (Colo. 2000) (en banc). The district judge rejected the arguments because

negligence remained an issue within the context of Fidelity’s breach of contract claim,

the dismissal of Fidelity’s negligence claim notwithstanding. Moreover, Pitkin failed to

preserve its economic loss theory in its summary judgment briefs, but even if the theory

were to be considered nothing prevented the application of a contractually agreed upon

                                                  3
standard of liability—negligence—in allocating the full loss to Pitkin. Aplt. App.,

Vol. VI at 141-42. The judge thus denied relief under Rule 59(e), and Pitkin appealed.

                                              II

       “We review the district court’s grant of summary judgment de novo,” SCO Grp.,

Inc. v. Novell, Inc., 578 F.3d 1201, 1208 (10th Cir. 2009), and its “ruling on a Rule 59(e)

motion for abuse of discretion,” Hayes Family Tr. v. State Farm Fire & Cas. Co.,

845 F.3d 997, 1004 (10th Cir. 2017). To the extent Pitkin challenges the judge’s

interpretation of the agency agreement, we apply Colorado law under a de novo standard

of review. See Spring Creek Expl. & Prod. Co. v. Hess Bakken Inv., II, LLC, 887 F.3d

1003, 1017-18 (10th Cir. 2018) (“Under Colorado law, ‘contract interpretation is a

question of law for the court to decide.’”) (quoting Copper Mountain, Inc. v. Indus. Sys.,

Inc., 208 P.3d 692, 696 (Colo. 2009) (en banc)) (brackets omitted)); see also Gorsuch,

Ltd., B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d 1230, 1236 & n.7 (10th Cir. 2014)

(applying state law in diversity action).

       We begin with the relevant provisions of the agency agreement: Pitkin “shall not,

without the prior written approval of [Fidelity’s] corporate underwriting department . . .

[c]ommit [Fidelity] to insure any Extra Hazardous Risk as defined herein,” or “[a]lter any

Title Assurance or other form furnished by [Fidelity] . . . .” Aplt. App., Vol. III at 89.

“Extra Hazardous Risk” is defined as “all risks which result in a liability not normally

assumed by [Fidelity].” Id. at 92. The title insurance forms Fidelity provided to Pitkin

included Schedule B, which contained standard Policy Exceptions 1, 2, 3, and 4. Id. at

219 (Flores Aff. ¶ 7). Policies issued without these exceptions “exposed Fidelity to

                                                   4
greater risk, including claims for off-record matters like easements and encroachments.”

Id. (Flores Aff. ¶ 8). Exception number 2 expressly excluded coverage for “[e]asements,

or claims of easements, not shown by the public records.” Id. at 216. But Schedule B in

the Henns’ policy stated, “EXCEPTIONS NUMBERED 1, 2, 3 AND 4 ARE HEREBY

DELETED.” Id. at 217.

       Pitkin does not deny its breach of the agreement. Instead, it focuses on the

judge’s interpretation of the loss and allocation of loss provisions. The agreement defines

“Loss” as:

       sums paid or to be paid by [Fidelity] . . . to settle or compromise claims
       under any of [Fidelity’s] Title Assurances issued by [Pitkin]. Loss shall
       include, but not be limited to, expenses, costs and attorney’s fees actually
       paid or incurred in connection with investigation, negotiation, litigation, or
       settlement of such claim which ultimately requires payment of any sum by
       [Fidelity].

Id. at 92. Subject to subparagraph 6.B of the agreement, Pitkin’s “General Liability” was

capped at “the first $5,000.00 of any Loss sustained or incurred by [Fidelity] as a result of

the issuance of the Title Assurances by [Pitkin].” Id. at 93. But under subparagraph 6.B,

entitled, “ALLOCATION OF LOSSES,” Pitkin was liable for the entire loss incurred as a

result of its negligent, willful, or reckless conduct:

       In the event that a Loss sustained or incurred for a matter arising under this
       Agreement resulted or arose from the negligent, willful or reckless conduct
       of [Pitkin], [Pitkin]’s employees or any independent contractor relied upon
       by [Pitkin], then [Pitkin] shall reimburse [Fidelity] for the Loss. The
       instances where [Pitkin] shall be liable to [Fidelity] under this subparagraph
       shall include, without limitation, the following:

             1. Failure of [Pitkin] to comply with the terms and conditions of this
                Agreement or with the manuals, underwriting bulletins and/or
                instructions given to [Pitkin] by [Fidelity].

                                                   5
Id. at 90.

       Applying this provision, the judge’s summary judgment discussion concluded

“Pitkin was negligent in its breach of the Agreement,” id., Vol. VI at 74, and therefore

was liable for the entire loss. Pitkin here offers four arguments to the contrary.

       First, it contends negligence is foreclosed by the economic loss rule: “a party

suffering only economic loss from the breach of an express or implied contractual duty

may not assert a tort claim for such a breach absent an independent duty of care under

tort law.” A.C. Excavating v. Yacht Club II Homeowners Ass’n, Inc., 114 P.3d 862, 865

(Colo. 2005) (en banc). There are three main policy reasons for applying the economic

loss rule between commercial parties:

       (1) to maintain a distinction between contract and tort law; (2) to enforce
       expectancy interests of the parties so that they can reliably allocate risks
       and costs during their bargaining; and (3) to encourage the parties to build
       the cost considerations into the contract because they will not be able to
       recover economic damages in tort.

Spring Creek Expl. & Prod., 887 F.3d at 1020 (quoting BRW, Inc. v. Dufficy & Sons, Inc.,

99 P.3d 66, 72 (Colo. 2004)).

       Fidelity stipulated to the dismissal of its negligence claim precisely because it was

barred by the economic loss rule. See Aplt. App., Vol. IV at 17. Following through,

Pitkin tells us parties may not incorporate a negligence standard into their contract. But

Colorado courts have recognized that “sophisticated parties can build the anticipated cost

of a breach of their respective duties into their bargain,” A Good Time Rental, LLC v.

First Am. Title Agency, 259 P.3d 534, 537 (Colo. App. 2011), and generally may


                                                 6
incorporate tort standards into their contract, see, e.g., BRW, Inc., 99 P.3d at 74-75

(holding that economic loss rule barred negligence claims because duty to perform in a

non-negligent manner was provided for by contract). It points to an exception to the

economic loss rule, one which allows a tort claim alleging breach of a duty independent

of a contract. See A.C. Excavating, 114 P.3d at 865. Pitkin asserts this exception

precludes a finding of negligence here because “[n]egligence must be based on breach of

a duty independent of a contract.” Aplt. Br. at 16. But conspicuously missing from this

tangled argument is any acknowledgement that there is no tort claim here. Nor does

Pitkin explain how applying an exception to the economic loss rule, which would permit

an independent negligence claim, helps its cause.

       Pitkin’s second argument is equally flawed. It asserts the dismissal of Fidelity’s

negligence claim precludes consideration of its negligence, even for purposes of applying

the allocation of loss provision to resolve this breach of contract claim. It characterizes

this argument as a procedural bar, akin to collateral estoppel, but once again, this

argument distorts the economic loss rule and frustrates the contractual intent of the

parties. In Colorado, the economic loss rule applies unless a duty of care is imposed by

tort law, independent of contractual obligations. The rule and exception are distinct and

ought not be conflated. Fidelity’s dismissal of its negligence claim under the economic

loss rule is not a procedural bar to enforcement of the allocation of loss provisions

contained in the agency agreement. Pitkin would have us apply the economic loss rule to

bar recovery—not only as to a negligence claim—but also as to the express contract

provisions. It cites no authority for such a dubious application of the economic loss rule.

                                                 7
Moreover, it does not deny it agreed (under subparagraph 6.B) to be liable for the entire

loss resulting from its negligent, willful or reckless conduct. Even if there was no

independent tort (alleged or not) the language of the contract dictates the remedy. At

bottom, Pitkin asks us to ignore the parties’ expressly manifested intent. See Pepcol Mfg.

Co. v. Denver Union Corp., 687 P.2d 1310, 1313 (Colo. 1984) (en banc) (“An integrated

contract in the first instance is to be interpreted in its entirety with the end in view of

seeking to harmonize and to give effect to all provisions so that none will be rendered

meaningless.”).

       Third, Pitkin contends Fidelity waived the issue of negligence by failing to plead

and establish the elements of a negligence claim in its summary judgment briefs. This

argument again conflates the dismissed negligence claim with the agreed contract remedy

for a loss resulting from the “negligent, willful or reckless conduct of [Pitkin],” which is

expressly identified as the “[f]ailure of [Pitkin] to comply with the terms and conditions

of this Agreement or with the manuals, underwriting bulletins and/or instructions given to

[Pitkin] by [Fidelity].” Aplt. App., Vol. III at 90.2




       2
         The district court declined to apply this definition of “negligent, willful or
reckless conduct” and instead applied a definition of “negligence” contained in
Colorado’s civil jury instructions. In its reply brief, Pitkin objects to revisiting the
district court’s construction of the agreement, asserting Fidelity did not challenge it.
But, as Pitkin acknowledges, we review the district court’s interpretation de novo.
See Spring Creek Expl. & Prod. Co. v. Hess Bakken Inv., II, LLC, 887 F.3d 1003,
1017-18 (10th Cir. 2018). Moreover, it does not contend the agency agreement is
ambiguous, nor does it explain why we should not apply its plain terms.

                                                   8
       Finally, Pitkin contends it is not responsible for the entire loss because Fidelity

paid the Henns to settle its own claims, not necessarily a claim arising under the policy.

The undisputed evidence indicates otherwise. Fidelity provided evidence demonstrating

its settlement with the Henns consisted of payments for attorney’s fees and the

diminution of their property value resulting from the easement. See id., Vol. III at 210

(Nygaard Aff. ¶¶ 14-15). These were “sums paid . . . by [Fidelity] . . . to settle or

compromise claims under any of [Fidelity’s] Title Assurances issued by [Pitkin].” Id. at

92. Thus, the entire settlement amount qualifies as a “Loss” under the agency agreement,

and Pitkin was obligated to reimburse Fidelity for that loss.

                                             III

       The judgment of the district court is affirmed. Pitkin’s motion to seal Volume VII

of the appendix is granted, subject to its correction of an apparent filing error. Volume

VII contains a redacted version of Pitkin’s amended statement of undisputed facts. See

Aplt. App., Vol. VII at 87-88. This document was not included elsewhere in the

appendix. Accordingly, Pitkin shall supplement the appendix with a publicly available

redacted version of this document and an unredacted version filed under seal. See

10th Cir. R. 25.6(B).

                                                         Entered for the Court


                                                         Terrence L. O’Brien
                                                         Circuit Judge




                                                   9
