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Detroit Public Schools Program Management Team, LLC v. Valley Forge Insurance Co.

April 27, 2010

DETROIT PUBLIC SCHOOLS PROGRAM MANAGEMENT TEAM, LLC, AND LEXINGTON INSURANCE COMPANY, INC., PLAINTIFFS,
v.
VALLEY FORGE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Robert H. Cleland United States District Judge

OPINION AND ORDER DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Pending before the court are cross motions for summary judgment. The motions have been fully briefed, and the court has concluded that no hearing on the motions is necessary. See E.D. Mich. LR 7.1(e)(2). Because Plaintiffs' claim requires the resolution of disputed issues of material fact, summary judgment is inappropriate for either side and the court will deny both motions.

I. BACKGROUND*fn1

The single issue in this case is whether Defendant owes the Detroit Public Schools Program Management Team, LLC (DPSPMT) a duty to defend Plaintiff DPSPMT's members in an underlying state tort case, Beavers v. Barton Malow, Co. The other Plaintiff, Lexington Insurance Co. ("Lexington"), is an insurance company with an acknowledged duty to defend DPSPMT's members in the underlying Beavers lawsuit.

DPSPMT is a Michigan limited liability company organized to act as Detroit Public Schools' ("DPS's") agent for the purposes of managing DPS's obligations under a 1994 bond program, known as the Capital Improvement Program. Pursuant to its obligations to DPS, DPSPMT arranged for and recommended that DPS enter into a contract with Jenkins Construction ("Jenkins"). (Joint App'x ¶ 3.) On November 7, 2001, Jenkins entered into an agreement with DPS, the Agreement for Consulting Services ("Consulting Agreement"). (Id. at ¶ 3, Ex. B.) Pursuant to the terms of the Consulting Agreement, Jenkins was responsible for "[p]roviding preconstruction services in support of the New Cass Technical High School project," including managing, procuring bids, planning, and scheduling. (Id.) As part of its duties under the Consulting Agreement, Jenkins was overseeing the demolition of the Tanner Storage and Moving Building ("Tanner Building"), which was owned by DPS. (Id. at ¶ 2.)

On December 18, 2001, Rick Beavers, a Jenkins employee, inspected the Tanner Building pursuant to Jenkins's duties under the Consulting Agreement. (Id. ¶ 3.) Beavers was accompanied by Robert Smith, an employee of Barton Malow, which is a DPSPMT member. (Id. at ¶ 2.) Smith was assigned to work with DPSPMT. (Id.) During the inspection Beavers fell from a loading dock and was injured. (Id.)

On March 24, 2003, Beavers filed a lawsuit in Michigan state court seeking to recover damages caused by his fall off the loading dock in the Tanner Building. He sued Barton Malow Co., Jomar Building Co., Spillis Cardela, and DMJM, all of which are members of DPSPMT; Beavers also sued Robert Smith.

On the date of the accident, the Consulting Agreement was in effect. (Id. at ¶ 3.) There were no other contracts between DPS and Jenkins in effect on December 18, 2001. (Id.) Moreover, there were no contracts between DPSPMT and Jenkins that were in effect on that date. (Id.)

Plaintiff Lexington issued a general liability insurance policy to its named insured, DPSPMT. This policy (the "Lexington Policy") obligates Lexington to pay for the DPSPMT members' defense costs in the Beavers case, and Lexington has been defending the DPSPMT members in the Beavers case pursuit to its policy. (Id. at ¶¶ 4-5.) Defendant issued a commercial insurance policy, Policy Number C 2045349698 (the "Valley Forge Policy"), to its named insured, Jenkins, effective from January 4, 2001, to January 4, 2002. Defendant also issued a Contractor's Blanket Additional Insured Endorsement (Blanket Endorsement), which provided insurance coverage to additional insureds under certain circumstances. Specifically, the Blanket Endorsement amended Jenkins's policy to add as an "insured any person or organization... whom [Jenkins] is required to add as an additional insured on this policy under... a written contract or agreement." (Joint App'x Ex. C at 24.) Further, the Blanket Endorsement provides insurance to an additional insured covering only liability "arising out of [1] [Jenkins's] premises; [2] '[Jenkins's] work' for that additional insured; [3] Acts or omissions of the additional insured in connection with the general supervision of '[Jenkins's] work.'" (Id.)

On April 21, 2003, Plaintiff Barton Malow wrote a letter to Jenkins and CNA Insurance Companies*fn2 ("CNA") tendering the defense of the DPSPMT members. Barton Malow claimed that it and the rest of the DPSPMT members were additional insureds pursuant to the Valley Forge Policy and the Blanket Endorsement. In May of 2003, after CNA requested documentation of Barton Malow's claim, Barton Malow produced the "Jenkins Construction Contract," which Barton Malow initially claimed obligated Jenkins to insure it and the other DPSPMT members. In a letter dated August 26, 2003, Barton Malow admitted that the "Jenkins Construction Contract" did not apply because it was executed five months after Beavers's accident. (Joint App'x Ex. K.) Instead, Barton Malow wrote that there was a second contract: "Professional Services Contract for pre-construction services, dated 11/01, which does not include an Exhibit providing insurance to Jenkins by the Owner;... Therefore, we again request... defense for [the DPSPMT members]." (Id.) On May 30, 2008, Barton Malow sent Defendant a copy of the Consulting Agreement and tendered a defense specifically based on that agreement.*fn3

II. STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). "In deciding a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party's favor." Sagan v. United States, 342 F.3d 493, 497 (6th Cir. 2003). "Where the moving party has carried its burden of showing that the pleadings, depositions, answers to interrogatories, admissions and affidavits in the record, construed favorably to the non-moving party, do not raise a genuine issue of material fact for trial, entry of summary judgment is appropriate." Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986)).

The court does not weigh the evidence to determine the truth of the matter, but rather, to determine if the evidence produced creates a genuine issue for trial. Sagan, 342 F.3d at 497(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). The moving party discharges its burden by "'showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case." Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citing Celotex, 477 U.S. at 325). The burden then shifts to the nonmoving party, who "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party must put forth enough evidence to show that there exists "a genuine issue for trial." Horton, 369 F.3d at 909 (citing Matsushita, 475 U.S. at 587). Summary judgment is not appropriate when "the evidence presents a sufficient disagreement to require submission to a jury." Anderson, 477 U.S. at 251-52.

The existence of a factual dispute alone does not, however, defeat a properly supported motion for summary judgment-the disputed factual issue must be material. See id. at 252 ("The judge's inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict -- 'whether there is [evidence] upon which a jury can properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.'" (alteration in original) (citation omitted)). A fact is "material" for purposes of summary judgment when proof of that fact would ...


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