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Massachusetts Bay Insurance Co. v. The Cincinnati Insurance Co.

United States District Court, E.D. Michigan, Southern Division

June 19, 2018




         This matter is before the Court on Plaintiff Massachusetts Bay Insurance Company's Motion for Summary Judgment. (Docket 13.) Defendant The Cincinnati Insurance Company filed a response and Plaintiff filed a Reply. (Dkts. 15, 17.) Plaintiff brings a single claim for equitable subrogation against Defendant. (Compl., dkt. 1.) The Court heard this motion on May 23, 2018.

         I. Background & Facts

The parties are insurers of contractors on a construction site where an injury occurred. Mondrian Holdings, LLC, or its affiliate Mondrian Properties, LLC, ("Mondrian") was the general contractor. (Compl. ¶ 10.) Mondrian was covered by Defendant's insurance policy number ENP 021 05 33 (the "Cincinnati Policy") for the period from September 19, 2013, through September 19, 2016. (Pl.'s Mot. Summary J. Ex. D, dkt. 13-5.) Mondrian was also covered by a policy issued by Solid Surfaces Unlimited, Inc. ("Solid Surfaces"). Solid Surfaces was a subcontractor of Mondrian on the construction. (Compl. ¶ 11.) Pursuant to its subcontract agreement with Mondrian, Solid Surfaces agreed to include Mondrian as an "additional insured" on its liability insurance policy. (Subcontractor Agreement, Def.'s Resp. Ex. 2, dkt. 15-3.) Plaintiff issued a commercial general liability insurance policy to Solid Surfaces, policy number ZDB-8699818 11 for the period from May 1, 2013 through May 1, 2014 (the "Hanover Policy"). (Pl.'s Mot. Ex. E, dkt. 13-6.)

         On or about November 25, 2013, Kerry Ledford, employed by Ledford Contracting, Inc., was assigned to the construction site at premises located in Troy, Michigan (the "Job Site"). (Pl.'s Mot. Ex. C, ¶ 5; Responses to Interrogatories 1-3, Def.'s Resp. Ex. 9, dkt. 15-10.) Ledford is a granite installer who worked as a subcontractor for Solid Surfaces. (Kerry Ledford Dep. 29, 33, 46, 49-50, Def.'s Resp. Ex. 1, dkt. 15-2.) Ledford was injured at the Job Site in November 2013 when he was carrying a piece of backsplash into the house and fell.[1] (Ledford Dep. 18, 48.) At the time he fell he was using wood stairs that led into the house from the garage. (Ledford Dep. 18, 48.) It was Mondrian Holdings' supervisor's responsibility to install or inspect and secure the steps on the job. (Dep. Richard Remmert, 28-29, Pl.'s Mot. Ex. A, dkt. 13-2.) On September 15, 2014, Ledford filed suit against Mondrian Holdings, LLC, in Oakland County Circuit Court (the "Underlying Lawsuit"), alleging negligent acts, including "[f]ailing to properly build, construct, install or secure the step or stairs, so that it could be properly usable without breaking, collapsing, falling or becoming insecure." (Compl. and Jury Demand, No. 14-142921, Oakland County Circuit Court, Pl.'s Mot. Ex. C, dkt. 13-4.) Ledford also named one "John Doe" as a defendant, further identified as "the person or business entity who did build, install, provide or otherwise create the steps or stairs leading into the house from the garage at the construction site of the premises located at 3201 McClure, City of Troy, State of Michigan." (Id. at ¶ 7.)

         Mondrian tendered defense to Defendant Cincinnati to defend it in the state court suit. Cincinnati filed an answer, but in a letter dated December 11, 2014, Cincinnati's attorney demanded that Plaintiff Massachusetts Bay Insurance Company (Massachusetts) and/or its subsidiaries, assume Mondrian's defense and indemnify it, as well as reimburse defense-related expenses to date. (Daniels Letter, Dec. 11, 2014, Pl.'s Mot. Summary J., Ex. F, dkt. 13-7.)

         In light of Cincinnati's position that it was Massachusetts' duty to defend, and in light of the unknown "John Doe" defendant, Massachusetts agreed to defend Mondrian in the state court suit as an additional insured, but "under a full and complete reservation of rights" and "subject to the terms and conditions" of the policy. (Massachusetts/Hanover letter, Dec. 19, 2014, Pl.'s Mot. Summary J. Ex. G, dkt. 13-8.) In Plaintiff's motion for summary judgment, Plaintiff alleges that it ultimately "settled the claims against Mondrian in the Underlying Action for a settlement payment of $230, 000 in or about October, 2015." (Pl.'s Mot. Summary J. 7, dkt. 13.) Plaintiff alleges that Defendant "refused to participate in settlement negotiations and refused to contribute or reimburse Plaintiff for the cost of defending and settling the claims against Mondrian." (Pl.'s Mot. Summary J. 7, dkt. 13.)

         Plaintiff made additional attempts to tender defense and indemnity to Defendant, including via email and letters dated September 29, 2015, and April 13, 2016, after learning through the pleadings and discovery that Mondrian alone installed the steps involved in the incident. (Hanover/Massachusetts Letter, Sept. 29, 2015, Pl.'s Mot. Summary J. Exs. H, K, dkts. 13-9, -12; Letter, April 13, 2016, Id. at Ex. M, dkt. 13-14; see also Id. at Exs. L, N, and O.) Plaintiff alleges that it provided supporting documentation at Defendant's request. (Pawlowski Letter, Oct. 14, 2015, Pl.'s Mot. Summary J. Ex. L, dkt. 13-13; Email Correspondence, Pl.'s Mot. Summary J., Exs. N, O, dkts. 13-15, -16.) Plaintiff alleges that at the time of filing its motion for summary judgment, Defendant still had not responded "in any meaningful fashion" to its requests for reimbursement. (Pl.'s Mot. Summary J. at 8, dkt. 13.)

         Plaintiff's position is that its policy made Mondrian an additional insured only with respect to Solid Surfaces' work. Because the losses alleged in the lawsuit resulted from the sole negligence of Mondrian, as supported by discovery, Mondrian was not an "additional insured" pursuant to the Hanover Policy and Mondrian's only available coverage for the underlying incident would have been Defendant Cincinnati's policy. Plaintiff alleges that the plain terms of the Cincinnati Policy required Defendant to defend and indemnify Mondrian in the state court lawsuit.

         II. Summary Judgment Standard

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A moving party may meet that 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Rule 56 expressly provides that:

A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed. R. Civ. P. 56(c)(1). Rule 56 also provides that

If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may:
(1) give an opportunity to properly support or address the fact;
(2) consider the fact undisputed for purposes of the motion;
(3) grant summary judgment if the motion and supporting materials-including the facts considered undisputed-show that the movant is entitled to it; or
(4) issue any other appropriate order.

Fed. R. Civ. P. 56(e). “The court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3).

         When the moving party has met its burden under rule 56, “its opponent 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). Ultimately a district court must determine whether the record as a whole presents a genuine issue of material fact, id. at 587, drawing “all justifiable inferences in the light most favorable to the non-moving party.” Hager v. Pike Cnty. Bd. Of Educ., 286 F.3d 366, 370 (6th Cir. 2002).

         III. Analysis

         A. Whether There Was Coverage Under Plaintiff's Policy, The Hanover Policy, For the Loss At Issue

         Plaintiff's motion for summary judgment, while raising several issues, relies nearly entirely on establishing two things: (1) that Mondrian's sole negligence caused Ledford's injury and (2) that Mondrian's sole negligence precludes coverage as an additional insured under the Hanover (Plaintiff's) Policy. Plaintiff does not establish that coverage under the Hanover Policy is precluded even if Mondrian were solely negligent.

         1. Whether Plaintiff's Policy, The Hanover Policy, Provides Coverage For Ledford's Accident

         Pursuant to the subcontractor agreement, Solid Surfaces was required to "carry commercial general liability insurance . . . naming the Contractor and the Owner as Additional Insured's hereunder" and "[a]dditional insured coverage shall apply as primary insurance with respect to any other insurance afforded to Owner and Contractor [Mondrian Holdings and its Subsidiaries]." (Subcontractor Agreement, Def.'s Resp. Ex. 2, dkt. 15-3.) The Hanover Policy provides coverage to Mondrian as an additional insured:

1. Additional Insured by Contract, Agreement or Permit Under Section II - Who Is An insured, Paragraph 5. is added as follows:
5.a. Any person or organization with whom you agreed, because of a written contract, written agreement or permit to provide insurance, is an insured, but only with respect to:
(1) "Your work" for the additional insured(s) at the location designated in the contract, agreement or permit; . . .

         (Hanover Policy, Comm'l General Liability Special Broadening Endorsement, pg. 1 of 6, dkt. 15-5.) The Hanover Policy ...

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