Allied World Assurance Co. (U.S.) v. Great Divide Ins. Co.
| Decision Date | 30 September 2022 |
| Docket Number | 3:21-CV-386 (SVN) |
| Parties | ALLIED WORLD ASSURANCE COMPANY (U.S.), INC., Plaintiff, v. GREAT DIVIDE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Connecticut |
RULING AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
In this insurance coverage dispute, Plaintiff, Allied World Assurance Company (U.S.), Inc. (“Allied World”), and Defendant, Great Divide Insurance Company (“Great Divide”), mutually insure a subcontractor, Precision Trenchless LLC (“Precision”). After Precision's allegedly defective work on a construction project caused property damage, the employer and general contractor brought a lawsuit against it. Precision requested that both Allied World and Great Divide defend it in the suit, and Allied World began defending it. The underlying suit subsequently settled. During the pendency of that suit Allied World filed the present action, seeking a declaration that Great Divide had a co-primary duty to defend Precision as well as reimbursement for Great Divide's portion of the defense. Great Divide disputes that it had any duty to defend, citing “other insurance” clauses in both insurers' policies to support its argument that its duty to defend would be triggered only after Precision's defense expended Allied World's coverage.
The parties have now filed cross-motions for summary judgment. Although no material facts are in dispute, the parties disagree over the priority of coverage afforded by their respective insurance policies. Allied World contends that Great Divide's defense obligation was co-primary, rather than excess, because the two policies do not insure the same risk. Great Divide contends that its coverage was excess to Allied World's coverage without consideration of identity of risk, and alternatively, that the policies insure the same risk. For the following reasons, the Court agrees with Great Divide's second argument. Accordingly, the Court denies Allied World's motion for summary judgment, ECF No. 46, and grants Great Divide's motion for summary judgment, ECF No. 49.
The record reveals the following facts, which are largely undisputed. In 2016, the Metropolitan District Commission (the “MDC”) engaged Ludlow Construction Co. (“Ludlow”) to serve as the general contractor for a sewer rehabilitation project in West Hartford, Connecticut. Def.'s Local Rule (“L.R.”) 56(a)2 Statement (“St.”), ECF No. 57, ¶ 1. As part of the project, the MDC directed Ludlow to replace the sewer and water lines on the street at issue. Pl.'s L.R. 56(a)2 St., ECF No. 55, ¶ 22. Ludlow subcontracted with Precision to replace the sanitary sewer lines on the street. Def.'s L.R. 56(a)2 St. ¶ 3. In May of 2018, Precision installed a resin-infused liner to reinforce an existing sanitary sewer pipe located beneath the road. Id. ¶ 4.
In October of 2018, a section of the liner collapsed, creating a blockage in the sanitary sewer pipe. Id. ¶ 5. The blockage in the pipe released sewage and sewage water into nearby homes and properties, causing damage. Id.; Pl.'s L.R. 56(a)2 St. ¶ 25. The MDC and Ludlow paid the property owners to repair the damage. Id. ¶ 26.
The underlying action arising from this event, eventually consoliDated: Precision Trenchless, LLC v. Saertex multiCom LP, No. 3:19-CV-54 (JCH), was composed of three cases. Pl.'s L.R. 56(a)2 St. ¶ 21. First, the MDC filed claims against both Precision and Ludlow. Ex. F to Compl., ECF No. 1-6. Second, Ludlow filed claims against Precision. Ex. D to Compl., ECF No. 1-4. Third, Precision filed claims against the manufacturer of the liner. Ex. C to Compl., ECF No. 1-3. Following consolidation of these actions, the underlying consolidated action settled with respect to all claims and, accordingly, has been administratively closed. See No. 3:19-cv-54, ECF No. 335.
Precision had two relevant insurance policies, both of which were in effect on the date that the liner collapsed. Pl.'s L.R. 56(a)2 St. ¶ 3. Allied World issued Precision a Commercial General Liability (“CGL”) policy, No. 0310-6854, effective from April 30, 2018, to April 30, 2019. Def.'s L.R. 56(a)2 St. ¶ 14; Ex. A to Compl., ECF No. 1-1. The policy provides coverage up to $1 million per occurrence and $2 million in the aggregate. Pl.'s L.R. 56(a)2 St. ¶ 5. As relevant here, it provides that Allied World “will pay those sums that the insured becomes legally obligated to pay as damages because of . . . ‘property damage' to which this insurance applies.”[1] Ex. A to Compl. at 7. The policy also contains various exclusions, including for property damage arising out of the “discharge, dispersal, seepage, migration, release or escape of ‘pollutants[.]'” Id. at 9. In turn, “pollutants” are defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including . . . waste.” Id. at 21. In sum, Allied World's CGL policy generally covers physical injury to tangible property caused by an accident, but it does not cover physical injury to tangible property caused by the discharge of a contaminant such as waste.
Allied World's CGL policy contains an “other insurance” clause. The clause provides that, when “other valid and collectible insurance is available to the insured for a loss” covered by the CGL policy, the CGL insurance is “primary,” subject to certain enumerated exceptions not relevant here. Id. at 18. If the other insurance is not primary, then Allied World's coverage obligations “are not affected.” Id. If the other insurance is also primary, then coverage will be shared between Allied World and the other co-primary insurer depending on whether that other insurance permits contribution by equal shares. Id.
Great Divide issued Precision a Contractors Pollution Liability (“CPL”) policy, No. CPL2026068-10, effective from April 29, 2018, to April 29, 2019. Def.'s L.R. 56(a)2 St. ¶ 19; Ex. B to Compl., ECF No. 1-2. This policy provides coverage up to $1 million per occurrence and in the aggregate. Pl.'s L.R. 56(a)2 St. ¶ 12. The CPL policy covers “property damage” arising from a “pollution condition” caused by “an occurrence” resulting from the insured's work that occurs during the policy period. Ex. B to Compl., ECF No. 1-2 at 8. The terms “property damage” and “occurrence” are defined the same as in Allied World's CGL policy. Id. at 17. “Pollution condition” and “pollutant,” together, are defined as “the discharge, dispersal, release, seepage, migration, or escape” of “any solid, liquid, gaseous or thermal irritant or contaminant, including . . . waste.” Id. In sum, Great Divide's CPL policy covers physical injury to tangible property arising from an accidental discharge of a contaminant such as waste.
After the underlying action commenced, Precision requested that both Allied World and Great Divide defend it. Pl.'s L.R. 56(a)2 St. ¶ 30. Allied World agreed to defend Precision subject to a reservation of rights. Id. ¶ 31. Great Divide did not defend Precision.[2] Specifically, Great Divide represented that the two policies' “other insurance” clauses render Great Divide's CPL coverage in excess of Allied World's CGL coverage. Def.'s L.R. 56(a)2 St. ¶¶ 28-29.
In March of 2021, Allied World brought the present two-count complaint against Great Divide. Count One seeks a declaration pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, that Great Divide owed a co-primary duty to defend Precision in the underlying action alongside Allied World because Precision's liability was insured by Great Divide's CPL policy. Compl. ¶¶ 53-56. Count Two claims unjust enrichment and equitable contribution on the ground that Allied World unfairly shouldered the totality of Precision's defense costs. Id. ¶¶ 65-70. Following discovery, the parties filed cross-motions for summary judgment. ECF Nos. 46, 49. Both motions turn on a single, identical issue: whether Great Divide had a duty to defend Precision in the underlying action in light of the two insurance policies' “other insurance” clauses.
Federal Rule of Civil Procedure 56(a) provides, in relevant part, that a court “shall grant summary judgment if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” A factual dispute must be both genuine and material to defeat summary judgment, meaning that it “might affect the outcome of the suit under the governing law” and could allow a reasonable jury to return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). While the movant bears an “initial responsibility of informing the district court of the basis for its motion,” a non-movant who bears the ultimate burden of proof must “designate specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986) (internal quotation marks omitted). Thus, summary judgment is proper “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322.
A court may properly address the merits of a declaratory judgment action through a motion for summary judgment. Middlesex Ins. Co. v. Mara, 699 F.Supp.2d 439, 444 (D. Conn. 2010). “[I]n an insurance case, it is the function of the court to construe the provisions of the insurance contract and, if no material facts are at issue, the question of whether coverage exists is a question of law that is appropriately decided on a motion for summary judgment.” Id. at 445 (internal punctuation and...
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