Arch Specialty Ins. Co. v. Colony Ins. Co.
| Docket Number | CIVIL ACTION NO. 19-12570-WGY |
| Decision Date | 14 March 2022 |
| Parties | ARCH SPECIALTY INSURANCE COMPANY, Plaintiff, v. COLONY INSURANCE COMPANY, and Endurance American Specialty Insurance Company, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Peter G. Hermes, Brian M. Gibbons, Hermes, Netburn, O'Connor & Spearing, Boston, MA, for Plaintiff.
David A. Grossbaum, Daniel R. Conte, Hinshaw & Culbertson LLP, Boston, MA, for Defendant Endurance America Insurance Company.
William L. Boesch, Sugarman, Rogers, Barshak & Cohen, Boston, MA, for Defendant Colony Insurance Company.
YOUNG, D.J.
Arch Specialty Insurance Company ("Arch") seeks declaratory judgment establishing that Endurance American Specialty Insurance Company ("Endurance") must share its duty to defend one of its clients, the Board of Governors of Glover Landing Condominium Trust ("Glover Landing"), against a lawsuit. See Pl.’s Third Am. Compl. ("Arch's Third Am. Compl."), ¶¶ 23-49, ECF No. 30. The Board of Governors has been sued by two Condominium owners, Nicholas Mango ("Mango") and Elizabeth Garthe ("Garthe"), in Housing Court. Id. Mango and Garthe allege that the Board of Governors’ failure to make necessary repairs and the bungling of construction projects they undertook, among other things, has forced them to vacate their apartment. See Statement Material Facts Mot. Dismiss Arch Against Colony, Ex. 1, Mango Housing Compl. ("Underlying Complaint") ¶¶ 94-141, ECF No. 43-1. Both Arch and Endurance moved for summary judgment seeking declaratory judgment on: (1) whether Endurance shares a duty to defend with Arch; and (2) if so, how the duty is to be allocated. See Pl.’s Mot. Summ. J. Endurance ( ), ECF No. 44; Mot. Summ. J. Endurance ( "), ECF No. 54.
At the hearing on October 18, 2021, the Court took the matter of Endurance's duty to defend -- and thus both Arch's motion and Endurance's cross-motion -- under advisement. See Electronic Clerk's Notes, ECF No. 69.
This Court DENIES Arch's motion for summary judgment and GRANTS Endurance's cross-motion for summary judgment.
Arch1 filed its first complaint on December 23, 2019, against four defendants: Colony Insurance Company ("Colony"), Nova Casualty Company, Endurance, and Greenwich Insurance Company (collectively, the "Defendant Companies"). Pl.’s Compl. ("Arch's Compl."), ECF No. 1.2
Arch brought five counts in its complaint. See Arch's Third Am. Compl. ¶¶ 23-49. 3
The first four counts are identical and seek declaratory judgment compelling each of the respective Defendant Companies to defend Grover Landing Condominium Trust's Board of Governors against a lawsuit filed by one of its tenants (the "Underlying Suit"). Id. In these counts Arch also seeks declaratory judgment establishing that each Defendant Company must contribute to Arch's existing defense and clarifying the appropriate method of cost allocation among Arch and the Defendant Companies. Id. The fifth count seeks an order compelling the Defendant Companies to "contribute ratably toward the payment of defense costs incurred in the underlying action, in amounts to be determined at trial" and to "[d]eclare the appropriate method of allocation of defense costs among the plaintiffs and defendants." Id. ¶ 49.
On September 7, 2021, Arch voluntarily dropped two of the counts, Counts III and IV, effectively dismissing its case against two of the defendant companies: Nova Casualty Company and Greenwich Insurance Company. See Notice Voluntary Dismissal, ECF No. 60.
All three of the remaining parties then moved for summary judgment. Arch moved for partial summary judgment against Colony and Endurance on the issue of their duty to defend and how that duty is to be allocated. See Pl.’s Mot. Summ. J. Colony, ECF No. 41; Arch's Mot. Summ. J. Against Endurance. Colony and Endurance cross-moved for summary judgment against Arch, seeking dismissal of the claims against them and declaratory judgment establishing that they had no duty to defend or contribute to the Underlying Suit. See Mot. Colony Summ. J.4 , ECF No. 48; Endurance's Cross-Mot. Summ. J.5
During the hearing on October 18, 2021, this Court granted Colony's cross-motion for summary judgment and denied Arch's partial motion for summary judgment against Colony (Count I), Arch's Third Am. Compl. ¶¶ 23-27, holding that Colony had no duty to defend, because a coverage exclusion contained in its insurance contract with Grover Landing applied, see Electronic Clerk's Notes, ECF No. 69. The Court took the matter of Endurance's duty to defend (Count III), Third Am. Compl. ¶¶ 33-37, under advisement, see Electronic Clerk's Notes.
The parties have fully briefed this issue. See Pl. Arch Specialty Insurance Co.’s Mem. Supp. Mot. Partial Summ. J. Endurance's Duty Defend ( ), ECF No. 45; Mem. Endurance Supp. Opp'n Pl.’s Mot. Partial Summ. J. & Cross-Mot. Summ. J. ("Endurance's Mem. Summ. J.") 6-13, ECF No. 55; Arch's Opp'n Mem. Endurance Mot. Summ. J. & Reply Endurance's Opp'n Mot. Summ. J. ("Arch's Opp'n Endurance"), ECF No. 62; Reply Endurance Supp. Cross. Mot. Summ. J. ("Endurance's Reply"), ECF No. 67.
Mango and Garthe have owned a condominium, Unit 7B, located in Building 21 at Glover Landing in Marblehead, Massachusetts ("Unit 7B"), since 1982. See Underlying Complaint ¶ 1.6 They resided in this condominium until February 6, 2015, at which point they allege the apartment became uninhabitable and they were forced to vacate. See id. Mango and Garthe filed suit in the Northeast Housing Court for the Commonwealth of Massachusetts on December 17, 2015 (the "Underlying Suit"), against Timothy Brenton, Michael O'Connor, Lawrence Garrett, Susan Hankins, Rebecca Magoon, Grace Tucker, Lynne Celli, Douglas Haley, and Christine Lenahan, individually and in their capacity as the Board of Governors of Glover Landing (the "Mango Defendants" or the "Board"). See generally id.
In the Underlying Suit, Mango and Garthe brought six counts against the Mango Defendants: (1) negligence; (2) intentional damage to real property; (3) trespass; (4) a derivative action for breach of fiduciary duties; (5) violation of civil rights (based Mango and Garthe's inability to use and enjoy their property); and (6) a request for injunctive relief (blocking the Mango defendants from replacing the windows in Unit 7B with non-code-compliant windows). See Underlying Complaint ¶¶ 94-141. These counts mostly revolve around the Board's failure to approve replacements for faulty windows in Unit 7B and the Board's failure to repair the roof, which allegedly leaked into Unit 7B, damaging the ceiling, walls, and floors of the apartment. Id. ¶¶ 59-84, 93. The complaint (the "Underlying Complaint"), however, also makes allegations regarding the condition of the fire escapes, id. ¶¶ 37-53, the balconies, id. ¶¶ 54-58, the foundation, and other structural deficiencies, id. ¶ 85.
The events that caused damage to Unit 7B are drawn in part from the Underlying Complaint.
In addition to the Underlying Complaint there are several other relevant sources of information: two of Mango's depositions, several letters, and a deposition from Daniel Darisse ("Darisse"), the Property Manager for Grover Landing, among other exhibits. See Def. Endurance Rule 56.1 Statement Undisputed Fact Supp. Opp'n Pl.’s Partial Mot. Summ. J. & Cross-Mot. Summ. J. ("Endurance's Facts") ¶¶ 7, 13-20, 38, 42-43, ECF No. 56. While the parties disagree as to the materiality of these documents and depositions, they do not deny their veracity or authenticity. See, e.g., Arch's Resp. Endurance's Rule 56.1 Statement Facts ("Arch's Facts") ¶ 7, ECF No. 61; Arch's Opp'n Endurance 2-6; Endurance's Reply 3-6.
The events that caused damage to the Garthe's unit are also drawn in part from these extrinsic facts -- the materiality of which will be discussed later in this Memorandum and Order, see infra II.B.1.c.
The extrinsic facts bear on several general allegations regarding the state of disrepair of Grover Landing. In his depositions, Mango alleges that Grover Landing was built before permits were issued in 1967, making it not code-compliant. Endurance's Facts, Ex. 2, Tr. Nicholas Mango Deposition Vol. 2 ("Mango Dep. I") 235:23-237:10, ECF No. 56-2. Mango testified that the buildings that constitute Grover Landing also never received the required inspections. Id. 237:20-23.7 Allegedly, the Board has kept this secret from its tenants for over 50 years. Id. 246:1-3. According to Mango, the original bungled construction is the source of many (if not all) of the problems, including the "messed up" roof drains, cracks in the walls, and the architecture of the windows. Id. 246:4-6, 248:4-6. The negligence of the Board in making repairs and replacements, however, compounded these problems, Mango testified. Id. 247:19-248:10.
Arch's dispute with Endurance revolves around a limited set of issues, which can be grouped into three general problems: (a) the window dispute, (b) the upper and lower roof leaks, and (c) general hurdles with obtaining repairs. See generally Arch's Third Am. Compl.; Arch's Mem. Summ. J. Against Endurance; Endurance's Mem. Summ. J.
The Underlying Complaint alleges that in 1988 Grover Landing amended the Master Deed to remove windows from the common elements; as a matter of policy, however, Glover Landing continued to repair, maintain, and replace windows in individual condominiums. Underlying Complaint ¶¶ 59-60. It was not until 1997 that Grover Landing began holding individual unit owners responsible for the maintenance of their windows. Id. ¶ 63. Both prior to and after 1988, the windows were failing, causing rain and storm leakage. Id. ¶ 62.
In his depositions, Mango testified that when he was elected to the...
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