Ass'n of Apartment Owners of Imperial Plaza v. Fireman's Fund Ins. Co.

• Decision Date: 09 April 2013
• Docket Number: Civ. No. 11–00758 ACK–KSC.
• Citation: 939 F.Supp.2d 1059
• Parties: ASSOCIATION OF APARTMENT OWNERS OF IMPERIAL PLAZA, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Hawaii

939 F.Supp.2d 1059

ASSOCIATION OF APARTMENT OWNERS OF IMPERIAL PLAZA, Plaintiff,

v.FIREMAN'S FUND INSURANCE COMPANY, Defendant.

Civ. No. 11–00758 ACK–KSC.

United States District Court,

D. Hawai‘i.

April 9, 2013.

Alan Van Etten, Aaron L. Loeser, Deeley King Pang & Van Etten, A Limited Liability Law Partnership, Honolulu, HI, for Plaintiff.

Gregory K. Markham, Keith K. Kato, Kevin S.W. Chee, Kyle Jack Takuro Kagihara, Chee Markham & Feldman, Honolulu, HI, for Defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

ALAN C. KAY, Senior District Judge.

This case arises from a dispute between an insurance company and the owners of a property as to whether an insurance agreement covers arsenic damage to the property. On December 11, 2011, the Association of Apartment Owners of Imperial Plaza (“Plaintiff” or “Imperial Plaza”) filed a Complaint asking for declaratory relief that Fireman's Fund Insurance Company (“Defendant” or “FFIC”) must pay benefits to Plaintiff under an insurance policy issued by FFIC.¹ ECF No. 1. On November 28, 2012, Plaintiff filed a Motion for Partial Summary Judgment (“MSJ”) and a Concise Statement of Facts (“Plntf.'s CSF”) asking for a judgment that the arsenic damage is covered by the insurance policy. ECF No. 23 & 24. Defendant filed an opposition on March 4, 2013 (“Def.'s Opp.”) along with a Concise Statement of Facts (“Def.'s CSF”). ECF No. 52 & 53. Plaintiff filed a reply on March 11, 2013 (“Plntf.'s Reply”). This Court held a hearing on March 25, 2013 regarding this matter.

FACTUAL BACKGROUND

Defendant issued an all-risks insurance policy to Plaintiff that covered the real property and building located at 725 Kapiolani Blvd., Honolulu, HI (“Building”) from the time period of October 15, 2009–October 15, 2010 (“Policy”). Plntf.'s CSF Ex. 1 at 967. Defendant provided substantially similar coverage to Plaintiff from October 15, 2005 through October 15, 2012. Plntf.'s CSF Dec. of John Bouchie at 2 ¶ 6.

The Building was originally a three-story warehouse with a roof consisting of a cement topping slab. Plntf.'s CSF Ex. 2 at IP01151. A thick layer of insulation was placed on top of the cement roof slab (“Insulation Layer”), with the roof being placed upon the Insulation layer. Id. The Insulation Layer consisted of a layer of cork, a layer of canec, and another layer of cork. Id. Canec is a building material unique to Hawai'i. Plntf.'s CSF Ex. 3 at IP 000370. It is a fiberboard made out of sugar cane bagasse and treated with inorganic arsenic compounds as an anti-termite agent. Id.

In the 1990's, a fourth floor was constructed on top of the existing third floor roof of the Building. Plntf.'s CSF Ex. 2 at IP 01151; Ex. 4 at IP01308. To build the fourth floor, the builders poured a concrete slab upon the entire existing roof assembly of the Building before constructing the fourth floor on top of part of the new slab. Id. The builders ran plumbing lines through the third floor roof and Insulation Layer to service the fourth floor. Plntf.'s CSF Ex. 4 at IP01308.

On February 26, 2003, Miyasato Kuniyoshi Engineers LLC conducted tests of the fourth floor to discover the source of floor deflections. Plntf.'s CSF Ex. 2 at IP 01151, Def.'s CSF Ex. A, Attachment B at 1–3. The report found that moisture in the Insulation Layer was decomposing the canec. Id. The report also recommended removal of the Insulation Layer and replacement of the floor. Id.

In 2006, polyurethane gel was injected into the depressed areas of the fourth floor in order to increase stability of the flooring. Plntf.'s CSF Ex. 2 at IP 01152. Although a 2006 and 2008 report conducted by Wiss, Janney, Elstner Engineering concluded that the polyurethane gel injections were effective (“WJE Report”), Trinity ERD conducted further tests in 2010 to determine if the Insulation Layer was dry in order to inject additional material to support the concrete floor slab. Plntf.'s CSF Ex. 3 at IP 00945.

On or about June 9, 2010, the date of Trinity ERD's report, Plaintiff discovered the presence of arsenic in the fourth floor concrete slab above the Insulation Layer. Plntf.'s CSF Ex. 3. Moisture had infiltrated the Insulation Layer and dissolved the canec. Plntf.'s CSF Ex. 4 at IP 01309, Def.'s CSF Ex. A, Attachment B at Page 2 of 4. The moisture carried the arsenic in the canec into the cement topping slab above the Insulation Layer. Plntf.'s CSF Ex. 4 at IP 01309, Def.'s CSF Ex. A at 1. The concentration of arsenic required abatement because it posed a health risk to the Building occupants. Plntf.'s CSF Ex. 4 at IP 01310, Def.'s CSF Ex. A at 1 ¶ 4. Plaintiff reported the arsenic damage claim to Defendant shortly thereafter. Plntf.'s CSF Dec. Of John Bouchie at 2.

Defendant's consultant, Allana, Buick, and Bers, Inc. (“ABB”), completed an investigation of the damage to the Building and sent a report to Defendant on January 12, 2011. Def.'s CSF Ex. A. On February 10, 2011, Defendant sent a letter to Plaintiff denying coverage of the damage under the Policy (“Denial Letter” or “Denial”).

Sometime in 2011–2012, Plaintiff remediated the Building, removing the fourth floor concrete slab and the decomposed canec. Plntf.'s MSJ at 4, Plntf.'s CSF Ex. 4 at IP 01307. During remediation, Trinity ERD investigated additional potential sources of moisture. Plntf.'s CSF Ex. 4 at IP 01310. As a result of the investigation, the plumbing piping and an air handler were rehabilitated as part of the remedial construction. Id. Defendant did not send a consultant to examine the Building during remediation, although the record reflects that ABB had stated in the January 12, 2011 report to Defendant that the Building should be remediated. Def. Opp. at 7; Def.'s CSF Ex. A at 2. Additionally, Plaintiff's engineer consultant, Colin Murphy, communicated to Defendant's consultant, ABB, that Plaintiff would begin remediation and proceed with repairs. Plntf.'s Reply Ex. 7 at 46, 66–67. Plaintiff did not re-tender the claim to Defendant either during or after remediation. Def.'s CSF at 3 ¶ 6, Dec. of Paul Blanchard at 2.

While the parties agree to the above basic outline of events; they disagree as to the causation of the moisture that resulted in the arsenic damage. Each party's contentions are explained below.

Plaintiff contends that the moisture came from either (1) a broken domestic water line, (2) a broken waste line, (3) a large package type air handler unit located within the space and adjacent to the low area of the slab, or (4) cracks in the toppingslab that could have allowed water into the Insulation Layer. Plntf.'s CSF at 2 ¶ 5, Dec. of Colin Murphy ¶¶ 4–5, Ex. 4.

Defendant argues that the moisture came from either (1) “leakage in the roof assembly prior to construction of the upper floor” or (2) the exposure of edge conditions at the roof perimeter during the construction of the fourth floor. Def.'s CSF at 3 ¶ 2 (citing Plntf.'s CSF Ex. 3 at IP 00962). Defendant also argues that the floor depressions are likely due to the canec degradation caused by moisture trapped in the Insulation Layer from around 1990–1991. Def.'s CSF Ex. A at 1.

STANDARD

A party may move for summary judgment on any claim or defense—or part of a claim or defense—under Federal Rule of Civil Procedure (“Rule”) 56. Summary judgment “should be granted ‘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.’ ” Maxwell v. Cnty. of San Diego, 697 F.3d 941, 947 (9th Cir.2012) (quoting Fed.R.Civ.P. 56(a)). Under Rule 56, a “party asserting that a fact cannot be or is genuinely disputed must support the assertion,” either by “citing to particular parts of materials in the record” or by “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).

The substantive law determines which facts are material; “only disputes over facts that might affect the outcome of the suit under the governing law properly preclude the entry of summary judgment.” Nat'l Ass'n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1147 (9th Cir.2012). “The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (citation omitted).

A genuine issue of material fact exists if “a reasonable jury could return a verdict for the nonmoving party.” United States v. Arango, 670 F.3d 988, 992 (9th Cir.2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Conversely, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott, 550 U.S. at 380, 127 S.Ct. 1769.

The moving party has the burden of persuading the court as to the absence of a genuine issue of material fact. Avalos v. Baca, 596 F.3d 583, 587 (9th Cir.2010).² If the moving party satisfies its burden, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Sluimer v. Verity, Inc., 606 F.3d 584, 587 (9th Cir.2010). The nonmoving party must present evidence of a “genuine issue for trial,” Fed.R.Civ.P. 56(e), that is “significantly probative or more than merely colorable.” ³LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir.2009) (citation omitted). Summary judgment will be granted against a party who fails to demonstrate facts sufficient to establish “an element essential to that party's case and on which that party will bear the burden of proof at trial.” Parth v. Pomona Valley Hosp. Med. Ctr., 630 F.3d 794, 798–99 (9th Cir.2010) (citation omitted).

When evaluating a motion for summary judgment, ...