Auto Owners Ins. Co. v. Travelers Cas. & Surety
| Decision Date | 12 September 2002 |
| Docket Number | No. 8:99-CV-920-T-23EAJ.,8:99-CV-920-T-23EAJ. |
| Citation | 227 F.Supp.2d 1248 |
| Parties | AUTO OWNERS INSURANCE COMPANY, Plaintiff, v. TRAVELERS CASUALTY & SURETY COMPANY, Defendants. Travelers Casualty & Surety Company, Cross-Plaintiff/Third Party Plaintiff v. Auto Owners Insurance Company, Counter-Defendant, v. Northbrook Property & Casualty Company, Third-Party Defendant, |
| Court | U.S. District Court — Middle District of Florida |
Michael S. Rywant, Kerry C. McGuinn, Jr., Rywant, Alvarez, Jones, Russo & Ruyton, P.A., Tampa, FL, John A. Yeager, Willingham & Cote, P.C., East Lansing, MI, for Auto-Owners Ins. Co.
Steven George Schember, Mary Li Creasy, Christian A. Peterson, Shumaker, Loop & Kendrick, Tampa, FL, for Reliance Ins. Co.
Robert L. Rocke, Raul Valles, Jr., Foley & Lardner, Tampa, FL, for Sun Contracting, Inc., Harlan R. Sunquist, Patricia Sunquist.
W. Gray Dunlap, Jr., Simmons & Dunlap, Tampa, FL, for Northbrook Property & Cas. Co.
Steven George Schember, Jaime Austrich, Shumaker, Loop & Kendrick, Tampa, FL, for Travelers Cas. and Surety Co.
Magistrate Judge Elizabeth A. Jenkins issued a "Report and Recommendation" (Doc. 101) concerning the motions for summary judgment filed in this action. No party objects, and the time for objecting has passed. The Court ADOPTS the "Report and Recommendation" (Doc. 101) and GRANTS the plaintiff's motion for summary judgment (Doc. 70), DENIES the defendant/counter plaintiff, third party plaintiff's motion for summary judgment (Doc. 71), and GRANTS the third party defendant's motion for summary judgment (Doc. 73). The Clerk is directed to (1) enter judgments in favor of the plaintiff and the third party defendant, (2) terminate any pending motions, and (3) close the file.
Before the court are Plaintiff's Motion for Summary Judgment (Dkt.70); Reliance Insurance Company's Motion for Summary Judgment (Dkt.71); Memorandum of Law in Support of Reliance's Motion for Summary Judgment (Dkt.72); Counterclaim Defendant Northbrook Property and Casualty Insurance Company's Motion for Summary Judgment (Dkt.73); Counterclaim Defendant Northbrook Property and Casualty Insurance Company's Memorandum of Law in Support of Its Motion for Summary Judgment (Dkt.74); Counterclaim Defendant Northbrook Property and Casualty Insurance Company's Memorandum of Law in Opposition to Reliance's Motion for Summary Judgment (Dkt.75); Defendants', Sun Contracting, Inc., Harlan R. Sunquist and Patricia R. Sunquists' Response to Plaintiff's Motion for Summary Judgment and Memorandum of Law (Dkt.76); Defendants', Sun Contracting, Inc., Harlan R. Sunquist and Patricia R. Sunquists' Response to Reliance's Motion for Summary Judgment and Memorandum of Law (Dkt.77); Memorandum of Travelers in Opposition to Auto-Owner's Motion for Summary Judgment (Dkt.78); Response Brief of Auto-Owners in Opposition to Reliance's Motion for Summary Judgment (Dkt.79); Response of Travelers in Opposition to Motion for Summary Judgment of Northbrook Property and Casualty Insurance Company (Dkt.80); and notices of filing of supplemental authority submitted by the parties (Dkts.83, 87,88).1 Oral argument was held on June 18, 2002.
This action commenced on April 19, 1999, and arises under this court's diversity jurisdiction. The complaint filed by Plaintiff, Auto Owners Insurance Company ("Auto Owners"), seeks declaratory judgment against Defendants, Reliance Insurance Company which was purchased by Travelers Casualty & Surety Co. (hereinafter referred to as "Reliance"), Sun Contracting Inc., Harlan Sunquist and Patricia Sunquist. Auto Owners seeks a determination that a settlement payment made by Reliance to non-party Wellcraft Marine ("Wellcraft") is not covered by a comprehensive general liability ("CGL") policy issued by Auto Owners to Sun Contracting, Inc. ("Sun"). Auto Owners also seeks a determination that it has no duty to indemnify or defend Sun or Harlan and Patricia Sunquist (the "Sunquists") in a lawsuit filed against them by Reliance. Auto Owners has been providing Sun and the Sunquists a defense in the lawsuit under a reservation of rights.
Reliance has filed a counterclaim against Auto Owners and a third party claim against Northbrook Property and Casualty Insurance Company ("Northbrook").2 Northbrook also issued CGL policies to Sun. Reliance seeks a declaratory judgment that Auto Owners and Northbrook, pursuant to CGL policies issued by Auto Owners and Northbrook to Sun, are liable for Reliance's costs that it alleges it expended on behalf of Sun.3
Auto Owners, Reliance and Northbrook have all filed motions for summary judgment asserting that there are no genuine issues of material fact in dispute.4
Sun is a general contractor incorporated in the state of Florida. Sun's principals are Harlan and Patricia Sunquist. Auto Owners is an insurance company incorporated in the state of Michigan. Auto Owners issued CGL policies to Sun for liability coverage from April 16, 1991, through April 16, 1996.5 Northbrook is an insurance company incorporated in Illinois. Northbrook issued CGL policies to Sun from January 15, 1984, through April 1, 1991.6 Reliance is a surety company which issued performance and payment bonds to Sun.
In the course of its business, Sun entered into a contract for the construction of, among other things, a so-called "lay-up facility" at the Sarasota, Florida boat manufacturing facility of Denmar Industries, Inc. d/b/a Wellcraft Marine ("Wellcraft"). Part of the Wellcraft contract required the installation of an underground galvanized piping system to convey acetone. Sun, as contractor and principal, and Reliance, as surety, issued performance and payment bonds to Wellcraft. Also, as part of the construction contract, Sun agreed to indemnify Wellcraft for any property damage or personal injury arising out of the construction.
The performance bond issued to Wellcraft was a standard "AIA Document A311" bond and it incorporated by reference the construction contract between Sun and Wellcraft by which Sun was to build the lay-up facility and ancillary structures. The bond provides that when the obligee declares the principal to be in default, the surety has the obligation to complete the contract or pay the cost of completion.7
Sun entered into subcontracts with Aqua Service, Inc. ("Aqua") and Aqua Plumbing Services Inc. ("Aqua Services") for the installation of the underground galvanized piping system in the lay-up facility. After completion of the Wellcraft contract by Sun in 1984, it was determined in February 1991 that the pipe system installed by Aqua and Aqua Services leaked.
Wellcraft stopped the source of contamination in February 1991.8 The leaking line was abandoned and Wellcraft began using an overhead line that was not installed by Sun to transfer the acetone into the lay-up building.9
The State of Florida Department of Environmental Protection ("FDEP") commenced an administrative action against Wellcraft in 1993 which resulted in the entry of a consent order for environmental cleanup. The consent order provided that Wellcraft discovered the leak in the underground acetone line on February 21, 1991, the line was abandoned, and Wellcraft began using an overhead line to transfer the acetone into the lay-up building.10
In February 1995, Wellcraft filed a civil action in Manatee County Circuit Court against Sun, the Sunquists, Reliance, Aqua, and Aqua Plumbing for damages related to the acetone leak, including property damages: Genmar Industries, Inc. d/b/a Wellcraft Marine v. Sun Contracting, Inc., et. al., case no. CA95-2731 (the "Wellcraft Litigation"). That suit included a claim by Wellcraft against Reliance on the performance bond.
On June 3, 1998, Reliance and Wellcraft entered into an agreement for the settlement of all claims asserted by Wellcraft against Reliance in the Wellcraft Litigation. Under the terms of the settlement agreement, Reliance paid Wellcraft $50,000 in full and final settlement of all claims between Reliance and Wellcraft. Reliance alleges that it also incurred attorney's fees in the amount of $177,889.20 and costs of $19,292.67 in defending the Wellcraft litigation.11 Reliance did not obtain a release of Sun's liability to Wellcraft.12 Wellcraft's claim against Sun was later settled by liability payments made by Auto Owners and Northbrook.13 Wellcraft also settled with Aqua, Aqua Services and their surety.
Sun also entered into a contract for the construction of three facilities for the City of Pinellas Park, Florida (the "Pinellas Contract"). Sun, as principal and general contractor, and Reliance, as surety, issued a public construction bond to the City of Pinellas Park.14
On March 28, 1989, Sun filed suit against the City of Pinellas Park for non-payment of the Pinellas Contract ("Pinellas Litigation"). Pinellas Park filed a counterclaim against Sun for breach of contract, negligence and breach of warranty and a claim against Reliance for payment on the Pinellas bond. Pinellas Park's claims were based upon the alleged negligence and faulty installation of a roof and stucco by Sun's subcontractors. On April 14, 1999, summary final judgment was granted in favor of Reliance.15
Reliance alleges in its motion for summary judgment that "Sun's faulty workmanship under the Pinellas contract caused moisture damage during the coverage period for the Northbrook policies," and "Reliance defended and obtained summary judgment in the Pinellas Litigation . . .".16
As a result of the Pinellas Litigation, Reliance alleges it incurred in excess of $90,000 in attorney's fees and costs which it seeks from Northbrook....
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