Baltimore Contract., Inc. v. Circle Floor Co. of Wash., Inc.

• Decision Date: 09 October 1970
• Docket Number: Civ. No. 18765.
• Parties: BALTIMORE CONTRACTORS, INC., a body corporate, to its own use and to the use of H. J. Defriez and other similarly situated Underwriters at Lloyd's, London v. CIRCLE FLOOR COMPANY OF WASHINGTON, INC., a body corporate.
• Court: U.S. District Court — District of Maryland

318 F. Supp. 106

BALTIMORE CONTRACTORS, INC., a body corporate, to its own use and to the use of H. J. Defriez and other similarly situated Underwriters at Lloyd's, London

v.

CIRCLE FLOOR COMPANY OF WASHINGTON, INC., a body corporate.

Civ. No. 18765.

United States District Court, D. Maryland.

October 9, 1970.

Paul Walter and Tydings & Rosenberg, Baltimore, Md., for plaintiff.

George T. Tyler and Ober, Grimes & Shriver, Baltimore, Md., for defendant.

THOMSEN, District Judge.

In form, this is an action by Baltimore Contractors, Inc. (BC), the principal contractor on a construction job, against a subcontractor (Circle) for damages resulting from a fire caused by Circle. In substance, it is a controversy between Underwriters at Lloyd's, London (Lloyd's), which had issued to BC a Builder's Risk Policy, insuring against all risks of physical loss or damage to the work in progress, and Liberty Mutual Insurance Co. (Liberty), which had issued to Circle a Comprehensive General Liability Policy.

Counsel for Circle and Liberty contend: (1) that Circle is an insured under the Lloyd's policy; (2) that Lloyd's may not assert a claim by way of subrogation against one of its insureds; (3) that the "other insurance" clause of the Lloyd's policy does not operate as an excess clause; and (4) even if plaintiff is entitled to recover, interest should not be awarded. Counsel for BC and Lloyd's dispute each of those contentions.

The case has been submitted to the Court without a jury on a stipulation and supplemental stipulation of facts, with attached exhibits, and one affidavit. The parties have also agreed that the Court may draw proper inferences from the stipulated facts. Diversity jurisdiction exists.

BC, as general contractor, entered into a contract with the City of Baltimore (City or owner), under which BC undertook to construct and deliver to the City, in complete and acceptable condition in accordance with the plans and specifications, new buildings for Baltimore Polytechnic Institute and Western High School.

BC entered into two subcontracts with Circle, each dated November 26, 1965, under which Circle undertook to perform certain work, viz: "Provide all the required labor, materials, tools, equipment, scaffolding, facilities and service, necessary for and incidental to the performing of all Work called for in" specified divisions of the prime contract, including "Resilient Flooring" and related work, in strict conformity with the prime contract between BC and the City.

The prime contract contained customary provisions that BC would be responsible for any damage which its work and operations might cause to the work being constructed, that BC would be responsible for the acts and omissions of its subcontractors and would indemnify the City against all claims arising out of the operations of BC and its subcontractors, and that BC would carry specified amounts of Compensation, Liability and Property Damage Insurance. The prime contract also contained the following provision:

"46. Insurance (Fire, etc.):

"(a) The Contractor shall at his own costs, insure the work and keep it insured at all times during the period of construction and until final acceptance of it by the City, against loss or damage by fire, storm, wind, and hail, the amount of insurance at all times to be at least equal to the amount paid on account of work and material and plus the value of work or materials furnished or delivered but not yet paid for by the City provided, however, that in fixing the amount of said insurance, from time to time, the value of non-insurable items as determined by the Engineer may be deducted.

"(b) The policies shall be made payable to the City and the Contractor as their interests may appear, and the policies shall be left in the possession of the Engineer."

The subcontracts between BC and Circle included the following provisions:

"V. Subcontractor shall do the work and diligently proceed with same in a thoroughly workmanlike manner under the direction of Contractor and to the satisfaction of Owner and Contractor. With respect to the scope, details, execution and conditions of acceptance of the work, Subcontractor shall be bound by the provisions of the Prime Contract to the full extent that Contractor is bound.

"VI. Prior to completion and final acceptance, the risk of loss or damage to the work from any cause whatsoever caused by Subcontractor shall be upon the Subcontractor, who shall not make any claim or demand or bring any suit or action whatsoever against Contractor and Owner arising out of any such loss or damage to the work but shall promptly and diligently and at his own expense rebuild, repair and restore the work to its condition prior to such injury, loss or damage. Subcontractor shall defend, indemnify and hold Contractor and Owner harmless against and from any claims, suits, actions, or demands, of or by any person (including Subcontractor's employees), firm or corporation for damages for death, personal injury, property damage or other loss or injury arising out of or in any manner connected with the performance of the work by Subcontractor. Contractor may retain as security from any money due or to become due hereunder an amount not in excess of all claims or demands against and from which Subcontractor is required to defend, indemnify and hold it harmless as aforesaid, and Subcontractor agrees to reimburse Contractor for surplus amounts not withheld through deductions.

"Subcontractor shall procure, prior to the commencement of the work and keep in effect during the whole course of the work: (a) comprehensive general liability insurance; * * *."

In accordance with the requirements of the subcontracts, Circle provided BC with an appropriate certificate of insurance from Liberty, indicating that Liberty had issued to Circle a Workmen's Compensation Policy, a Comprehensive General Liability Policy and a Comprehensive Automobile Liability Policy, stating that the General Liability Policy covered "All Hazards, Including Contractual". That policy included a broad "Contractual Liability Insurance Endorsement", and covered both the negligence claim and the contractual claim which are asserted as basis of recovery against Circle herein.

Thereafter Circle began performance of its obligations under the subcontracts, which included the installation of vinyl tile to the floor of the premises under construction. In furtherance of its work, Circle requested and was assigned a room in one of the new buildings for use as a storage room. That room was under the exclusive control of the employees of Circle, which, on January 31, 1967, had stored twenty 5-gallon cans of "Solarite" mastic in the room. At about 8:30 a. m. on January 31, 1967, Circle's superintendent placed a gas-fired flame heater on the floor close to the cans of "Solarite" and ignited the heater, in order to heat the mastic and make it more pliable and easier to apply to the floor surface. The cans bore a label which contained the following warning in large print:

                "CAUTION           SOLARITE
                Flammable Mixture  MC 1509 Mastic
                Do Not Use Near    Wood Block Floors
                Fire or Flame      Cold
                                   Solar Compounds
                                   Corp
                                   Linden, N. J."
                

Circle's superintendent also put a piece of plywood at the rear of the heater, which was facing the cans of mastic, to reflect the heat toward the cans. At about 2:30 p. m. on January 31, the mastic ignited, either from overheating or from a spark from the heater. Placing the lighted heater...