Cont'l Cas. Co. v. Amerisure Ins. Co.
| Decision Date | 03 January 2017 |
| Docket Number | 3:14CV529 |
| Citation | 226 F.Supp.3d 537 |
| Parties | CONTINENTAL CASUALTY COMPANY, Plaintiff, v. AMERISURE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Western District of North Carolina |
David G. Redding, David G. Redding, P.A., Marjorie C. Redding, Tison Redding, PLLC, Charlotte, NC, Karen Ventrell, CNA Coverage Litigation Group, Washington, DC, for Plaintiff.
Danielle Nicole Godfrey, Richard Leonard Pinto, Pinto Coates Kyre & Bowers, PLLC, Greensboro, NC, for Defendant.
This matter is before the Court upon Plaintiff Continental Casualty Company's ("Continental") Motion for Summary Judgment (Doc. No. 33), Defendant Amerisure Insurance Company's ("Amerisure") Motion for Summary Judgment (Doc. No. 31), as well as Continental's Motion to Strike (Doc. No. 43) and Motion in Limine (Doc. No. 34). All motions have been fully briefed and are ripe for disposition.
The facts in this case are largely undisputed. This is an insurance coverage action arising out of serious injuries to an employee of a subcontractor that occurred during the construction of a project owned by Charlotte Mecklenburg Hospital Authority ("CMHA") in Pineville, North Carolina. The general contractor on the project, KBR Building Group, LLC ("BE & K"), entered into a subcontract with SteelFab, Inc. ("SteelFab") to supply and erect the structural steel infrastructure for the project. SteelFab, in turn, subcontracted with Carolina Steel and Stone, Inc. ("CSS") for the erection of structural steel. On December 14, 2010, an employee of CSS, Dustin Miller, fell from steel decking and suffered serious injuries.
In addition to instituting a workers' compensation action against CSS, Miller filed a personal injury action against SteelFab and BE & K ("the Miller suit"). Specifically, the Miller suit alleged that Miller was working for CSS, a subcontractor of SteelFab and that while working for CSS and pursuant to CSS's subcontract with SteelFab, he was injured. He asserts that actions or omissions by BE & K, SteelFab, and CSS contributed to his injuries, including inter alia allegations that CSS did not provide adequate safety protections and that BE & K and SteelFab failed to provide and failed to require CSS to provide such protections to CSS employees.
At the time of the accident, CSS held commercial general liability ("CGL") and umbrella insurance policies issued by Amerisure, as required by the CSS–SteelFab subcontract. SteelFab and BE & K were additional insureds under both the Amerisure policies. The CGL Policy provided limits of liability of $1,000,000 per occurrence and the Umbrella Policy provided limits of $5 million per occurrence. SteelFab held policies issued by Continental, and BE & K was an additional insured under the Continental policies. The Continental CGL Policy also provided for a $1,000,000 per occurrence limit.
The Amerisure policy contains standard insurance industry forms which include, inter alia, the following language:
(Doc. No. 5–2, p. 16 of 30).
With respect to the duty to defend and the duty to indemnify, the Amerisure Policy states:
The Amerisure policies also contained an exclusion (the "CIP exclusion") which provided as follows:
This insurance does not apply to "bodily injury" or "property damage" arising out of either your ongoing operations or operations included within the "products-completed operations hazard" if such operations were at any time included within a "controlled insurance program" for a construction project which you are or were involved.
(Doc. No. 5–3, p. 31; Doc. No. 5–5, p. 29).
The policy defined "controlled insurance program" as:
a construction, erection or demolition project for which the prime contractor/ project manager or owner of the construction project has secured general liability insurance covering some or all of the contractor subcontractors involved in the project, otherwise referred to as an Owner Controlled Insurance Program (O.C.I.P.) or Contractor Controlled Insurance Program. (C.C.I.P).
After construction had begun on the project, CMHA opted to implement a rolling owner controlled insurance program ("ROCIP") on the project.1 In connection with the ROCIP, CMHA obtained General Liability and Workers Compensation policies of insurance from Zurich American Insurance Company ("Zurich"). BE & K was enrolled in the ROCIP and insured under the Zurich policy. SteelFab was not enrolled, nor was CSS. In late December 2010, after Mr. Miller's injury, Amerisure inquired of Zurich whether CSS was insured under any insurance policies issued by Zurich per the ROCIP procured by CMHA. Zurich informed Amerisure by letter dated December 23, 2010 that CSS was not enrolled in the ROCIP and thus was not insured under the Zurich ROCIP insurance. Therefore, Amerisure knew that CSS was not covered under the ROCIP.
Moreover, prior to the present dispute, during an audit of premium, Amerisure's auditor asked CSS to provide any documentation regarding any operations covered by an OCIP. Amerisure's practice was to exclude from its premium calculations payroll for its named insured's operations covered by an OCIP, resulting in lower premiums. In other words, the insured pays no premium to Amerisure for payroll on operations covered by an OCIP.
In order to take advantage of a lower premium, the named insured had to provide documentation proving its operations were covered by an OCIP. The December 2011 audit report reflects that Amerisure required CSS to provide documentary proof in the form of OCIP insurance policies, certificates of insurance showing CSS covered by OCIP insurance or payroll reports submitted to any CIP carrier, showing which of CSS's operations, if any, were covered by an OCIP. CSS did not provide to Amerisure any documentation showing CSS's operations were covered by any OCIP during the May 2010 to May 2011 period when Miller was injured.
Because CSS provided no documentation proving that any of its operations were, according to Amerisure, "OCIP projects" or "OCIP jobs covered elsewhere," Amerisure calculated the final premium (i.e. price) charged to CSS for CGL insurance provided under the Amerisure policies based on CSS' payroll on all of CSS' operations, including CSS's operations on the CMHA project per the SteelFab–CSS subcontract. In other words, Amerisure charged CSS and CSS paid premium for insurance coverage, including coverage for additional insureds, based on the exposures presented by all of CSS's operations between May 30, 2010 to May 30, 2011, including CSS's operations on the CMHA project when Miller was injured.
When SteelFab and BE & K were sued by Miller, Continental, on their behalf, tendered defense and indemnity of the Miller suit to CSS and Amerisure. More than three months after the tender, Amerisure responded by letter May 22, 2013 denying any duty to defend or indemnify SteelFab and BE & K. Amerisure admitted that SteelFab and BE & K are additional insured's under the Amerisure policy pursuant to the terms of the contract and policy provisions. Despite this admission, Amerisure rejected the tender, stating that the policies'; CIP exclusion, contained in both the CGL and umbrella policies, applied to preclude coverage. Continental was compelled to step in and provide defense and indemnity coverage to BE & K and SteelFab. Continental paid $660,700 in legal fees and costs to defend SteelFab and BE & K, and ultimately settled the Miller suit for $1.7 million subject to rights to obtain indemnification and/or contribution from Amerisure.
Continental brought this declaratory judgment action seeking a judicial determination that Amerisure had a duty under the Amerisure policy to defend SteelFab and BE & K in the Miller suit. Continental also seeks a declaration that the Amerisure policy is primary and non-contributing, and that Continental is entitled to reimbursement of all attorney's fees and expenses incurred in connection with the defense in the Miller suit. Amerisure has counterclaimed for a declaratory judgment that Amerisure has no obligation to defend BE & K or SteelFab in the Miller suit or to reimburse Continental for its costs incurred in defending that litigation.
Summary judgment is appropriate in those cases in which there is no genuine dispute as to a material fact, and in which it appears that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Summary judgment should be granted in those cases "in which it is perfectly clear that no genuine issue of material fact remains unresolved and inquiry into the facts is unnecessary to clarify the application of the law." Haavistola v. Comty. Fire Co. of Rising Sun, Inc. , 6 F.3d 211, 214 (4th Cir. 1993). "[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. Centra, Inc. , 947 F.2d 115, 119 (4th Cir. 1991).
Under North Carolina law, it is well established that the interpretation of an insurance policy is a question of law for the court to decide. See, e.g., Wachovia Bank & Trust Co. v. Westchester Fire Ins....
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