Frederick Mut. Ins. Co. v. Ahatov

• Decision Date: 04 April 2017
• Docket Number: CIVIL ACTION NO. 15–2285
• Parties: FREDERICK MUTUAL INSURANCE CO. v. Suhrob AHATOV, et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

274 F.Supp.3d 273

FREDERICK MUTUAL INSURANCE CO.

v.Suhrob AHATOV, et al.

CIVIL ACTION NO. 15–2285

United States District Court, E.D. Pennsylvania.

Signed April 4, 2017

Michael F. Nerone, Pion, Nerone, Girman, Winslow & Smith, P.C., Philadelphia, PA, for Frederick Mutual Insurance Co.

Celia Ann Rooney, Michael T. Rooney, Rooney & Rooney, Philadelphia, PA, Kevin L. Connors, Connors Law LLP, Exton, PA, Jeffrey H. Schervone, Hill Wallack LLC, Michael Kevin Martin, Hill Wallack LLP, Yardley, PA, for Suhrob Ahatov, et al.

Michael Dubinsky, Richboro, PA, pro se.

MEMORANDUM OPINION

DAVID R. STRAWBRIDGE, UNITED STATES MAGISTRATE JUDGE

I. INTRODUCTION

Plaintiff Frederick Mutual Insurance Company ("Plaintiff" or "Frederick") brings this action¹ against Suhrob Ahatov ("Ahatov"), Dilnuza Kabildjanova ("Kabildjanova"), Kieran Cole Construction, Inc. ("Kieran"), J. Tull Mechanical ("Tull"), Concept Development Group, Inc. ("Concept"), AAA Brothers ("AAA"), Metro Impact, Inc. ("Metro"), and Michael Dubinsky ("Dubinsky") (collectively, "Defendants"), seeking a declaratory judgment that Frederick has no duty to defend or indemnify Concept or Dubinsky or any other person/entity with respect to the claims asserted by Ahatov and Kabildjanova in the underlying tort claim action.²

Presently before the Court is Plaintiff's Motion for Summary Judgment ("Pl. Mot.") (Doc. No. 59) and accompanying Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment ("Pl. Br.") (Doc. No. 60); substantive responses with accompanying briefs of Defendants Dubinsky ("Dubinsky's Br.") (Doc. No. 67) and Ahatov and Kabildjanova ("Ahatov Br.") (Doc. No. 68); and Frederick's reply ("Pl. Reply") (Doc. No. 69). Defendant AAA has filed a non-substantive response stating that it does not oppose the relief requested by Frederick. (Doc. No. 66.) Defendants Kieran and Concept have not responded.³

Upon consideration of the materials presented and the extensive oral argument held on March 17, 2017, and for the reasons set out within this memorandum, we grant Plaintiff's motion for summary judgment.

II. FACTUAL AND PROCEDURAL HISTORY

We set out here the relevant proceedings leading up to the current litigation. We start with a brief discussion of the pending state action in the Philadelphia Court of Common Pleas; we then move to consider the worker's compensation proceedings and end with a discussion of the particulars of this motion.

A. Philadelphia Court of Common Pleas Case

The present action seeking declaratory judgment is directly related to a pending state court action in the Philadelphia Court of Common Pleas, Ahatov et al. v. Kieran Cole Construction Inc., et al. , Case No. 140900267 (Pa. Com. Pl.) (hereinafter, the "Phila. Suit"). There, Ahatov and Kabildjanova (Ahatov's wife) assert tort claims arising out of a work site injury on February 12, 2013 suffered by Ahatov at a construction site located at 2301 Montrose Street, Philadelphia, Pennsylvania. Phila. Suit , Compl. at ¶¶ 9, 14.

On January 13, 2013, Dubinsky had purchased the property from Metro. (Dubinsky Br. at 2.) Dubinsky then hired Concept as the general contractor to manage the construction of a house on the property. See Doc. No. 59–5, Pl.'s Exh. E, Building Agreement Between the Owners and the Contractor on Fee Plus Cost of Labor and Materials ("Builder's Agreement"). While the Builder's Agreement states that the matters were agreed upon on January 15, 2013, the document was not executed until August 7, 2013. (Id. ) In any event, Concept promptly began work after January 15. By early February, Concept hired Tull, Ahatov's employer, as the HVAC contractor. Phila. Suit , Compl. at ¶ 4, 11. On February 12, 2013, Ahatov suffered a fall through an "unguarded hole" on the first floor to the concrete basement floor, sustaining serious injuries. (Id. at ¶ 14.) On September 1, 2014, after retaining counsel, Ahatov and Kabildjanova filed the underlying state action naming Kieran, Tull, Concept, AAA, Metro, Dubinsky, and John Doe A–J and John Doe Corporations A–J for (1) a failure to carry adequate workers' compensation insurance, (2) negligence at the construction worksite, and (3) loss of consortium by Kabildjanova. (Id. at ¶¶ 2–8, Count I, Count II, and Count III.) We understand this case to be awaiting trial.

B. Worker's Compensation Benefits Proceeding

On January 8, 2014, Ahatov filed a petition for worker's compensation benefits asserting that Concept was his employer at the time of the accident. See Doc. No. 59–2, Pl.'s Exh. B, Claim Petition for Benefits from Uninsured Employer and the Uninsured Employers Guaranty Fund ("W.C. Claim"). The matter was heard and on August 25, 2015, a final decision was rendered, holding that Concept was Ahatov's "statutory employer" at the time of the accident and that Concept was therefore obligated to pay Ahatov's worker's compensation benefits if Tull did not. See Doc. No. 59–3, Pl.'s Exh. C, Worker's Compensation Decision Rendered ("W.C. Decision"). As neither Concept nor Tull carried worker's compensation insurance on the date of the injury, the Uninsured Employers Guaranty Fund became secondarily liable. (Id. at ¶¶ 13–14.) The decision was not appealed.

C. Current Litigation

At the time of the incident, Concept and only Concept was the named insured on the Contractors Special Policy issued by Frederick. See Doc. No. 59–4, Pl.'s Exh. D, Contractors Special Policy ("Policy"). The Policy was purchased for a "one-shot" construction project and was issued for one year with an inception date of January 9, 2013. See Doc. No. 67–4, Def. Dubinsky's Exh. B, Builders Risk Coverage Declarations. Upon the filing of the underlying state action, Concept tendered its defense and indemnity to Frederick. Frederick accepted the tender with a Reservation of Rights. See Doc. No. 60. Dubinsky also tendered to Frederick but Frederick rejected the tender asserting that it had no duty to defend or indemnify. See Doc. No. 3, Pl.'s Exh. A, Case No. 2:16–cv–02234. Frederick now seeks an affirmation by way of declaratory judgment filed on April 27, 2016. See Doc. No. 1. Specifically, Frederick seeks the entry of an order declaring that it has "no duty or obligation to defend [or indemnify] Defendant Concept [or Defendant Dubinsky] and/or any other person or entity under the Policy with respect to claims asserted by Defendants Ahatov and Kabildjanova in the underlying action." Doc. No. 1; Doc. No. 1, Case No. 2:16–cv–02234.

III. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if there is no genuine issue of material fact and "the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). An issue is "genuine" if the evidence is such that, if accepted, "a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. ( Id. )

Under Pennsylvania law, the interpretation of an insurance contract is a question of law for the court to decide. Reliance Ins. Co. v. Moessner , 121 F.3d 895, 900 (3d Cir. 1997). "Thus, on a summary judgment motion a court can determine, as a matter of law, whether a claim is within a policy's coverage or is barred by an exclusion." Verticalnet, Inc. v. U.S. Specialty Ins. Co. , 492 F.Supp.2d 452, 456 (E.D. Pa. 2007) (citing Butterfield v. Giuntoli , 448 Pa.Super. 1, 670 A.2d 646, 651 (1995) ). Courts in these cases interpret coverage clauses broadly "to afford the greatest possible protection to the insured" and interpret policy exceptions narrowly against the insurer. Westport Ins. Corp. v. Bayer , 284 F.3d 489, 498 n. 7 (3d Cir. 2002) (quoting Eichelberger v. Warner , 290 Pa.Super. 269, 434 A.2d 747, 750 (1981) ).

With respect to non-movants who fail to respond to a motion for summary judgment, Federal Rule of Civil Procedure 56(e) explains that the court may: "(1) give an opportunity to properly support or address the fact; (2) consider the fact undisputed for purposes of the motion; (3) grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it; or (4) issue any other appropriate order." The 2010 Advisory Committee Notes to subdivision (e) states that:

[S]ummary judgment cannot be granted by default even if there is a complete failure to respond to the motion, much less when an attempted response fails to comply with Rule 56(c) requirements. Nor should it be denied by default even if the movant completely fails to reply to a nonmovant's response. Before deciding on other possible action, subdivision (e)(1) recognizes that the court may afford an opportunity to properly support or address the fact. In many circumstances this opportunity will be the court's preferred first step.

The Declaratory Judgments Act may be invoked by parties to an insurance contract to interpret their obligations under the contract. General Accident Ins. Co. v. Allen , 547 Pa. 693, 692 A.2d 1089, 1095 (1997). "[The] first step in a declaratory judgment action concerning insurance coverage is to determine the scope of the policy's coverage. After determining the scope of coverage, the court must examine the complaint in the underlying action to ascertain if it triggers coverage." ( Id. ) (internal citations omitted). In the context of this declaratory judgment action, Frederick must convince the Court that its contractual coverage precludes the defense and indemnity of Concept and Dubinsky.⁴

IV. DISCUSSION

Frederick makes two principal arguments. First, it asserts that the following three exclusions in the Policy between Frederick and Concept bar coverage for Concept: (1) exclusion 11, which bars coverage for bodily injury of an employee that occurs in the course of employment; (2) exclusion 12, which bars coverage for bodily injury that should be covered under workers' compensation insurance;...