Harleysville Mut. Ins. Co. v. Hartford Cas. Ins. Co.
| Decision Date | 26 February 2015 |
| Docket Number | No. 7:11–CV–187–FL.,7:11–CV–187–FL. |
| Citation | 90 F.Supp.3d 526 |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | HARLEYSVILLE MUTUAL INSURANCE COMPANY, Plaintiff, v. HARTFORD CASUALTY INSURANCE COMPANY; Assurance Company of America; First Financial Insurance Company; First Mercury Insurance Company; G.R. Hammonds, Inc., also known as G.R. Hammonds Roofing, Inc., also known as Hammonds Roofing ; Hartford Fire Insurance Company, Defendants. |
90 F.Supp.3d 526
HARLEYSVILLE MUTUAL INSURANCE COMPANY, Plaintiff
v.
HARTFORD CASUALTY INSURANCE COMPANY; Assurance Company of America; First Financial Insurance Company; First Mercury Insurance Company; G.R. Hammonds, Inc., also known as G.R. Hammonds Roofing, Inc., also known as Hammonds Roofing ; Hartford Fire Insurance Company, Defendants.
No. 7:11–CV–187–FL.
United States District Court, E.D. North Carolina, Southern Division.
Signed Feb. 26, 2015.
Filed Feb. 27, 2015.
David G. Harris, II, David L. Brown, Nelson Brown & Co., Greensboro, NC, for Plaintiff.
Kearns Davis, D.J. O'Brien, III, Brooks Pierce McLendon Humphrey & Leonard, LLP, John C. Millberg, Meredith E. Woods, Millberg, Gordon and Stewart, PLLC, Raleigh, NC, Lee H. Ogburn, Steven M. Klepper, Kramon & Graham, P.A., Baltimore, MD, Christopher M. Kelly, Gallivan, White & Boyd, P.A., Frank Lane Williamson, Nancy E. Walker, Tin Fulton Walker & Owen, PLLC, Charlotte, NC, Phillip E. Reeves, Elizabeth Jones Smith, Gallivan, White & Boyd, P.A., Greenville, SC, Blake A. Palmer, Denise Marra DePekary, Gary S. Kull, Carroll McNulty & Kull LLC, Basking Ridge, NJ, James Almond Merritt, Jr., Merritt, Webb, Wilson & Caruso, PLLC, Durham, NC, for Defendants.
ORDER
LOUISE W. FLANAGAN, District Judge.
This matter is before the court on motions for summary judgment by defendant First Mercury Insurance Company (“First Mercury”) (DE 110); plaintiff Harleysville Mutual Insurance Company (“Harleysville”) (DE 111); defendant Assurance Company of America (“Assurance”) (DE 117); and defendant First Financial Insurance Company (“First Financial”) (DE 126). Also before the court is a motion for summary judgment or for partial summary judgment by defendants Hartford Casualty Insurance Company and Hartford Fire Insurance Company (collectively, “Hartford”) (DE 114), together with Hartford's motion to seal certain exhibits (DE 121). The motions have been fully briefed, and the issues raised are ripe for ruling.
BACKGROUND
Harleysville filed an amended complaint in this action on November 17, 2011, seeking entry of a declaratory judgment regarding the relative rights of the parties under policies of commercial general liability insurance issued by Harleysville, Hartford, Assurance, First Financial, and First Mercury (the “insurance companies”), to defendant G.R. Hammonds, Inc. (“Hammonds”). Harleysville seeks a judgment declaring and adjudging whether and to what extent coverage is afforded under the respective policies of the insurance companies
as a result of claims asserted against Hammonds in three sets of underlying state court lawsuits. The claims asserted against Hammonds in the underlying lawsuits arise out of allegedly defective roofing work performed by Hammonds at three multi-family residential construction projects, commonly known as Concord West, Southampton Pointe, and Vista Cove.
First Financial answered the amended complaint on December 7, 2011, seeking a declaratory judgment that the First Financial insurance policy does not provide coverage to Hammonds for any of the underlying lawsuits, and that First Financial owes nothing to any other party to the lawsuit. Assurance also answered denying coverage under its policy, but also seeking by way of counterclaim against plaintiff a determination whether and to what extent coverage is afforded under the insurance companies' respective policies, in the event the court determines that more than one policy provides coverage. Hammonds filed an answer on December 9, 2011, asserting numerous defenses, including that plaintiff has an obligation to defend and indemnify Hammonds in the underlying lawsuits. First Mercury answered on February 28, 2012, asserting numerous defenses, including that the First Mercury insurance policy does not provide coverage for the underlying lawsuits.
In the meantime, on December 14, 2011, Hartford moved to dismiss or stay the present lawsuit, in favor of resolution of the dispute in South Carolina. The court denied the motion by order entered May 18, 2012. The court entered a case management order on May 21, 2012, providing for discovery, in reference to the parties' joint report and plan, on the subject of the construction of the underlying projects, and the claims and settlements arising out of such construction. Upon plaintiff's unopposed motion, the court also consolidated with the present action one other prior-filed declaratory judgment action, Case No. 7:11–CV–98–FL, raising overlapping coverage issues regarding the underlying Southampton Pointe lawsuit.1
On December 21, 2012, Hartford filed an answer, asserting several defenses, including that indemnity for the underlying Concord West and Southampton Pointe lawsuits should be decided in South Carolina state court, or, if decided in this court, that Hartford is entitled to contribution from the other insurance companies in the amount of those parties' reasonable shares. Hartford also moved to stay this action pending resolution of an appeal to the Fourth Circuit Court of Appeals of an order by the District of South Carolina denying Hartford's motion to remand that action to South Carolina state court, and dismissing the case in favor of the present matter.
On February 27, 2013, the court stayed this action pending Hartford's appeal to the Fourth Circuit of the District of South Carolina order. On November 15, 2013, the Fourth Circuit affirmed the District of South Carolina order denying remand and dismissing the matter in the District of
South Carolina. Hartford Fire Ins. Co. v. Harleysville Mut. Ins. Co., 736 F.3d 255, 263 (4th Cir.2013). Thereafter this court lifted the stay entered previously and entered an amended case management order providing amended deadlines for completion of discovery and dispositive motions.
In their motions for summary judgment filed May 22, 2014, Harleysville, Assurance, First Financial, and First Mercury each contend that coverage for claims asserted in the underlying lawsuits should be triggered according to the date of completion of construction, which date they contend falls within the time period solely of Hartford's insurance policy, with respect to the Concord West and Southampton Pointe projects. With respect to the Vista Cove project, by contrast, which involved several different construction phases, Harleysville and Assurance contend that coverage may extend, in differing respects discussed further herein, to all policies except that of First Mercury. First Financial and First Mercury separately contend that an exclusion in their policies bars coverage for any of the underlying lawsuits.
Hartford, by contrast, asserts in its motion for summary judgment that coverage is determined according to the date of injury-in-fact, in the form of damages from water intrusion, which it contends is a date that may fall any time between completion of construction and the time of the underlying lawsuits. Accordingly, Hartford contends that indemnity for settlement costs should be afforded under each of the policies of the insurance companies, on a pro rata “time-on-risk” basis. Hartford also contends that the court should limit its judgment to a declaration of indemnity obligations and not address defense costs, although it proposes a similar trigger of coverage in the event defense costs are allocated by the court.
Hammonds responded to the insurance companies' motions for summary judgment, asserting that it is covered under one or more of the insurance companies' policies, and taking a neutral position on the proper trigger of coverage under such policies. Hammonds also contends that the exclusions asserted by First Financial and First Mercury are inapplicable.
The parties submitted or referenced in the record the following evidence in conjunction with their motions for summary judgment: (1) the operative complaints in each of the underlying lawsuits, including exhibits attached thereto (DE 34–10 to –25); (2) the insurance companies' policies issued to Hammonds (DE 34–1 to –9; DE 112–1 to –3; DE 116–1 to –8); (3) responses to interrogatories (DE 112–5; 113–6 to –10; DE 118–4 to –7); (4) responses to requests for admissions (DE 113–1 to–6); (5) affidavit of Matthew Day, a Harleysville claims evaluator, in support of Harleysville's motion for summary judgment (DE 113–10); (6) declaration of Laura Johnson Evans, defense counsel for Hartford in the underlying Concord West and Southampton Pointe lawsuits, in support of Hartford's motion for summary judgment (DE 115); (7) expert reports submitted in each of the underlying lawsuits (DE 113–9; DE 118–1 to –2); (8) excerpts of Hammonds's subcontract for the Vista Cove project (DE 118–3); (9) proposed sealed exhibits containing confidential case assessments by Hartford's counsel in the underlying Concord West and Southampton Pointe lawsuits (DE 120 and 120–1);2
(10) a complaint filed in state court by First Mercury seeking declaratory relief regarding insurance coverage for other construction projects, and Hartford's answer thereto (DE 130–1 to –2).
STATEMENT OF UNDISPUTED FACTS
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