Harleysville Worcester Ins. Co. v. Paramount Concrete, Inc., No. 3:11cv578SRU.

CourtUnited States District Courts. 2nd Circuit. United States District Court (Connecticut)
Writing for the CourtSTEFAN R. UNDERHILL, District Judge.
Citation10 F.Supp.3d 252
PartiesHARLEYSVILLE WORCESTER INS. CO., Plaintiff, v. PARAMOUNT CONCRETE, INC., R.I. Pools Inc., and Scottsdale Ins. Co., Defendants.
Decision Date31 March 2014
Docket NumberNo. 3:11cv578SRU.

10 F.Supp.3d 252

PARAMOUNT CONCRETE, INC., R.I. Pools Inc., and Scottsdale Ins.
Co., Defendants.

No. 3:11cv578SRU.

United States District Court, D. Connecticut.

Signed March 31, 2014.

10 F.Supp.3d 257

James A. Budinetz, McElroy, Deutsch, Mulvaney & Carpenter/PH, LLP, Hartford, CT, Laurence M. McHeffey, Todd E. Jaworsky, McElroy, Deutsch, Mulvaney & Carpenter, LLP, Greenwood Village, CO, for Plaintiff.

Alison L. McKay, Law Offices of Paul A. Lange LLC, Stamford, CT, Megan E. Bryson, Paul A. Lange, Law Offices of Paul A. Lange, LLC, Startford, CT, Raymond J. Plouffe, Jr., Bai, Pollock, Blueweiss & Mulcahey, Shelton, CT, Elizabeth F. Ahlstrand, Mark B. Seiger, Robert D. Laurie, Seiger Gfeller Laurie LLP, West Hartford, CT, for Defendants.


STEFAN R. UNDERHILL, District Judge.

This is an insurance coverage action relating to claims for damage to swimming pools constructed with defectively produced concrete, known as “shotcrete.” Plaintiff Harleysville Worcester Insurance Company (“Harleysville”) has brought this declaratory judgment action pursuant to 28 U.S.C. §§ 2201 and 1332(a)(1), against defendant Paramount Concrete (“Paramount”), defendant R.I. Pools, and Paramount's excess liability insurer, defendant Scottsdale Insurance Company, seeking a declaration that it has no duty to indemnify Paramount in its underlying litigation brought by R.I. Pools. See Harleysville Compl. (doc. # 1). Paramount and R.I. Pools have both moved for partial summary judgment on the issue of coverage (docs. # 78 and 94).

I. Standard of Review

Summary judgment is appropriate when the evidence demonstrates that “there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c) ; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (plaintiff must present affirmative evidence in order to defeat a properly supported motion for summary judgment).

When ruling on a summary judgment motion, the court must construe the facts in the light most favorable to the nonmoving party and must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505 ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Adickes v. S.H. Kress & Co., 398 U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ; see also Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir.1992) (court is required to “resolve all ambiguities and draw all inferences in favor of the nonmoving party”). When a motion for summary judgment is properly supported by documentary and testimonial evidence, however, the nonmoving party may not rest upon the mere allegations or denials of his pleadings, but must present sufficient probative evidence to establish a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir.1995).

“Only when reasonable minds could not differ as to the import of the evidence is summary judgment proper.” Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.1991) ; see also Suburban Propane v. Proctor Gas, Inc., 953 F.2d 780, 788 (2d Cir.1992). If the nonmoving party submits evidence that is “merely colorable,” or is not “significantly probative,” summary judgment may be granted. Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505.

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The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted. Id. at 247–48, 106 S.Ct. 2505. To present a “genuine” issue of material fact, there must be contradictory evidence “such that a reasonable jury could return a verdict for the non-moving party.” Id. at 248, 106 S.Ct. 2505.

If the nonmoving party has failed to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof at trial, then summary judgment is appropriate. Celotex, 477 U.S. at 322, 106 S.Ct. 2548. In such a situation, “there can be ‘no genuine issue as to any material fact,’ since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Id. at 322–23, 106 S.Ct. 2548 ; accord Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995) (movant's burden satisfied if he can point to an absence of evidence to support an essential element of nonmoving party's claim). In short, if there is no genuine issue of material fact, summary judgment may enter. Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

II. Background

In May 2009, R.I. Pools commenced a products liability lawsuit in Connecticut Superior Court against Paramount, a manufacturer and supplier of shotcrete, after approximately nineteen pools built by R.I. Pools and incorporating Paramount's shotcrete cracked, causing extensive damage to the pools. The case went to trial and on February 17, 2011, the jury returned a verdict in favor of R.I. Pools, awarding compensatory damages of $2,760,207.90. The jury also found that R.I. Pools was entitled to punitive damages, because Paramount had acted “with a reckless disregard for the safety of product users, consumers and others who were injured by the product.” Subsequently, the court awarded punitive damages in the form of attorneys' fees. Paramount Mem. Supp. Summ. J. 2–6 (doc. # 79); R.I. Pools Local Rule 56(a)(1) Statement (doc. # 95); Harleysville Mem. Opp. Summ. J. 5–9 (doc. # 117).

Prior to entering the shotcrete business, Paramount purchased a Commercial General Liability (“CGL”) insurance policy from Harleysville. The CGL policy obligates Harleysville to defend any claim and indemnify any judgment against Paramount if the cause of action is covered by the policy. Included in the scope of coverage is “property damage” caused by an “occurrence,” which the policy defines as “an accident, including continuous or repeated exposure to substantially the same harmful conditions.” The policy compensates Paramount for up to one million dollars in damages per occurrence, and two million dollars total. Harleysville defended Paramount in its litigation with R.I. Pools, but reserved the right to contest coverage in the event of an unfavorable judgment. See id.

Shortly after the verdict in the underlying litigation, Harleysville filed this declaratory judgment action, asking the Court to rule that: (1) Paramount's insurance policy did not provide coverage for the damages awarded in the underlying litigation; and (2) even if it otherwise

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would, several exclusions bar coverage. Harleysville Compl. ¶¶ 31–34. Paramount filed a counterclaim also seeking a declaratory judgment, and seeking damages for Harleysville's alleged bad faith defense in the underlying action and violations of the Connecticut Unfair Trade Practices Act. Paramount Am. Countercl. (doc. # 59). Paramount and R.I. Pools move for partial summary judgment on the issue of coverage.

III. Discussion

Under the law of Connecticut, which governs this diversity action, construction of an insurance contract presents a question of law. Hartford Cas. Ins. Co. v. Litchfield Mut. Fire Ins. Co., 274 Conn. 457, 462, 876 A.2d 1139 (2005) ; Am. Home Assurance Co. v. Abrams, 69 F.Supp.2d 339, 348 (D.Conn.1999). In an insurance case, it is the function of the court to interpret the provisions of the contract and, “if no material facts are at issue, the question of whether coverage exists ... is appropriately decided on a motion for summary judgment.” Peerless Ins. Co. v. Disla, 999 F.Supp. 261, 263 (D.Conn.1998).

Insurance policies are construed according to general rules of contract interpretation. W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990) ; Middlesex Ins. Co. v. Mara, 699 F.Supp.2d 439, 446 (D.Conn.2010). If the terms of an insurance policy are clear and unambiguous, they must be accorded their ordinary meaning. Stack Oil, 922 F.2d at 121. When the terms of an insurance contract are “susceptible of two equally responsible interpretations,” however, the court should construe the words to provide coverage for the loss. Heyman Assocs. No. 1 v. Ins. Co. of the Pa., 231 Conn. 756, 770, 653 A.2d 122 (1995).

The insured bears the burden of establishing coverage. Yale Univ. v. Cigna Ins. Co., 224 F.Supp.2d 402, 411 (D.Conn.2002). Once an insured produces evidence of a covered loss, the burden ordinarily shifts to the insurance company to prove that an exclusion applies to limit or bar coverage. Id. at 412 ; see also McCormick & Co. v....

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