Ill. Union Ins. Co. v. Midwood Lumber & Millwork, Inc.
Decision Date | 30 September 2016 |
Docket Number | 13-CV-2466 (MKB) |
Parties | ILLINOIS UNION INSURANCE COMPANY, Plaintiff, v. MIDWOOD LUMBER & MILLWORK, INC., IGNATIUS REGIS, CLAYTON LABOARD, DEANNA ROSE SIMMS, as Administratrix of the Estate of Winston Gillette, 231 CARLTON AVENUE, LLC, BORO ARCHITECTS, LLC, KINGS MATERIAL CO., INC., ALBANNA ENGINEERING, P.C., INTEGRITY CONSULTING SERVICES, INC., S&B MASONRY CORP. and PROFESSIONAL GRADE CONSTRUCTION GROUP, INC., Defendants. MIDWOOD LUMBER & MILL WORK, INC., Third-Party Plaintiff, v. ALL RISK BROKERAGE CO., INC., Third-Party Defendant. |
Court | U.S. District Court — Eastern District of New York |
On April 23, 2013, Plaintiff Illinois Union Insurance Company ("Illinois Union") commenced the above-captioned declaratory judgment action against Defendants Midwood Lumber & Millwork, Inc. ("Midwood"), Ignatius Regis, Clayton Laboard, Deanna Rose Simms as administratrix of the estate of Winston Gillette, 231 Carlton Avenue, LLC, Boro Architects, LLC, Kings Material Co., Inc., Albanna Engineering, P.C., Integrity Consulting Services, Inc., S&B Masonry Corp. and Professional Grade Construction Group, Inc. (Compl., Docket Entry No. 1.) Illinois Union seeks a declaratory judgment: (1) that it has no obligation to defend or indemnify Midwood with respect to three lawsuits that are being litigated in the Supreme Court of the State of New York, Kings County (the "Underlying Actions"),1 in which Midwood has been named as a defendant; and (2) that the remaining Defendants in this action, who are parties to the Underlying Actions, have no right to make any claims against Illinois Union pursuant to Midwood's insurance policy with Illinois Union. (Id.) On September 26, 2014, Midwood filed a third-party complaint against All Risk Brokerage Co., Inc. ("All Risk"), Midwood's insurance broker. (Third-party Compl., Docket Entry No. 81.) As described in further detail below, currently before the Court are Illinois Union's motion for summary judgment and cross-motions by Midwood and All Risk for partial summary judgment. For the reasons discussed below, the Court grants in part and denies in part Illinois Union's motion for summary judgment and denies the cross-motions by Midwood and All Risk.
Illinois Union brings this action because it claims that it has no obligation to defend or indemnify Midwood based on an addendum to Midwood's insurance policy, entitled "Limitation of Coverage to Designated Premises or Project" (the "Designated Premises Endorsement"), which precludes coverage and, in addition, because the incident from which the Underlying Actions arose involved the use of an automobile, also not covered by Midwood's insurance policy. (Compl. ¶¶ 33-45.)
On December 23, 2013, Illinois Union moved for summary judgment as to its claim that the Midwood insurance policy precluded coverage as a matter of law, and Midwood cross-moved for summary judgment on the grounds that the incident that gave rise to the Underlying Actions was covered by the 2012 Policy. Ill. Union Ins. Co. v. Midwood Lumber & Millwork, Inc., No. 13-CV-2466, 2014 WL 639420, at *1 (E.D.N.Y. Feb. 18, 2014).
By Opinion and Order dated February 18, 2014, Judge Allyne R. Ross granted in part and denied in part Illinois Union's motion for summary judgment and denied Midwood's motion for summary judgment2 (the "2014 Decision"). Id. Judge Ross determined that based on the plain language of the Midwood insurance policy, Illinois Union had no obligation to defend or indemnify Midwood with respect to the Underlying Actions because the Designated Premises Endorsement limited Midwood's insurance coverage to certain designated premises. Id. at *7-8. Because the incident that gave rise to the Underlying Actions occurred on premises that were not listed on the Designated Premises Endorsement, Illinois Union was not obligated by the Midwood insurance policy to defend or indemnify Midwood. Id. at *8.
Judge Ross found, however, that Illinois Union's seven-month delay in disclaiming coverage was unreasonable as a matter of law. Id. at *12. Judge Ross also found that there was a genuine issue of material fact as to whether Midwood was prejudiced by Illinois Union's unreasonable delay, thereby equitably estopping Illinois Union from denying or disclaiming coverage. Id. at *14. Based on this genuine issue of material fact, Judge Ross denied Illinois Union's summary judgment motion as to Midwood's equitable estoppel counterclaim and directed the parties to "conduct further discovery on this issue and . . . renew motions at the conclusion of that discovery." Id. at *14.
After engaging in further discovery, Illinois Union, Midwood and All Risk now move for relief. Midwood argues that Illinois Union's delay in disclaiming coverage has prejudiced Midwood and that equitable estoppel therefore operates to prevent Illinois Union from not defending it in the Underlying actions. (Midwood Mem. of Law in Opp'n ("Midwood Opp'n") 3, Docket Entry No. 147.)
Midwood also seeks partial summary judgment based on its counterclaim that the policy must be reformed to exclude the Designated Premises Endorsement because its inclusion in the policy was either a mutual mistake or a fraudulently induced unilateral mistake. (Id. at 1.)
In addition, Midwood and All Risk alternatively move for partial summary judgment to dismiss Illinois Union's claim that it has no obligation to defend or indemnify Midwood based on the terms in the Designated Premises Endorsement. (Midwood Mot. for Partial Summ. J., Docket Entry No. 145; All Risk Mot. for Partial Summ. J., Docket Entry No. 148.) Midwood and All Risk argue that because the Designated Premises Endorsement is neither included in the quote nor the binder that they received in advance of the policy, the parties never agreed to include the Designated Premises Endorsement in the 2012 Policy, and that the Designated Premises Endorsement is therefore not a part of Midwood's insurance policy and does not relieve Illinois Union's from its obligation to defend or indemnify Midwood in the Underlying Actions. Midwood also argues that, despite Judge Ross's determination that the Designated Premises Endorsement precludes insurance coverage, the Court may consider this motion either (1) because Judge Ross did not consider the issue of whether the Designated Premises Endorsement was "properly included" in the policy, and thus the law-of-the-case doctrine does not preclude this argument, or (2) becausenew evidence and the avoidance of "manifest injustice" provide a basis to reconsider the 2014 Decision. (Midwood Mem. 15-18.)
For its part, Illinois Union moves for summary judgment as to Midwood's equitable estoppel counterclaim, arguing that Midwood cannot show that the delay in disclaiming coverage caused prejudice to Midwood, and the Court should therefore not apply equitable estoppel, and it also cross-moves for summary judgment as to Midwood's reformation counterclaim.3 (Illinois Union Mot. for Summ. J., Docket Entry No. 135; Illinois Union Mem. of Law ("Illinois Union Mem.") 1-2, Docket Entry No. 135-1.)
Because the facts are set forth in detail in the 2014 Decision, Ill. Union Ins., 2014 WL 639420, at *1-3, the Court provides only a summary of the pertinent facts. The Court also provides the additional facts resulting from the discovery engaged in by the parties after the 2014 Decision.
Midwood operates a retail and wholesale lumberyard located at 1169 Coney Island Avenue, Brooklyn, New York.4 (Midwood's Statement of Material Facts Pursuant to Local Civil Rule 56.1 ("Midwood 56.1") ¶ 1, Docket Entry No. 145-23; All Risk's Local Rule 56.1 Statement of Facts ("All Risk 56.1") ¶ 4, Docket Entry No. 148-4.) A "significant" portion of Midwood's business includes delivering and unloading construction materials and equipment outside of its lumberyard location. (Midwood 56.1 ¶ 2.) All Risk is an insurance broker hired by Midwood to procure insurance coverage on Midwood's behalf. (Id. ¶ 3; All Risk 56.1 ¶ 7.)Illinois Union is an insurance company that provides insurance in New York. (All Risk 56.1 ¶¶ 1-2.) Partners Specialty Group ("Partners Specialty"), a wholesale broker, acted as an intermediary between All Risk and Illinois Union. (Midwood 56.1 ¶¶ 8-9; All Risk 56.1 ¶¶ 18-19.)
All Risk obtained two general commercial liability insurance policies from Illinois Union on Midwood's behalf, one in 2011 with a coverage period from May 25, 2011 through May 26, 2012 (the "2011 Policy"), and the other in 2012 with a coverage period from May 26, 2012 through May 25, 2013 (the "2012 Policy"), which is the pertinent policy at issue (collectively the "Policies").5 (Midwood 56.1 ¶ 8-9; 2011 Policy, Docket Entry No. 135-11; 2012 Policy, Docket Entry No. 135-15.)
Midwood applied for the 2011 Policy on March 23, 2011 (the "2011 Application"). (Midwood 56.1 ¶ 10; 2011 Application, Docket Entry No. 148-6.) The 2011 Application listed as the named insureds Midwood and ten limited liability companies. (2011 Application 3.) The 2011 Application sought insurance for Midwood's business operations at ten different premises, (id. at 1-2), with varying levels of insurance coverage, (id. at 6-7).
Illinois Union provided a quote for general commercial liability insurance, including pricing and proposed terms (the "2011 Quote"). (2011 Quote, Docket Entry No. 148-7.) The 2011 Quote listed Midwood as the only named insured and included the policy period, the insurance coverage limits, the deductible, the premium and the estimated exposure. (Id. at 1.) Under "additional terms and conditions," the quote listed the titles of twenty-eight forms,endorsements and exclusions that would be included in the final policy. (Id. at 2.) Based on the ...
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