John S. Clark Co., Inc. v. United Nat'L. Ins. Co., No. 1:02CV00576.

• Decision Date: 05 January 2004
• Docket Number: No. 1:02CV00576.
• Citation: 304 F.Supp.2d 758
• Court: U.S. District Court — Middle District of North Carolina
• Parties: JOHN S. CLARK COMPANY, INC. Plaintiff, v. UNITED NATIONAL INSURANCE COMPANY; Gallagher Bassett Services, Inc.; and the Travelers Indemnity Company, Defendants.

304 F.Supp.2d 758

JOHN S. CLARK COMPANY, INC. Plaintiff, v. UNITED NATIONAL INSURANCE COMPANY; Gallagher Bassett Services, Inc.; and the Travelers Indemnity Company, Defendants.

No. 1:02CV00576.

United States District Court, M.D. North Carolina.

January 5, 2004.

COPYRIGHT MATERIAL OMITTED

Steven Douglas Hedges, Robert Harper Heckman, Gregory Todd Higgins, Benjamin Rushing Edwards, Nexsen Pruet Adams Kleemeier, PLLC, Greensboro, NC, for Plaintiff.

Steve Macon Pharr, Mark D. Boynton, Pharr & Boynton, PLLC, Winston-Salem, NC, Catalina J. Sugayan, Jill A. Van Wormer, Lord, Bissell & Brook, Chicago, IL, Samuel H. Poole, Jr., Steven D. Anderson, Cranfill, Sumner and Hartzog, L.L.P., Charlotte, NC, for Defendants.

MEMORANDUM OPINION

BULLOCK, District Judge.

On June 19, 2002, John S. Clark Company, Inc. ("Plaintiff") filed this civil action in the General Court of Justice, Superior Court Division, Forsyth County, North Carolina, against United National Insurance Company ("United"), Gallagher Bassett Services, Inc. ("Gallagher"), and National Catholic Risk Retention Group ("National"). Plaintiff's original complaint stated separate claims for relief against Defendants United, Gallagher, and National for breach of contract. Plaintiff's original complaint also stated additional claims for relief against Defendants United and Gallagher on the bases of negligence, bad faith, and unfair or deceptive trade practices in violation of North Carolina General Statute Section 75-1.1 et seq.

On July 17, 2002, Defendants United, Gallagher, and National properly filed a joint notice of removal to this court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. On June 16, 2003, Plaintiff filed an amended complaint that dropped all claims for relief against Defendant National and stated new claims for relief against The Travelers Indemnity Company ("Travelers") on the bases of breach of contract, negligence, bad faith, and unfair or deceptive trade practices in violation of North Carolina General Statute § 75-1.1 et seq. Before the court is Defendant United's motion for partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).¹ For the following reasons, Defendant United's motion for partial judgment on the pleadings will be granted.

FACTS

In considering Defendant United's motion for judgment on the pleadings, the court must accept all well-pleaded factual allegations in Plaintiff's complaint as true. See 5A Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 1368 at 520 (2d ed.1990). This case arises out of Defendants' alleged failure to investigate, adjust, and indemnify Plaintiff's claims for losses incurred during the construction of a Parish Life Center and other associated renovations of the Saint Therese Catholic Church in Mooresville, North Carolina ("the construction project"). On January 25, 2000, Plaintiff entered into a Design-Build Agreement ("the Contract") with the Roman Catholic Diocese of Charlotte, North Carolina ("the Diocese"). Under the terms of the Contract, the Diocese agreed to obtain an insurance policy to cover the construction project that "include[d] as named insureds the Owner, Contractor, Architect/Engineer, Subcontractors and Sub subcontractors." (Am.Compl.¶ 6.) Specifically, the Contract obligated the Diocese to secure "`all risk' insurance for physical loss or damage including without duplication of coverage at least: theft, vandalism, malicious mischief, transit, collapse, false work, temporary buildings, debris removal, flood, earthquake, testing and damage resulting from defective design, workmanship or materials." (Id.)

Pursuant to the terms of the Contract, the Diocese secured multiple layers of insurance to cover the construction project, including a Combined Property, Casualty, and Crime Insurance Policy ("the Policy") issued by Defendant United.² The terms and conditions of coverage listed in "Section I" of the Policy provided first-party all risks property insurance for the construction project to protect the property interests of both the Diocese and Plaintiff.³ Under "Insuring Agreement A" in Section I of the Policy, Defendant United expressly agreed "to indemnify [the Diocese and Plaintiff] for all risks of physical loss or damage to Real and Personal property ... occurring during the period of insurance." (Am.Compl.¶ 9, Ex. A.)

Section I of the Policy also listed a number of express terms labeled as "Conditions" that explained and qualified the scope of insurance coverage provided by the Policy. For example, a clause labeled "Valuation" stated that "[t]he Underwriters shall not be liable for loss or damage in excess of ... the cost to repair, rebuild or replace the destroyed or damaged property in a condition equal to but not superior to or more extensive than its condition when new." (Am.Compl.Ex. A.) Other relevant terms and conditions of the Policy provided as follows:

7. ORDINANCE DEFICIENCY CLAUSE: Notwithstanding anything contained herein to the contrary, the Underwriters shall be liable also for the loss occasioned by the enforcement of any state or municipal law, ordinance or code, which necessitates, in repairing or rebuilding, replacement of material to meet such requirements. If demolition is required to comply with such enforcement Underwriters shall also be liable for such additional costs.

8. EXPENSE TO REDUCE OR PREVENT LOSS: This Insurance also covers such expenses as are necessarily incurred for the purpose of reducing or preventing any loss under this Insurance not exceeding, however, the amount by which the loss under this insurance is thereby reduced.

(Am.Compl.¶¶ 12, 13, Ex. A.)

On June 5, 2000, Plaintiff began work on the construction project. On January 19, 2001, portions of the construction project collapsed due to strong winds and poor construction. According to Plaintiff's complaint, other portions of the construction project also sustained physical loss or damage due to faulty workmanship. Specifically, Plaintiff alleges that "the Project and/or the Property sustained physical loss or damage as a result of ... faulty workmanship, including but not limited to improperly located, sized, constructed, formed, filled and/or reinforced floor slabs, masonry walls, concrete walls, window openings and stairwells." (Am. Compl. ¶ 40.)

On or about January 21, 2001, Plaintiff notified Defendants United and Gallagher of its alleged losses. Plaintiff also notified Defendants United and Gallagher of its claims under the Policy to recover the costs to cleanup and reconstruct collapsed portions of the construction project as well as its claims under the Policy to recover the costs to repair other defectively built portions of the construction project and correct its own faulty workmanship. Thereafter, Plaintiff cleared and reconstructed the collapsed portion of the construction project.

Plaintiff also repaired all other defectively built portions of the construction project and corrected its own faulty workmanship. According to Plaintiff's complaint, "[t]he demolition, repairs and/or reconstruction performed by Clark to repair, remedy and rebuild the losses and damages, including, but not limited to, the masonry walls and window openings, were necessary to provide the structural and seismic integrity required for compliance ... with the North Carolina Statewide Building Code." (Am.Compl.¶ 51.) Plaintiff further alleges in its complaint that "the repairs and/or reconstruction ... were necessary to provide the structural and seismic integrity required to reduce or prevent the risk of future damage, failure, collapse or replacement of the Property." (Am.Compl.¶ 52.)

After Defendants United and Gallagher denied coverage under the Policy and failed to indemnify Plaintiff for its alleged losses, Plaintiff filed this lawsuit. Defendant United has acknowledged that a portion of Plaintiff's losses are covered by the Policy and has reimbursed Plaintiff for the costs to clean up and reconstruct portions of the construction project that collapsed due to strong winds and poor construction. Therefore, the narrow issue presented by Defendant United's motion for partial judgment on the pleadings is whether the terms of the Policy extend to cover the costs incurred by Plaintiff to repair defectively built portions of the construction project that suffered no wind damage and to correct its own faulty workmanship based on the facts as alleged in the pleadings.

DISCUSSION

A motion for judgment on the pleadings is determined by the same standard applied to a motion to dismiss for failure to state a claim upon which relief can be granted. See Irish Lesbian & Gay Org. v. Giuliani, 143 F.3d 638, 644 (2d Cir.1998); see also Pledger v. N.C. Dep't of Health & Human Servs., Dorothea Dix Hosp., 7 F.Supp.2d 705, 707 (E.D.N.C.1998). In considering a motion for judgment on the pleadings, the court must view the facts presented in the pleadings and inferences drawn therefrom in the light most favorable to the non-moving party. Edwards v. City of Goldsboro, 178 F.3d 231, 248 (4th Cir.1999). The court must accept all well pleaded factual allegations in the non-moving party's pleadings as true and reject all contravening assertions in the moving party's pleadings as false. Wright and Miller, supra, at 520.

When considering a defendant's motion for judgment on the pleadings, the court must base its decision solely on information obtained from the pleadings. Dobson v. Central Carolina Bank and Trust Co., 240 F.Supp.2d 516, 519 (M.D.N.C.2003) (citations omitted). Entry of judgment on the pleadings is improper "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In other words, a defendant cannot succeed on a motion for judgment on the pleadings when allegations in the plaintiff's pleadings would...