Katopothis v. Windsor-Mount Joy Mut. Ins. Co., Civil Action No. 14-380 (RDM)

• Decision Date: 26 September 2016
• Docket Number: Civil Action No. 14-380 (RDM)
• Citation: 211 F.Supp.3d 1
• Parties: Vasilli KATOPOTHIS and Francesca Dahlgren, Plaintiffs, v. WINDSOR-MOUNT JOY MUTUAL INSURANCE COMPANY, Defendant /Third Party Plaintiff, and R.W. Home Services, Inc. d/b/a Gale Force Cleaning and Restoration, Defendant, v. R.W. Home Services, Inc. d/b/a Gale Force Cleaning and Restoration, Third Party Defendant.
• Court: U.S. District Court — District of Columbia

211 F.Supp.3d 1

Vasilli KATOPOTHIS and Francesca Dahlgren, Plaintiffs,

v.WINDSOR-MOUNT JOY MUTUAL INSURANCE COMPANY, Defendant /Third Party Plaintiff,andR.W. Home Services, Inc. d/b/a Gale Force Cleaning and Restoration, Defendant,

v.R.W. Home Services, Inc. d/b/a Gale Force Cleaning and Restoration, Third Party Defendant.

Civil Action No. 14-380 (RDM)

United States District Court, District of Columbia.

Signed September 26, 2016

Erik Broch Lawson, Glenn Hugh Silver, C. Thomas Brown, Silver & Brown, Fairfax, VA, for Plaintiffs.

Charles B. Peoples, Michael H. Burgoyne, Thomas, Thomas & Hafer LLP, Washington, DC, for Defendant/Third Party Plaintiff.

George D. Bogris, Mintzer, Sarowitz, Zeris, Ledva & Meyers, LLP, Towson, MD, for Defendant.

MEMORANDUM OPINION

RANDOLPH D. MOSS, United States District Judge

This case arises from a plumbing accident at the Delaware vacation home of Francesca Dahlgren and her husband Vasilli Katopothis ("Plaintiffs"), who are residents of the District of Columbia. Dkt. 5–1 at 3. While Plaintiffs were in the District, a pipe failure flooded their Delaware residence, leading to an infestation of mold and, Plaintiffs say, necessitating the demolition of the home. They allege losses of more than $800,000. Dkt. 35 at 6, 12.

Plaintiffs now seek to recover from two defendants. First, they have sued their home insurance provider, Windsor-Mount Joy Mutual Insurance Co. ("Windsor"), a Pennsylvania corporation with its principal place of business in Pennsylvania. Dkt. 5–1 at 3. Plaintiffs claim that Windsor breached their insurance contract by refusing to cover Plaintiffs' loss. Dkt. 35 at 2–6 (Am. Compl. ¶¶ 5–33). Second, Plaintiffs have sued the company they hired to mitigate the flood damage, R.W. Home Services, Inc. doing business as Gale Force Cleaning and Restoration ("Gale Force"), which is a Delaware corporation with its principal place of business in Delaware. Dkt. 42–5 at 2 (McCreary Decl. ¶ 2). Alleging that Gale Force failed adequately to remediate the loss, Plaintiffs assert claims against it for breach of contract, negligence, negligent misrepresentation, and violations of the Delaware Consumer Protection Act. Dkt. 35 at 7–12 (Am. Compl. ¶¶ 39–72). In addition, Windsor has filed a third party complaint against Gale Force. Dkt. 28. That complaint alleges that, to the extent Windsor is liable to Plaintiffs, it is subrogated to Plaintiffs' claims against Gale Force for breach of contract and negligence claims and that it is also entitled to recover as a matter of common law indemnity and contribution. Id.

Two sets of motions are now before the Court. First, Plaintiffs and Windsor have filed cross-motions for summary judgment. Plaintiffs have moved for partial summary judgment against Windsor as to liability—that is, they seek to establish coverage. Dkt. 36. Windsor, in turn, has cross-moved for summary judgment, arguing that the policy's "Exclusions for Unoccupied Residences" exclude Plaintiffs' loss from coverage. Dkt. 46. Second, Gale Force has moved to dismiss all claims against it for lack of personal jurisdiction, and has moved to dismiss Windsor's subrogation counts for failure to state a claim. Dkt. 42. Plaintiffs and Windsor oppose the motion to dismiss for lack of personal jurisdiction and, in the alternative, request leave to conduct additional jurisdictional discovery. Dkts. 48 & 49. Windsor further requests that, if personal jurisdiction over Gale Force is lacking, that the Court "vouch-in" Gale Force or transfer the case to Delaware. Dkt. 48–1 at 7–14. Finally, Windsor opposes the motion to dismiss the subrogation counts. Id. at 14–18.

For the reasons discussed below, the Court concludes that the insurance policy unambiguously excludes coverage of Plaintiffs' claims. As a result, Plaintiffs' motion for partial summary judgment will be denied and Windsor's motion for summary judgment will be granted. The Court further concludes that it lacks personal jurisdiction over Gale Force with respect to Plaintiffs' claims against it, and that further jurisdictional discovery is unwarranted.

The Court will therefore transfer the case to the U.S. District Court for the District of Delaware pursuant to 28 U.S.C. § 1406(a).

I. BACKGROUND

The following facts are undisputed, except where specifically noted:

In the spring of 2000, Plaintiffs purchased a second home in Rehoboth Beach, Delaware. Dkt. 40–1 (Dahlgren Dep. 23:9–23:15). They have since used it periodically throughout each year, spending close to forty percent of their time there. Id. at 15:11–15:17. They spend the remainder of their time in Washington, D.C., where they live and work. Id. at 15:11–15:14, 18:16–18:18; accord Dkt. 40–15 (Katopothis Dep. 7:2–7:13). While Plaintiffs were in the District for a ten-day period in February 2013, a plumbing accident caused significant damage to their Delaware home. Dkt. 40–1 (Dahlgren Dep. 102:1–103:3).

A. The Insurance Policy

Plaintiffs contracted with Windsor to insure the Delaware property on an annual basis starting on June 15, 2000. Dkt. 40 at 13. The policy thereafter renewed every year, with the operative policy covering the period between June 15, 2012, and June 15, 2013. Dkt. 40 at 13–16. It consists of two relevant forms: a twenty-seven-page "Special Form," Dkt. 40–21 at 3–27, and a one-page endorsement, labeled "ML-508D (04-06)," id. at 30. Windsor added form ML-508D to the policy in 2004 and then modified it in 2006. Dkt. 40 at 14–15.

The Special Form defines the policy's rules of coverage, which differ for real and personal property. For real property, the policy has what is commonly known as an "all risk" structure. This means that any direct physical damage to the insured building is covered, unless the policy specifically identifies the risk of such loss as an "exclusion."¹ Dkt. 40–21 at 11. For personal property, the policy has what is known as a "named peril" structure. This means that personal property is insured only against risks expressly listed in the policy and, even then, only against risks that are not otherwise excluded.² Dkt. 40–21 at 13–14. The "accidental discharge or overflow" of water from a plumbing system is a risk to personal property expressly covered by the policy, subject to applicable exclusions. Dkt. 40–21 at 14.

The Special Form also contains three types of exclusions. They are: (1) exclusions applicable only to real property,³ see Dkt. 40–21 at 12–13; (2) exclusions applicable to both real and personal property, and which are subject to an additional "anti-concurrent causation" clause,⁴ see id. at 15–16; and (3) exclusions applicable to both real and personal property, and which contain an explicit exception allowing coverage for "ensuing loss [es],"⁵ see id. at 16–17. Neither party contends that Plaintiffs' insurance claim falls within any of these Special Form exclusions.

The parties dispute only the proper interpretation of the freestanding ML-580D endorsement, titled "Additional Exclusions for Unoccupied Residences." Id. at 30. It provides:

ML-508D (04-06)

ADDITIONAL EXCLUSIONS FOR UNOCCUPIED RESIDENCES

In addition to exclusions found elsewhere in your policy, if the insured residence is vacant, unoccupied (meaning an absence of 72 hours), or under construction and unoccupied, the Insured must:

a. Maintain Heat in the residence and shut off the water supply where it enters the residence. If the residence is heated by a hot water system, the water supply to the heating system must be maintained and the water supply to the rest of the residence must be shut off.

OR

b. Shut off the water supply where it enters the residence and completely empty liquids from any plumbing, heating, air condition system, water heater, or domestic appliance.

If this is not done, we do not pay for loss caused by freezing of or discharge, leakage, or overflow from any plumbing, heating, or air conditioning system or any appliance or other equipment attached to it.

Dkt. 40–21 at 30. The Delaware Department of Insurance approved this endorsement, see Dkt. 40–22, as required by Delaware law, see Del. Code tit. 18, § 2714(a).

The same page on which Windsor printed the endorsement also includes an "important policyholder notice," labeled "WB-27D (07-11)." See Dkt. 40–21 at 30. Unlike the ML-580D endorsement, the notice was not submitted for regulatory approval, and, as Windsor itself agrees, it is not part of the contract. Dkt. 40–3 (Underwood Dep. 87:8–88:13). According to Windsor's corporate designee, Windsor included the notice "to help the insured to realize the provisions of the [ML-508D] exclusion." Id. The notice that accompanied the operative policy stated:

WB-27D (07-11)

IMPORTANT POLICYHOLDER NOTICE

FAILURE TO FOLLOW THE REQUIREMENTS OF THE POLICY COULD COST YOU THOUSANDS OF DOLLARS

Be aware that damage from water which escapes from plumbing and heating systems and appliances is a frequent cause of loss and can cause large claims and great damage particularly when the leak goes undetected and the water keeps running and running for long periods of time. In the past we have paid water damage claims in excess of $100,000! There are some simple, common sense steps you can take to minimize these claims and thus save yourself the cost of your deductible and the inconvenience of major damage to your property. At the same time, in the long run, minimizing claims can keep insurance rates down and protect your insurability.

Please read form ML-508D (04-06) which is a part of your policy and states that if you fail to take one of two steps when the insured property is vacant or unoccupied (meaning an absence in excess of 72 hours) or under construction and unoccupied, you will have no coverage for the kinds of water damage described in the form. We interpret "occupancy" to mean that someone stays there overnight. Other visits to the premises do not constitute "occupancy."

If your home does not currently have a means to shut off the water supply where it enters the home or to shut off the water to the

...