Lexington Ins. Co. v. Paddock Swimming Pool Co.
| Citation | 532 F.Supp.3d 1 |
| Decision Date | 01 April 2021 |
| Docket Number | No. 1:19-cv-3131 (GMH),1:19-cv-3131 (GMH) |
| Parties | LEXINGTON INSURANCE CO., et al., Plaintiffs, v. PADDOCK SWIMMING POOL CO., et al., Defendant. Paddock Swimming Pool Co., Cross Claimant, v. P&F Services, LLC, Cross Defendant. |
| Court | U.S. District Court — District of Columbia |
Christopher Konzelmann, White and Williams LLP, Philadelphia, PA, for Plaintiff.
James O'Brien, Matthew Thomas Angotti, Anderson, Coe & King, LLP, Baltimore, MD, for Defendant Paddock Swimming Pool Company.
John Terrance Brennan, The Brennan Law Firm, LLC, Sugar Land, TX, for Defendant P & F Services, LLC, Freddie Beall.
G. MICHAEL HARVEY, United States Magistrate Judge In this contract and negligence action, Plaintiffs are seven insurance companies (Lexington Insurance Co., Westchester Surplus Lines Insurance Co., Aspen Insurance UK Ltd., Endurance American Specialty Insurance Co., Certain Underwriters at Lloyd's London, The Princeton Excess and Surplus Lines Insurance Co., and General Security Indemnity Co. of Arizona) that proceed as subrogees of their insureds, a number of interrelated companies connected with the ownership and operation of a hotel (the "Hotel") located in the District of Columbia. Defendant Paddock Swimming Pool Company ("Paddock") was hired to renovate the rooftop pool at the Hotel. The claims arise out of water damage to Hotel property from a rainstorm that occurred while the renovation was in progress. The motions currently before the Court—Plaintiffs’ motion for partial summary judgment and Paddock's motion for summary judgment—concern, primarily, the proper interpretation of the renovation contract between DC I&G Capital Lessee ("DC I&G"), the lessee and operator of the Hotel and Paddock (the "Renovation Contract").1 More specifically, the motions turn chiefly on the construction and legal consequences of a waiver-of-subrogation clause in the Renovation Contract. For the reasons that follow, Plaintiffs’ motion for partial summary judgment is denied and Paddock's motion for summary judgment is granted.
The following undisputed facts are derived from the Court's review of the record before it.2 During the relevant time period, La Salle Hotel Properties ("La Salle") was a Real Estate Investment Trust, which purchased the Hotel in 2001. ECF No. 62-3 at 11–12, 14 (). After the purchase, for tax purposes, La Salle created two entities involved with the operation of the property: I&G Capitol, LLC ("I&G") owned the building and leased it to DC I&G to operate the Hotel. Id. at 14–15; ECF No. 63 at 2 (); ECF No. 66 at 2 (). As a subsidiary of La Salle, DC I&G is insured under the relevant insurance policy in this case (the "Insurance Policy").
On December 5, 2017, DC I&G (identified as "Owner" in the Renovation Contract) and Paddock (identified as "Contractor" in the Renovation Contract), using an American Institute of Architects ("AIA") form agreement frequently used for construction/renovation jobs, executed the Renovation Contract for Paddock to renovate the Hotel's rooftop pool. ECF No. 62-5 at 1 (the Renovation Contract); see also ECF No. 62-1 at 1; ECF No. 66 at 8; cf. Gables Constr., Inc. v. Red Coats, Inc. , 468 Md. 632, 228 A.3d 736, 748 (2020) (). The "Scope of Work" comprised tasks related to the pool's filter room; the pool's structural box; and the pool itself, including its decking, coping, drainage, and waterproofing. ECF No. 62-5 at 9–11. Pursuant to Article 9 of the Renovation Contract, entitled "Contractor," Paddock warranted, among other things, that it would utilize new, good quality materials and that its work would be free from defects (id. at 4 (Section 9.4)) and that it was responsible for the acts and omissions of its own employees as well as the agents and employees of any subcontractors (id. (Section 9.7)). Under Article 16—"Protection of Persons and Property"—Paddock promised to "take reasonable precautions for [the] safety of, and [ ] provide reasonable protection to prevent damage, injury, or loss to: [ ] employees on the Work and other persons who may be affected thereby; [ ] the Work and materials and equipment to be incorporated therein; and [ ] other property at the site or adjacent thereto." Id. at 7 (Section 16.1). That provision further required Paddock to "promptly remedy damage and loss to property at the site caused in whole or in part" by Paddock or a subcontractor, but "only to the extent" that Paddock was at fault. Id.
Article 17 of the Renovation Contract governed, as its title indicates, "Insurance." It includes, among others, the following provisions:
Id. at 7. In addition, the final section of Article 17 is the so-called subrogation waiver:
La Salle held a policy underwritten by Plaintiffs (the Insurance Policy identified above) covering the "Named Insured"—defined as La Salle "and any subsidiary, associated, allied or affiliated company, corporation, firm, organization, partnership, Joint Venture, Limited Liability Company or individual, whether wholly or partially owned or controlled by [La Salle], where [La Salle] maintains an interest, or where [La Salle] is required to provide insurance, ... and any other party in interest that is required by contract or other agreement to be named"—in "all real and personal property owned, used, leased or intended for use by the Insured or in which the Insured may have an insurable interest, or for which the Insured may be responsible for the insurance." ECF No. 62-15 at 6, 9 (the Insurance Policy). The policy also covered "[c]ontractors’ and/or subcontractors’ ... interests in property covered to the extent of the Insured's liability imposed by law or assumed by contract." Id. at 10. The policy insured against "all risks of direct physical loss of or damage to property described" in the policy. Id. at 21. The Insurance Policy also includes a subrogation clause stating that, "[i]n the event of a payment under [the] policy, [Lexington Insurance Company] shall be subrogated to the extent of such payment to all the Insured's rights of recovery therefor." Id. at 27. Importantly, the insured parties retained the right to recover under the Insurance Policy notwithstanding "[a]ny release from liability entered into ... prior to loss." Id.
Paddock began work on the project and, by April 2018, the pool liner had been removed from the pool's structural box, leaving the structural box exposed.3 ECF No. 60 at 16 (); ECF No. 60-6 at 6 (testimony of Paddock's 30(b)(6) deponent). It is undisputed that a drain line in the structural box was left uncapped at the time that heavy rains impacted the area of the hotel on April 16, 2018; it is also undisputed that during those rains, water entered the Hotel, causing damage.4 ECF No. 60-6 at 4, 11–12; ECF No. 60 at 16–18 (); ECF No. 62-1 at 3 (); ECF No. 63 at 3 (); ECF No. 66 at 5 ().
The Hotel filed a claim pursuant to the Insurance Policy for property damage and loss of business caused by the April 16, 2018 incident. ECF No. 62-1 at 3 (); ECF No. 62-11 at 16–17 (deposition of Plaintiffs’ Rule 30(b)(6) designee); ECF No. 62-13 at 6 (); ECF No. 66 at 6 (). Plaintiffs paid the insurance proceeds—a total of $766,616.34—to La Salle for the claim.5 ECF No. 62-1 at 3 (); ECF No. 62-11 at 17 (deposition of Plaintiffs’ Rule 30(b)(6) designee); ECF No. 62-12 (); ECF No. 66 at 6 (...
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