Liberty Int'l Underwriters Canada v. Scottsdale Ins. Co.

• Decision Date: 28 June 2013
• Docket Number: Civil No. 12–4934 (NLH/JS).
• Citation: 955 F.Supp.2d 317
• Parties: LIBERTY INTERNATIONAL UNDERWRITERS CANADA, Plaintiff, v. SCOTTSDALE INSURANCE COMPANY and Infinity Access LLC, Defendants.
• Court: U.S. District Court — District of New Jersey

955 F.Supp.2d 317

LIBERTY INTERNATIONAL UNDERWRITERS CANADA, Plaintiff,

v.SCOTTSDALE INSURANCE COMPANY and Infinity Access LLC, Defendants.

Civil No. 12–4934 (NLH/JS).

United States District Court,

D. New Jersey.

June 28, 2013.

Stephen Allen Loney, Jr., Esq., Hogan Lovells U.S. LLP, Philadelphia, PA, for Plaintiff Liberty International Underwriters Canada.

Gary S. Kull, Esq., April T. Villaverde, Esq., Carroll, McNulty & Kull LLC, Basking Ridge, New Jersey, for Defendants Scottsdale Insurance Company and Infinity Access LLC.

OPINION

HILLMAN, District Judge:

Currently pending before the Court is the Motion for Judgment on the Pleadings by Defendant Infinity Access LLC. For the reasons set forth below, the Motion shall be denied.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This matter stems from an insurance policy coverage dispute. Plaintiff Liberty International Underwriters Canada (“LIU”) is an insurance agency based in Toronto, Ontario, Canada that provides liability insurance coverage. (Compl. ¶ 2.) Defendant Scottsdale Insurance Company (“Scottsdale”) is also an insurance agency, and is located in Scottsdale, Arizona. ( Id. ¶ 3.) Defendant Infinity Access LLC (“Infinity”) is a company engaged in the construction and remodeling business. Tractel Ltd. (“Tractel”) is also a construction and remodeling business, and is likewise based in Canada. ( Id. ¶ 6.) ¹

According to the facts alleged in Plaintiff's Complaint, in March of 2005, Tractel and Infinity entered into multiple construction work contracts. ( Id. ¶ 10.) Under the contracts, Infinity became Tractel's subcontractor, and agreed to provide Tractel with supplies, equipment, and labor necessary to install window washing systems at construction sites. ( Id.) Pursuant to the terms of the contracts, Infinity agreed to hold harmless and indemnify Tractel for any work-related liabilities resulting from Infinity's conduct at the sites. ( Id.)

On or about November 9, 2006, Scottsdale issued a commercial general liability policy to Infinity (hereinafter “the Scottsdale Policy”). ( Id. ¶ 18.) The Scottsdale Policy provided coverage to Infinity for bodily injury and property damage, and had a per occurrence limit of $1 million and a $5 million aggregate limit. ( Id.) The Scottsdale Policy included a provision that provided coverage for additional insureds—such as Tractel—when such coverage was required by a construction agreement with Infinity. ( Id.) The provision in the Scottsdale Policy explicitly stated as follows:

[A]ny person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for “bodily injury,” “property damages” or “personal and advertising injury” caused, in whole or in part, by: (1) Your acts or omissions; or (2) The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured.

A person's or organization's status as an additional insured under this endorsement ends when your operations for that additional insured are completed.

( Id.) Scottsdale also issued a commercial umbrella policy to Infinity on November 9, 2006, which had a per occurrence limit of $2 million and a general aggregate limit of $2 million. ( Id. ¶ 20.) Akin to the general commercial liability policy, Scottsdale's umbrella policy likewise applied to Infinity's additional insureds. ( Id.)

On or about May 1, 2007, LIU issued a commercial general liability policy to Tractel (hereinafter “the LIU Policy”). ( Id. ¶ 15.) The LIU Policy had a per occurrence limit of up to $1 million and covered bodily injuries and property damage under certain circumstances. ( Id.) According to LIU, the policy was intended to serve as an excess policy available to Tractel in the absence of other insurance coverage. ( Id.) The LIU Policy contained a subrogation clause, which provided that:

The Insurer shall be subrogated to all of the “Insured's” rights of recovery with respect to any payment made under this Policy. In this regard, the “Insured” shall execute any documentation required to enforce such rights and shall co-operate in all respects with the Insurer to assist in the enforcement of such rights. The “Insured” shall do nothing to interfere with or impair the Insurer's right of subrogation. The Insurer shall have no right of subrogation against any “Insured” under this Policy.

( Id. ¶ 16.)

In September of 2006, the Marina District Development Company, LLC (“MDD”), owners of the Borgata Hotel and Casino in Atlantic City, New Jersey, hired Tractel to install window washing scaffolding at the construction site for The Water Club at the Borgata. ( Id. ¶ 21.) Tractel, in turn, subcontracted with Infinity on August 10, 2007 to install the window washing scaffolding. ( Id.) As part of the agreement between Tractel and Infinity, Infinity agreed to fully indemnify and hold Tractel harmless for any property damage or personal injuries related to the Borgata construction project. ( Id. ¶¶ 11, 12.) To memorialize this agreement, Scottsdale issued certificates of insurance to Tractel that reflected Tractel's status as an additional insured under the Scottsdale Policy and its umbrella excess policies. ( Id. ¶ 13.) According to LIU, the contract between Tractel and Infinity also provided that the Scottsdale Policy would serve as the primary insurance policy, and that the LIU Policy was secondary and would only be utilized to cover claims in excess of the Scottsdale Policy's coverage limits. ( Id. ¶¶ 17, 19.)

On September 23, 2007, a fire occurred at the Borgata construction site, resulting in damages in excess of $80,000,000. ( Id. ¶ 21.) MDD alleged that the fire resulted from the welding activities of an Infinity employee at the construction site. ( Id.) As a result, MDD filed a lawsuit against Tractel, Infinity, and other related parties in the Superior Court of New Jersey in Atlantic County, alleging breach of contract and warranty, negligence, indemnification, and vicarious liability claims. ( Id. ¶ 22.) Rather than immediately asking Infinity to hold it harmless and indemnify it in the state court action, Tractel tendered defense of the action to LIU pursuant to the terms of the LIU Policy. ( Id. ¶ 23.) The claim against Tractel in the underlying state court action was subsequently settled, and LIU funded the settlement. ( Id. ¶ 24.) LIU avers that it notified Scottsdale of the settlement negotiations and requested it to join the discussions and pay Tractel's share pursuant to the indemnity agreement between Tractel and Indemnity, but Scottsdale refused to do so. ( Id.)

On December 1, 2011, MDD and Tractel filed a Joint Stipulation of Dismissal and Assignment of Claims agreement in the state court action. (Def.'s Mot. J. Pleadings, Ex. A.) Notably, the agreement stated as follows:

Plaintiff Marina District Development d/b/a Borgata Hotel Casino & Spa (the “Borgata”), and Defendant Tractel, Ltd. (“Tractel”), by and through their counsel, herewith stipulate and agree as follows:

...

(3) Tractel and its insurers assign all claims and causes of action they have or may have against any defendant, cross-defendant and/or third-party defendant as a result of, arising from or related to the September 27, 2007 fire at The Water Club, including, but not limited to, the facts alleged in the Complaint, as amended, Tractel's responsive pleadings and/or the Third–Party Complaints.

( Id.)

As a result of the state court litigation and subsequent settlement, LIU paid $769,383.58 in defense fees and expenses on Tractel's behalf. (Compl. ¶ 24.) LIU claims that it has attempted to recover some of these costs from Infinity and Scottsdale pursuant to the additional insured provisions in the Scottsdale Policy and Infinity's umbrella policy, but Defendants have refused to pay. ( Id.) LIU therefore filed the instant Complaint before this Court on August 6, 2012, asserting the following two counts against Defendants Scottsdale and Infinity: (1) a declaratory judgment requesting the Court to declare that Defendants had a duty to defend and indemnify Tractel for the underlying litigation and that LIU should be reimbursed for all amounts it paid and expenses incurred in conjunction with the underlying litigation; and (2) equitable indemnity and contribution pursuant to the indemnity agreement entered into between Tractel and Infinity. Defendant Infinity filed the instant Motion for Judgment on the Pleadings on October 12, 2012, to which LIU responded in opposition on October 22, 2012. Infinity replied on November 1, 2012. Since the filing of the instant submissions, the parties have engaged in discovery. As a result of issues unveiled during the discovery process, the parties requested and obtained the Court's permission to file supplemental briefing relating to the pending Motion, which they did on April 1 and 25, 2013, respectively. Accordingly, the Motion is now ripe for judicial consideration.

II. JURISDICTION

The Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332, the diversity jurisdiction statute, which provides that: “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $ 75,000, exclusive of interest and costs, and is between [c]itizens of different States[.]” 28 U.S.C. § 1331(a)(1). Plaintiff LIU is a Canadian corporation with its principal place of business located in Toronto, Ontario, Canada. Defendant Scottsdale is an Ohio corporation with its principal place of business located in Scottsdale, Arizona. Defendant Infinity is a Minnesota limited liability company with its principal place of business in Saint Paul, Minnesota. All of Infinity's members are Minnesota citizens. ² As...