M. Dematteo Const. Co. v. Century Indem. Co.
| Citation | 182 F.Supp.2d 146 |
| Decision Date | 03 October 2001 |
| Docket Number | No. CIV.A. 00-12057-WGY.,CIV.A. 00-12057-WGY. |
| Parties | M. DEMATTEO CONSTRUCTION CO. and Flatiron Structures Co., LLC, Plaintiffs, v. CENTURY INDEMNITY COMPANY, as successor to the Insurance Company of North America; the Home Insurance Company; the Hartford Fire Insurance Company; and Lumbermans Mutual Casualty Company, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Eric F. Eisenberg, Lauren Timoney Upton, Doreen M. Zankowski, Hinckley, Allen & Snyder, Boston, MA, for Plaintiffs.
Marie Cheung-Truslow, Gerald W. Motejunas, Lecomte, Emanuelson, Motejunas & Doyle, Quincy, MA, Christopher A. Duggan, Matthew J. Walko, Smith, Duggan & Johnson, Boston, MA, for Defendants.
Garrick F. Cole, Smith & Duggan, L.L.P., Nancy M. Reimer, Donovan Hatem LLP, James A. Sweeney, Attorney General's Office, Boston, MA, for Interested Parties.
The plaintiffs, the joint venture of M. DeMatteo Construction Co. and Flatiron Structures Co., LLC ("DeMatteo"), have brought this action against the defendants, The Insurance Company of North America ("North America"),1 The Home Insurance Company ("Home"), The Hartford Fire Insurance Co. ("Hartford"), and Lumbermans Mutual Casualty Co. ("Lumbermans") (collectively the "Insurers"), alleging that the Insurers failed to pay a claim for an insured loss of $927,968.90 pursuant to a builder's risk insurance policy, under which DeMatteo was an additional insured. DeMatteo asserts claims against the Insurers for breach of contract (Count I) and for unfair insurance claims and settlement practices and unfair and deceptive trade acts and practices in violation of Massachusetts General Laws chapters 176D and 93A (Count II). Am. Compl. ¶¶ 18-26.
On June 29, 2001, the Insurers moved for summary judgment pursuant to Federal Rule of Civil Procedure 56 on both counts of the complaint "based on the Plaintiffs' violation of the insurance policy's subrogation clause and the Plaintiffs' failure to state a claim for violation of Mass. Gen. laws c. 93A and 176D." Defs.' Mot. at 1. After the parties agreed to submit the motion to the Court for consideration on the papers, the Court denied the Insurers' motion as to the breach of contract claim and granted the motion as to the chapters 176D and 93A claims. Order of Aug. 22, 2001 [Docket No. 43]. This memorandum sets forth the reasoning of the Court's order.
As part of the Central Artery/Tunnel Project (the "Project"), DeMatteo entered into a contract with the Massachusetts Highway Department to construct the Interstate I-90 interchange that will connect the Ted Williams Tunnel to Logan International Airport. Am. Compl. ¶ 9.
The insurance needs of the Project are met by a policy (the "Policy") under which the Massachusetts Highway Department and Bechtel/Parsons Brinckerhoff are the named insureds. Defs.' Stmt. ¶ 1. The Policy contains a twenty-four-page manuscript form entitled "Builders Risk Program," which was drafted by the broker/insurance consultant for the Massachusetts Highway Department and Bechtel/Parsons Brinckerhoff, and was negotiated primarily with the lead insurer, North America. Id. ¶ 2. The manuscript form and the North America policy jacket constitute the "Master Policy." Id. ¶ 3. Home, Hartford, and Lumbermans subscribed to the Master Policy and attached their respective company jackets to it. Id. The terms and conditions of the Master Policy control with respect to all claims. Id.
Under the Policy, the named insureds are the Massachusetts Highway Department, the Massachusetts Turnpike Authority, and Bechtel/Parsons Brinckerhoff. Id. ¶ 4. DeMatteo is an additional insured under the Policy to the extent of its involvement in the Project. Id. ¶ 5.
On or about July 28, 1997, a pre-existing 120-inch outfall pipe and tidal gate malfunctioned during a particularly high tide. Id. ¶ 7 . As a result of this malfunction, millions of gallons of water from Boston Harbor flowed back through the pipe and submerged the Project site where DeMatteo was performing its work under nearly fifteen feet of water. Id.
Immediately following the discovery of the flooded Project site, DeMatteo notified the Insurers of the incident. Newman Aff. ¶ 3. Shortly after this notice, the Insurers' claims adjuster, Steven Downs ("Downs") visited the site and met with DeMatteo personnel. Id. ¶ 9. DeMatteo conducted an extensive investigation and discovered that the primary causes of the flood were a flood gate that became detached from the outfall pipe and thus failed to prevent the backflow of the tidal surge, id. ¶ 4, and substantial gaps in the seams of the outfall pipe that allowed the water to escape the Project site, id. ¶ 5. The outfall pipe was owned, operated, and maintained by the Massachusetts Port Authority ("MassPort"). DeMatteo shared its findings with the Insurers, and Downs attended at least one meeting at which the findings were discussed. Id. ¶¶ 9-10.
In order to reclaim the site and all of the equipment and materials, protect the Project from further damage, and resume its contract work, DeMatteo conducted immediate emergency procedures, including the installation of "stop logs" to replace the missing flood gate and the installation of a steel bulkhead, effectively sealing off the outfall pipe and diverting drainage to dry sections of the pipe. Id. ¶¶ 4, 6. DeMatteo also incurred significant costs in repairing the leaking joints of the outfall pipe. Id. ¶ 5. These emergency measures and repairs cost DeMatteo $1,041,106.98, for which it submitted a claim to the Insurers.3 Id. Ex. A. The Insurers denied the majority of DeMatteo's claim, offering to pay only $142,767.39. Id. ¶ 11. Despite lengthy discussions and additional proofs of loss submitted by DeMatteo, the insurers refused to pay the remainder of DeMatteo's claim. Id. ¶ 13.
In exchange for payment of the undisputed amount of $142,767.39, DeMatteo submitted signed subrogation agreements to the Insurers on November 8, 1998. Id. ¶ 12 & Ex. B. DeMatteo reserved its rights and continued to seek payment for the remainder of its claim, repeatedly asserting that its claim was covered under the Policy. Id. ¶ 13.
On July 22, 1999, while negotiations continued, DeMatteo and the Insurers entered into a "Standstill and Non-Waiver Agreement and Reservation of Rights" ("Standstill Agreement"). Defs.' Stmt. ¶ 8; Downs Aff. Ex. B. The Standstill Agreement extended the time for DeMatteo to file suit against the Insurers from July 28, 1999 to September 7, 1999. Downs Aff. Ex. B. The Standstill Agreement also preserved all of the Insurers' rights and defenses under the Policy, including their rights of subrogation. Id. The parties amended the Standstill Agreement eleven times, extending it to October 6, 2000. Id. During this time, the Insurers continued to deny coverage. Pl.'s Stmt. at 3.
On July 21, 2000, Home, Lumbermans, and Hartford,4 as subrogees of DeMatteo, filed an action against MassPort in the Massachusetts Superior Court sitting in and for the county of Suffolk. Id. at 3-4; Defs.' Reply Ex. B. On April 5, 2001, the parties to that action filed a Joint Stipulation of Dismissal ("Joint Stipulation"), stating that:
such dismissal shall be without prejudice to any claims, demands, actions, suits, rights, or defenses, in law or in equity, to the extent they exist and are properly raised, that are now or become in the future the subject of, or are subsequently commenced as a result of a judgment obtained in, the action captioned M. DeMatteo Construction Co. and Flatiron Structures Co., LLC v. Century Insurance Company, as successor to the Insurance Company of North America; Home Insurance Company; Hartford Fire Insurance Company, and Lumbermans Mutual Casualty Company v. Insurance Company of North America; Home Insurance Company; Hartford Fire Insurance Company; and Lumbermans Mutual Insurance Company v. Massachusetts Port Authority, Civil Action No. 00-12057-WGY, now pending before the United States District Court for the District of Massachusetts ... of any person or entity joined as a party to the Federal Court action now or in the future.
Zankowski Aff. Ex. B, at 2. Judgment was entered on the Superior Court docket on April 11, 2001. Id. at 1.
DeMatteo filed the instant action on October 5, 2000. Compl. at 1, 5. On December 27, 2000, the Insurers served a third-party complaint on MassPort, asserting that MassPort's failure properly to maintain its tidal gates resulted in the damages sustained by DeMatteo, and seeking declaratory relief that, in the event that DeMatteo was successful in its claims against the Insurers, MassPort would be liable to the Insurers as subrogees of DeMatteo. Am. Third-Party Compl. ¶¶ 16-17. On April 3, 2001, two days before the parties in the state court action filed the Joint Stipulation, MassPort filed a motion to dismiss the third-party complaint, alleging that the statute of limitations had expired for any possible MassPort liability. Pl.'s Stmt. at 4. Following oral hearing on April 26, 2001, the Court granted MassPort's motion to dismiss the third-party complaint because it was filed beyond the three-year statute of limitations for torts under Massachusetts law, Mass. Gen. Laws ch. 260, § 2A. Order of Apr. 27, 2001, at 2 [Docket No. 27].
Summary judgment is appropriate if, after reviewing the facts in the light most favorable to the nonmoving party and drawing all justifiable inferences in favor of the nonmoving party, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)), "the pleadings, depositions, answers to...
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