Nautilus Ins. Co v. Triple C Constr. Inc

• Decision Date: 06 January 2011
• Docket Number: Civil No. 10-2164 (RBK/JS)
• Parties: NAUTILUS INSURANCE CO., Plaintiff, v. TRIPLE C CONSTRUCTION, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

NAUTILUS INSURANCE CO., Plaintiff,

v.TRIPLE C CONSTRUCTION, INC., Defendant.

Civil No. 10-2164 (RBK/JS)

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

CAMDEN VICINAGE

DATED: January 6, 2011

OPINION

NOT FOR PUBLICATION

KUGLER, United States District Judge:

Plaintiff Nautilus Insurance Company ("Nautilus") issued Defendant Triple C Construction, Inc. ("Triple C") a general liability insurance policy that does not cover injuries to employees. Triple C was subsequently sued by a worker injured at a worksite. Nautilus brought this action against Triple C seeking a declaratory judgment that it is not obligated under the insurance policy to indemnify or defend Triple C against the injured worker's claims. Nautilus now moves this Court for default judgment because Triple C failed to respond to the Complaint. For the reasons discussed below, the Court grants Nautilus' motion for default judgment.

I. BACKGROUND

Nautilus issued Triple C a general liability insurance policy that was effective from September 14, 2007 to September 14, 2008 (the "Policy"). (Ex. D to Pl.'s Cmpl.). In April 2010, Vander Teixeira sued Triple C and several other construction companies in the Superior Court of New Jersey. Teixeira alleges that in April 2008, he was "working for 3 Brothers Construction" at a worksite in Brigantine, New Jersey. (Ex. C to Aff. of Robert J. Cosgrovedated July 29, 2010 ("Cosgrove Aff."), ¶ 15). Triple C contracted with 3 Brothers Construction and other contractors to perform work at the worksite. According to Teixeira, he was injured when he inadvertently touched the trigger of a pneumatic nail gun, which fired a nail striking him in the stomach and penetrating his abdomen. Teixeira alleges that Triple C, 3 Brothers Construction, and other contractors were jointly responsible for safety at the worksite. He claims that they disabled the "contact trip mechanism" on the nail gun and generally failed to provide a safe worksite. (Id. ¶ 21). Teixeira claims that all the contractors "acted with intentional, wanton and willful disregard for [his] health, safety, and rights." (Id. ¶ 31T). He asserts a negligence claim against Triple C and seeks compensatory and punitive damages.

Triple C sent Nautilus a copy of Teixeira's complaint and requested that Nautilus provide coverage pursuant to the Policy. Nautilus retained counsel to defend Triple C subject to certain restrictions. Specifically, Nautilus informed Triple C that it "reserve[d] the right to withdraw from [Triple C's] defense upon appropriate written notification to [Triple C] if [at] any time it becomes apparent that none of the damages being claimed by the plaintiffs are covered by this policy." (Ex. G to Cosgrove Aff.). Nautilus subsequently instituted this action against Triple C for a declaratory judgment that it does not have a duty under the Policy to defend or indemnify Triple C regarding Teixeira's negligence claim.

Pursuant to the Policy, Nautilus agreed to the following:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.

(Ex. F to Cosgrove Aff., at 13). The Policy further provides:

This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";

(2) The "bodily injury" or "property damage" occurs during the policy period;...

(Id.). The Policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Li at 26). Nautilus does not deny that Teixeira's injuries occurred within the "coverage territory."¹

The Policy includes various exclusions and limitations on liability. First, it does not provide coverage if Triple C "expected or intended" the "bodily injury" or "property damage." (Id. at 14). Second, the Policy does not apply "to a person, whether or not an 'employee' of any insured, if benefits for the 'bodily injury' are payable or must be provided under a workers' compensation or disability benefits law or a similar law." (Id. at 19). Third, the Policy does not cover expenses related to "bodily injury" to an "'employee' of any insured arising out of and in the course of... employment by any insured... or... erforming duties related to the conduct of any insured's business." (Id. at 35). The employee-exclusion applies "[w]hether any insured may be liable as an employer or in any other capacity" and "to any obligation so share damages with or repay someone else who must pay damages because of the injury." (Id.). For purposes of the employee-exclusion, the Policy defines "employee" as: [A]ny person or persons who provide services directly or indirectly to any insured, regardless of where the services are performed or where the "bodily injury" occurs, including, but not limited to a "leased worker", a "temporary worker", a "volunteer worker", a statutory employee, a casual worker, a seasonal worker, a contractor, a subcontractor, an independent contractor, and any person or persons hired by, loaned to, or contracted by any insured or any insured's contractor, subcontractor, or independent contractor.

(Id.). Fourth, the Policy excludes "bodily injury" arising out of "the rendering or failure to render any professional services by you or on your behalf." (Li at 66). "Professional services" include "[s]upervisory, inspection, [or] quality control" services. (Id.). Fifth, the Policy excludes "bodily injury" arising out of "work performed by any contractors or subcontractors unless such work is being performed specifically and solely for you." (Id. at 67). Finally, regarding punitive and exemplary damages, the Policy provides:

This insurance does not apply to a claim of indemnification for punitive or exemplary damages. If a "suit" shall have been brought against you for a claim within the coverage provided under the policy, seeking both compensatory and punitive or exemplary damages, then we will afford a defense for such action. We shall not have an obligation to pay for any costs, interest or damages attributable to punitive or exemplary damages.

(Id. at 41).

Nautilus filed its Complaint on April 29, 2010, seeking a declaration that Nautilus does not have a duty under the Policy to indemnify or defend Triple C regarding Teixeira's claims. On June 2, 2010, Nautilus filed proof that it served Triple C with process. The proof of service includes a sworn statement by Ceclia Obie, declaring that she personally served the Summons and Complaint on Charles Howard as managing agent for Triple C at 408 West Shore Road, Brigantine, New Jersey on May 25, 2010. ² On June 18, 2010, Nautilus filed a second proof of service, which declared that Ms. Obie again served Mr. Howard at the same address on June 17, 2010. Triple C did not answer or otherwise respond to Nautilus' Complaint. On July 9, 2010, Nautilus requested that the clerk enter default against Triple C pursuant to Rule 55(a). The clerk entered default the same day.

Nautilus now moves for default judgment. Nautilus seeks a declaration that it does not have a duty under the Policy to defend or indemnify Triple C regarding Teixeira's negligence claim. Nautilus does not seek any money damages.

II. JURISDICTION

"Before entering a default judgment against a party that has not filed responsive pleadings, 'the district court has an affirmative duty to look into its jurisdiction both over the subject matter and the parties.'" Bank of Am., N.A. v. Hewitt, No. 07-4536, 2008 U.S. Dist. LEXIS 90719, at *5 (D.N.J. Nov. 7, 2008) (quoting Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986)).

Here, the Court has subject-matter jurisdiction under 28 U.S.C. § 1332 because the case involves citizens of different states and the amount in controversy exceeds $75,000.00.³ Nautilus is an Arizona corporation with its principal place of business in Arizona. Triple C is a New Jersey corporation with its principal place of business in New Jersey. Thus, the parties are completely diverse. Regarding the jurisdictional amount, Nautilus seeks a declaration that it is not required to indemnify Triple C for Teixeira's unspecified amounts of compensatory and punitive damages. In order to satisfy the jurisdictional amount, claims for punitive damages may be aggregated with claims for compensatory damages unless the former are "patently frivolousand without foundation." Golden v. Golden, 382 F.3d 348, 355 (3d Cir. 2004) (quoting Gray v. Occidental Life Ins. Co., 387 F.2d 935, 936 (3d Cir. 1968)). "Punitive damage claims are per se 'patently frivolous and without foundation' if they are unavailable as a matter of state substantive law." Id. The Third Circuit has held that a nonfrivolous request for an unspecified amount of punitive damages "will generally satisfy the amount in controversy requirement because it cannot be stated to a legal certainty that the value of the plaintiffs claim is below the statutory minimum." Id. at 355-57 (finding that the jurisdictional amount was satisfied even though actual damages totaled approximately $50,000 because a viable claim for punitive damages was sufficient to establish jurisdictional minimum).

Here, there is no bar to recovery of the jurisdictional amount. Under New Jersey substantive law, ⁴ an injured plaintiff may recover punitive damages if the defendant committed "a deliberate act or omission with knowledge of a high degree of probability of harm and reckless indifference to the consequences." Smith v....