NVR, Inc. v. Motorists Mut. Ins. Co.

• Decision Date: 01 March 2019
• Docket Number: 2:16-cv-00722
• Citation: 371 F.Supp.3d 233
• Parties: NVR, INC., Plaintiff, v. MOTORISTS MUTUAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

371 F.Supp.3d 233

NVR, INC., Plaintiff,

v.MOTORISTS MUTUAL INSURANCE COMPANY, Defendant.

2:16-cv-00722

United States District Court, W.D. Pennsylvania.

Signed March 1, 2019

Carolyn Batz McGee, Kathleen A. Gallagher, Porter Wright Morris & Arthur LLP, Pittsburgh, PA, John E. Hall, Jack Hall, PC, Carnegie, PA, for Plaintiff.

Joseph W. Selep, Sharon A. Hall, Aaron H. Weiss, Zimmer Kunz, PLLC, Pittsburgh, PA, for Defendant.

OPINION

Mark R. Hornak, Chief United States District Judge

This is an insurance coverage dispute stemming from two lawsuits concerning the explosion of a propane heater on a construction site. The Plaintiff, NVR, Inc. ("NVR") is an additional insured on a Commercial General Liability policy provided by the Defendant, Motorists Mutual Insurance Company ("MMIC"). NVR seeks a declaratory judgment defining its rights with respect to its demand for insurance coverage relating to two actions filed in the Court of Common Pleas of Allegheny County, Pennsylvania. (Am. Compl. ¶ 1, ECF No. 9). NVR asserts that MMIC failed to defend and/or indemnify NVR for their involvement in a lawsuit brought by an individual against NVR, and further alleges that MMIC did so in bad faith. MMIC counters by arguing that it had no duty to indemnify NVR or provide a defense to it in the lawsuit because NVR failed to provide timely notice of the suit in contravention of the insurance policy, and that MMIC was prejudiced as a result. NVR also seeks indemnification for its expenses and fees incurred in bringing a property damage action related to the same explosion against one of its contractors. MMIC argues that this claim is not covered by the policy.

In Count I of the Amended Complaint, NVR seeks a declaration that MMIC has a duty to defend and/or indemnify NVR in connection with the personal injury lawsuit filed against them by the individual. (Am. Compl. ¶¶ 80–88). Count II is a breach of contract claim related to MMIC's alleged refusal to defend and indemnify NVR in connection to the same lawsuit. (Id. ¶¶ 89–97). Count III is a separate breach of contract claim related to MMIC's alleged refusal to indemnify NVR with respect to any of the claims asserted by NVR for the property damage that NVR incurred from the propane heater explosion. (Id. ¶¶ 98–106). Count IV alleges that MMIC's refusal to defend and/or indemnify NVR in these matters was in bad faith. (Id. ¶¶ 107–37).

Now before the Court are cross-motions for summary judgment filed by both parties. (ECF Nos. 74, 78). Both parties seek the entry of summary judgment in their favor on all counts. The matters have been fully briefed, (ECF Nos. 92, 95, 103, 106, 109, 113), and are now ripe for disposition. For the reasons that follow, NVR's Motion (ECF No. 74) will be DENIED and MMIC's Motion (ECF No. 78) will be GRANTED.

I. BACKGROUND

The following facts are undisputed. Plaintiff, NVR, is a company that performs residential construction services. (Am. Compl. ¶ 14). NVR retained Rusmur Floors, Inc. ("Rusmur") to install flooring at a housing development being built by NVR in Allegheny County, Pennsylvania. (MMIC CSF ¶ 10, ECF No. 96). This dispute stems from an incident that occurred on February 28, 2011, on one of NVR's residential construction project properties at which Rusmur was performing flooring work. On that date, Gary Loy was severely burned and injured when a defective propane heater exploded. (NVR CSF ¶¶ 1–2, ECF No. 93). Loy brought a lawsuit in the Allegheny Court of Common Pleas on March 13, 2012, for his personal injuries sustained during the incident. (Id. ¶ 4; Loy v. NVR, Inc. , No. GD-12-004835 (Pa. Ct. Com. Pl. 2012) [hereinafter the "Loy Litigation Matter"] ). Loy brought suit against a number of defendants, including NVR and Rusmur.¹ (Id. ). NVR denied that it was negligent and maintained that Loy's injuries were solely attributable to other named defendants in the actions, including Rusmur. (Id. ¶ 5). In connection with the same incident, but in a separate lawsuit, NVR filed suit against Rusmur and a number of other defendants on June 13, 2012, in the Allegheny Court of Common Pleas for property damage at the construction site. (Id. ; NVR, Inc. v. Loy , No. GD-12-010262 (Pa. Ct. Com. Pl. 2012) [hereinafter the "NVR Property Damage Matter"] ).

At the time of the propane heater explosion, NVR and Rusmur were operating under a Master Contractor Agreement ("MCA") which applied to all work performed by Rusmur for NVR and subcontractors performing work on Rusmur's behalf for NVR. (NVR CSF ¶ 10). Per the MCA, Rusmur was required to carry commercial general liability ("CGL") insurance. (Id. ¶ 11). The relevant language from the MCA is as follows:

SECTION 7: INSURANCE

At all times while performing the Work, and for a period of two (2) years thereafter, Contractor will maintain for the benefit of itself and NVR the following minimum insurance coverages:

* * *

C. Commercial General Liability Insurance with bodily injury and property damage limits set forth in Amendment A, and with a contractual liability endorsement covering Contractor's obligations set forth in Sections 3 and 8 of this Agreement in such amounts as NVR may from time to time request, but in no event less than those set forth in Attachment A.

* * *

Contractor shall add NVR as an "Additional Insured" on the above Commercial General Liability and Commercial Automobile Liability policies. All insurance policies will provide an endorsement for a waiver of subrogation in favor of NVR, Inc. Further, all insurance policies will provide that Contractor's insurance policies will be considered primary despite any insurance policies in place by NVR. Contractor also agrees to cause its subcontractors to maintain insurance coverage identical to the coverage set forth in Sections 7(A), 7(B), 7(C) and 7(D), all of which shall name NVR as an additional insured, and if they do not have such coverages, Contractor recognizes and acknowledges that it shall bear exclusive liability for any claims arising by reasons of the actions or failures to act of its subcontractors.

Contractor will provide to NVR current certificates of insurance or other appropriate evidence of compliance with the provisions of this Section 7 promptly after the signing of this Agreement and before any Work commences, and on or before the anniversary date of each policy during which Work is to be performed. Each certificate of insurance shall contain an unqualified clause to the effect that the policy shall not be subject to cancellation, nonrenewal, adverse change, or reduction in amounts of coverage without thirty (30) days prior written notice to NVR.

(NVR-Rusmur Master Contractor Agreement (the "MCA") at 4, ECF No. 94-7).

Defendant MMIC issued a Commercial General Liability Policy, form number CG 0001 (12-07), to Rusmur, bearing policy number 33-276184-20E (the "Policy"). (MMIC CSF ¶ 1, ECF No. 96; CGL Policy Issued by Defendant (the "Policy"), ECF No. 94-8). The Policy was later amended to designate NVR as an additional insured subject to the terms of the endorsement and the Policy. (MMIC CSF ¶ 2). NVR was an additional insured on the Policy during the time period encompassing this incident. (NVR CSF ¶ 12). Section I of Coverage A of the Policy provides coverage for "sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies." (Policy at 18). The Policy states that MMIC has "the right and duty to defend the insured against any "suit" seeking those damages." (Id. ).

The Policy also contains a provision that requires that an insured provide notice to MMIC of any pending claims against the insured. The relevant language is as follows:

Section IV – COMMERCIAL GENERAL LIABILITY CONDITIONS

* * *2. Duties In The Event Of Occurrence, Offense, Claim Or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the "occurrence" or offense took place;

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any injury or damage arising out of the "occurrence" or offense.

b. If a claim is made or "suit" is brought against any insured, you must:

(1) Immediately record the specifics of the claim or "suit" and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or "suit" as soon as practicable.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit";

(2) Authorize use to obtain records and other information;

(3) Cooperate with us in the investigation, or settlement of the claim or defense against the "suit"; and

(4) Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply.

d. No insureds will, except at their own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.

(Policy at 28). For the purposes of the Policy, "you" is defined as "the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy." (Id. at 18). An "insured" is "any person or organization qualifying as such under Section II – Who Is An Insured." (Id. ). Section II was amended to include NVR as an "insured" under the Policy. (Id. at 17). Neither party disputes that NVR qualifies as an "insured" under the Policy. (NVR CSF ¶ 12).

On March 28, 2012, fifteen days after the state court complaint in the Loy Litigation Matter was filed, MMIC acknowledged in writing that it received "suit papers filed against" Rusmur. (ECF No. 97-11). The same correspondence indicated that MMIC was assigning Rusmur's...