Those Certain Underwriters at Lloyd's v. DVO, Inc.

Decision Date17 July 2020
Docket NumberCase No. 1:19-cv-00252
Citation473 F.Supp.3d 236
Parties THOSE CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Subscribing to Policies PGIARK07130-00 and PGIXS00546-00, Plaintiff, v. DVO, INC. and Dairy Energy, Inc., Defendants.
CourtU.S. District Court — Western District of New York

Dan D. Kohane, Steven E. Peiper, Hurwitz & Fine, P.C., Buffalo, NY, Michael Kotula, Rivkin, Radler LLP, Uniondale, NY, for Plaintiff.

Charles E. Graney, Steven R. Hamlin, Webster Szanyi, LLP, Buffalo, NY, for Defendants DVO, Inc.

Charles E. Graney, Steven R. Hamlin, Webster Szanyi, LLP, Buffalo, NY, David M. Knapp, Kevin T. Merriman, Ward Greenberg Heller & Reidy LLP, Rochester, NY, for Defendants Dairy Energy, Inc.


Christina Reiss, District Judge

Plaintiff, Those Certain Underwriters at Lloyd's, London, subscribing to policies PGIARK07130-00 ("Policy 7130") and PGIXS00546-00 ("Policy 546") (collectively, the "Policies"), brings this action against Defendants DVO, Inc. ("DVO") and Dairy Energy, Inc. ("Dairy Energy" and collectively, "Defendants") seeking a declaratory judgment regarding its duties to defend and indemnify DVO in an underlying action between DVO and Daily Energy, captioned Dairy Energy, Inc. v. DVO, Inc. , Case No. CL18002382-00 (Va. Cir. Ct.) (the "Underlying Action").

DVO is the insured under Policy 7130, which is the Primary Policy, as well as Policy 546, which is an Excess Policy. Policy 7130 contains a Professional Liability Policy (the "7130 Professional Liability Policy") and a Commercial General Liability Policy (the "7130 Commercial General Liability Policy"). Policy 546 affords excess coverage subject to the same terms and conditions set forth in the 7130 Professional Liability Policy and the 7130 Commercial General Liability Policy. For purposes of the pending motions, the parties agree that only the 7130 Professional Liability Policy is at issue.1

In its Complaint, Plaintiff asserts that it is not required to defend or indemnify DVO under the 7130 Professional Liability Policy and that, to the extent that the Underlying Action would otherwise trigger coverage, several exclusions apply. In response, DVO counterclaims for a declaratory judgment that the 7130 Professional Liability Policy gives rise to a duty to defend the Underlying Action because it concerns "professional services" and no exclusions apply. DVO further alleges that Plaintiff breached the express terms of the Policies and the implied covenant of good faith and fair dealing by disclaiming coverage and commencing this action.

Dairy Energy's counterclaim seeks a declaratory judgment that mirrors DVO's requests. In addition, Daily Energy argues that, to the extent that Dairy Energy recovers from DVO in the Underlying Action, Dairy Energy would be entitled to satisfaction of its judgment against DVO pursuant to the 546 Policy.

On September 3, 2019, DVO moved for partial summary judgment pursuant to Fed. R. Civ. P. 56, seeking dismissal of Plaintiff's Complaint, a declaration that Plaintiff must defend DVO in the Underlying Action pursuant to the terms of the 7130 Professional Liability Policy, and reimbursement for attorneys’ fees and costs incurred in connection with this action. (Doc. 34.) Plaintiff opposed the motion and cross-moved for summary judgment requesting a declaration that Plaintiff is not required to defend or indemnify DVO. (Doc. 41.) In addition, Plaintiff moved to dismiss DVO's claim for breach of the implied covenant of good faith and fair dealing under Fed. R. Civ. P. 12(b)(6). DVO and Daily Energy opposed Plaintiff's cross-motion on November 12, 2019. On November 26, 2019, the court took the pending motions under advisement.

Plaintiff is represented by Dan D. Kohane, Esq., Michael Kotula, Esq., and Steven E. Peiper, Esq. DVO and Dairy Energy are represented by Charles E. Graney, Esq., and Steven R. Hamlin, Esq. Dairy Energy is also represented by David M. Knapp, Esq., and Kevin T. Merriman, Esq.

I. The Factual Record.
A. Whether the Contested Exhibits Are Admissible.

The parties contest whether two exhibits, identified as DVO's Exhibit 2-C (an email from a DVO employee transmitting a claim under the 7130 Professional Liability Policy) and Plaintiff's Exhibit G (a policy statement from the American Society of Civil Engineers ("ASCE")) are properly before the court. A party may support a factual assertion made in a motion for summary judgment by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials[.]" Fed. R. Civ. P. 56(c)(1)(A). Even if the cited materials are not themselves admissible at trial, the court may consider "the content or substance of otherwise inadmissible materials where ‘the party submitting the evidence show[s] that it will be possible to put the information ... into an admissible form.’ " Humphreys & Partners Architects, L.P. v. Lessard Design, Inc. , 790 F.3d 532, 538 (4th Cir. 2015) (alterations in original) (quoting 11 James Wm. Moore et al., Moore's Fed, Practice § 56.91 [2] (3d ed. 2015)); see also Lee v. Offshore Logistical & Tramp., L.L.C. , 859 F.3d 353, 355 (5th Cir. 2017) (holding "the material may be presented in a form that would not, in itself, be admissible at trial") (citation and internal quotation marks omitted).

Pursuant to Fed. R. Civ. P. 56(c)(2), the opposing party may "object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence." Id. An opposing party waives its objections if the contested materials "were attached as exhibits to [its] Rule 56.1 Statement and were a part of [its] moving papers." Capobianco v. City of N.Y. , 422 F.3d 47, 55 (2d Cir. 2005) (citing 10A Charles Alan Wright et al., Fed. Practice & Procedure § 2722, at 384-85 (3d ed. 1998)).

Plaintiff contests the admissibility of DVO's Exhibit 2-C, a February 20, 2018 email from Corey Brickl, a DVO employee, to a representative from Premier Claims Management, LLC, because it is not authenticated through an affidavit or deposition testimony by a person with personal knowledge of its contents, which purportedly renders it inadmissible hearsay. Exhibit 2-C includes as attachments a project proposal for a digester signed on January 27, 2010 by Stephen W. Dvorak as President of GHD, Inc. (DVO was formerly named GHD, Inc.) and Kyle T. Van Der Hyde of Dairy Energy as well as a February 12, 2018 letter from Daily Energy's counsel providing notice of a claim against DVO. Because Plaintiff included portions of these exhibits in both its Complaint and its motion for summary judgment, it has waived any objection to them. See Capobianco , 422 F.3d at 55 (holding defendants waived objections to the admissibility of documents cited in their statement of facts and briefs).

Even in the absence of waiver, "[t]he bar for authentication of evidence is not particularly high" and " ‘is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.’ " United States v. Gagliardi , 506 F.3d 140, 151 (2d Cir. 2007) (quoting Fed. R. Evid. 901(a) ). The email and project proposal are authored by a DVO employee and the claim letter was sent by counsel for Dairy Energy, and thus both documents are likely to be easily authenticated at trial. See Gordon v. New England Cent. R.R., Inc. , 2019 WL 5084160, at *2 (D. Vt. Oct. 10, 2019) (considering unauthenticated exhibits on summary judgment when the defendant "identified either the creator of each exhibit or a person with knowledge of the document's creation who will properly authenticate the document at trial"); Hinterberger v. Catholic Health Sys. , 299 F.R.D. 22, 38 (W.D.N.Y. 2014) (holding Rule 56(c) "simply provides that the evidence must be capable of presentation in admissible form at the time of trial; it does not require that the materials be presented in an admissible form on summary judgment"). Exhibit 2-C is therefore properly before the court.

DVO, in turn, challenges the admissibility of Plaintiff's Exhibit G, the ASCE policy statement regarding warranty and guarantee clauses for professional engineering service contracts, on the grounds that "Plaintiff may not rely on documents extrinsic to Daily Energy's complaint" to avoid its duty to defend. (Doc. 43 at 10.) A policy statement is not relevant to the duty to defend unless it is attached to, incorporated within, or integral to the Complaint in the Underlying Action. See Int'l Bus. Macks. Corp. v. Liberty Mut. Ins. Co. , 363 F.3d 137, 148 (2d Cir. 2004) ("[T]he general rule in determining whether an insurer has a duty to defend is to compare the allegations of the complaint with the operative insurance policy."). Because the Complaint in the Underlying Action includes no reference to the ASCE policy statement, Exhibit G is not properly before the court.2

B. Whether the Court May Consider Statements of Fact Without Record Citations.

Both Plaintiff and DVO rely on factual assertions unsupported by record citations. For example, Plaintiff asserts, without record evidence, that the "Court in the Underlying Action denied DVO's plea in bar because of fact issues concerning the alleged ten-year design warranty in the Dairy-DVO contract. But for the alleged ten-year design warranty, the Underlying Action would have been dismissed already." (Doc. 41-9 at 26, ¶ 12.) DVO, in turn, asserts that the digester project at issue in the Underlying Action "was not approved by the State USDA Rural Development program official, a condition precedent to the [Standard Form...

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