(Uk v. Jdca, LLC

• Decision Date: 21 November 2014
• Docket Number: CIVIL ACTION NO. 11-00001-WGY
• Court: U.S. District Court — District of Connecticut
• Parties: GREAT LAKES REINSURANCE (UK), PLC, Plaintiff, v. JDCA, LLC, Defendant. JDCA, LLC, Third-Party Plaintiff, v. WELLS FARGO BANK, NATIONAL ASSOCIATION, WELLS FARGO BANK, NATIONAL ASSOCATION d/b/a FLATIRON CAPITAL, LLC, FLATIRON CAPITAL, LLC, CPM INSURANCE SERVICES, INC., and CONTINENTAL AGENCY OF CONNECTICUT, INC., Third-Party Defendants.

GREAT LAKES REINSURANCE (UK), PLC, Plaintiff, v. JDCA, LLC, Defendant.

JDCA, LLC, Third-Party Plaintiff, v. WELLS FARGO BANK, NATIONAL ASSOCIATION, WELLS FARGO BANK, NATIONAL ASSOCATIONd/b/a FLATIRON CAPITAL, LLC, FLATIRON CAPITAL, LLC, CPM INSURANCE SERVICES, INC.,and CONTINENTAL AGENCY OF CONNECTICUT, INC., Third-Party Defendants.

CIVIL ACTION NO. 11-00001-WGY

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

November 21, 2014

YOUNG, D.J.¹

MEMORANDUM AND ORDER

I. INTRODUCTION

This case arises from a dispute over an insurance contract issued by Great Lakes Reinsurance (UK) PLC ("Great Lakes"), an insurer, to JDCA, LLC ("JDCA"), the owner of a Connecticut property that suffered significant fire damage. Great Lakes brought a declaratory judgment action requesting a determination that it was not liable for any insurance claims because JDCA violated the conditions of the insurance policy or, in the alternative, because the insurance policy had been cancelled before the fire. JDCA counterclaimed for insurance benefits. Soon thereafter, JDCA added three additional parties: Flatiron Capital ("Flatiron"),² which financed JDCA's insurance premiums; CPM Insurance Services, Inc. ("CPM"), which served as JDCA's broker; and Continental Agency of Connecticut, Inc. ("Continental"), which served as Great Lakes' agent. A series of counterclaims and cross-claims ensued.

Three separate motions for summary judgment are now before this Court. First, Great Lakes moves for summary judgment on the ground that the insurance contract in question does not require payment because JDCA failed to comply with certainsprinkler system requirements. Second, Flatiron moves for summary judgment on the breach of contract and negligence claims brought by JDCA, which stem from Flatiron's financing of the insurance premiums. Finally, JDCA moves for summary judgment on the ground that it promptly paid the relevant insurance premiums.

After careful consideration, this Court GRANTS the Great Lakes and Flatiron motions, and DENIES the JDCA motion.

A. Procedural History

This action has a lengthy and complex history. On January 3, 2011, Great Lakes filed a complaint in federal district court seeking a declaratory judgment that an insurance policy issued to JDCA had been properly rescinded before the insured property was damaged by fire, leaving Great Lakes without any obligation toward JDCA. Compl. 1, ECF No. 1. Judge Droney was initially assigned the case. Elec. Note, ECF No. 3. JDCA answered on January 19, 2011, denying the substance of Great Lakes' allegations, raising several affirmative defenses, and filing a counterclaim against Great Lakes seeking damages for failure to pay insurance benefits. Answer Def., JDCA, LLC, ECF No. 9. On February 11, 2011, Great Lakes answered the counterclaim. Answer & Affirmative Defs. Pl. Def.'s Countercl., ECF No. 10. Discovery proceeded over the course of 2011, see, e.g., Elec. Note, ECF No. 12, and on December 15, 2011, this case wasreassigned to Judge Kravitz after Judge Droney was appointed to the Second Circuit. Order Transfer, Dec. 15, 2011, ECF No. 18.

The lawsuit then expanded. On February 9, 2012, JDCA filed a third-party complaint against three third-party defendants: Flatiron, for breach of contract and negligence; CPM, for negligence and breach of fiduciary duty; and Continental, for negligence (collectively with CPM and Flatiron, the "Third-Party Defendants"). Third Party Compl., ECF No. 25. CPM filed its answer on May 7, 2012, in which it denied the negligence charge, raised a series of special defenses, and brought cross-claims seeking indemnification from Flatiron, Continental, and Great Lakes. Answer & Special Defenses Third-Party Def. CPM Ins. Servs., Inc. Cross-cl. & Jury Claim, ECF No. 48.

Over the next several weeks, the other parties submitted their own responsive filings, denying the substance of JDCA's allegations and bringing similar indemnification counterclaims against many of the other parties in the litigation.³ See Great Lakes Reinsurance (UK) PLC's Answer Third Party Compl., Crossclaim, & Affirmative Defenses, ECF No. 51 (answering CPM); Answer, Special Defenses & Cross-cls. Third-Party Defs. WellsFargo Bank, N.A., Wells Fargo Bank N.A. d/b/a Flatiron Capital, LLC & Flatiron Capital LLC, ECF No. 55 (answering JDCA and bringing counterclaim against CPM, Continental, and Great Lakes); Great Lakes Reinsurance (UK) PLC's Answer & Affirmative Defenses Cross-cl. Filed Def. Wells Fargo Bank d/b/a Flatiron Capital, ECF No. 56 (answering Flatiron); Answer & Special Defenses Third-Party Def. CPM Ins. Servs. Inc. Cross-cl. Third Party Defs. Wells Fargo Bank, Nat'l Assoc. & Wells Fargo Bank Nat'l Assoc. D/B/A Flatiron Capital, LLC, ECF No. 58 (answering Flatiron); Third-Party Def. Cont'l Agency Conn., Inc.'s Answer & Affirmative Defenses Cross-cl. Filed Def. CPM Ins. Serv., Inc. Dated May 7, 2013 & Cross-cl. Against Said Entity, ECF No. 60 (answering and bringing cross-claim against CPM); Third-Party Def. Cont'l Agency Conn., Inc.'s Answer & Affirmative Defenses Cross-cl. Filed Defs. Wells Fargo Bank D/B/A Flatiron Capital Dated May 23, 2013 & Cross-cl. Against Said Entities, ECF No. 61 (answering and bringing cross-claim against Flatiron); Answer & Special Defenses of Third-Party Def. CPM Ins. Servs., Inc. Cross-cls. Third-Party Def. Cont'l Agency of Conn., Inc., ECF No. 63 (answering Continental); Answer & Special Defenses Third-Party Def. Wells Fargo Bank, N.A. d/b/a Flatiron Capital, LLC Cross-cls. Def. CPM Ins. Servs., Inc., ECF No. 64 (answering CPM).

Once all parties and claims were added, discovery continued.⁴ On October 18, 2012, after Judge Kravitz passed away, the case was reassigned to Judge Hall. Order Transfer, ECF No. 89. The case was reassigned to this session on January 10, 2013. Order Transfer, ECF No. 94.

On January 31, 2013, Great Lakes moved for summary judgment on its original complaint for declaratory relief, JDCA's counterclaim for breach of contract, and the cross-claims brought by the Third-Party Defendants.⁵ Pl.'s Mot. Summ. J., ECF No. 98; Mem. Law Supp. Pl.'s Mot. Summ. J. ("Great Lakes Summ. J. Mem."), ECF No. 98-1. JDCA, CPM, and Flatiron filed motions opposing summary judgment in mid-March 2013. Objection Mot. Summ. J., ECF. No 105 (JDCA); Mem. Law Def. JDCA, LLC. Opp'n Pl.'s Mot. Summ. J. ("JDCA First Opp'n Mem."), ECF No. 107; Third-Party Def. CPM Ins. Servs., Inc.'s Mem. Law Opp'n Pl.'s Great Lakes Reinsurance (UK) PLC's Mot. Summ. J. ("CPM First Opp'n Mem."), ECF No. 119; Opp'n Def. Wells Fargo Bank, N.A., Wells Fargo Bank N.A. d/b/a Flatiron Capital, LLC & FlatironCapital LLC Pl. Great Lakes Ins. (UK) PLC's Mot. Summ. J. ("Flatiron First Opp'n Mem."), ECF No. 120. In late June, after further discovery, these parties filed updated oppositions to summary judgment. Supplemental Mem. Law Def. JDCA, LLC Opp'n Pl.'s Mot. Summ. J. ("JDCA Second Opp'n Mem."), ECF No. 139; Third-Party Def. CPM Ins. Servs., Inc.'s Supplemental Mem. Law Opp'n Pl. Great Lakes Reinsurance (UK), PLC's Mot. Summ. J. ("CPM Second Opp'n Mem."), ECF No. 146; Flatiron's Supplemental Opp'n Pl.'s Mot. Summ. J. ("Flatiron Second Opp'n Mem."), ECF No. 147. Great Lakes replied on July 11, 2013. In its reply, Great Lakes withdrew one ground for its summary judgment motion, that the insurance policy in question had been cancelled because of nonpayment, but maintained the second ground, that the plain wording of the contract precluded payment of insurance benefits. Mem. Reply Def. JDCA, LLC & Third Party Def. CPM Ins. Servs.' Mem. Opp'n Mot. Summ. J. ("Great Lakes Reply") 2, ECF No. 148.

A second motion for summary judgment was soon filed. On July 15, 2013, Flatiron moved for summary judgment on the negligence and breach of contract claim raised in JDCA's third-party compliant, as well as the derivative cross-claims raised by CPM and Continental.⁶ Flatiron's Mot. Summ. J. 1, ECF No. 151; Flatiron's Mem. Law. Supp. Mot. Summ. J. ("Flatiron Summ.J. Mem."), ECF No. 151-2. CPM and JDCA filed motions in partial opposition to the Flatiron motion. Third-Party Def. CPM Ins. Servs., Inc.'s Mem. Law. Partial Opp'n Third-Party Def. Wells Fargo Bank, Nat'l Assoc., Wells Fargo Bank, Nat'l Assoc., Wells Fargo Bank, Nat'l Assoc. D/B/A Flatiron Capital, LLC & Flatiron Capital, LLC's Mot. Summ J. ("CPM Opp'n Flatiron"), ECF No. 155; Mem. Law. Def. JDCA, LLC Partial Opp'n Third-Party Defs. Wells Fargo Bank, Mot. Summ. J. ("JDCA Opp'n Flatiron"), ECF No. 157. Flatiron replied on August 16, 2013. Flatiron's Reply Opp'n Mot. Summ. J. ("Flatiron Reply Summ. J."), ECF No. 159.

Finally, on August 7, 2013, JDCA filed a motion for interlocutory summary judgment on the question of whether JDCA timely paid the insurance premiums.⁷ Mot. Interlocutory Summ. J. Pl. Great Lakes Reinsurance (UK) PLC JDCA, LLC ("JDCA Summ. J. Mot."), ECF No. 156. Great Lakes opposed this motion on September 5, 2013. Pl. Great Lakes Reinsurance (UK) PLC's Mem. Opp'n Def. JDCA's Mot. Interlocutory Summ. J. ("Great Lakes JDCA Opp'n"), ECF No. 162.

This Court held a motion session on October 4, 2013, at which time it took all three motions under advisement. Minute Entry, Oct. 4, 2013, ECF No. 169. There, the Court gave the parties additional time to complete any depositions leftoutstanding, and after doing so, to report "if any facts have changed." Id. The parties did so on February 14, 2014. Supplemental Mem. Opp'n Def, JDCA's Mot. Interlocutory Summ. J. ("Great Lakes Supplemental Opp'n"), ECF No. 177; Supplemental Mem. Favor Pl.'s Mot. Summ. J. ("Great Lakes Supplemental Mem."), ECF No. 178; Supplemental Mem. Defs. Wells Fargo Bank, N.A., Wells Fargo Bank N.A. d/b/a/ Flatiron Capital, LLC & Flatiron Capital LLC. (Collectively "Flatiron") Supp. Mot. Summ. J. ("Flatiron Supplemental Mem."), ECF No. 179; Third-Party Def. CPM Ins. Servs., Inc.'s 2d Supplemental Mem. Law Opp'n Pl. Great Lakes Reinsurance (UK), PLC's Mot. Summ. J. & Supp. JDCA's Interlocutory...