Weitz Co. v. Lexington Ins. Co.
| Decision Date | 05 May 2011 |
| Docket Number | No. 4:10-cv-00254-JAJ,4:10-cv-00254-JAJ |
| Parties | THE WEITZ COMPANY, LLC, Plaintiff, v. LEXINGTON INSURANCE COMPANY; ALLIED WORLD ASSURANCE COMPANY (U.S.), INC.; WESTCHESTER SURPLUS LINES INSURANCE COMPANY; ESSEX INSURANCE COMPANY; AXIS SURPLUS INSURANCE COMPANY; LLOYD'S OF LONDON, et al., a/k/a/ UNDERWRITERS AT LLOYD'S; and various unknown insurers hereby named JOHN DOE INSURERS, Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
THE WEITZ COMPANY, LLC, Plaintiff,
v.
LEXINGTON INSURANCE COMPANY; ALLIED WORLD ASSURANCE COMPANY (U.S.), INC.;
WESTCHESTER SURPLUS LINES INSURANCE COMPANY; ESSEX INSURANCE COMPANY;
AXIS SURPLUS INSURANCE COMPANY; LLOYD'S OF LONDON, et al., a/k/a/ UNDERWRITERS AT LLOYD'S;
and various unknown insurers hereby named JOHN DOE INSURERS, Defendants.
No. 4:10-cv-00254-JAJ
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION
Dated: May 5, 2011
This matter comes before the Court pursuant to Defendants' Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants are Lexington Insurance Company ("Lexington"); Allied World Assurance Company (U.S.), Inc. ("Allied"); Westchester Surplus Lines Insurance Company ("Westchester"); Essex Insurance Company ("Essex"); Axis Surplus Insurance Company ("Axis"); and Lloyd's of London, et al., a/k/a/ Underwriters at Lloyd's ("Lloyd's Underwriters").
Plaintiff The Weitz Company, LLC ("Weitz") filed a Complaint against the Defendants on June 4, 2010. [Dkt. No. 1.] Plaintiff has since filed a First Amended Complaint1 on October 28, 2010, and a Second Amended Complaint on March 3, 2011.
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The Court finds that Weitz has complied with Fed. R. Civ. P. 8 and has alleged sufficient facts upon which claims against the Defendants can be based. Accordingly, the Court denies the motions.
The Weitz Company, LLC is an Iowa limited liability company with its principal place of business in Des Moines, Iowa. [Second Am. Compl., Dkt. No. 66 ¶ 1.] The sole
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member of Weitz is The Weitz Group, LLC, with its principal place of business in Des Moines, Iowa. Id. ¶¶ 2-3. The corporate members of The Weitz Group, LLC, all of whom are Iowa corporations with their principal places of business in Des Moines, Iowa, are the Weitz Company I, Inc., The Weitz Company II, Inc., The Weitz Company III, Inc., and The Weitz Company IV, Inc. Id. ¶ 4. The individual members of the Weitz Group, LLC are citizens of Arizona, Arkansas, Colorado, Florida, Hawaii, Iowa, and Wisconsin. Id. ¶ 5.
The Defendants are all corporations in the business of providing insurance, including property insurance, to businesses and individuals. Lexington is a Delaware corporation with its principal place of business in Boston, Massachusetts. Id. ¶ 7. Allied is a Delaware corporation with its principal place of business in New York, New York, or Boston, Massachusetts. Id. ¶ 8. Westchester is a Georgia corporation with its principal place of business in Roswell, Georgia. Id. ¶ 9. Essex is a Delaware corporation with its principal place of business in Glen Allen, Virginia. Id. ¶ 10. Axis is a Georgia corporation with its principal place of business in Illinois. Id. ¶ 11. Lloyd's Underwriters is a British corporation licensed to undertake insurance business in the United States of America. Id. ¶ 12.
On January 8, 2011, Weitz entered into a written "Agreement Between Owner and Contractor" (the "Contract") with CC-Aventura, Inc. ("Hyatt") for the construction of a luxury life-care "Classic Residence" retirement community located at 10333 West Country Club Drive, Aventura, Florida (the "Project"). Id. ¶ 16. The Project consisted of two 23-story residential buildings (the "Towers"), an amenities building, an adjacent health center ("Care Center"), and a parking garage. Id. The Contract had an insurance section specifically detailing obligations of each party to the other.
The Contract required Weitz to purchase and maintain its own comprehensive general liability coverage including:Bodily Injury Liability . . . Property Damage Liability . . . Blanket Contractual Liability, Completed Operations, Broad Form Property Damage . . . [with the above insurance] to also include products and complete operations endorsement which
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shall be maintained for a term ending not sooner than two (2) years after Final Completion.
[Dkt. No. 19, Exh. E – Owner-Contractor Agreement at cl. 7.A.(ii)(a)-(d).] The Contract also stated that "[a]ll insurance required to be maintained by [Weitz] . . . shall be primary to any other valid and collectible insurance . . . ." Id. at cl. 7.M. Pursuant to paragraph 7.N. of the Contract,
[the] Owner and Contractor waive all rights against each other and any of their Subcontractors, any Separate Contractor and their respective agents and employees, each of the other, for damages caused by fire or other perils to the extent covered by property insurance . . . The policies shall provide such waivers of subrogation by endorsement or otherwise. A waiver of subrogation shall be effective as to the person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person had an insurable interest in the property damaged.
According to the Complaint, Allied, Axis, Essex, Lexington, Lloyd's Underwriters, and Westchester issued "all risk" property insurance policies to Hyatt covering the Project (the "Policies"). Second Am. Compl., ¶ 17. All-risk policies cover all causes of loss and physical damage to the Project property unless expressly excluded. Id. ¶ 24. For example, the Policy entered into between Lexington, Allied, and Hyatt provided "Perils Insured Against" to include "all risks of direct physical loss of or damage to property described herein including general average, salvage and all other similar charges on shipments covered hereunder, if any, except as hereinafter excluded." [Dkt. No. 19, Exh. C ¶ 9.] Pertinent "Perils Excluded" consisted of a range of perils such as mechanical breakdown, natural disasters, etc., but also included,
the cost of making good defective design or specifications, faulty materials or faulty workmanship. But if loss or damage from a covered peril herein results, to covered property, from such defective design or specifications, faulty material or faulty
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workmanship, then this policy will cover such ensuing loss or damage not otherwise excepted or excluded from coverage . . .
Id. ¶ 10.C. The policy covered "losses occurring [during] the Policy Period," but had a contractual twenty-four month limitations period, which ran from the inception of loss:
No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twenty-four months next after inception of the loss.
Id. ¶¶ 1, 28.
According to Weitz, the terms of the Contract and the Policies meant that the Defendants were primarily liable to pay for property damages covered by the Policies. Second Am. Compl., ¶ 26.
In or about September 2004, the Care Center sustained damages and Hyatt made a claim on one or more of the Policies for the damages. Id. ¶ 18. In or about July 2005, the Towers sustained damages and Hyatt made a claim on one or more of the Policies for the damages. Id. ¶ 19. Finally, in or about the fall of 2008, Hyatt discovered additional property damage on the plaza deck of the Towers. Id. ¶ 20. In the complaint, Weitz claims that these damages were all insured under one or more of the Policies by the Defendants. Id. ¶¶ 18-20, 23-26.
Weitz asserts that Hyatt made a claim for the damages to the Care Center and the Towers under one or more of the Policies.3 Id. ¶ 21. These structures were insured under Defendants' Policies. Id. ¶ 23. Weitz claims the property damages to the Project were not expressly excluded and are therefore covered under Defendants' Policies. Id. ¶ 25.
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Hyatt also sued Weitz for damages in June of 2006 in the United States District Court for the Southern District of Florida, Miami Division ("Florida Action")4 Id. ¶ 21. In the Florida Action, Hyatt alleged breach of contract, code-violation, and breach of guaranty claims arising out of Weitz's untimely and defective workmanship and subpar, code-violating construction practices.5 [Dkt. No. 37, Exh. A ¶¶ 9-41 & Counts VI, VII, VIII, and IX.] Shortly before trial, Weitz entered into a confidential settlement agreement with Hyatt (the "Settlement Agreement"). Id. ¶ 27. Pursuant to the Settlement Agreement, Weitz paid Hyatt for the property damage Hyatt suffered. Id. ¶ 28. The terms of the Settlement Agreement provided for Weitz to pay the sum of $53,000,000 ("settlement amount") to Hyatt, with some undisclosed portion of the settlement amount paid by MSA Architects, Inc. ("MSA"). [Dkt. No. 37, Exh. B ¶ 2.] Weitz preserved its right to pursue claims against the Defenants in the Settlement Agreement. Id. ¶¶ 5.2, 5.3. Weitz alleges that this Settlement Agreement also, to an undisclosed amount, "extinguished" any primary liability the Defendants' Policies incurred from the property damage. Second Am. Compl., ¶ 27.
Weitz alleges that the property damage paid for in the Settlement Agreement should have been covered by the Policies. Further, that the Defendants failed to pay for damages caused by covered perils and damages covered under the Policies because the damages were not expressly excluded. Second Am...
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