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Metropolitan Glass Company, Inc. v. National Trust Insurance Co.

United States District Court, S.D. Alabama, Southern Division

December 17, 2014

METROPOLITAN GLASS COMPANY, INC. and QBE INSURANCE CORPORATION, Plaintiffs,
v.
NATIONAL TRUST INSURANCE COMPANY, FCCI INSURANCE COMPANY, and FCCI INSURANCE GROUP, Defendants.

REPORT AND RECOMMENDATION

WILLIAM E. CASSADY, Magistrate Judge.

This cause is before the Magistrate Judge for issuance of a report and recommendation, pursuant to 28 U.S.C. § 636(b), on the complaint (Doc. 1, Exhibit A), the defendants' motion to dismiss and/or strike certain claims and brief in support thereof (Doc. 2), plaintiffs' response in opposition (Doc. 13), and the moving parties' reply (Doc. 15). Upon consideration of the foregoing pleadings, it is recommended that the Court GRANT IN PART and DENY IN PART the defendants' motion to dismiss and/or strike certain claims (Doc. 2).

FINDINGS OF FACT

"This action arises out of a lawsuit involving alleged defects and deficiencies in the construction of the fifteen story, 98 unit Windemere Condominium Building in Perdido Key, Florida[.]" (Doc. 1, Exhibit A, COMPLAINT, at ¶ 8.) Destinations, Inc., the developer and owner of Windemere, entered a contract with McCrory to construct the building. ( Id. at ¶¶ 10-11.) On or about May 19, 2003, McCrory, the general contractor, hired plaintiff Metropolitan Glass Company, Inc. ("Metropolitan") as a subcontractor "to order and install the windows and sliding glass doors at Windemere[.]" ( Id. at ¶ 12.)

In or around May of 2006, Destinations filed suit against "Citizens"[1] to recover "ceiling delamination" damages wrought by Hurricane Ivan. ( Id. at ¶ 14.) By court order dated October 6, 2008, the Windemere Association, Inc. ("Association") was substituted as party plaintiff for Destinations because in April of 2005 Destinations turned over control of the building to the Association. ( Id. at ¶¶ 13 & 15.) Association filed an amended complaint on June 9, 2009, and therein asserted numerous claims against McCrory. ( See id. at ¶ 16.) McCrory filed a second amended third-party complaint on November 21, 2011, and named Metropolitan and other subcontractors as the parties responsible for the damages claimed by the Association. ( See id. at ¶ 17.) Approximately two months later, on January 17, 2012, the Association filed its third amended complaint that named Metropolitan as a defendant. ( Id. at ¶ 18.)

The Third Amended Complaint against Metropolitan allege[d] construction defects related to the windows and doors it installed and subsequent property damage to the Windemere building and work of other trades. The claims asserted against Metropolitan included, but were not limited to, ongoing water intrusion and damage the Windemere building since construction, resulting from the installation of incorrect windows and doors and resulting water intrusion. Additionally, in discovery, allegations were also made that through confusion over the wind codes, the wrong windows and doors were mistakenly installed, causing and resulting in water and other property damage to the interior structure of the building and interior parts of the building.

( Id. (internal citation omitted); see also id. at ¶ 19 ("After discovery, the damages claimed against Metropolitan exceeded $5, 000, 000.00.").)

At all relevant times from October of 2007 through October of 2011, Metropolitan held two Commercial General Liability policies with FCCI, one for the term October 12, 2007 through October 12, 2010 and the second for the term October 12, 2010 through October 12, 2011. ( See id. at ¶ 20.) Both policies included a limitation of liability per occurrence of $1, 000, 000.00, obligated "FCCI to pay those sums that the insured [Metropolitan] becomes legally obligated to pay as damages because of... "property damage" to which th[e] insurance applies[, ]'" and obligated "FCCI to defend the insured [Metropolitan] against any "suit" seeking those damages.'" ( Id. at ¶ 21 (internal citations omitted).)

The FCCI CGL policy further provided that if other valid and collectible insurance was available to Metropolitan for a loss FCCI covered, FCCI's obligations would include, but are in no way limited to, at least[] a 4/5's (four-fifth's) share in the defense costs incurred by QBE and settlement funds paid by QBE on behalf of Metropolitan, based on the years of coverage by FCCI and one year of coverage by QBE.

( Id. at ¶ 22.) Indeed, Metropolitan's policies with FCCI and its policy with QBE Insurance Corporation ("QBE") provided for an identical method of sharing costs ( id. at ¶ 23), as follows: "If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.'" ( Id. at ¶ 22 (citations omitted).)

Despite Metropolitan's timely notification to FCCI of the claims brought against it by McCrory and the Association, "FCCI denied coverage and refused to provide a defense and/or indemnity to Metropolitan." ( Id. at ¶ 27; see also id. at ¶ 26.) However, QBE did defend Metropolitan on the claims asserted by McCrory and the Association. ( Id. at ¶ 31.)[2]

32. During mediation efforts, FCCI was given notice of an impending settlement to resolve the claims asserted against Metropolitan by the Association and McCrory. That notice demanded that FCCI step in and contribute to the settlement. That notice also expressly reserved any and all rights against FCCI for reimbursement/contribution, in the event that FCCI did not contribute.
33. FCCI refused to contribute. Instead, FCCI again denied that it owed any coverage obligation to Metropolitan.
34. The damages claimed against Metropolitan exceeded $5, 000, 000.00; exposing Metropolitan to liability greatly in excess of the QBE Policy limits of $1, 000, 000.00.
35. In light of the potential for an excess judgment against Metropolitan, QBE paid its policy limits of $1, 000, 000.00 to settle the claims of the Association and McCrory filed against Metropolitan.
36. QBE also incurred defense costs, expenses, and attorneys[] fees in defending Metropolitan in the underlying case in excess of $497, 132.95.

( Id. at ¶¶ 32-36.)

Based upon the foregoing, Metropolitan and QBE filed a nine-count complaint in the Circuit Court of Mobile County, Alabama on August 8, 2014 against National Trust Insurance, FCCI Insurance Company, and FCCI Insurance Group ("FCCI"). (Doc. 1, Exhibit A.)

COUNT I

(DECLARATORY JUDGMENT)

...
38. Plaintiffs are entitled to a declaration from the Court that a duty of defense was owed under the FCCI CGL Policy for the claims made against Metropolitan by the Association and McCrory.
39. Plaintiffs are also entitled to a declaration from the Court that a duty of indemnity benefits was owed under the FCCI CGL Policy for the claims made against Metropolitan by the Association and McCrory.
40. Plaintiffs allege that a justiciable controversy exists regarding the rights, duties, and obligations of the Defendants under the FCCI CGL Policy.
WHEREFORE, Plaintiffs demand judgment in their favor and against Defendants in the full amount of all damages, attorneys' fees, costs, the settlement amount, and expenses incurred now and in the future by Plaintiffs, as well as an award of punitive damages in an amount that is sufficient to punish Defendants for their wrongful conduct in this matter, as well as to deter Defendants and other similarly situated defendants from similar conduct in the future, along with all further legal and equitable relief to which the Plaintiffs may be entitled.

COUNT II

(BREACH OF CONTRACT-SETTLEMENT CONTRIBUTION)

...
42. Defendants received timely notice and demands to contribute to the settlement of the claims against Metropolitan filed by the Association and McCrory.
43. Defendants failed and refused to contribute to Metropolitan's settlement with the Association and McCrory.
44. QBE paid $1, 000, 000.00 to obtain that underlying settlement, along with attorneys[] fees and other expenses.
45. Defendants owe Plaintiffs... a 4/5's (four-fifth's) share of the $1, 000, 000.00 paid by QBE to settle the underlying claims against Metropolitan, based on the years of coverage by FCCI and one year of coverage by QBE.
WHEREFORE, Plaintiffs demand judgment in their favor and against Defendants in the full amount of all damages, attorneys' fees, costs, the settlement amount, and expenses incurred now and in the future by Plaintiffs, as well as an award of punitive damages in an amount that is sufficient to punish Defendants for their wrongful conduct in this matter, as well as to deter Defendants and other similarly situated defendants from similar conduct in the future, along with all further legal and equitable relief to which the Plaintiffs may be entitled.

COUNT III

(BREACH OF ...


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