Am. European Ins. Grp. v. NEI Gen. Contracting

654 F.Supp.3d 78

AMERICAN EUROPEAN INSURANCE GROUP, INC., Plaintiff, v. NEI GENERAL CONTRACTING, Wendy's Drywall, Inc., and Joshua Menchion, Defendants.

Case No. 21-CV-10401-AK

United States District Court, D. Massachusetts

Signed February 6, 2023

John A. Donovan, III, Sloane & Walsh LLP, Boston, MA, for Plaintiff.

Michael Kantrovitz, Michael Patnode, Pro Hac Vice, Kantrovitz & Kantrovitz, LLC, Boston, MA, Martin Kantrovitz, Law Offices of Martin Kantrovitz, Boston, MA, for Defendant Joshua Menchion.

MEMORANDUM AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

A KELLEY, UNITED STATES DISTRICT JUDGE

This is an insurance coverage dispute concerning the duty of an insurance company to defendant and indemnify parties to a personal injury action pending in the Massachusetts Superior Court. Plaintiff American European Insurance Group ("AEIG") seeks a declaratory judgment holding that it owes no duty to defend Wendy's Drywall, Inc. ("Wendy's") or NEI General Contracting ("NEI") in the Superior Court action between Wendy's, NEI, and Joshua Menchion ("Mr. Menchion"). On summary judgment, both AEIG and Mr. Menchion ask the Court to rule as a matter of law on the question of AEIG's duty to defend and indemnify Wendy's and NEI.

I. BACKGROUND

In evaluating the cross motions for summary judgment,¹ the Court relies on AEIG's statement of material facts, [Dkt. 21 at 2-7 ("SMF")], which Mr. Menchion does not dispute.

a. Uncontested Facts

i. The Insurance Contracts

AEIG issued a commercial general liability policy ("the CGL policy") to Wendy's, a drywalling contractor. [SMF ¶ 13]. The CGL policy contains a "disclosure notice," which states "Your policy contains an exclusion of coverage for any claim or suit caused by bodily injury to employees, contractors, and employees of contractors." [Id.] The disclosure notice refers to Endorsement AE 0006, a separate provision in the policy, for additional terms on this exclusion of coverage. [Id.] Endorsement AE 0006, in turn, excludes from coverage bodily injury to any contractor, contractor's employee, or family member of a contractor's employee arising out of services performed by that contractor. [Id. ¶ 14]. It further excludes coverage for any obligation Wendy's, as the insured party, accrues "to indemnify or contribute with another because of damages arising out of such 'bodily injury.' " [Id.]

The CGL policy contains further language defining the scope of additional insured parties. [Id. ¶ 16]. This language extends coverage, as additional insured parties, to "any person or organization" with which the primary insured, Wendy's, had agreed in writing to add as an additional insured parties prior to any injury giving rise to a claim. [See id.] The policy covers additional insured parties only with respect to liability or injury caused by Wendy's acts or omissions, or acts or omissions of persons acting on Wendy's behalf "in performance of [its] ongoing operations for the additional insured." [Id.]

In addition to the CGL policy, AEIG issued a commercial umbrella policy ("the umbrella policy") to Wendy's. [Id. ¶ 17]. The umbrella policy provides coverage for Wendy's "ultimate net loss" for bodily injury or property damage in excess of its limits on other insurance policies. [See id.] The umbrella policy insures all additional insured policies on Wendy's underlying insurance policies, [id. ¶ 18], and states that the CGL policy is one of the qualifying underlying insurance policies, [id. ¶¶ 19-20]. Like the CGL policy, the umbrella policy contains similar language excluding coverage for bodily injury to contractors and contractors' employees, and for any obligation Wendy's accrues to indemnify or contribute with another party. [Id. ¶ 21].

ii. The Subcontractor Agreement

NEI, a general contractor, engaged Wendy's as a subcontractor. [SMF ¶ 22]. Article 13 of the subcontractor agreement between NEI and Wendy's requires Wendy's to carry various forms of insurance. [Dkt. 21-4 ("Sub. Agmt.") § 13]. First, Wendy's is required to carry CGL coverage at specified limits to "cover liability arising from premises, operations, independent contractors, products-completed operations, and personal and advertising injury." [Id. § 13.1.1]. The agreement provides that "Contractor, Owner and all other parties required of the Contractor shall be included as insured's [sic]" on Wendy's CGL policy through completion of an endorsement form. [Id.]. In other words, upon completion of proper paperwork, NEI (the "Contractor") and all parties it was required to insure were to be listed as additional insured parties on Wendy's CGL policy. This policy would "apply as Primary and non-contributing insurance before any other insurance or self insurance . . . maintained by, or provided to, the additional insured." [Id.]. Wendy's was required to "maintain CGL coverage for itself and all insured's [sic] for the duration of the project." [Id.; SMF ¶ 23]. The agreement further required Wendy's to carry umbrella coverage, which "must include as insured's [sic] all entities that are additional insured's [sic] on the CGL." [Sub. Agmt. § 13.1.4; SMF ¶ 24]. Wendy's was required to name NEI as a "certificate holder" on Wendy's policies, and to name both NEI and Codman Square Neighborhood Development Corporation as additional insured on its policy certificates. [Sub. Agmt. § 13.1.5].

iii. The Personal Injury Action

In June 2016, NEI was hired to perform construction, rehabilitation, demolition, and environmental work at a job site in Boston. [Id. ¶ 1]. NEI, in turn, hired Wendy's as a subcontractor to perform drywalling and related work at the job site. [Id. ¶ 2]. NEI also hired Hannah Environmental Energy, Inc. ("Hannah") to perform demolition, salvage, and environmental work at the job site. [Id. ¶ 4]. Mr. Menchion was an employee of Hannah. [Id. ¶ 5].

On the day of the accident in question, Wendy's had caused the floor of the job site to be covered in drywall mud. [See id. ¶ 3]. Mr. Menchion, while operating a circular saw, slipped and fell on a muddy surface at the job site, sustaining serious bodily injuries. [Id. ¶ 8].

In May 2021, Mr. Menchion filed a lawsuit in Norfolk Superior Court against NEI and Wendy's, alleging that both parties' negligence had caused his injuries.² [Dkt. 21-1]. Specifically, his complaint alleges that NEI, as the general contractor, owed a duty to provide a reasonably safe workplace for all workers at the job site, and was responsible for job and safety training for Hannah employees. [SMF ¶¶ 6-7]. It alleges that NEI was negligent in its failure to inspect the property, supervise its employees, and to otherwise lawfully perform its duties to provide a reasonably safe workplace and adhere to pertinent regulations. [See id. ¶ 9]. Likewise, the complaint alleges that Wendy's was negligent in its performance of drywalling work when its employees "created a hazardous condition by allowing unsafe amounts of drywall mud to accumulate and remain on the floor on the Subject Property for an unreasonable period of time." [Id. ¶ 11]. For purposes of this declaratory judgment action, AEIG and Mr. Menchion do not litigate the substance of Mr. Menchion's allegations against NEI and Wendy's in the Norfolk Superior Court action.

b. Procedural History

In March 2021—two months before Mr. Menchion filed his personal injury lawsuit in Superior Court—AEIG filed this action in federal court, naming Mr. Menchion, NEI, and Wendy's as defendants, and seeking a declaratory judgment relieving it of any duty under the CGL policy or umbrella policy to defend or indemnify Wendy's or NEI in relation to Mr. Menchion's injuries. [Dkt. 1]. After Mr. Menchion initiated the Norfolk Superior Court action, AEIG amended its complaint to reference that action, and to assert that it similarly owed no duty to defend or indemnify Wendy's or NEI in relation to Mr. Menchion's injuries. [Dkt. 4]. AEIG timely served all three defendants, [Dkts. 9, 10, 13], but only Mr. Menchion answered, [Dkt. 8]. With the litigation proceeding only against Mr. Menchion, AEIG filed the instant motion for summary judgment. [Dkt. 20]. Mr. Menchion, in his opposition, asks for the Court to grant summary judgment in favor of the absent party Wendy's by declaring that AEIG owes a duty to defend and indemnify it in relation to the Norfolk Superior Court action. [Dkt. 25].

II. STANDARDS OF LAW

a. Summary Judgment

The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) (citing Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990)). Summary judgment may be granted when the record, viewed in the light most favorable to the non-moving party, presents no "genuine issue of material fact," and the moving party is entitled to judgment as a matter of law. Paul v. Murphy, 948 F.3d 42, 49 (1st Cir. 2020). The Court must determine (1) whether a factual dispute exists; (2) whether the factual dispute is "genuine," such that a "reasonable fact-finder could return a verdict for the non-moving party on the basis of the evidence"; and (3) whether a fact that is genuinely in dispute is material, such that it "might affect the outcome of the suit under the applicable substantive law." Scott v. Sulzer Carbomedics, Inc., 141 F. Supp. 2d 154, 170 (D. Mass. 2001). Courts must draw all reasonable inferences in the non-moving party's favor, and the non-moving party may "defeat a summary judgment motion by demonstrating, through submissions of evidentiary quality, that a trialworthy issue persists." Paul, 948 F.3d at 49 (citation omitted). On issues where the non-moving party bears the ultimate burden of proof, the non-moving party "must present definite, competent evidence to rebut the motion." Mesnick, 950 F.2d at 822.

b. Insurance Coverage

Resolution of AEIG's claim turns on the interpretation of two contracts: the insurance policy AEIG issued...