Cincinnati Ins. Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh

377 F.Supp.3d 859

The CINCINNATI INSURANCE COMPANY, Plaintiff,

v.NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant.

Case No. 1:17-cv-250

United States District Court, S.D. Ohio, Western Division.

Signed March 28, 2019

Colleen Marie Blandford, Kohnen & Patton, LLP, Cincinnati, OH, Kimberly Ann Kyle, Kohnen & Patton, Cincinnati, OH, for Plaintiff.

Patrick Fredette, Pro Hac Vice, Christopher Michael Ryan, McCormick Barstow, LLP, Cincinnati, OH, for Defendant.

ORDER RESOLVING CROSS MOTIONS FOR SUMMARY JUDGMENT AND DEFENDANT'S MOTION TO STRIKE

Timothy S. Black, United States District Judge

This civil action is before the Court on Plaintiff The Cincinnati Insurance Company ("CIC" or "Plaintiff")'s motion for summary judgment (Doc. 17) and the parties' responsive memoranda (Docs. 21, 23), and Defendant National Union Fire Insurance Company of Pittsburgh, Pa. ("Defendant" or "National Union")'s motion for summary judgment (Doc. 12) and the parties' responsive memoranda (Docs. 17, 21).¹ Also before the Court is National Union's motion to strike (Doc. 22) and the parties' responsive memoranda (Docs. 25, 27).

I. BACKGROUND

The parties agree that there is no outstanding dispute of material fact.² This case arises out of a May 26, 2015 fire at an apartment building located at 6020 Dahlgren Street in Cincinnati, Ohio (the "Building"). (Doc. 13-2 at ¶ 1). Firefighters were dispatched to the Building, and Daryl E. Gordon, a firefighter, was killed responding to the fire. (Id. at ¶ 2; Doc. 18-1 at ¶ 3).

During the relevant timeframe, The Community Builders, Inc. ("TCB") owned the building. (Doc. 18-1 at ¶ 2). Wallick Properties Midwest LLC ("Wallick"), managed the building for TCB, pursuant to a Management Agreement. (Doc. 18-1 at ¶ 3; Doc. 3-1). The Management Agreement between TCB and Wallick contained the following provision regarding insurance:

Insurance. The Owner [TCB] will inform the Agent [Wallick] of insurance to be carried with respect to the Project and its operations and the Owner will cause such insurance to be placed and kept in effect at all times. The Agent will pay premiums out of the Rental Agency Account and premiums will be treated as operating expenses. All insurance will be placed with such companies, or such conditions, in such amounts and with such beneficial interests appearing thereon as shall be acceptable to the Owner and Consenting Parties and shall be otherwise in conformity with the mortgage; provided that the same will include public liability coverage, with the Agent designated as one of the insured, in amounts acceptable to [Wallick] as well as [TCB] and the Consenting Parties. [Wallick] will investigate and furnish [TCB] with full reports as to all accidents, claims and potential claims for damages relating to the Project and will cooperate with [TCB's] insurers in connection therewith.

(Doc. 3-1 at PAGEID # 409). Therefore, under the Management Agreement, TCB was required to secure insurance that designated Wallick as an insured. Wallick was also required to cooperate with TCB's insurers.

Liberty Mutual Insurance/American Economy Insurance Company ("Liberty Mutual") issued a Commercial Package Policy (the "Liberty Mutual Policy"). Wallick qualified as an "insured" under the Liberty Mutual Policy. (Doc. 13-2 at ¶ 8).

Gordon's estate brought claims against TCB and Wallick, among others. The claims were settled with contributions from multiple insurers, including CIC and National Union. (Doc. 18-1 ¶¶ 4–5). Liberty Mutual contributed to the settlement of Gordon's claims on behalf of Wallick until its primary policy was exhausted. (Doc. 13-2 at ¶ 11). CIC paid $ 1,000,000, its policy limit, on behalf of Wallick as part of the settlement. (Doc. 3 at ¶ 5).

CIC claims that the insurance policies issued by itself and National Union are both excess policies and therefore National Union should contribute to the settlement on a pro rata basis. National Union argues that the policy it issued is in excess to CIC's policy and therefore is not required to contribute to CIC's settlement payment. Therefore, the Court will next examine the relevant portions of the insurance policies at issue.

A. CIC Policy

CIC issued a policy to Wallick with a "Commercial General Liability Coverage Part" for the period June 24, 2014 to June 24, 2015 (the "CIC Policy"). (Doc. 18-1 at ¶ 6; Doc. 12-3). CIC originally issued an insurance policy to Wallick on June 24, 2009. (Doc. 18-1 at ¶ 17). The CIC policy has a per occurrence limit of $ 1,000,000. (Doc. 18-1 at ¶ 7). The "Insuring Agreement" section of the CIC Policy provides in relevant part:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.

(Doc. 12-3 at PAGEID # 657).

The "Commercial General Liability Conditions" section of the CIC Policy includes an "Other Insurance" provision providing:

5. Other Insurance

If other valid and collectible insurance is available to the insured for a loss we cover under COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY or COVERAGE B. PERSONAL AND ADVERTISING INJURY LIABILITY of this Coverage Part, our obligations are limited as follows:

a. Primary Insurance

This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by method described in c. below.

b. Excess Insurance

This insurance is excess over:

...

(2) Any other primary insurance available to the insured covering liability for damages arising out of the premises or operations, or the products and completed operations, for which the insured have been added as an additional insured by attachment of an endorsement.

(Id. at 670–71).

The CIC Policy also contains the following endorsement (the "Real Estate Property Managed Endorsement," or the "Endorsement"):

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. REAL ESTATE PROPERTY MANAGED

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

This insurance does not apply to "property damage" to property you operate or manage or as to which you act as agent for the collection of rents or in any other supervisory capacity

With respect to your liability out of your management of property for which you are acting as real estate manager this insurance is excess over any other valid and collectible insurance available to you.

(Id. at 701). The Real Estate Property Managed Endorsement was added to the CIC Policy in 2012. (Doc. 18-1 at ¶¶ 22–23).

The CIC Policy reflects a "Commercial General Liability Coverage Part" premium of $ 145,558. (Doc. 12-3 at 494). The premium charged under the CIC policy for coverage provided by the "Real Estate Property Managed Endorsement" was $ 1,957.00. (Doc. 12-3 at 723).

The Schedule of Locations (the "Schedule of Locations", Doc. 13-3, at PAGEID # 869–76) lists all the properties covered by the Commercial General Liability Coverage Part. The Building is not listed on the Schedule of Locations. It is undisputed that Wallick was acting as a real estate manager for the Building.

Finally, the CIC Policy contains the following "Method of Sharing" provision:

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 limits of insurance to the total applicable limits of insurance of all insurers.

(Doc. 12-3 at PAGEID # 671).

B. National Union Policy

National Union issued an Umbrella Policy to TCB for the period May 1, 2014 to May 1, 2015 (the "National Union Policy"). (Doc. 12-4). Wallick also qualified as an insured under the National Union Policy. (Doc. 13-2 at ¶ 12). The National Union Policy has a limit of $ 25,000,000. (Doc. 12-4 at PAGEID # 740). The National Union Policy Reflects a premium of $ 314,112.00 or $ 12,564.48 per $ 1,000,000 of coverage. (Id. ). The "Insuring Agreement" section of the National Union Policy provides in relevant part:

INSURING AGREEMENT – COMMERCIAL UMBRELLA LIABILITY

A. We will pay on behalf of the Insured those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay as damages by reason of liability imposed by law because of Bodily Injury, Property Damage or Personal Injury and Advertising Injury to which this insurance applies or because of Bodily Injury or Property Damage to which this insurance applies assumed by the Insured under an Insured Contract.

(Id. at 741).

The National Union Policy includes the following "Limits of Insurance" provisions:

LIMITS OF INSURANCE

...

F. This policy applies only in excess of the Retained Limit . If however, a policy shown in the Schedule of Underlying Insurance forming a part of this policy has a limit of insurance:

1. greater than the amount shown in such schedule, this policy will apply in excess of the greater amount of valid and collectible insurance; or

2. less than the amount shown in such schedule, this policy will apply in excess of the amount shown in the Schedule of Underlying Insurance forming a part of this policy.

G. If the total applicable limits of Scheduled Underlying Insurance are reduced or exhausted by the payment of Loss to which this policy applies

...