Dimillo v. Travelers Prop. Cas. Co. of Am.

789 F.Supp.2d 194

Christopher DiMILLO, Plaintiff,

v.TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Defendant.

No. 1:10–cv–00263–JAW.

United States District Court, D. Maine.

June 2, 2011.

Alexander Wilson Saksen, Drummond & Drummond, LLP, Portland, ME, for Plaintiff.Carol I. Eisenberg, Wendell G. Large, Richardson, Whitman, Large & Badger, Portland, ME, for Defendant.

ORDER ON MOTION FOR SUMMARY JUDGMENT

JOHN A. WOODCOCK, JR., Chief Judge.

A condominium owner seeks to enforce coverage under a property insurance policy purchased by his condominium association. Because he has not raised a genuine issue of material fact as to whether he has standing to enforce the terms of the policy, the Court grants the insurance company's motion for summary judgment.

I. STATEMENT OF FACTSA. Procedural Background

On March 31, 2010, Christopher DiMillo filed an amended complaint in Cumberland County Superior Court seeking a judicial declaration that Travelers Property Casualty Company of America (Travelers) is obligated to indemnify him for damages to his condominium and to hold him harmless for all covered losses under the Travelers policy that inured to his benefit; he also seeks damages against Travelers for its failure to defend and indemnify him. Notice of Removal (Docket # 1) Attach. 2 ( Compl.). On April 27, 2010, the action was removed to this Court. Notice of Removal. On September 15, 2010, Travelers moved for summary judgment on the grounds that Mr. DiMillo lacks standing or capacity to prosecute his claims because he is not an insured under the policy. Def. Travelers Property Casualty Company of America's Mot. for Summ. J. (Docket # 14) ( Def.'s Mot.). On October 6, 2010, Mr. DiMillo responded. Pl.'s Opp'n. to Def.'s Mot. for Summ. J. (Docket # 17) ( Pl.'s Opp'n ). On October 20, 2010, the Magistrate Judge granted Mr. DiMillo leave to file a supplemental response in recognition of “an ongoing discovery concern” between the parties. Order (Docket # 21). On November 16, 2010, Mr. DiMillo filed his supplemental response. Pl.'s Supplemental Objection to Def.'s Mot. for Summ. J. (Docket # 22) ( Pl.'s Supplemental Opp'n ). On November 24, 2010, Travelers replied. Def. Travelers Property Casualty Company of America's Reply Mem. in Supp. of its Mot. for Summ. J. (Docket # 25) ( Def.'s Reply ).

B. Factual Background

Mr. DiMillo owns an individual condominium unit (condo) in the Mountainside Phase IX condominium project located at 2136 Crocker Mountain Road in Kingfield, Maine. Def. Travelers Property Casualty Company of America's Statement of Undisputed Material Facts ¶ 1 (Docket # 16) (DSMF); Pl.'s Opp'n to Def.'s Statement of Material Facts ¶ 1 (Docket # 18) (PODSMF). In the fall of 2009, Mr. DiMillo's condo suffered severe water damage. DSMF ¶ 2; PODSMF ¶ 2. The resulting repairs required Mr. DiMillo to strip the condo to its studs to remediate the damage. Pl.'s Additional Material Facts ¶ 8 (Docket # 18) (PAMF); Def. Travelers Property Casualty Company of America's Reply to Pl.'s Additional Statement of Facts ¶ 8 (Docket # 26) (DRPAMF).

At the time of the incident, Mountainside Phase IX and Mountain Valley Property, Inc. maintained in force a Travelers property insurance policy (the policy). DSMF ¶ 3; PODSMF ¶ 3. Mountainside Phase IX is the condominium association (the Association) and Mountain Valley Property, Inc. (MVP) is the Association's property manager. PODSMF ¶ 3. The policy was a condominium PAC (property and casualty) policy effective January 1, 2009 through January 1, 2010. DSMF ¶ 4; PODSMF ¶ 4. The only named insured on the policy was “Mountainside Phase IX & Mountain Valley Property Inc.,” and the insured premises were described as Crocker Mountain, Burnt Mountain, Bigelow Mountain, and Carrabasset Valley condominiums.¹ DSMF ¶ 5; PODSMF ¶ 5. After Mr. DiMillo sustained water damage to his condo, the Association attempted to assign to Mr. DiMillo its right to pursue Travelers for all claims associated with the incident.² PAMF ¶ 1; DRPAMF ¶ 1; Pl.'s Supplemental Statement of Material Facts ¶ 17 (Docket # 23) (PSSMF); Def.'s Resp. to Pl.'s Supplemental Statement of Material Facts ¶ 17 (Docket # 26) (DRPSSMF).

Mr. DiMillo is a member of the Association. PAMF ¶ 14; DRPAMF ¶ 14. The Association's bylaws require the Board of Directors to “obtain and maintain to the extent available in accordance with general business practices, insurance on the Condominium buildings and all other insurable improvements upon the land, including both but not limited to all of theunits ....” ³ PAMF ¶ 15 (emphasis provided by Mr. DiMillo); DRPAMF ¶ 15. A certificate of insurance was to be issued to each unit owner, showing the relative amount of insurance covering each unit. PAMF ¶ 15; DRPAMF ¶ 15. The insurance is paid for through the common expenses, which are paid by each unit owner. PAMF ¶ 15; DRPAMF ¶ 15.

When Mr. DiMillo bought his condo in 2002, representatives of MVP told him he only needed to buy a “contents” policy as the Association had purchased a policy for all other losses.⁴ PAMF ¶¶ 6–7; DRPAMF ¶¶ 6–7. Based on this representation, Mr. DiMillo bought a “contents-only” policy and no other insurance. PAMF ¶ 13; DRPAMF ¶ 13. After the damage to Mr. DiMillo's condo, Cindy Hammond, a representative from the Association, told him that the Association and its insurer would “take care of” the damage to the condo. ⁵ PAMF ¶ 9; DRPAMF ¶ 9. The Association thought that the policy covered the damage to Mr. DiMillo's condo. PSSMF ¶ 18; DRPSSMF ¶ 18. It brought a claim for damages to Mr. DiMillo's condo under the policy, and Travelers denied that claim on October 7, 2009. DSMF ¶ 6; PODSMF ¶ 6.

C. Previous Claims

In 2006, Travelers paid a claim under a previous iteration of this same Travelers policy.⁶ PSSMF ¶ 1; DRPSSMF ¶ 1. The underlying claim was for water damage caused by a running toilet on the second floor, possibly due to a defective valve. PSSMF ¶ 2; DRPSSMF ¶ 2. Travelers paid $29,971.32 on that claim for the water damage and covered “replacement costs” of “building and contents.” PSSMF ¶ 3; DRPSSMF ¶ 3. Similarly, in 2010, Travelers paid a claim under the policy for water damage to the unit located at 2174 Bigelow Road, unit 9, also in the Association. PSSMF ¶ 4; DRPSSMF ¶ 4. The claim was for water damage caused by an outside drain clogging and causing “water backup.” PSSMF ¶ 5; DRPSSMF ¶ 5. Travelers paid $3,188.89 on that claim for water damage and covered “replacement costs” and “building and contents.” PSSMF ¶ 6; DRPSSMF ¶ 6.

In at least one annual policy, the underwriting documents referenced the interior of individual units. PSSMF ¶¶ 14–16; DRPSSMF ¶¶ 14–16. In 2005, a Travelers representative visited Maine to determine the extent of coverage for the property under the “General Liability and Property coverages” policy. PSSMF ¶ 14; DRPSSMF ¶ 14. Travelers' March 2005 “Commercial Building Valuation Report” did not limit valuation to the exterior portion of the property at 2135 and 2136 Crocker; it valued the interior at $68,649. PSSMF ¶ 16; DRPSSMF ¶ 16. In its 2005 “Risk Assessment Report,” Travelers listed certain risks to the interior of the property as risks it must assess in determining policy limits. PSSMF ¶ 16; DRPSSMF ¶ 16.

The underwriting file for previous iterations of the policy further made some references to individual condominium units. PSSMF ¶¶ 8–13; DRPSSMF ¶ 8–13. For example, Travelers permitted mortgagees of individual units to be added as “additional insureds” on the Association's annual policies of insurance. PSSMF ¶ 8; DRPSSMF ¶ 8. In 2006, Travelers discussed applying a credit for interior sprinkler systems on the property. PSSMF ¶ 10; DRPSSMF ¶ 10. The Underwriting Analysis for that year described the covered property as “14 [buildings] with 1–4 units each totaling 40 units” with “hardwired smoke detectors.” PSSMF ¶ 11; DRPSSMF ¶ 11. The Statement of Value for that year valued the property at 2135 and 2136 Crocker at $317,304.00. PSSMF ¶ 12; DRPSSMF ¶ 12. It valued the personal property at 2135 and 2136 Crocker at $1,000. PSSMF ¶ 13; DRPSSMF ¶ 13. In 2008, Travelers calculated a policy limit of $548,872.00 on the property at 2135 and 2136 Crocker. PSSMF ¶ 9; DRPSSMF ¶ 9.

D. The Parties' Contentions

1. Travelers' Motion

Travelers contends it is entitled to summary judgment “on the ground that [Mr. DiMillo] lacks standing or capacity to prosecute his claims because he is not an insured under the policy.” Def.'s Mot. at 2. Travelers argues that the policy “was a contract of insurance with the Association and not with [Mr. DiMillo].” Id. at 4. It says that the Association is an entity separate from Mr. DiMillo, that the relevant provisions of the insurance policy are solely between the Association and Travelers, and that the insurance contract did not impose any obligations on Mr. DiMillo or vest any rights in him. Id. It contends that all of this is unambiguous from the language of the policy. Id. at 5. To emphasize the lack of ambiguity, Travelers cites policy language providing that where property damage is covered by the policy, “any claim for loss must be made by the Named Insured.” Id. at 6.

Travelers asserts that since Mr. DiMillo is not a party to the policy he “has no basis to sue to enforce the contract.” Id. It states that there is no “cogent reason” the Court should disregard the separate identities of Mr. DiMillo and the Association. Id. at 7. It argues that, instead, a suit against the Association is “the appropriate route for [Mr. DiMillo] to object to the claims handling by the Association and its insurer.” Id.

2. Mr. DiMillo's Response and Supplemental Response

Mr. DiMillo responds that he has standing to bring this suit “under an array of legal theories.” Pl.'s Opp'n. at 1. He first contends that he has standing because the Association “assigned its right to pursue [Travelers] for covered damages.” Id. at 4. He asserts that the “assignment was signed by an...