Nautilus Ins. Co. v. Remac Am., Inc.

956 F.Supp.2d 674

NAUTILUS INSURANCE COMPANY

v.REMAC AMERICA, INC., et al.

Civil Action No. DKC 13–0169.

United States District Court, D. Maryland.

July 9, 2013.

Richard J. Berwanger, Jr., Stacey Ann Moffet, Eccleston and Wolf PC, Hanover, MD, for Plaintiff.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for review in this insurance coverage dispute are two motions filed by Plaintiff Nautilus Insurance Company (“Nautilus”): (1) a motion for default judgment against Defendants REMAC America, Inc. (“REMAC”) and Mark V. Soresi (ECF No. 22); and (2) a motion for summary judgment (ECF No. 4). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Nautilus's motions will be granted.

I. BackgroundA. The Policy

This case involves a commercial general liability insurance policy issued by Nautilus to REMAC for the policy period of December 21, 2009 to December 21, 2010 (“the Policy”). The Policy identifies REMAC as the “Named Insured” with a mailing address in Potomac, Maryland. (ECF No. 1–3, at 4, Common Policy Declarations).¹ Under the heading “Location of All Premises You Own, Rent, or Occupy,” the same Potomac address is the only address listed. ( Id. at 12, Commercial General Liability Coverage Part Declarations). The Policy defines “insured” to include the “ ‘executive officers' and directors” of REMAC, but only “with respect to their duties as [REMAC's] officers or directors.” ( Id. at 21, Section II, Who Is An Insured). Likewise, REMAC's stockholders are insureds “with respect to their liability as stockholders.” ( Id.).

The Policy generally requires Nautilus to “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” and to “defend the insured against any ‘suit’ seeking those damages.” (ECF No. 1–3, at 13, Section I—Coverages, Coverage A Bodily Injury and Property Damage Liability). The Policy also requires Nautilus to “pay medical expenses ... for ‘bodily injury’ caused by an accident. (3) Because of your operations.” ( Id. at 19, Section I Coverages, Coverage C Medical Payments). “Bodily injury” is defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” ( Id. at 24, Section V—Definitions). “Suit” is defined as “a civil proceeding in which damages because of ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ to which this insurance applies are alleged.” ( Id. at 27).

The Policy also contains a number of exclusions. Relevant here, the Policy includes an endorsement titled “Exclusion—Injury to Employees, Contractors, Volunteers and Workers.” (ECF No. 1–3, at 36, Form L205) (“the Employer's Liability Exclusion”). With respect to Coverage A for Bodily Injury and Property Damage Liability, the Employer's Liability Exclusion provides that:

This insurance does not apply to:

e. Employer's Liability

“Bodily injury” to:

(1) An “employee” of any insured arising out of and in the course of:

(a) Employment by any insured; or

(b) Performing duties related to the conduct of any insured's business; or

(2) The spouse, child, parent, brother or sister of that “employee” arising out of Paragraph (1) above.

This exclusion applies:

(1) Whether any insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.( Id.) (emphasis in original). The Employer's Liability Exclusion defines “employee” as follows:

[A]ny person or persons who provide services directly or indirectly to any insured, regardless of whether the services are performed or where the “bodily injury” occurs including, but not limited to, a “leased worker”, a “temporary worker”, a “volunteer worker”, a statutory employee, a casual worker, a seasonal worker, a contractor, a subcontractor, an independent contractor, and any person or persons hired by, loaned to, employed by, or contracted by any insured or any insured's contractor, subcontractor, or independent contractor.

( Id.). Elsewhere, the Policy contains a provision that makes all exclusions to Coverage A applicable to Coverage C Medical Payments. ( Id. at 19, Coverage C Medical Payments, Section 2, Exclusion G).

B. The Underlying Action

On January 24, 2012, Joseph Friend filed a lawsuit against REMAC in the Circuit Court for Berkley County, West Virginia (“the Underlying Action”). Mr. Friend's complaint in the Underlying Action alleges that, on March 26, 2010, he was working on a job site located near Martinsburg, West Virginia, as a REMAC employee. (ECF No. 1–1 ¶ 5). Mr. Friend avers that, on the day in question, REMAC required him “to operate heavy construction equipment that was attached to a similar piece of heavy construction equipment by a chain.” ( Id.). Mr. Friend asserts that, while following REMAC's instructions to use the first piece of equipment to tow the second piece, the chain attaching the equipment “broke, or came loose, and came flying back at a high rate of speed and struck [him] in the head, severely injuring him.” ( Id.).

In Count I, Friend alleges that REMAC “negligently, grossly negligent[ly], carelessly, willfully, wantonly, wrongfully, and/or otherwise [unlawfully]” engaged in a number of acts or omissions that directly and proximately caused him to sustain the following harms: temporary and permanent bodily injury; past and future medical expenses; past and future lost income; physical pain and suffering; mental anguish and emotional distress; loss of enjoyment of life; permanent scarring; humiliation; and embarrassment. (ECF No. 1–1 ¶¶ 1–11). Specifically, Mr. Friend alleges that REMAC failed to use a chain that was appropriate and safety-rated for towing; failed to provide him with an enclosed cab to prevent him from being struck by flying debris; failed to perform a hazard assessment of the work site; and created or permitted unsafe and hazardous working conditions by, inter alia, not providing him with required personal protective equipment. In Count II, Mr. Friend alleges that REMAC failed to follow federal workplace safety rules and that this failure proximately caused his injuries and damages. ( Id. ¶¶ 12–14). In Count III, Mr. Friend alleges that REMAC knew about the unsafe and hazardous conditions at the work site; knew that such conditions violated “a safety statute, rule, regulation or ... a commonly accepted and well-known safety standard”; and nonetheless intentionally exposed its employees to the unsafe working conditions, directly and proximately causing Mr. Friend's injuries and damages. ( Id. ¶¶ 15–19). Mr. Friend also seeks punitive damages in connection with Counts I and II.

On March 1, 2012, REMAC removed the Underlying Action to the United States District Court for the Northern District of West Virginia. See Friend v. REMAC Am., Inc., No. 12–cv–17 (N.D.W.Va.). On November 15, 2012, Mr. Friend moved for leave to file an amended complaint in the Underlying Action to add Mark V. Soresi as a defendant. Mr. Friend's proposed amended complaint alleged that Mr. Soresi is the “owner, operator, and sole shareholder” of REMAC. (ECF No. 1–2 ¶ 3). On February 14, 2013, Judge Groh denied Mr. Friend's motion for leave to amend on futility and prejudice grounds. Friend v. Remac Am., Inc., 924 F.Supp.2d 692, 698–700 (N.D.W.Va.2013).

C. The Coverage Action

On January 15, 2013, Nautilus filed a complaint in this court that names REMAC and Mr. Soresi as Defendants and Mr. Friend as an “Interested Party.” (ECF No. 1). Nautilus seeks a judgment declaring (1) that it has no duty under the Policy to defend REMAC or Mr. Soresi against any claim asserted by Mr. Friend in the Underlying Action or that otherwise arises out of the “Occurrence,” defined by Nautilus as the March 26, 2010 incident during which Mr. Friend was allegedly injured; and (2) that it has no duty under the Policy to indemnify REMAC or Mr. Soresi for any sums that either Defendant becomes liable to pay Mr. Friend in the Underlying Action or that otherwise arise out of the Occurrence. ( Id. at 11). On January 25, ten days after filing its complaint, Nautilus moved for summary judgment. (ECF No. 4). On January 29, Nautilus served REMAC, Mr. Soresi, and Mr. Friend with a copy of the complaint, the summons, and its motion for summary judgment. (ECF Nos. 6, 8, & 10).

On March 7, 2013, Mr. Friend filed an answer to Nautilus's complaint (ECF No. 14), a jury trial demand (ECF No. 13), and a response to the motion for summary judgment (ECF No. 11). Nautilus filed a reply in support of its motion for summary judgment (ECF No. 16) and moved for entry of default against REMAC and Mr. Soresi (ECF Nos. 17, 19, & 20). On May 15, 2013, the clerk entered default against REMAC and Mr. Soresi. (ECF No. 21). On May 22, Nautilus moved for default judgment against REMAC and Mr. Soresi, incorporating its summary judgment motion by reference. (ECF No. 22).

II. Motion for Default JudgmentA. Standard of Review

Federal Rule of Civil Procedure 55(b)(2) authorizes the entry of default judgment against a properly served defendant who fails to file a timely responsive pleading. In reviewing a motion for default judgment, the well-pleaded factual allegations in the complaint as to liability are accepted as true. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780–81 (4th Cir.2001). It must still be determined, however, “whether these unchallenged factual allegations constitute a legitimate cause of action.” Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494 (D.Md.2010).

Where, as here, a plaintiff seeks declaratory relief rather than monetary damages, default judgment is appropriate if the well-pleaded allegations of the complaint establish the plaintiff's right to such relief. See, e.g., Nautilus Ins. Co. v. BSA...