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State Automobile Mutual Insurance Co. v. Old Republic Ins. Co.

United States District Court, D. Maryland

July 16, 2015

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, Plaintiff,
v.
OLD REPUBLIC INSURANCE COMPANY, et al., Defendants

Page 616

For State Automobile Mutual Insurance Company, Plaintiff, Counter Defendant: Julie Furst Maloney, LEAD ATTORNEY, The Leder Law Group PC, Towson, MD; Steven E Leder, LEAD ATTORNEY, The Leder Law Group LLC, Towson, MD.

For Old Republic Insurance Company, Defendant, Cross Defendant: Angus R Everton, LEAD ATTORNEY, Morgan Carlo Downs and Everton PA, Hunt Valley, MD.

For Fidelity Engineering Corporation, Defendant, Cross Claimant, Counter Claimant: Peter Joseph Basile, LEAD ATTORNEY, Ferguson Schetelich and Ballew PA, Baltimore, MD.

For AMCP-1, LLC, Defendant: Steven Lee Tiedemann, LEAD ATTORNEY, Owings Mills, MD.

Page 617

MEMORANDUM OPINION

Richard D. Bennett, United States District Judge.

Plaintiff State Automobile Mutual Insurance Company (" Plaintiff" or " State Automobile" ) brings this action against Defendants Old Republic Insurance Company (" Old Republic" ), Fidelity Engineering Corporation (" Fidelity" ), and AMCP-1, LLC (" AMCP-1" ), seeking a declaratory judgment pursuant to 28 U.S.C. § 2201, equitable subrogation, and equitable contribution. State Automobile claims that Old Republic breached its duties to defend and indemnify Fidelity in a pending action in the Circuit Court for Anne Arundel County, Maryland (the " Underlying Action" ).

Currently pending before this Court are Plaintiff State Automobile's Motion for Partial Summary Judgment (ECF No. 25); Defendant Fidelity's Motion for Partial Summary Judgment (ECF No. 26); and Defendant Old Republic's Cross-Motion for Summary Judgment (ECF No. 27). On July 13, 2015 this Court held a hearing on the pending motions. For the reasons that follow, Plaintiff State Automobile's Motion for Partial Summary Judgment (ECF No. 25) is GRANTED; Defendant Fidelity's Motion for Partial Summary Judgment (ECF No. 26) is GRANTED; and Defendant Old Republic's Cross-Motion for Summary Judgment (ECF No. 27) is DENIED. In sum, Old Republic has a duty to defend Fidelity in the Underlying Action.[1]

Page 618

BACKGROUND

In ruling on a motion for summary judgment, this Court reviews the facts and all reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); see also Hardwick ex rel. Hardwick v. Heyward, 711 F.3d 426, 433 (4th Cir. 2013). When both parties file motions for summary judgment, as here, the court applies the same standard of review to both motions, with this Court considering " each motion separately on its own merits to determine whether either [side] deserves judgment as a matter of law." Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003), cert denied, 540 U.S. 822, 124 S.Ct. 135, 157 L.Ed.2d 41 (2003); see also havePower, LLC v. Gen. Elec. Co., 256 F.Supp.2d 402, 406 (D. Md. 2003) (citing 10A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2720 (3d ed. 1983)). During the July 13, 2010 hearing, the parties agreed that, in the present action, no facts are at issue.

The subject action arises out of successive commercial general liability (" CGL" ) policies issued by Defendant Old Republic and Plaintiff State Automobile to Defendant Fidelity. Mem. in Supp. of Pl.'s Mot. for Partial Summ. J., 3, ECF No. 25-1. Old Republic issued two policies to Fidelity, the first running from April 1, 2008-April 1, 2009, and the second from April 1, 2009-April 1, 2010. Id. State Auto then issued Fidelity four policies, running in sum from April 1, 2010-April 1, 2014. Id. at 3-4. Under the policies, each insurer agreed to defend Fidelity against any suit seeking damages for " property damage" caused by an " occurrence." Pl.'s Mot. for Partial Summ. J. Exs. E, F, ECF Nos. 25-6, 25-7 (Old Republic CGL Policies). Essentially, the Old Republic and State Automobile policies were identical and adopted the language of the standard 1986 CGL policy.

In May 2008, Defendant AMCP-1 entered into a contract with Hostetter Construction Corporation (" Hostetter" ) to construct a mixed office/retail building in Anne Arundel County, Maryland (the " Project" ). Id. at 2. Hostetter then contracted with Fidelity, wherein Fidelity would perform all HVAC and plumbing requirements for the Project. Id. Fidelity agreed to provide all labor and necessary equipment and materials to install the HVAC system, including all related piping. Id. Fidelity also agreed to perform the initial treatment of the water in the HVAC system, as well as all water treatments for a period of one year following the completion of the Project. Id. Fidelity, in turn, entered into a subcontract with Hydro-Logic, Inc. (" Hydro-Logic" ) to perform the stipulated water treatment. Id.

On August 30, 2013, AMCP-1 filed the Underlying Action in the Circuit Court for Anne Arundel County against Fidelity,[2] alleging that Fidelity failed to perform the necessary HVAC water treatment, resulting in damage to the pipes and other components of the HVAC system.[3]Id. AMCP-1 claims that the alleged leaks began during the " Spring of 2010," but does not ...


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