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Constructure Management, Inc. v. Berkley Assurance Co.

United States District Court, D. Maryland

March 2, 2017




         THIS MATTER is before the Court on Defendant Berkley Assurance Company's (“Berkley”) Motion to Dismiss (ECF No. 11) and Defendant StarStone National Insurance Company's (“StarStone”)[2] Motion to Dismiss (ECF No. 14). The Motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons outlined below, the Court will convert Berkley's Motion in part to a motion for summary judgment and deny in part Berkley's Motion. The Court will also deny StarStone's Motion.

         I. BACKGROUND[3]

         Plaintiff Constructure Management, Inc. (“Constructure”) is a Pennsylvania corporation that provides construction management services. In April 2013, Constructure executed a contract with Star Development Group, LLC to be a general contractor for the construction of a Homewood Suites hotel in Laurel, Maryland (the “Project”). This contract required Constructure to remedy nonconforming and damaged work that might occur during the Project. Constructure then entered into a subcontract (the “Subcontract”) with Integrated Building Systems, Inc. (“Integrated”), a Pennsylvania corporation, for structural steel and rough carpentry work on the Project, which was scheduled to begin in June of 2013 and end by November 2013.

         The Subcontract required Integrated to maintain commercial general liability insurance coverage, naming Constructure, among others, an additional insured. Integrated obtained an insurance policy from Berkley (the “Policy”). The Policy named Integrated as a beneficiary and described Integrated's location with an address in Havertown, Pennsylvania. The Policy, effective between November 2013 and 2014, contained a per occurrence limit of $1 million and a general aggregate limit of $2 million. Integrated obtained a second policy from StarStone (the “Umbrella Policy”). The Umbrella Policy provided coverage above the Policy in the amount of $4 million.

         Constructure alleges that during the completion of the Project, Integrated and its subcontractors (collectively, “the Subcontractors”) negligently performed their work, causing property damage. Constructure repaired the damage and completed the Project, but suffered substantial monetary losses as a result of paying for the repairs. Constructure submitted an insurance claim to recover the cost of repairing the damage and completing the Project. Constructure submitted the claim to Brandywine Insurance Advisors (“Brandywine”), who Constructure states is an agent for Berkley and StarStone in Pennsylvania. Constructure alleges Berkley and StarStone failed to pay and ignored the claim.

         In October 2014, Constructure filed suit in the Circuit Court for Howard County, Maryland against Aegis Security Insurance Company (“Aegis”), who Constructure alleged was the surety of Integrated for the Project.[4] In the Howard County case, Constructure alleged Aegis breached its performance bond obligations by failing to perform Integrated's subcontractual duty to process the insurance claim. Aegis then filed a third-party complaint against Integrated seeking indemnification and contribution. On February 3, 2016, Constructure and Aegis dismissed all their claims against each other, with prejudice.[5]On February 24, 2016, the circuit court granted Constructure's motion for summary judgment, dismissing Integrated's claims. The circuit court concluded Integrated assigned all of its rights against Constructure to Aegis under their agreement of indemnity. Constructure subsequently dismissed its claims against Integrated without prejudice.

         On February 1, 2016, Constructure filed the present suit against Defendants. (ECF No. 1). In its three-count Complaint, Constructure seeks declaratory judgments (Count I) and alleges breaches of contract (Counts II and III) against Berkley and StarStone, respectively. On March 15, 2016, Berkley filed a Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7) (ECF No. 11), and the following day, StarStone filed a Motion to Dismiss for Failure to State a Claim under Rule 12(b)(6) (ECF No. 14). The Motions were fully briefed as of May 11 and May 20, 2016, respectively. (ECF Nos. 19, 20, 24, 28).


         A. Standards of Review

         1. Rule 12(b)(6)

         Both Berkley and StarStone move to dismiss the Complaint under Rule 12(b)(6). “The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint, ” not to “resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999) (quoting Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). A complaint fails to state a claim if it does not contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), or does not “state a claim to relief that is plausible on its face, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). Though the plaintiff is not required to forecast evidence to prove the elements of the claim, the complaint must allege sufficient facts to establish each element. Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449 (D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012)), aff'd sub nom., Goss v. Bank of Am., NA, 546 Fed.Appx. 165 (4th Cir. 2013).

         In considering a Rule 12(b)(6) motion, a court must examine the complaint as a whole, consider the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm'rs of Davidson Cty., 407 F.3d 266, 268 (4th Cir. 2005) (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). But, the court need not accept unsupported or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979), or legal conclusions couched as factual allegations, Iqbal, 556 U.S. at 678.

         2. Rule 12(b)(7)

         Berkley also moves to dismiss the Complaint under Rule 12(b)(7) for failure to join a necessary party under Rule 19.[6]Rule 12(b)(7) motions require a two-step inquiry. First, the court must determine “whether a party is necessary to a proceeding because of its relationship to the matter under consideration pursuant to Rule 19(a).” Owens-Ill., Inc. v. Meade, 186 F.3d 435, 440 (4th Cir. 1999) (quoting Teamsters Local Union No. 171 v. Keal Driveaway Co., 173 F.3d 915, 917-18 (4th Cir. 1999)) (internal quotation marks omitted). If the absent party is necessary, it must be ordered into the action so long as joinder does not destroy the court's jurisdiction. Id. Second, “[w]hen a party cannot be joined because its joinder destroys diversity, the court must determine whether the proceeding can continue in its absence, or whether it is indispensable pursuant to Rule 19(b) and the action must be dismissed.” Id.

         Although Rule 12(b)(7) permits dismissal, “[c]ourts are loath to dismiss cases based on nonjoinder of a party, so dismissal will be ordered only when the resulting defect cannot be remedied and prejudice or inefficiency will certainly result.” Id. at 441; see also Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Rite Aid of S.C., Inc., 210 F.3d 246, 250 (4th Cir. 2000) (“Dismissal of a case [for nonjoinder] is a drastic remedy . . . which should be employed only sparingly.” (quoting Teamsters, 173 F.3d at 918)). The burden is on the moving party to “show that the [entity] who was not joined is needed for a just adjudication.” Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 92 (4th Cir. 2005) (quoting 7 Charles Alan Wright, et al., Federal Practice and Procedure § 1609 (3d ed. 2001)) (internal quotation marks omitted).

         B. Analysis

         1. Berkley's 12(b)(7) Motion

         Berkley argues Constructure's Complaint warrants dismissal because Integrated and Aegis are necessary parties under Rule ...

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