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The Hartford Fire Insurance Co. v. The Harborview Marina & Yacht Club Community Association, Inc.

United States District Court, D. Maryland

July 5, 2017

THE HARTFORD FIRE INSURANCE COMPANY Plaintiff and Counter-Defendant
v.
THE HARBORVIEW MARINA & YACHT CLUB COMMUNITY ASSOCIATION, INC. Defendant and Counter-Claimant

          MEMORANDUM OPINION

          PETER J. MESSITTE UNITED STATES DISTRICT JUDGE.

         Several parties are engaged in a dispute over the 2014 collapse of a pier in Baltimore.

         The case began when the Hartford Fire Insurance Company (the “Hartford”)-which insured the pier-sued Harborview Marina & Yacht Club Community Association, Inc. (“Harborview”)-which owns the pier-seeking a declaratory judgment to the effect that there is no coverage for the collapse of the pier under Harborview's policy with the Hartford. Harborview counterclaimed, asserting that the Hartford breached the insurance contract and failed to act in good faith when it denied coverage under the policy.[1]

         Since then, the Hartford and Harborview have brought two other parties into the fold. The Hartford filed a third-party claim against C.A. Lindman, Inc. (“C.A. Lindman”)-a contractor which was using the pier to complete construction and maintenance on the façade of a nearby building at the time the pier collapsed. Harborview then filed a third-party cross claim against C.A. Lindman, and thereafter, Harborview filed a third-party complaint against Coleman Consulting (“Coleman”)-the engineer and consultant on the façade construction and maintenance project. Coleman has filed a Motion to Dismiss Harborview's Third-Party Complaint (ECF No. 53).

         For the following reasons, the Motion will be DENIED.

         I. FACTS

         In 2014, the Hartford, through its broker Insurance, Inc., approached Harborview about purchasing insurance coverage for Harborview's docks and piers at Harborview Drive, Baltimore, Maryland. Compl. ¶ 8, ECF No. 1. Harborview was looking to insure a number of its piers, including one that began beyond the eastern side of the building at Pierside Drive and extended into the Baltimore harbor. Id. ¶ 9. Accordingly, Harborview obtained from the Hartford a “Marina Operators Legal Liability and Boat Dealer Policy, ” Policy No. 30 ML HS9073 (the “Policy”), effective June 26, 2014 to June 26, 2015 providing aggregate combined coverage of $5.1 million. Compl., Ex. 1, ECF No. 1-1.

         Hartford submits that when Harborview applied for insurance the pier was actually in a state of advanced deterioration, and was inherently defective in design and/or construction. Compl. ¶ 10. Despite these deficiencies, says the Hartford, Harborview represented to it that the pier was of substantially newer construction, reconstruction, or refurbishment and in substantially new, or as good as new condition. Id. ¶ 11. The Hartford says Harborview never disclosed the true condition of the pier. Id. ¶ 12.

         On November 22, 2014, the pier failed, id. ¶ 17, in consequence of which Harborview made a claim under the Policy for $5.1 million (the “Claim”). Id. ¶ 18. Pursuant to its rights under the Policy, the Hartford investigated the Claim, id. ¶ 19, but at the conclusion of its investigation, decided that the Claim was not covered because the pier failure was due to age, wear and tear, gradual deterioration, wasted condition, inherent vice or defective repair, not due to a fortuity or any covered risk. Id. ¶¶ 20-21. The Hartford thus denied coverage. Id. ¶ 20.

         On these facts, the Hartford seeks a declaratory judgment that (1) there is no coverage for the claim under the Policy, (2) the claim is not covered for want of fortuity, (3) Harborview breached the Conditions of Coverage under the Policy, and (4) coverage for the pier under the Policy is void and unenforceable. Id. ¶¶ 25, 29, 35, 38.[2]

         Harborview has counterclaimed against the Hartford, alleging breach of contract under the Policy and failure of the insurance company to act in good faith, and asks for damages in the amount of $5.1 million. Def's. Counterclaims ¶¶ 41, 43, 46, 49, 51, 60, ECF No. 10. Harborview submits that prior to issuing the Policy, the Hartford failed to survey or investigate the pier and the rest of the insured property, and therefore failed to draft a policy that properly accounted for Harborview's freestanding piers. Id. ¶ 12. According to Harborview, the Hartford also failed to properly or fully investigate the cause of the collapse, ignoring the role played by a third-party contractor. Id. ¶ 21. Harborview further submits that the Hartford reinterpreted the Policy in a way that created exclusions to coverage that did not exist at the time of the suffered loss. Id. ¶ 20.

         Then came the Hartford's third-party Complaint against C.A. Lindman, seeking contribution and indemnification against Harborview's counter-claims.[3] ECF No. 38. The Hartford argues that if it is held liable to Harborview, C.A. Lindman should be deemed responsible for any required payments because the damages allegedly sustained by Harborview were the proximate result of the actions of C.A. Lindman, its agents or subcontractors. Harborview then filed its own cross-claim against C.A. Lindman (ECF No. 42), asserting that if the Hartford's claims for declaratory relief are granted fully or in part, C.A. Lindman should be held liable for the damages arising from and related to the pier collapse. C.A. Lindman has answered both complaints. ECF Nos. 46, 73. Harborview has also filed yet another third-party claim (i.e., impleader), this time against Coleman Consulting, alleging that Coleman, as the consultant on the façade construction and maintenance project, was negligent in its use of the pier and was therefore jointly and severally liable with C.A. Lindman for the damages and liabilities arising from the collapse.[4] ECF No. 50. According to Harborview, Coleman breached its duty of care to ensure that the pier was used in a safe and non-negligent manner by failing to inspect the pier or ascertain its load-bearing capacity.

         On March 29, 2017, Coleman filed a Motion to Dismiss Harborview's Third-Party Complaint (ECF No. 53) on the grounds that the Third-Party Complaint fails to state a claim and, in the alternative, because the Court lacks subject matter jurisdiction over the claim.[5] Coleman argues that Federal Rule of Civil Procedure 14 does not permit the claim Harborview asserts against it and that the Court lacks supplemental jurisdiction over it.

         II. STANDARDS OF REVIEW

         A. Lack of Subject ...


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