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Greater New York Mutual Insurance Company v. Brent E. Goldsmith, Inc.

United States District Court, D. Maryland

May 21, 2018

GREATER NEW YORK MUTUAL INSURANCE COMPANY Plaintiff,
v.
BRENT E. GOLDSMITH, INC. Defendant.

          MEMORANDUM

          STEPHANIE A. GALLAGHER, UNITED STATES MAGISTRATE JUDGE

         Plaintiff Greater New York Mutual Insurance Company (“GNY”) filed this negligence action against Brent E. Goldsmith, Inc. (“Goldsmith”). [ECF No. 1]. Pending before this Court is Goldsmith's Motion for Summary Judgment. [ECF No. 26]. The issues have been fully briefed [ECF Nos. 26, 27, 33], and no hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the reasons stated below, Goldsmith's Motion will be granted.

         BACKGROUND

         The facts below are taken in the light most favorable to GNY, the non-moving party. GNY is a subrogating insurance carrier, which, in 2016, insured Carlton Condominium, Inc., 8725 Loch Raven Boulevard, Towson, Maryland 21286 (“the Carlton”). See Policy, [ECF No. 27-1]. Specifically, GNY's Policy consisted of two coverage parts, Commercial Property Coverage and Commercial General Liability (“CGL”) Coverage. Id. at 4. In the spring of 2016, Dexter Wilson, the owner of Unit 403 in the Carlton (“the Unit”), hired a plumber, Goldsmith, to disconnect his steam radiators, so that Wilson could repair and paint the Unit's interior walls. Pl.'s Compl., [ECF No. 1 ¶ 1]; Pl.'s Opp., [ECF No. 27 at 2]. “Goldsmith was quite familiar with [] Wilson, having done six or seven other jobs for him over the years.” Pl.'s Opp., [ECF No. 27 at 2]. Goldsmith removed the radiators on July 27, 2016, while the Unit was unoccupied. Id. At Wilson's specific request, Goldsmith did not cap the open steam pipes after disconnecting the radiators. See id.; Wilson Email, [ECF No. 26-4] (“In order to minimize the cost of removal[, ] I asked [Goldsmith] not to cap the pipes.”).[1] Because the work was being completed in July, the building's central boiler/heating system was not functioning, and, as such, there was no steam running through the pipes. Def.'s Mem., [ECF No. 26-1 at 3]; Edwards Dep., p. 50, [ECF No. 26-6 at 5] (At his deposition, GNY's expert testified that, because the heating system was not “fired up” in the summer, the building did not “have a year-round demand for steam . . . .”). According to Goldsmith, Wilson intended “to reconnect the radiators shortly after removing them” and advised Goldsmith that he would “contact [Goldsmith] when [he] was ready to have the radiators reconnected.” [ECF No. 27-2 at 4-5]. Goldsmith, however, “was not contacted again regarding [the radiators] until on or about November 8, 2016, when [Goldsmith] received an emergency call from [] Wilson advising that steam was escaping into the [U]nit through the open steam piping.” Def.'s Mem., [ECF No. 26-1 at 3]. Upon receiving Wilson's call, Goldsmith returned to the Unit the same day and reconnected the radiators. Pl.'s Opp., [ECF No. 27 at 3]. Because the Carlton had turned on the central boiler/heating system weeks before the steam was discovered on November 8, 2016, the interior of the Unit suffered extensive damage. Id. at 3. Pursuant to “its obligations under [the Carlton's] Policy, ” GNY paid the Carlton $121, 773.60 in remedial costs. Pl.'s Compl., [ECF No. 1 ¶ 9]; Pl.'s Opp., [ECF No. 27 at 3]. GNY made payment directly to the Carlton, which, in turn, “remitted payment to [Wilson] to pay the contractor [he] hired” for the repairs. Pl.'s Opp., [ECF No. 27 at 3]. GNY, through this action, seeks to recuperate its costs from Goldsmith, alleging negligence. Pl.'s Compl., [ECF No. 1].

         LEGAL STANDARD

         Rule 56(c) of the Federal Rules of Civil Procedure states that summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Goldsmith, as the moving party, bears the burden of showing that there is no genuine dispute of material facts. See Casey v. Geek Squad, 823 F.Supp.2d 334, 348 (D. Md. 2011). If Goldsmith establishes that there is no evidence to support GNY's case, the burden then shifts to GNY to proffer specific facts to show a genuine issue exists for trial. Id. GNY must provide enough admissible evidence to “carry the burden of proof at trial.” Id. at 349 (quoting Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1315-16 (4th Cir. 1993)). The mere existence of a scintilla of evidence in support of GNY's position is insufficient; rather, there must be evidence on which the jury could reasonably find for GNY. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Moreover, a genuine issue of material fact cannot rest on “mere speculation, or building one inference upon another.” Casey, 823 F.Supp.2d at 349. Additionally, summary judgment shall be warranted if the non-moving party fails to provide evidence that establishes an essential element of the case. GNY “must produce competent evidence on each element of his or her claim.” Miskin v. Baxter Healthcare Corp., 107 F.Supp.2d 669, 671 (D. Md. 1999). If GNY fails to do so, “there can be no genuine issue as to any material fact, ” because the failure to prove an essential element of the case “necessarily renders all other facts immaterial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); see also Casey, 823 F.Supp.2d at 348-49. In ruling on a motion for summary judgment, a court must view the facts and inferences “in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).

         ANALYSIS

         Goldsmith's motion for summary judgment on GNY's negligence claim hinges on whether Wilson qualifies as an “insured” under the Commercial Property Coverage Part that GNY issued to the Carlton. See Def.'s Mem., [ECF No. 26-1 at 5-8]. Specifically, Goldsmith argues that, as subrogee of its insured (Wilson), GNY is “bound by [his] rights and obligations” and is subject to any defenses that may be asserted against him. Id. at 5. Accordingly, Goldsmith contends that GNY's claims are barred by its insured's (Wilson's) contributory negligence and/or assumption of the risk. Id. at 15-20. GNY disputes Wilson's status as its insured, [2] Pl.'s Opp., [ECF No. 27 at 4-10], though it does not contest Goldsmith's assertion that Wilson was contributorily negligent or assumed the risk of the property damage sustained to the Unit, see Id. at 4-18. Because this Court finds that GNY is a subrogee of Wilson, the insured, Goldsmith's contributory negligence and assumption of the risk affirmative defenses defeat GNY's claim.[3]

         I. Wilson Qualifies as an Insured Under the Carlton's Commercial Property Coverage Part

         Wilson qualifies as an insured under the Carlton's Commercial Property Coverage Part. The Maryland Condominium Act (“MCA”) controls. See Md. Code Ann., Real Prop. Section 11-101, et seq. (West). Specifically, the MCA requires that a condominium's governing body (“council of unit owners”), id. § 11-109, provide both property and CGL insurance, id. § 11-114(a). At issue, however, is the scope of property insurance coverage that the MCA mandates - specifically, whether a condominium's master policy must only insure against property damage incurred to common elements or to the structure of a condominium, or whether it must also insure against property damage sustained in individual units. Here, GNY contends that “Wilson has no right to insured status for the purpose of property coverage under the Policy, ” Pl.'s Opp., [ECF No. 27 at 5], while Goldsmith argues that the MCA, after its 2009 amendments, “made the unit owners insureds under such property insurance policies, ” Def.'s Reply, [ECF No. 31 at 12].

         Goldsmith accurately interprets the MCA. In relevant part, Section 11-114(a)(1) provides that the council of unit owners shall maintain “[p]roperty insurance on the common elements and units, exclusive of improvements and betterments installed in units by unit owners . . ., insuring against those risks of direct physical loss commonly insured against . . . .” Md. Code Ann., Real Prop. § 11-114 (West) (emphasis added). Meanwhile, Section 11-114(a)(2) provides that the council of unit owners shall also maintain “[CGL] insurance . . ., covering occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements.” Id. § 11-114(a)(2). Importantly, Section 11-114(c) sets forth further insurance policy requirements for both property and CGL coverage, stating:

Insurance policies carried pursuant to subsection (a) . . . shall provide that: (1) For property and casualty losses to the common elements and the units, exclusive of improvements and betterments installed in the units by unit owners other than the developer, each unit owner is an insured person under the policy with respect to liability arising out of his ownership of an undivided interest in the common elements or membership in the council of unit owners;

Id. § 11-114(c)(1) (emphasis added). Here, GNY relies upon the “liability arising out of” language to argue that a unit owner is an insured under a condominium's master policy only “for the purposes of ‘liability' insurance - and even then - only ‘arising out of his ownership of an undivided interest in the common element or membership in the council of unit owners.'” Pl.'s Opp., [ECF No. 27 at 6-7] (citation omitted). As Goldsmith demonstrates, however, GNY's sole reliance on the “liability arising out of” provision ignores subsection (c)(1)'s prefatory clause, which expressly states: “For property and casualty losses to the common elements and the units, exclusive of improvements and betterments installed in the units by unit owners other than the developer, each unit owner is an insured person . . . .” Md. Code Ann., Real Prop. § 11-114(c)(1) (West) (emphasis added). As such, the provision requires that each unit owner be an insured in the event of property and casualty losses to the units themselves. Narrowing the provision as GNY urges would render the prefatory phrase surplusage - because a general liability policy does not provide coverage for property damage to “the common elements and the units, ”[4] if a unit owner were an insured only with respect to the general liability policy, the prefatory phrase would be meaningless. See Lowery v. State, 61 A.3d 794, 806 (Md. 2013) (“[W]e read the [] statute ‘so that no word, clause, sentence or phrase is rendered superfluous or nugatory.'”) (citation omitted).

         As Goldsmith demonstrates, see Def.'s Reply, [ECF No. 31 at 4-8], interpreting Section 11-114(c)(1) to require that each unit owner be an insured in the event of property and casualty losses to the units themselves is in accordance with the Maryland Legislature's express overruling of the Maryland Court of Appeals decision in Anderson v. Council of Unit Owners ofGables on Tuckerman Condominium, 948 A.2d 11 (Md. 2008), superseded by statute, 2009 Md. Laws Ch. 522 (S.B. 201); 2009 Md. Laws Ch. 523 (H.B. 287). In Anderson, the court consolidated two claims involving two different condominium complexes. Id. at 13. Specifically, two units suffered property damage, one from a leaking water heater and one from a grease fire, and both unit owners sought to have their respective council of unit owners pay the costs of the repairs. Id. at 13-17. Importantly, in both claims, the property damage did not extend ...


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