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Arch Insurance Co. v. U.S. Silica Co.

United States District Court, D. Maryland

September 24, 2018

ARCH INSURANCE COMPANY, Plaintiff,
v.
U.S. SILICA COMPANY, Defendant.

          MEMORANDUM OPINION

          Richard D. Bennett, United States District Judge.

         Plaintiff Arch Insurance Company (“Plaintiff” or “Arch”) of Jersey City, New Jersey brings this action against Defendant U.S. Silica Company (“Defendant” or “Silica”) of Frederick, Maryland, alleging that the Defendant has failed to abide by its contractual obligations to document the transfer of its rights against a third party to the Plaintiff. (Am. Compl., ECF No. 15.) The jurisdiction of this Court is predicated on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). Silica has filed a Motion to Dismiss the Amended Complaint, arguing, inter alia, that it has in fact executed an assignment of its rights to Arch. (ECF No. 16.) The submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2016). As explained in more detail below, the Plaintiff does not sufficiently allege that the executed assignment fails to satisfy Silica's contractual obligations. Accordingly, this Court GRANTS the Defendant's Motion to Dismiss (ECF No. 16) and Plaintiff's claims are DISMISSED WITHOUT PREJUDICE. Arch shall be permitted to file a Second Amendment Complaint within 14 days. Failure to do so will result in a Dismissal WITH PREJUDICE.

         BACKGROUND

         In ruling on a motion to dismiss, this Court “accept[s] as true all well-pleaded facts in a complaint and construe[s] them in the light most favorable to the plaintiff.” Wikimedia Found. v. Nat'l Sec. Agency, 857 F.3d 193, 208 (4th Cir. 2017) (citing SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 422 (4th Cir. 2015)). Plaintiff Arch Insurance Company (“Plaintiff” or “Arch”) issues liability insurance policies. (Am. Compl., ECF No. 15 at ¶ 6.) Arch and Defendant U.S. Silica Company (“Defendant” or “Silica”) entered into an insurance contract whereby Arch issued a primary commercial general liability policy to Silica as the named insured for September 1, 2013 through September 1, 2014 (the “Arch Policy”). (Id. at ¶¶ 7-8.) The Arch Policy included a $250, 000 self-insured retention and up to $1, 750, 000 of liability insurance per occurrence against covered “bodily injury.” (Id. at ¶ 10.) In addition, the Arch Policy contained “Commercial General Liability Conditions” which included:

2. Duties in the Event of Occurrence, Offense, Claim or Suit.
. . .
c. You and any other involved insured must:
. . .
(4) Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply.
8. Transfer of Rights of Recovery Against Others to Us If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring “suit” or transfer those rights to use and help us enforce them.

(ECF No. 15-2.)

         On or around November 26, 2008, Silica and a third party, Union Pacific, entered into an Industry Track Agreement governing the use and operation of a particular railway track that runs through the Silica facility in Pacific, Missouri. (ECF No. 15 at ¶¶ 13-14.) Under Article 9 of the Industry Track Agreement, Union Pacific owes indemnity to Silica “from and against any and all claims for loss arising from or growing out of the negligent acts or omissions of the Railroad.” (ECF No. 15-3.) On or about May 2, 2014, Kevin King, Jr. (“Mr. King”) filed a complaint against Union Pacific, claiming that he suffered injuries as a result of Union Pacific's alleged negligence (the “King claim”). (ECF No. 15 at ¶¶ 20-21.) Mr. King subsequently amended his complaint, adding Silica as a defendant. (Id. at ¶ 23.)

         In the summer of 2015, Union Pacific, Silica, Arch, and National Union Fire Insurance Company of Pennsylvania (“National Union”)[1] negotiated toward a resolution of the King claim. (Id. at ¶ 24.) On or around August 24, 2015, the four parties entered into an agreement setting forth each of their assumed obligations in connection with the settlement efforts and respective positions regarding such obligations (the “Mediation Agreement”). (ECF No. 15-6.) This agreement provided that “$1, 750, 000 of any such settlement shall be paid by Arch on behalf of U.S. Silica above U.S. Silica's self-insured retention” and “U.S. Silica shall provide cooperation to Arch . . . in any post settlement proceeding pursued by Arch . . . against Union Pacific.” (Id.) Ultimately, Arch paid $1, 750, 000 toward settling the King claim on behalf of U.S. Silica above U.S. Silica's self-insured retention, and Mr. King released all claims against Silica and Arch. (ECF No. 15 at ¶¶ 28-29.)

         Since settling the King claim, Arch has initiated attempts to recover its payment from Union Pacific, including through informal negotiation and mediation. (ECF No. 15 at ¶¶ 30-31.) In these efforts, Arch has requested that-pursuant to the Arch Policy and Mediation Agreement-Silica document the transfer of its rights against Union Pacific to Arch, as may be required for Arch to formally initiate and pursue arbitration against Union Pacific. (Id. at ¶¶ 33-34.) On June 9, 2017, Arch sent Silica a proposed assignment of claim. (ECF No. 15-8.) The Amended Complaint asserts, however, that “[t]o date, Silica has refused to ...


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