United States District Court, D. Maryland
Xinis United States District Judge.
before the Court is Plaintiff The Hanover Insurance Company
(“Hanover”)'s motion for summary judgment and
a related motion to seal. ECF Nos. 345, 387. The motions are
fully briefed by Hanover, Honeywell International, Inc.
(“Honeywell”), and Engineered Systems Alliance,
LLC (“ESA”), and a hearing was held on March 27,
2019. See Loc. R. 105.6. For the following reasons,
the Court denies Hanover's motion for summary judgment
and grants Honeywell's motion to seal.
2010, the United States General Services Administration
(“GSA”) entered into a contract with Honeywell to
design and build a central utility plant. ECF No. 1 ¶
14. The central utility plant provides electricity, steam,
and water to a federal facility in Maryland, in part through
turbine generators. ECF No. 47 ¶ 6. The failure of the
G-9 Turbine and related equipment form the basis of this
hired ESA to provide “the design, construction,
installation, and other services for the
infrastructure” of the plant. Id. ¶ 8. As
part of the Honeywell-ESA contract for this service, ESA was
required to obtain insurance. ECF No. 183-1, art. 10.
Specifically, the contract required that Honeywell be a named
insured on the policy and that, in case of loss or damage,
the insurance company provide payment to ESA and Honeywell
“as their respective interests appear.”
Id. Fulfilling its contractual obligation, ESA
purchased the Hanover Policy (“the Policy”)
central to this opinion.
Policy includes both ESA and Honeywell as named insureds and
references each as “you” or “your”
throughout. ECF No. 1-1 at 2, 11, 25. The Policy covers
“direct physical ‘loss' to Covered
Property.” Id. at 11. The Policy defines
“loss” as “accidental loss or damage”
and “Covered Property” as “property that is
owned by ‘you' or is property of others in
‘your' care, custody or control” to include
“[m]aterials, supplies, fixtures, equipment” and
other similar physical property. Id. at 11, 25.
Covered Causes of Loss are “RISKS OF DIRECT PHYSICAL
‘LOSS' to Covered Property except those causes of
‘loss' listed in the Exclusions.”
Id. at 12. The Policy explicitly excludes from
coverage “consequential loss of any kind, ”
“except as otherwise provided.” Id. at
Policy also permits Hanover to “[s]ettle the
‘loss' with the owners of the property.”
Id. at 40. The Policy states that “[a] receipt
for payment from the owners of that property will satisfy any
claim of yours.” The Policy also provides that if
Hanover pays an insured under the Policy, and that insured
has “rights to recover damages from another, those
rights are transferred to [Hanover] to the extent of [its]
payment.” Id. at 24.
12, 2014, the G-9 Turbine suffered severe damage. ECF No. 1
¶ 28. When investigating the cause of damage, the
parties also discovered damage to the turbine's inlet air
cooling coils (“IAC-9 Coils”). Id.
¶ 26. Honeywell, as the owner of the G-9 Turbine,
incurred the costs to refurbish the G-9 Turbine while ESA
incurred the costs to replace the IAC-9 Coils. ECF No. 345 at
3-4. Honeywell contends that it suffered additional losses
arising from damage to the G-9 Turbine which led to
Honeywell's “failure to meet performance guarantees
that have been made to GSA.” ECF No. 141 ¶ 27.
Based on the damage to the IAC-9 Coils and the G-9 Turbine,
ESA filed a claim with Hanover seeking coverage under the
Policy. ECF No. 1 ¶ 3.
January 14, 2015, Hanover filed this action for declaratory
relief regarding the scope of coverage under the Policy for
the G-9 Turbine and IAC-9 Coils. ECF No. 1. Honeywell and ESA
each filed counterclaims against Hanover, seeking declaratory
judgments and alleging that Hanover breached the terms of the
Policy by not paying on the claims for the covered losses.
ECF Nos. 20, 47. Honeywell and ESA also filed crossclaims
against each other for breach of contract and
indemnification. ECF Nos. 141, 183. Honeywell later amended
its crossclaims to assert claims for additional defective
work not at issue here. ECF No. 141.
March of 2018, Hanover and Honeywell settled the claims
related to the G-9 Turbine and memorialized the settlement
terms in a Settlement Agreement. ECF No. 346. ESA was not
party to the settlement, and nothing in the Settlement
Agreement expressly extinguished ESA's liability to
Honeywell on the crossclaims. However, the Settlement
Agreement purported to “satisfy any claim of
[ESA's].” Id. § F (brackets in
original) (quoting the Policy). The Settlement Agreement also
stated that Honeywell and Hanover “are settling and
resolving, in its entirety, the portion of the Insurance
Claim regarding the G-9 Turbine only.” Id.
§ 2.A; see also id. § 3.A.
(“The Settlement Payment to Honeywell solely relates to
damages caused by or resulting from direct physical loss to
the G-9 Turbine and is not related to any damage to the IAC-9
Coils.”). The settlement payment to Honeywell was less
than Honeywell's estimated costs to refurbish the G-9
Turbine, and the parties agreed that payment represented
“a good faith and fair compromise to avoid the costs
and risks of further litigation between Hanover and
Honeywell.” Id. § 2.E. After the
settlement was reached, Hanover and Honeywell dismissed the
claims against each other. ECF No. 328.
also separately attempted to pay ESA for its property losses
associated with the damaged IAC-9 Coils by mailing to ESA a
check for $110, 000. ECF No. 345-10. ESA returned
Hanover's check. ECF No. 345-11. Hanover now seeks
summary judgment in its favor, contending that it has
satisfied fully its obligations under the Policy and that
ESA's counterclaims are moot now that the claims for both
the G-9 Turbine and IAC-9 Coils have been resolved.
Standard of Review
judgment is appropriate when the court, viewing the evidence
in the light most favorable to the non-moving party, finds no
genuine disputed issue of material fact, entitling the movant
to judgment as a matter of law. See Fed. R. Civ. P.
56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th
Cir. 2008). “A party opposing a properly supported
motion for summary judgment ‘may not rest upon the mere
allegations or denials of [his] pleadings,' but rather
must ‘set forth specific facts showing that there is a
genuine issue for trial.'” Bouchat v. Baltimore
Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)). “A mere
scintilla of proof . . . will not suffice to prevent summary
judgment.” Peters v. Jenney, 327 F.3d 307, 314
(4th Cir. 2003). Importantly, “a court should not grant
summary judgment ‘unless the entire record shows a
right to judgment with such clarity as to leave no room for
controversy and establishes affirmatively that the adverse
party cannot prevail under any circumstances.'”
Campbell v. Hewitt, Coleman & Assocs., Inc., 21
F.3d 52, 55 (4th Cir. 1994) (quoting Phoenix Sav. &
Loan, Inc. v. Aetna Casualty & Sur. Co., 381 F.2d
245, 249 (4th Cir. 1967)). Where the party bearing the burden
of proving a claim or defense “fails to make a showing
sufficient to establish the existence of an element essential
to that party's case, and on which that party will bear
the burden of proof at trial, ” summary judgment
against that party is likewise warranted. Celotex,
477 U.S. at 322.