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

United States District Court, D. Maryland

July 15, 2019

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

          MEMORANDUM OPINION

          RICHARD D. BENNETT UNITED STATES DISTRICT JUDGE.

         Plaintiff Arch Insurance Company (“Arch”) of Jersey City, New Jersey initially commenced this lawsuit alleging that Defendant, U.S. Silica Company (“Silica”), of Frederick, Maryland, had breached its contractual obligations by failing to document the transfer of its rights against a third party, Union Pacific Railroad Company (“Union Pacific”), to Arch. (ECF No. 22.) Previously, Silica moved to dismiss Arch's Amended Complaint, arguing, inter alia, that it had in fact executed an assignment of its rights to Arch, thereby satisfying its obligations. As Arch's Amended Complaint failed to explain why the executed assignment was inadequate, this Court dismissed Arch's Amended Complaint without prejudice and permitted Arch to file a Second Amended Complaint.

         Arch's Second Amended Complaint acknowledges that Silica has executed an assignment of claim, but alleges that this assignment is nevertheless “unacceptable” because it contains language Arch finds objectionable and omits language it desires. This second amended pleading brings five Counts, styled as follows: breach of contract (Counts I and II); specific performance (Count III); and declaratory relief and judgment (Counts IV and V). Silica has once again moved to dismiss pursuant to Fed.R.Civ.P. Rule 12(b)(6). (ECF No. 23). The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2018). Put simply, Arch has again failed to articulate why Silica' executed Assignment of Claim fails to satisfy its contractual obligations. For this reason, and as more fully set forth herein, Silica's Motion to Dismiss (ECF No. 23) is GRANTED and Arch's Complaint, as amended (ECF Nos. 1, 15, 22), is now DISMISSED WITH PREJUDICE in its entirety.

         BACKGROUND

         I. Factual Allegations.

         The background of this case has been summarized in a prior opinion of this Court. See Arch Ins. Co. v. U.S. Silica Co., RDB-17-3652, 2018 WL 4562939, at *1-2 (D. Md. Sept. 24, 2018). Jurisdiction of this Court is predicated on diversity of citizenship under 28 U.S.C. § 1332. The facts and circumstances giving rise to this litigation are further addressed below. 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)). This Court may also consider documents “explicitly incorporated into the complaint by reference and those attached to the complaint as exhibits . . . .” Parker v. United States Postal Service, Civ. A. No. RDB-15-562, 2016 WL 7338412 (Dec. 19, 2016) (quoting Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016)); see also Fed. R. Civ. P. 10(c). In recounting the background of this case, this Court takes judicial notice of the documents attached to Arch's original Complaint and subsequent amendments thereto, including contracts executed by the parties, assignments of claims proposed by Arch and Silica, and a lengthy series of emails between counsel for Plaintiff and Defendant.

         A. The Industry Track Agreement.

         On or around November 26, 2008, Defendant Silica and a third party, Union Pacific, entered into an Industry Track Agreement governing the use and operation of a railway track which runs through a Silica facility located in Pacific, Missouri. (ECF No. 22 at ¶ 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.” (Id. at ¶ 16.) The Industry Track Agreement contained an anti-assignment condition and a provision which purports to limit Silica's rights of recovery against Union Pacific. (Pl.'s Ex. B, ECF No. 1-2; Pl.'s Ex. G at 19-20, ECF No. 22-2.)

         B. The Liability Insurance Policy.

         Plaintiff Arch issues liability insurance policies. (Id. at ¶¶ 8, 10.) Arch and Silica entered into an insurance contract whereby Arch issued a primary commercial general liability policy to Silica as the named insured for a one-year period beginning September 1, 2013 and ending September 1, 2014 (the “Arch Policy”). (Id. at ¶ 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.) Additionally, the Arch Policy contained “Commercial General Liability Conditions” which states in relevant part as follows:

         SECTION IV. COMMERCIAL GENERAL LIABILITY CONDITIONS

         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 any 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 right to us and help us enforce them.

(Pl.'s Ex. A, ECF No. 15-2 at 45, 47.)

         C. The Mediation Agreement.

         On or about May 2, 2014, Kevin King, Jr. filed a complaint against his employer, Union Pacific, under 45 U.S.C. §§ 51-60, the Federal Employers' Liability Act, claiming that he suffered injuries as a result of Union Pacific's alleged negligence (the “King claim”). (Id. at ¶ 20.) Mr. King later amended his complaint, adding Silica as a defendant. (Id. at ¶ 22.) 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 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”). (Id. at ¶ 25.) The Mediation 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. at ¶ 25.) 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. (Id. at ¶ 28).

         D. Efforts to Execute an ...


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