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Blissful Enterprises, Inc. v. Cincinnati Insurance Co.

United States District Court, D. Maryland

September 30, 2019



          George L. Russell, III United States District Judge.

         THIS MATTER is before the Court on Defendant Cincinnati Insurance Company's (“Cincinnati”) Motion for Summary Judgment (ECF No. 21) and Plaintiff Blissful Enterprises, Inc.'s (“Blissful”) Opposition to Defendant's Motion for Summary Judgment and Cross-Motion for Summary Judgment (“Cross-Motion”) (ECF No. 23). The Motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2018). For the reasons outlined below, the Court will grant Cincinnati's Motion and deny Blissful's Motion.

         I. BACKGROUND [1]

         Blissful owns and operates a hotel (the “Hotel”) at 2112 Emmorton Park Road in Edgewood, Maryland (the “Property”). (Compl. ¶¶ 1, 11, ECF No. 2). Blissful insured the Property via a policy issued by Cincinnati (the “Policy”). (Id. ¶ 11; id. Ex. 1 [“Policy”], ECF No. 2-1).[2] The Policy provides All Risk Coverage, or Open Peril coverage, that is, coverage for all risk of loss unless excluded by the Policy. (Id. ¶ 13). Blissful purchased additional coverage included in a Hotel Commercial Property Endorsement (the “Endorsement”). (Compl. ¶ 20; Policy at 82-102). The Property contains a storm water drainage system connected to the Hotel that “drains water from around the building, and water from off the roof of the building, through a system of pipes which feed into an underground pipe.” (Id. ¶ 23).

         On January 14, 2016, [3] Blissful employees cleaning up leaves on the Property noticed what appeared to be a “sinkhole” next to the building. (Gregory Aff. ¶ 6, ECF No. 21-5; Def.'s Mot. Summ. J. [“Def.'s Mot.”] Ex. 1(A) [“Cincinnati Claim Notes”] at 8, ECF No. 21-6).[4] Blissful reported the incident (the “Loss”) to Cincinnati, stating that underground pipes may be damaged. (Id.; Compl. ¶ 29). On January 20, 2016, John Gregory, a Cincinnati Senior Claims Specialist, sent Blissful a Reservation of Rights letter and noted that, “if there are damages to underground pipes, drains, or flues, they must be physically attached to Covered Property for the policy to respond.” (Gregory Aff. ¶ 8; Cincinnati Claim Notes at 8). Blissful retained William Baker to investigate the loss and attached to its insurance claim his February 3, 2016 letter, which stated that a “metal pipe has failed at the connection to the existing concrete manhole [which resulted in] a large amount of soil be[ing] displace[d] down the pipe, . . . caus[ing] two small retaining walls to fail and to void soil from under concrete and stone inlet aprons located in a drainage swale.” (Def.'s Mot. Ex 1(C) [“Baker Letter”], ECF No. 21-8). Baker referred to the loss as a “sinkhole.” (Id.). In a February 4, 2016 email, Gregory emailed a Blissful representative this statement: “based on the engineer's report and hotel site plan, we will provide coverage for the underground piping, however, as you are aware, the policy will not respond to filling the sinkhole itself.” (Compl. ¶ 30; Cincinnati Claim Notes at 11). Blissful then submitted an estimate (the “Estimate”) of the repair and restoration cost, $335, 484.00, (Compl. ¶ 31; id. Ex. 2 [“Estimate”], ECF No. 2-2). Surprised by the repair cost, Cincinnati chose to inspect the loss and evaluate the proposal. (Gregory Aff. ¶ 16). Upon investigation, Cincinnati wrote to Baker, asking him to explain how the loss satisfied the Policy's definition of “sinkhole.” (Cincinnati Claim Notes at 29-30). Baker could not confirm that it was, in fact, a sinkhole, so Cincinnati and Blissful each retained an expert, and the parties arranged a joint inspection of the Property for May 23, 2016. (Gregory Aff. ¶¶ 18-21). Following the inspection, Blissful's expert, Robert Najewicz, reported that “the bottom portion of the metal pipe was significantly corroded resulting in a loss in the structural integrity of the pipe that in turn appears to have contributed to the lateral deflection or shearing in the pipe and its subsequent collapse.” (Def.'s Mot. Ex. 2 [“Najewicz Report”] at 2, ECF No. 21-12). Cincinnati's expert, August Domel, agreed that “[t]he hole has occurred because of a breach in the pipe where it connects to the manhole has resulted in soil movement, ” which “allowed for the soil in the area to enter the pipe and be transported away leaving a hole.” (Def.'s Mot. Ex. 1(E) [“Domel Report”] at 4, ECF No. 21-10). Domel disputed Baker's sinkhole characterization because a sinkhole is “a ground depression caused by the dissolving of soft rocks naturally by groundwater circulating through them, ” whereas the Loss was related to pipe collapse. (Id.). On August 1, 2016, having concluded the loss was not actually a sinkhole or otherwise covered, Cincinnati denied Blissful's claim. (Compl. ¶ 32; Gregory Aff. ¶ 25).

         On or about March 23, 2018, Blissful sued Cincinnati in the Circuit Court for Harford County, Maryland. (Not. Removal at 1, ECF No. 1). In its two-count Complaint, Blissful alleges: breach of contract (Count I); and, in the alternative, promissory estoppel (Count II). Blissful alleges the underground pipe “collapsed due to decay hidden from view, and/or due to defective material or methods by which the pipe was installed, or due to breaking apart of the drain system.” (Compl. ¶ 24). “Alternatively the area containing the underground pipe sustained sinkhole damage for which Cincinnati agreed coverage existed under the Policy.” (Id. ¶ 25). Blissful alleges the Loss is covered by the Policy's Collapse Coverage Extension, (id. ¶¶ 17-19), or via the Endorsement's coverage for underground pipes, flues or drains, (id. ¶¶ 20-22).

         On April 26, 2018, Cincinnati removed the case to this Court. (ECF No. 1). On December 11, 2018, Cincinnati filed its Motion for Summary Judgment. (ECF No. 21). On January 2, 2019, Blissful filed an Opposition and Cross-Motion for Summary Judgment. (ECF No. 23). On January 22, 2019, Cincinnati filed an Opposition to the Cross-Motion and Reply with respect to its Motion. (ECF No. 24). On January 31, 2019, Blissful filed a Reply. (ECF No. 25).


         A. Standard of Review

         In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the nonmovant, drawing all justifiable inferences in that party's favor. Ricci v. DeStefano, 557 U.S. 557, 586 (2009); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)). Summary judgment is proper when the movant demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1)(A). Significantly, a party must be able to present the materials it cites in “a form that would be admissible in evidence, ” Fed.R.Civ.P. 56(c)(2), and supporting affidavits and declarations “must be made on personal knowledge” and “set out facts that would be admissible in evidence, ” Fed.R.Civ.P. 56(c)(4).

         Once a motion for summary judgment is properly made and supported, the burden shifts to the nonmovant to identify evidence showing there is genuine dispute of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The nonmovant cannot create a genuine dispute of material fact “through mere speculation or the building of one inference upon another.” Othentec Ltd. v. Phelan, 526 F.3d 135, 141 (4th Cir. 2008) (quoting Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985)).

         A “material fact” is one that might affect the outcome of a party's case. Anderson, 477 U.S. at 248; see also JKC Holding Co. v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001) (citing Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001)). Whether a fact is considered to be “material” is determined by the substantive law, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248; accord Hooven-Lewis, 249 F.3d at 265. A “genuine” dispute concerning a “material” fact arises when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. Anderson, 477 U.S. at 248. If the nonmovant has failed to make a sufficient showing on an essential element of her case where she has the burden of proof, “there can be ‘no genuine [dispute] as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

         When the parties have filed cross-motions for summary judgment, the court must “review each motion separately on its own merits to ‘determine whether either of the parties deserves judgment as a matter of law.'” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (quoting Philip Morris Inc. v. Harshbarger, 122 F.3d 58, 62 n.4 (1st Cir. 1997)). Moreover, “[w]hen considering each individual motion, the court must take care to ‘resolve all factual disputes and any competing, rational inferences in the light most favorable' to the party opposing that motion.” Id. (quoting Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)). The Court, however, must also abide by its “affirmative obligation” to “prevent factually unsupported claims and defenses” from going to trial. Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993) (quoting Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987)). If the evidence presented by the nonmovant is merely colorable, or is not significantly probative, summary judgment must be granted. Anderson, 477 U.S. at 249-50.

         B. Analysis

         Cincinnati argues that the Policy does not cover the Loss, regardless of which coverage part Blissful cites in support of its claim. Cincinnati also argues that it is not estopped from asserting Policy defenses and that Blissful should not be permitted to claim damages for a retaining wall. Blissful maintains the Policy covers the Loss, either under the Collapse Coverage Extension or the Hotel Commercial Property Endorsement's Underground Property Extension, that Cincinnati is estopped, and that the Court should allow the retaining wall to be part of its claim. At bottom, the Court agrees with Cincinnati.

         Because it will focus the analysis that follows, the Court will first address the retaining wall issue.

         1. Retaining Wall

         In its Cross-Motion, Blissful argues that the retaining wall that was destroyed is included in the Loss coverage because it was mentioned in discovery and that the Court should therefore award it the “undisputed amount of loss in this case, ” $335, 484.00. (Pl.'s Mot. at 3, 35). Cincinnati moves to strike the reference to the retaining wall because Blissful did not allege damages to the retaining wall in its Complaint, its expert does not mention it in his report, and Blissful has made no damages claim for it. The Court agrees with Cincinnati.

         A plaintiff is “bound by the allegations contained in its complaint and cannot, through the use of motion briefs, amend the complaint.” Zachair, Ltd. v. Driggs, 965 F.Supp. 741, 748 n.4 (D.Md. 1997) aff'd, 141 F.3d 1162 (4th Cir. 1998); see also Barclay White Skanska, Inc. v. Battelle Mem'l Inst., 262 Fed.Appx. 556, 563 (4th Cir. 2008) (“plaintiffs may not raise new claims without amending their complaints after discovery has begun”).

         Here, the Complaint does not mention a retaining wall and instead focuses on the damage to and replacement of the underground pipe. The Complaint alleges Cincinnati agreed to pay for the Loss and includes a screenshot of Gregory's February 4, 2016 email to Blissful's Mike Patel, in which Gregory states that Cincinnati will cover the underground piping but not will fill in the sinkhole. (Compl. ¶¶ 27-30). In the next paragraph, the Complaint refers to the Estimate that Blissful submitted to Cincinnati in 2016 and attached to the Complaint as Exhibit 2. Titled “Comfort Inn Storm Drain Pipe Replacement, ” the Estimate states the cost of the work would be $335, 484.00 and contains no reference to a retaining wall. (Id. Ex. 2 at 1). In its next paragraph, the Complaint refers to Cincinnati's denial of the claim, a letter which also focuses on “the cost of pipe replacement and soil backfill” at the Property. (Def.'s Mot. Ex. 1(F) [“Claim Denial Letter”] at 1, ECF No. 21-11). Blissful's failure to specify that their underground pipe claim also included damage to a retaining wall deprived Cincinnati of adequate notice under Rule 8. See Fed.R.Civ.P. 8(a)(2) (“a short and plain statement of the claim showing that pleader is entitled to relief”). Blissful notes that the retaining wall is mentioned in response to Cincinnati's Requests for Admissions, in a statement by Patel, and in Baker's February 3, 2016 letter. But Cincinnati should not have to guess what damages Blissful is claiming. The pre-suit correspondence, save for the Baker letter, concerned the underground pipes and the hole. If Blissful meant to include the retaining wall in its claim for damages, it should have made that clear in its Complaint. As a result, the Court will deny Blissful's Motion as to the retaining wall.

         The Court will next turn to the Policy and the coverage parts under ...

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