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Travelers Property Casualty Co. of America v. Centimark Corp.

September 26, 2006

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, PLAINTIFF,
v.
CENTIMARK CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Joy Flowers Conti

Magistrate Judge Lisa Pupo Lenihan

MEMORANDUM ORDER

The complaint filed by Travelers Property Casualty Company of America ("plaintiff" or "Travelers") was received by the clerk of court and was subsequently referred to United States Magistrate Judge Lisa Lenihan for pretrial proceedings in accordance with the Magistrates Judges Act, 28 U.S.C. § 636(b)(1), and Rules 72.1.3 and 72.1.4 of the Local Rules for Magistrates Judges.

The Magistrate Judge's Report and Recommendation (the "R&R"), filed on June 20, 2006, recommended that the motion for summary judgment filed by defendant Centimark Corporation ("defendant") be denied. Objections to the R&R were filed by defendant and a brief in opposition to the objections was filed by plaintiff. After review of the pleadings and documents in the case, together with the R&R, the court observes the following:

The R&R concludes that there exists at least a colorable claim that plaintiff may, under the equitable doctrine of subrogation, bring a claim originating from the property owner, Glimcher Properties LLP ("Glimcher LLP"), despite Travelers issuance of insurance on the property to Glimcher Realty Trust ("Glimcher Parent").*fn1 It further concludes that, defendant's assertions to the contrary notwithstanding, the evidence of record regarding the express limited warranty issued after completion of the work, but prior to payment, is insufficient to establish entitlement to summary judgment where genuine fact questions remain regarding, among other things, Glimcher LLP's acceptance of the warranty terms, the sufficiency of consideration, and whether any acceptance was induced by a misrepresentation relating to complete performance of the contract. Defendant disputes the R&R at length, although a significant portion of its objections consist of factual recitations*fn2 and full reiterations of arguments made in prior pleadings. It also requests oral argument on its motion for summary judgment.

I. SUBROGATION

Defendant erroneously characterizes the R&R's application of the doctrine of equitable subrogation as effecting an improper rewrite of the insurance contract to include Glimcher LLP as an additional insured. That assertion reflects a fundamental misunderstanding of the analysis underlying the R&R. The R&R rejects defendant's proffered argument - that it is entitled to summary judgment simply because plaintiff's named insured was Glimcher Parent. It rejects that argument because equitable considerations underlying the doctrine of subrogation counsel a different result. See R&R and citations therein. Given the position which defendant continues to espouse, this court can only reiterate that the issue presented - the question of equitable subrogation - clearly requires consideration of material facts (and the application of law to those facts) beyond the name of the insured on the insurance policy.

Defendant also objects to what it characterizes as the R&R's sua sponte and groundless conclusion that there exists a colorable claim under the doctrine of equitable subrogation on the basis of alter ego status. Defendant asserts that there is no evidence or testimony in the record to support this conclusion. To the contrary, as referred to in the R&R, there exists significant record evidence in support of a colorable claim. See, e.g., R&R at n.1, pp. 3-4, 7-8 (noting, among other facts, that defendant's roofing proposal for the work at issue, addressed to Glimcher Parent at a shared address, and self-described as work for Glimcher Parent, was attached without revision to the one-page Purchase Order executed by Glimcher LLP and observing that Glimcher Parent, although not the owner of the subject property, "conducted itself as the owner for purposes of the insurance transaction"). Further support for this aspect of the R&R may be found in Trustees of National Elevator Industry Pension, Health Benefit and Educational Funds v. Lutyk, 332 F.3d 188 (3d Cir. 2003). In Lutyk, the court of appeals affirmed a judgment for a plaintiff where the district court, at summary judgment, sua sponte invoked the alter ego doctrine and explained that the alter ego doctrine is a tool of equity. Id. at 193 n.6. The applicability of the alter ego doctrine is determined by the conduct of the parties material to the dispute at hand and piercing the corporate veil is a mechanism for remedying a fundamental unfairness that would otherwise result. Id. The court of appeals also noted that the theory of harm alleged may affect the scope of remedy that equity demands. Id.

Defendant's current assertion that no evidence relating to the alter ego doctrine exists is unfortunately akin to its prior assertions regarding evidence. See, e.g., R&R at n.8 (rejecting defendant's suggestion that the record raises no question of material fact regarding any damages causally related to its failure to obtain inspection by a structural engineer).*fn3 Moreover, defendant's repeated assertions regarding the clarity of the corporate name on the Purchase Order ignore the import of the R&Rs observation that the doctrine of equitable subordination looks to the equities as between the insurer and the insured. See id. at 8-9.*fn4

Defendant's assertion that this court cannot deny summary judgment unless it pierces the corporate veil on an alter ego theory*fn5 flatly ignores the further considerations raised in the R&R at note 15. The court observes that defendant continues to forego meaningful analysis of the ...


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