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Allegheny Design Management, Inc. v. Travelers Indemnity Company of America

United States District Court, Third Circuit

September 25, 2013



TERRENCER F. McVERRY, District Judge.

Pending before the Court is the MOTION FOR SUMMARY JUDGMENT (ECF No. 25), with brief in support (ECF No. 26), filed by Defendant Travelers Indemnity Company of America ("Travelers"). Plaintiff Allegheny Design Management, Inc. ("ADM") filed a response in opposition (ECF No. 30); Travelers filed a reply brief (ECF No. 32). The motion has been fully briefed and the factual record has been thoroughly developed via the submission of the parties' concise statement of material facts (ECF Nos. 27, 29, 33) and the various appendices and exhibits (ECF Nos. 28, 31, 34). Accordingly, the motion is now ripe for disposition.


The following background is taken from the Court's independent review of Travelers' motion, the filings in support and opposition thereto, and the record as a whole. Notably, the parties agree on the vast majority of the materials facts. All disputed facts and inferences have been resolved in the light most favorable to ADM, the non-moving party.

A. Factual Background

Plaintiff ADM constructs retail establishments on behalf of national commercial businesses in shopping malls throughout the United States. Among its projects, ADM was a general contractor in building a Finish Line retail store inside the Fashion Show Mall in Las Vegas, Nevada. Defendant Travelers issued a Commercial General Liability Insurance Policy to ADM in connection with its general contractor responsibilities.

As part of the project, ADM entered into a General Contractor Agreement with Finish Line.[1] Section 4.1 of the contract provides that "the Work to be performed at the Site is included in the Contract Documents and specified in [the] Owner's General Contractor Bid Form." (ECF No. 28-3 at 7). The General Contractor Bid Form lists "Final Cleaning" as part of the "General Requirements" for the Finish Line Project.

ADM also entered into two subcontracts in connection with the Finish Line Project. First, ADM entered into a subcontract with Elite Glass and Mirrors, Inc. ("Elite") to provide materials and labor for the installation of all glass required by the project. Second, ADM entered into a subcontract with Gold Star Cleaning Company ("Gold Star") for the final cleaning of the glass within the store.

In accordance with the subcontract, Elite accepted delivery of the glass and began its work. ADM Superintendent Karl Wilhelm ("Wilhelm") was on site to supervise the entire build-out and inspect Elite's work. Elite completed installation of the glass two to three days later. Throughout the delivery and installation process, Elite did not convey to ADM that the glass was defective in any way.[2]

On October 23, 2011, Gold Star began cleaning the newly installed glass.[3] At some time that day, a Gold Star representative noticed that the glass was damaged and notified Wilhelm that there was one long scratch. Wilhelm inspected the glass and confirmed the scratch; however, he later testified that there were also other scratches which he was unable to see upon his initial examination due to a barricade which impeded his view. At Wilhelm's instruction, Gold Star continued to clean the glass.[4] Although it remains unclear exactly when the glass was damaged, the parties agree that the damage to the glass took place before Gold Star finished cleaning. The parties are also in apparent agreement that either Gold Star or Elite caused the damage.

Fashion Show Mall Manager Marcus Wilcher ("Wilcher") also notified Wilhelm of the damaged glass the next morning. Two days later, on October 26, 2012, the Finish Line store opened for business. Wilcher also issued a "punch list" for the Finish Line store on October 27, 2011, which indicated that the glass work was not accepted, stating that the "glass has many small scratches." (ECF No. 28-5).

The record is somewhat imprecise as to when exactly ADM's work was considered to have been complete. The "General Contractor Agreement" between ADM and Finish Line provided that "Contractor shall be deemed to have completed a Project when Contractor completes, submits and Owner accepts, the Final Application for Payment as set forth in the Payment Checklist (PD-3) in the Construction Process Manual." (ECF No. 28-3 at 11). The Concise Statement of Material Facts ("CSMF") filed by Travelers states, and ADM admits, that "ADM's work was not completed until the scratches in the glass were addressed;" that "ADM's work under its contract with Finish Line was not completed until Gold Star returned to address the scratches on the glass identified in the punch list, " and that "ADM's work for Finish Line would not have been considered until Finish Line signed off on the punch list, which was October 27, 2011, at the earliest, and therefore after the damage to the glass occurred." (ECF No. 27 at 11-12, ¶¶ 40, 42, 43). The parties also agree that Gold Star returned to the Finish Line site at some point after the punch list to "complete work that was pursuant to [its] contract." (ECF No. 27 at 11, ¶ 42).

ADM later obtained a bid to repair the glass but never had it replaced. As ADM President Kuruc testified, the glass was never replaced "because once we were notified that there was an issue, we contacted our representative for our insurance carrier to let them battle it out." (ECF No. 28-13 at 5).

ADM submitted a claim to Travelers on October 31, 2011 in which it sought coverage for the damaged glass under the insurance policy. By letter dated January 6, 2012, Travelers denied ADM's claim on the ground that the damage to the glass did not meet the definition of "products-completed operations hazards." (ECF No. 28-10 at 2-5). Travelers also cited various exclusions that likewise precluded coverage.

Finish Line has not brought suit against ADM for damages related to the glass or made a formal claim to ADM. Kuruc did, however, testify that Finish Line's legal department asserted that ADM is obligated to pay for the damages to the glass. That assertion was apparently made during a telephone call, and Kuruc had received nothing in writing as of the date of his deposition.

B. Procedural History

ADM commenced this action on May 15, 2012 by filing a three-count Complaint in Court of Common Pleas of Armstrong County, in which it set forth claims for (1) breach of contract, (2) declaratory judgment, and (3) bad faith against Travelers. Travelers timely removed the case to this Court on May 15, 2012 and filed the instant motion for summary judgment on April 12, 2013.


Summary judgment must be granted when "the movant shows 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). The movant must identify those portions of the record which demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To withstand summary judgment, the non-movant must show a genuine dispute of material fact by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." FED. R. CIV. P. 56(c)(1)(A); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, ...

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