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Ramara, Inc. v. Westfield Ins. Co.

United States District Court, E.D. Pennsylvania

November 24, 2014

RAMARA, INC., Plaintiff,

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Gerald Austin McHugh, United States District Judge.

This matter involves cross motions for summary judgment in an insurance coverage dispute. Plaintiff Ramara, Inc. (" Ramara" ) is a business owner seeking coverage for an underlying personal injury lawsuit, brought by the employee of a subcontractor working on its property. Ramara's Complaint consists of two counts: (1) declaratory judgment regarding Westfield's duty to defend and/or indemnify Ramara with respect to a personal injury lawsuit brought by Anthony Axe (the " underlying complaint" ); and (2) breach of contract.

On March 10, 2014, Judge Dalzell denied Defendants' Motion to Dismiss in a comprehensive and thoughtful opinion. Ramara, 298 F.R.D. 219, 220 (E.D. Pa. 2014) (confronting many of the same legal issues currently before this Court). Plaintiff now moves for partial summary judgment as to Westfield Insurance Company (" Westfield" ), the carrier that issued the policy in question. Defendants[1] Westfield and Fortress Steel Service (" Fortress" ) oppose Ramara's motion and cross-move for summary judgment.

I. Background

There is nothing unusual about the facts of the underlying tort case. Ramara, owner of a parking garage, hired a general contractor to perform work on its property, which in turn hired a subcontractor, whose employee was then injured on the premises, giving rise to a claim against Ramara.

Specifically, Ramara hired Sentry Builders Corporation (" Sentry" ) to perform the work in question. On or about February 22, 2014, Sentry and Fortress Steel Services,

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Inc. (" Fortress" ), entered into a written letter agreement (" the Agreement" ) providing for the installation of certain concrete and steel components by Fortress at Ramara's parking garage. Ramara Compl. at ¶ ¶ 11-12. Fortress agreed to provide all necessary labor and equipment required to " perform the work in a workman-like manner and in accordance with the acceptable standard of the trade," and to supervise the project until its completion. Id. at ¶ ¶ 13-14. The Agreement stipulated that " Sentry Builders Corporation and or Ramara, Inc. will NOT be responsible for the procedures or actions of Fortress Steel in its performance or deliveries to complete the work." Id. at ¶ 16.

The Agreement further provided that " Fortress Steel will before commencement of work provide Sentry Builders Corp. insurance for Workmen's Compensation and General Liability with the appropriate limits of coverage, said certificate(s) of insurance shall also include the landlord Ramara, Inc. as additional insured." Id. at ¶ 17 and Exhibit B. A Certificate of Liability Insurance was issued by or on behalf of Westfield showing Fortress as the named insured under a Westfield Insurance Group policy providing $1 million of primary liability coverage per occurrence and $9 million of umbrella coverage. Id. at ¶ 18. Ramara and Sentry are listed as additional insureds under a typewritten section of the certificate entitled " Description of Operations/ Locations / Vehicles." Id. at ¶ 18 and Exhibit C. The typewritten section reads: " RE: Project 444 City Avenue -- Additional Insureds include Ramara Inc. and Sentry Builders with regard to above referenced project." Id.

Anthony Axe, a Fortress employee, was injured in April of 2012 during the course of the job, and filed a lawsuit in the Philadelphia County Court of Common Pleas against Ramara, as the owner of the property, and Sentry, as the general contractor, but not against his employer, Fortress, which is immune from suit pursuant to Pennsylvania's Workers' Compensation Act. See 77 Pa. Stat. Ann. § 481 (" The liability of an employer under this act shall be exclusive and in place of any and all other liability." ). The claims asserted by Axe in the underlying case are characteristic of the claims typically filed in worksite accidents.

The Commercial Umbrella Liability Declarations page of the Commercial Insurance Coverage policy issued by Westfield to Fortress (" the Policy" ) indicates $1 million per occurrence limits and $9 million general aggregate limits. Ramara's Motion for Partial Summary Judgment at Exhibits C--E. Given that Ramara was specifically listed as an additional insured, it unquestionably expected that the coverage provided by Westfield would protect it from bodily injury claims arising out of Fortress' work, such as those asserted in Axe's lawsuit. See Ramara Compl. at ¶ 35.

Ramara has moved for partial summary judgment, and Westfield, joined by Axe's employer,[2] has cross-moved for summary judgment. Neither party has identified any material factual dispute, and both contend that they are entitled to judgment as a matter of law pursuant to Fed.R.Civ.P. 56(a). See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

II. Key Provisions of the Policy

There are four provisions in the Policy and related documents that have been

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identified by the parties as being of controlling importance. First, " Additional Insured -- Owners, Lessees or Contractors -- Automatic Status When Required in Construction Agreement With You" (the " Additional Insured Endorsement" ) provides as follows, in relevant part:

A. Section II -- Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for 'bodily injury,' 'property damage,' or 'personal and advertising injury' caused, in whole or in part, by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured.
A person's or organization's status as an additional insured under this endorsement ends when your operations for that additional insured are completed.

Plaintiff's Motion for Partial Summary Judgment at Exhibit F; Defs. Ans. to Compl. at ¶ 56 (emphasis added). Defendants use this paragraph to argue that in order for Ramara to qualify as an additional insured under the Policy, the underlying complaint must explicitly allege that Axe's injuries were proximately caused by Fortress' acts or omissions.

Plaintiff responds that the Policy's " Other Insurance Endorsement," set out in relevant part below, directly conflicts with Defendants' interpretation of the key language in the Additional Insured Endorsement, and as such cannot be reconciled with the totality of the contract. The Other Insurance Endorsement provides:

When required by written contract with any additional insured owner, lessee, or contractor to provide insurance on a primary and noncontributory basis, Condition 4. Of Section IV -- Commercial Liability Conditions is deleted and replaced by the following:
4. Other Insurance

If other valid and collectible insurance is available for a loss we cover under Coverages A or B of this Coverage Part, our ...

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