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Insurance Co. of Greater New York v. Fire Fighter Sales & Service Co.

United States District Court, W.D. Pennsylvania

February 20, 2015

INSURANCE COMPANY OF GREATER NEW YORK, as subrogee of Five Star Hotels, LLC d/b/a Holiday Inn Parkway East, Plaintiff,

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[Copyrighted Material Omitted]

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For PATRICIA L. DODGE, Special Master: Patricia L. Dodge, LEAD ATTORNEY, Meyer, Unkovic & Scott LLP, Pittsburgh, PA.

For INSURANCE COMPANY OF GREATER NEW YORK, as Subrogee of FIVE STAR HOTELS, LLC d/b/a HOLIDAY INN PARKWAY EAST, Plaintiff: Matthew D. Matkov, Saltz Matkov PC, Berwyn, PA; Veronica W. Saltz, Saltz Matkov P.C., Wayne, PA.

For FIRE FIGHTER SALES & SERVICE CO, Defendant: Joshua R. Guthridge, LEAD ATTORNEY, John A. Robb, Jr., Robb Leonard Mulvihill LLP, Pittsburgh, PA.

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Joy Flowers Conti, United States District Judge.

I. Introduction

Pending before the court is the motion for summary judgment filed by defendant

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Fire Fighter Sales & Service Company's (" Fire Fighter" ) (ECF No. 139). Plaintiff, the Insurance Company of Greater New York (" GNY" ), in its second amended complaint (ECF No. 97), asserts claims of professional negligence (Count I) and breach of contract (Count II) arising from the extensive water damage sustained by a hotel insured by GNY when a water-filled standpipe froze and burst. Fire Fighter seeks summary judgment in its favor with respect to both counts. This court has jurisdiction pursuant to 28 U.S.C. § 1332.

II. Factual Background

This action stems from a property damage claim filed by Five Star Hotels, LLC (" Five Star" ), the owner and operator of the Holiday Inn Parkway East hotel (the " Hotel" ) located in Pittsburgh, Pennsylvania. Five Star purchased the Hotel in March 2005, intending to operate it as a Holiday Inn franchise. (Declaration of Ad Dhupar (" Dhupar Decl." ) (ECF No. 142-2) ¶ 8.) The Hotel was insured by GNY pursuant to a written insurance policy (policy number 6137M15022). (Id. ¶ 5.)

At the time that Five Star purchased the Hotel, the Hotel's fire suppression system consisted of a fire pump, two 6" standpipes (one each in the east and west stairwells),[1] and several fire hose access points located on each floor. (Combined Statement of Material Facts (" C.S.F." ) (ECF No. 157) ¶ 5.) As a condition of Five Star's franchise agreement, Holiday Inn directed Five Star to upgrade the Hotel's fire suppression system to include an automatic sprinkler system. (Deposition of Ad Dhupar (" Dhupar Dep." ) 31, (ECF No. 142-1)). Dhupar solicited bids from two companies, including Fire Fighter, to perform the necessary upgrades. (Id. at 120-21.)

At some point in 2005, Fire Fighter employees Mike Wessel (" Wessel" ) and Eric Grien met with Dhupar for an initial discussion and walk-through of the proposed project. (C.S.F. (ECF No. 157) ¶ 12.) During the walk-through, Wessel noted the presence of the existing standpipes in the Monroeville and Pittsburgh stairwells. (Deposition of Mike Wessel (" Wessel Dep." ) 23, (ECF No. 142-5).) Wessel observed that, although there were no heating mechanisms located in the stairwells, they appeared to be heated by radiant heat from surrounding areas. (Id. at 23-24; Dhupar Decl. (ECF No. 147-1) ¶ 15.) Dhupar advised Wessel that the stairwells had not experienced any freezing problems over the past twenty years. (Dhupar Dep. 154-55, (ECF No. 147-1); Wessel Dep. 25-26 (ECF No. 147-5).)

Shortly thereafter, Wessel and Grien prepared an initial proposal and presented it to Dhupar. (C.S.F. (ECF No. 157) ¶ 18.) The proposal quoted a price of $235,880.00 for the installation of the sprinkler system and a new standpipe to feed the sprinklers. (Id. ¶ 19; February 23, 2005 Proposal (" Initial Proposal" ) (ECF No. 142-6) at 1-3.) Dhupar responded that the Initial Proposal was too expensive and asked Wessel whether the sprinkler system could be fed from one of the existing standpipes. (Dhupar Dep. 127-29, (ECF No. 147-1); Wessel Dep. 20-21, 40, (ECF No. 142-5).) Wessel indicated that it could and agreed to prepare a modified proposal. (Dhupar Dep. 126-27 (ECF No. 147-1).)

On August 1, 2005, Wessel submitted a modified proposal incorporating Dhupar's request that the sprinkler system be connected to an existing standpipe. (August 1, 2005 Proposal (" August 1 Proposal" )

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(ECF No. 142-8) at 1-4; Wessel Dep. 42-43, (ECF No. 142-5).) Other terms of the offer included a provision that shop drawings would be provided and that all work would be done in accordance with applicable state and local codes. (August 1 Proposal (ECF No. 142-8) at 1.) The proposal also contained a provision that Fire Fighter would provide " P.E. Stamped Drawings," a term indicating that a professional engineer would review and stamp the proposed project design. (Id.)

On or about December 15, 2005, Dhupar met with Wessel and made several handwritten alterations to the August 1 Proposal. (Wessel Dep. 47, (ECF No. 142-5).) Dhupar's proposed changes included, inter alia, a requirement that Fire Fighter obtain " all approvals from the town/state/city as required," a change to the estimated completion date, and a modification of the total cost. (December 15, 2005 Proposal (" December 15 Proposal" ) (ECF No. 142-11) at 1-3.) Dhupar also indicated in writing that Fire Fighter should submit a " formal contract ASAP." (Id. at 3.) Neither Dhupar nor Fire Fighter altered the provision in the proposal that P.E. Stamped Drawings were required. (Id. at 1.) Wessel agreed that the changes made by Dhupar were acceptable to Fire Fighter, and Dhupar signed the December 15 Proposal. (Wessel Dep. 47-48, (ECF No. 142-5).) Despite Dhupar's handwritten notation that a " formal contract" would follow, no formal written contract was produced during discovery. (ECF No. 140 at 12.)

Following his meeting with Dhupar, Wessel returned to Fire Fighter's offices and handed the signed December 15 Proposal to Dolores Moyle, the administrative employee at Fire Fighter who processed proposals and contracts. (Wessel Dep. 49, (ECF No. 142-5).) Wessel next met with Fire Fighter's operations manager, Tom Zandier (" Zandier" ), to review the signed December 15 Proposal and determine " how we were to proceed, where we were supposed to start, what our job was." (Deposition of Thomas Zandier (" Zandier Dep." ) 16, (ECF No. 142-7).) Zandier explained the general design requirements of the job to Jeff Hughes (" Hughes" ), Fire Fighter's designer, who took over the design aspect of the job. (Deposition of Jeff Hughes (" Hughes Dep." ) 39, (ECF No. 142-12).) Hughes took measurements of the building, incorporated those measurements into a design drawing, and prepared that drawing for submission to the relevant permitting authority. (Id. at 41.)

At all times, Rick Malady was the only professional engineer working at Fire Fighter. (Deposition of Rick Malady (" Malady Dep." ) 71-72, (ECF No. 142-14).) Malady, however, had no involvement with the design process or installation of the sprinkler system and never reviewed the drawings or provided a P.E. stamp. (Malady Dep. 97, (ECF No. 142-14).)

On March 2, 2006, Fire Fighter obtained a building permit from the Borough of Braddock Hills to construct the sprinkler system. (Building Permit (ECF No. 142-17).) Fire Fighter completed the project on or before July 3, 2006. (July 3, 2006 Work Order (ECF No. 142-19).)

Consistent with Dhupar's request to utilize an existing standpipe, Fire Fighter physically connected the new sprinkler system to the standpipe located in the Monroeville Stairwell. (Deposition of Timothy McGreal (" McGreal Dep." ) 113-14, (ECF No. 142-4); Declaration of Timothy McGreal (" McGreal Decl." ) (ECF No. 142-27) ¶ 6.) Fire Fighter did not physically alter or connect anything to the standpipe on the Pittsburgh side of the Hotel. (McGreal Dep. 113, 115, (ECF No. 142-4).) However, Timothy McGreal (" McGreal" ), a professional engineer engaged as an expert

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witness by GNY, testified that the two standpipes were " hydraulically connected." (Id. at 113.) McGreal explained:

This isn't one fire sprinkler. This is a fire sprinkler system, so the pressure that's being delivered to the system is being delivered throughout the system. They're not discrete components. They're not ...

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