United States District Court, E.D. Pennsylvania
SCOTTSDALE INS. CO., Plaintiff,
KINSALE INS. CO., Defendant.
EDUARDO C. ROBRENO, J.
action arises from a claim by Plaintiff Scottsdale Insurance
Company ("Scottsdale") that Defendant Kinsale
Insurance Company ("Kinsale") is liable under an
insurance policy issued by Defendant Kinsale to AJA Skies the
Limit, Inc. ("AJA Skies the Limit") for the costs
of Plaintiff Scottsdale's defense and indemnification of
its own insured, P. Tamburri Steel, LLC
("Tamburri"), with respect to an underlying action
based on a written subcontract (the "Subcontract")
between Tamburri and AJA Skies the Limit. Kinsale removed the
case to federal court on the basis of diversity, and now
moves to compel arbitration. For the reasons that follow, the
Court will grant the motion to compel arbitration and dismiss
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
insured is Tamburri. Kinsale's insured is AJA Skies the
Limit. See Notice of Removal ¶ 1, ECF No. 1.
The Subcontract at issue concerns steel erection services
that were to be performed at a certain Pennsylvania
construction project. Compl. ¶ 18, ECF No. 1. Under the
Subcontract, a company called AJA Services, Inc. ("AJA
Services") agreed to indemnify and hold harmless
Tamburri with respect to all personal injury claims arising
out of or resulting from the performance of the steel
erection work performed on the project. Id. ¶
separate actions filed in the Court of Common Pleas of
Philadelphia County are relevant to the instant lawsuit. The
first of these is Buckman v. Gwynedd Mercy University, et
al., No. 2342 (Pa. Ct. Com. PI. filed Feb. 14, 2014)
(the "Buckman Action"). See id.
¶ 2. This was a personal injury action in which a
plaintiff steel worker claimed to have slipped and fallen on
wet steel decking at a construction site. See id.
¶ 14. On January 22, 2015, the Court of Common Pleas
entered a default judgment in favor of the
plaintiffs and against AJA Skies the Limit and AJA
Services for failure to answer the complaint within the
required time limit. See id. ¶ 21. Nearly a
year later, on January 12, 2016, the case settled for a total
amount of $1, 209, 717.69. See id. ¶ 22. On
April 28, 2016, the Court of Common Pleas held a bench trial
and subsequently entered a finding of liability and order of
judgment against AJA Skies the Limit and in favor of Tamburri
in the amount of $1, 154, 491, representing the reasonable
cost of settlement and the reasonable cost of attorneys'
fees and expenses incurred in defending against this action.
Id. ¶¶ 23-25. Scottsdale incurred and paid
the above defense and indemnity amounts on behalf of
Tamburri. Id. ¶ 26.
second action relevant to the instant case is P. Tamburri
Steel, LLC v. AJA Skies the Limit, Inc., et al., No.
0855, (Pa. Ct. Com. PI. filed Jan. 25, 2017) (the
"Tamburri Action"). See id.
¶ 2. In the Tamburri Action, Tamburri--the
defendant contractor in the Buckman Action--sought
declaratory relief to reform the Subcontract that was at
issue in the Buckman Action. Id. ¶ 28.
On January 14, 2015, the Court of Common Pleas entered
default judgment against AJA Skies the Limit. Id.
¶ 29. On February 23, 2015, the Court of Common Pleas
signed an order granting Tamburri's motion for entry of
judgment and order on default, thereby equitably reforming
the Subcontract to name "AJA Skies the Limit,
Inc."--rather than the originally named "AJA
Services, Inc., "--as the steel erector with whom
Tamburri subcontracted with respect to the construction
project at issue in the Buckman
Action. Id. ¶ 32.
following diagram illustrates the relationships between the
various actors implicated in this case:
instant case here in federal court, Scottsdale seeks, in both
its individual capacity and as a subrogee of Tamburri, to
recover from Kinsale the monies spent and incurred for its
defense and indemnity of Tamburri in the Buckman
Action. See Notice of Removal ¶ 15 (citing
Compl. ¶ 1). Kinsale "has consistently denied
coverage under [its] Policy with respect to the claims
alleged in the underlying Philadelphia county actions,
claiming that AJA Skies the Limit, Inc. was the only named
insured under Kinsale's Policy." Compl. ¶ 38.
October 20, 2014, Scottsdale sent Kinsale a letter tendering
the underlying claims against Tamburri to Kinsale and
requesting that Kinsale undertake the defense, indemnity, and
handling of the claims against Tamburri in the
Buckman Action pursuant to the terms of the
Subcontract. Id. ¶ 42. Scottsdale cautioned in
the letter that Kinsale's "failure, refusal[, ] or
neglect to undertake the defense and to indemnify Tamburri
would result in Kinsale being bound by the result of a trial
or settlement of the underlying Buckman
Action." Id. ¶ 43.
denied coverage for Scottsdale's tender on behalf of
Tamburri, asserting that Tamburri's Subcontract was not
with Kinsale's insured, AJA Skies the Limit, but instead
was with AJA Services, Inc., which was not an insured or
additional insured under Kinsale's policy. Id.
the issuance of the February 23, 2015, order reforming the
Subcontract to name "AJA Skies the Limit" instead
of "AJA Services, " Scottsdale retendered the
defense of Tamburri to Kinsale on March 6, 2015. Id.
¶ 45. Kinsale again denied coverage, and this cycle
happened twice more in 2015. See Id. ¶¶
47-49. In December 2015, Kinsale characterized the February
23, 2015, order as a "sham [o]rder" constituting a
"fiction" created by Scottsdale. Id.
¶ 49. Kinsale again denied the existence of any written
contract between Tamburri and AJA Skies the Limit sufficient
to trigger coverage under Kinsale's policy. See
on the foregoing facts, Scottsdale now brings six distinct
causes of action and requests for relief against Kinsale, all
of which stem from Scottsdale's expenses incurred in
defending AJA Skies the Limit in the Buckman Action.
These include unjust enrichment, quantum meruit, equitable
request for reimbursement of defense costs, equitable
contribution and indemnification, equitable subrogration, and
reformation of the Kinsale Insurance Policy. Id.
¶¶ 50-93. Scottsdale demands total compensation in
excess of $75, 000. Notice of Removal ¶ 16.
January 25, 2017, Kinsale removed the instant action to this
Court on the basis of diversity. ECF No. 1. On February 6,
2017, Kinsale filed a motion to dismiss and compel
arbitration. ECF No. 5. Scottsdale responded in opposition to
this motion on February 21, 2017. ECF No. 8. On March 7,
2017, the Court held an initial pretrial conference and
hearing on the motion to dismiss and compel arbitration.
See ECF Nos. 7, 11.
MOTION TO DISMISS AND ...