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Century Surety Company v. Odyssey Mechanical Corp

September 27, 2011

CENTURY SURETY COMPANY, PLAINTIFF,
v.
ODYSSEY MECHANICAL CORP., TRUMBULL EQUITIES, LLC, AND TOWER INSURANCE COMPANY OF NEW YORK DEFENDANTS.



The opinion of the court was delivered by: Glasser, United States District Judge:

Memorandum and Order

Plaintiff Century Surety Company ("Century") filed this declaratory judgment action, pursuant to 28 U.S.C. § 2201, against defendants Odyssey Mechanical Corp. ("Odyssey"), Trumbull Equities, LLC ("Trumbull") and Tower Insurance Company of New York ("Tower") in connection with a fire that occurred on November 22, 2008 at Trumbull's commercial property. Century seeks a judgment declaring that it is not obligated to defend against a suit by defendants or compensate any parties for fire damage allegedly caused by the actions of its policy-holder, Odyssey, because those actions are not covered by Odyssey's insurance policy. Century now moves for summary judgment. Defendant Tower opposes the motion, arguing the Court lacks subject matter jurisdiction because there is no case or controversy. For the following reasons, the Plaintiff's motion is GRANTED.

BACKGROUND

The following facts are undisputed, unless otherwise noted. In 2008, Odyssey purchased commercial general liability insurance, Policy CCP54782, from Century, effective for the period May 9, 2008 to May 9, 2009 (the "Policy"). Plaintiff's Statement of Material Facts Pursuant to Rule 56.1 ("Pl.'s R. 56.1") ¶ 1; Declaration of Copernicus T. Gaza ("Gaza Decl.") Ex. A. Under "business description," the policy listed "HVAC INST./REPAIR." Pl. R. 56.1 ¶ 2; Gaza Decl. Ex A at 3. "HVAC" is an industry abbreviation for "Heating, Ventilation and Air Conditioning." See Gaza Decl. Ex. A at 9 (classifying the business as "Heating or Combined Heating and Air Conditioning Equipment"). Under "specifically covered operations," the policy stated "Contractor [the insured, Odyssey] Doing HVAC Installation and Repair Work." Pl.'s R. 56.1 ¶ 6; Gaza Decl. Ex A at 9. Under the calculation for "Premium" the business was classified as "Heating or Combined Heating and Air Conditioning Equipment -- dealers or distributors only." Pl.'s R. 56.1 ¶ 5; Gaza Decl. Ex A. at 9.

In the fall of 2006, Trumbull contracted with Odyssey to install a sprinkler system in Trumbull's property at 31-10 37th Avenue, Long Island City, New York (the "37th Ave Building"), a 5-story commercial building. Pl.'s R. 56.1 ¶¶ 15-18; Gaza Decl. Ex. G. As part of that installation, Odyssey hired a subcontractor, New York City Sprinklers*fn1 , to provide the labor and secure the permits for the work. Pl.'s R. 56.1 ¶¶ 15 & 17; Gaza Decl. Ex. G.

On November 22, 2008 a fire broke out in Trumbull's Long Island City property, causing damage ("the fire damage"). Pl.'s R. 56.1 ¶¶ 7, 12. It is alleged that the sprinkler system installed by Odyssey failed to activate to extinguish the fire, Pl.'s R. 56.1 ¶¶ 7-8 & 14; Gaza Decl. Ex. B, C & E, although the reasons for that failure are in dispute. Shortly after the fire on December 3, 2008, Trumbull sent a letter to Odyssey and Century, stating that Trumbull "fully intend to hold Odyssey Mechanical liable for all damages sustained as a result of the recent fire at the premises due to the malfunctioning of the sprinkler system. By copy of this letter we are notifying your carrier of the aforesaid claim." Pl.'s R. 56.1 ¶ 7; Gaza Decl. Ex. B. On December 9, 2008, Francis Manfredi, an attorney acting for Tower, contacted Century by telephone and repeated the allegation that Odyssey installed a sprinkler system in the 37th Ave Building that did not function during the fire. Pl.'s R. 56.1 ¶ 8. Tower, as Trumbull's insurer, claims a right of subrogation against Odyssey. Answer to Amended Complaint, dated May 18, 2009, ¶ 10. Odyssey confirmed that it had installed a sprinkler system at the building. Pl.'s R. 56.1 ¶ 9.

Subsequently, both Century and Tower hired independent investigators to examine the cause of the fire. Pl.'s R. 56.1 ¶¶ 11-18; Gaza Decl. Ex. E & G. The investigation indicated that the fire was caused by sparks from a tenant's welding torch. See Gaza Decl. Ex E & G. During the investigation, Odyssey produced an invoice it issued to Trumbull dated September 19, 2006. Pl.'s R. 56.1 ¶ 16; Gaza Decl. Ex. G. The invoice stated "INSTALL & FURNISH SPRINKLER SYSTEM PER CODE." Pl.'s R. 56.1 ¶ 16, Gaza Decl. Ex G. Odyssey also produced a subcontract between Odyssey and New York City Sprinklers for the installation of sprinkler heads, dry valves, alarm valves, Siamese connections, and necessary work permits. Pl.'s R. 56.1 ¶ 17; Gaza Decl. Ex G.

On March 11, 2009, Century sent a letter to Odyssey in which Century stated that it would neither defend any claim nor cover any losses arising from the fire and Odyssey's installation of the sprinkler system because the losses were not part of the "HVAC installation and repair work" covered under the Policy. Pl.'s R. 56.1 ¶¶ 19-20; Gaza Decl. Ex. H. On March 12, 2009, Century filed this action seeking a declaratory judgment. No underlying action has been filed by Trumbull and Tower against Odyssey or Century. They therefore oppose the relief sought on the basis there is no case or controversy sufficient to confer jurisdiction on the Court.

JURISDICTION

Diversity of citizenship, which is not disputed, provides a basis for jurisdiction. See 28 U.S.C. § 1332(a)(1); Amended Complaint, dated March 19, 2009, ¶ 4-6. The issue presented is whether the claimed absence of a case or controversy deprives the Court of subject matter jurisdiction.

DISCUSSION

I.Standard of Review

"In determining a motion for summary judgment that is filed in the context of a declaratory judgment action, the same standard is applied as in any other action." United States v. State of New York, 3 F. Supp. 2d 298, 307 (E.D.N.Y. 1998). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). As an initial matter, the moving party has the burden of demonstrating that no genuine issue of material fact exists. Matsushita, 475 U.S. at 586. Once the movant points to the absence of an issue, the non-moving party cannot "rest upon the mere allegations or denials" in its pleadings but must produce evidence of a genuine issue of material fact. See Fed R. Civ. P. 56(e). See also Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

Credibility assessments and choices between conflicting versions of events, when material to the inquiry, are determinations that the Court must leave for a jury. SeeFischl v. Armitage, 128 F.3d 50, 55 (2d Cir. 1997). The Court is compelled to draw all reasonable inferences in favor of the nonmoving party, Matsushita, 475 U.S. at 586, and a genuine issue exists if a reasonable jury could find in favor of the non-moving ...


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