United States District Court, S.D. New York
KELLER FOUNDATIONS, LLC, HAYWARD BAKER, INC., and KELLER GROUP, PLC, Plaintiffs,
ZURICH AMERICAN INSURANCE COMPANY, Defendant.
OPINION & ORDER
A. ENGELMAYER UNITED STATES DISTRICT JUDGE.
Keller Foundations, LLC ("Keller"), Hayward Baker,
Inc. ("HBI"), and Keller Group, PLC ("Keller
Group") bring claims against defendant Zurich American
Insurance Company ("Zurich") for breach of contract
and breach of the contractual and statutory implied covenants
of good faith and fair dealing. The Court previously
dismissed plaintiffs' complaint for failure to state a
claim. The dismissal was without prejudice, and plaintiffs
have since repleaded their claims. Zurich now moves again to
dismiss plaintiffs' Amended Complaint for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6).
suit arises out of Zurich's 2013 settlement with a third
party under an insurance policy between plaintiffs and
Zurich. Plaintiffs claim, as before, that Zurich did not have
the authority under the insurance policy to enter into the
settlement agreement with the third party, and that Zurich
unlawfully damaged plaintiffs by doing so. Zurich counters
that it was permitted to settle with the third party under
the Policy, and that, in any event, its decision to do so did
not violate plaintiffs' rights under the policy or harm
reasons that follow, Zurich's motion is granted, but
without prejudice to plaintiffs' ability to bring an
amended complaint or a new lawsuit against Zurich to the
extent that factual developments postdating the Amended
Complaint so justify.
is a Delaware limited liability construction company that
maintains its principal place of business in Hanover,
Maryland. Dkt. 28 (“Amended Complaint” or
“AC”) ¶ 3.
a Delaware construction services corporation that maintains
its principal place of business in Hanover, Maryland.
Id. ¶ 4.
Group is a public limited ground engineering company
organized under the laws of the United Kingdom that maintains
its principal place of business in London, England.
Id. ¶ 5. Keller Group is the parent company of
both Keller and HBI. Id. ¶ 6. It is also the
parent of Capital Insurance Company (“Capital”),
a “captive reinsurer” that is fully funded by
Keller Group, id. ¶ 28, but which is not a
party to this action.
is an insurance company organized under the laws of New York
that maintains its principal place of business in Schaumburg,
Illinois. Id. ¶ 7.
issued a commercial general liability policy, No. GLO
3373933-06, effective June 1, 2009 to June 1, 2010.
Id. ¶ 22, Ex. A (the “Policy”).
Construction companies Keller and HBI were named insureds
under the policy, but their parent, Keller Group, was not.
Id. ¶¶ 22-23. Under the terms of the
Policy, Zurich was to provide insurance coverage to Keller,
HBI, and other named insureds-as well as to certain
additional insureds not specifically named in the Policy-for
claims of property damage or bodily injury. Id.
¶¶ 22-24. Specifically, the Policy required Zurich
[P]ay those sums that the insured becomes legally obligated
to pay as damages because of “bodily injury” or
property damage” to which this insurance applies. We
will have the right and duty to defend the insured against
any “suit” seeking those damages.
Policy also stated that Zurich “may, at [Zurich's]
discretion, investigate any ‘occurrence' and settle
any claim or ‘suit' that may result.”
Id. The Policy provided limits of liability in the
amount of $5 million per occurrence, and $5 million in the
aggregate. Id. at 18.
The Reinsurance Agreement
portion of Zurich's risk under the Policy was covered by
a “captive reinsurance agreement” issued by
Capital. AC ¶ 25; id., Ex. B (the
Reinsurance Agreement provided that Capital would reimburse
Zurich £450, 000 per loss on the Policy in excess of a
£50, 000 deductible. AC ¶ 27; Reinsurance
Agreement at 1.
The Diaz/HBI Suit
2009, HBI entered into a contract (the
“Contract”) with Diaz Fritz Isabel
(“Diaz”), to serve as a subcontractor at the
University Community Hospital Carrollwood Surgery/ICU
expansion project in Tampa, Florida (the
“Project”), where Diaz was a general contractor.
AC ¶ 15. In August 2009, groundwater seeped into the
existing portions of the hospital, causing damage to the
Project. Id. ¶ 16. On August 5, 2011, Diaz sued
HBI for breach of contract relating to the flood damage.
Id. ¶ 17. HBI asserted counterclaims for money
that it claimed it was owed for its work as subcontractor.
See The Diaz/Fritz Group, Inc. (d/b/a/ Diaz Fritz Isabel)
v. Hayward Baker, Inc., Case No. 11 09772, Circuit Court
of the Thirteenth Judicial Circuit in and for Hillsborough
County, Florida (the “Diaz/HBI Suit”); AC
The Diaz/Zurich Suit and the Settlement Agreement
December 20, 2011, Diaz, through its counsel, made a demand
by letter to Zurich for indemnity and defense, claiming to be
an additional insured under the Policy. AC ¶ 35. On
February 10, 2012, Zurich, through its counsel, replied by
letter, denying Diaz additional insured coverage under the
Policy. Id. ¶ 36.
February 15, 2012, Diaz filed a lawsuit against Zurich.
See The Diaz/Fritz Group, Inc. v. Zurich American
Insurance Company, No. 12 Civ. 716 (RAL) (EAJ), (M.D.
Fla., filed Apr. 4, 2012) (the “Diaz/Zurich
Suit”); AC ¶ 37. The Diaz/Zurich Suit was later
removed to the United ...