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Bingham Mechanical, Inc. v. CNA Insurance Co.

United States District Court, D. Idaho

March 31, 2014

BINGHAM MECHANICAL, INC., Plaintiff,
v.
CNA INSURANCE CO., et al. Defendants.

ORDER ON MOTION FOR SUMMARY JUDGMENT

RONALD E. BUSH, Magistrate Judge.

Pending before the Court is a Motion for Summary Judgment filed by Defendant Transportation Insurance Company[1] ("Transportation") in this declaratory judgment action on Transportation's duty to defend Plaintiff Bingham Mechanical, Inc. ("Bingham") under insurance policies Transportation issued to Bingham. (Dkt. 74). Having considered the record and oral arguments, the Court enters the following order:

BACKGROUND

A. The Underlying Mountain View Hospital Litigation

This case represents the apparent denouement of a veritable bird's nest of construction dispute claims, involving first-party claims, cross-claims, and third-party claims implicating the owner of the project, multiple contractors, and multiple insurance companies. The claims have been prosecuted and defended in multiple lawsuits.

All the claims, including Bingham's claims in this case, originate from the construction of Mountain View Hospital ("Hospital") in Idaho Falls, Idaho, from 2001 through 2003. Pl.'s St. Facts, ¶¶ 1-2. The Hospital hired Sahara, Inc., ("Sahara") as the general contractor and Sahara hired subcontractors to perform work on the project. Relevant here, Sahara hired Encompass Services Corporation ("Encompass") to install mechanical systems and Encompass then hired Bingham to install the "wet side" medical gas piping. Def.'s St. Facts, ¶ 6;. Pl.'s St. Facts, ¶¶ 5-6; 9.

It is not clear from the record in this case when the Hospital first noticed problems with the construction of the facility, but it sued Sahara in 2007 for breach of contract and negligence. Mountain View Hospital v. Sahara, Inc., CV07-464-E-BLW (D. Idaho) (" Mountain View Hospital " litigation/case). Bingham was not named as a defendant at that time. In September of 2009, an expert report in the Mountain View Hospital case identified alleged deficiencies in the mechanical work. Def.'s St. Facts, ¶¶ 4-7. Sahara filed a third-party complaint against its mechanical subcontractors, Encompass and United Team Mechanical, LLC ("UTM"), as the successor in interest to Encompass[2]. Pl.'s St. Facts, ¶¶ 5-6, 9; Mot. Jud. Notice, Ex. C, p. 3 (Dkt. 74-4). On September 29, 2009, UTM filed a Third Party Complaint against Bingham, seeking indemnity and contribution for any damages they might be ordered to pay Mountain View or Sahara. Mountain View Hospital, No. 4:07-cv-00464-BLW (Dkt. 100).

During the Hospital construction project, CNA was the liability insurance provider for Encompass, UTM, and Bingham (Bingham was insured by Transportation as a d/b/a of CNA). Pl.'s St. Facts, ¶ 10. CNA hired legal counsel to represent Encompass, which then defended the case, in part, by seeking contribution and/or indemnity from Bingham. Pl.'s St. Facts, ¶ 10. When Bingham was brought into the Mountain View Hospital case, it tendered the defense of the claims to its then-current insurer, Travelers Insurance Company ("Travelers") and to CNA, which had been its insurer at the time the hospital was built. Bailey Aff., ¶ 3 (Dkt. 78-3).

Travelers undertook UTM's defense and, after UTM sued CNA on a duty to defend claim, CNA agreed to pay one-half of UTM's defense costs. Id. at ¶ 5.

Cincinnati Insurance Company, Bingham's insurer at the time UTM brought Bingham into the Mountain View Hospital case, defended Bingham. Bingham also tendered defense of the case to Transportation on February 18, 2010. Almost ten months later, on December 13, 2010, Transportation issued a disclaimer and declined to assist in the defense. See Def.'s St. Facts, ¶¶ 9-10.

The Mountain View Hospital litigation ended with a Stipulated Motion to Dismiss All Claims Among the Parties (with one exception not relevant here) after summary judgment proceedings. Mountain View Hospital, No. 4:07-cv-00464-BLW (Dkt. 470). On May 22, 2012 the court granted the parties' stipulated motion to dismiss. Id. (Dkt. 472).

B. The Instant Case

The case at hand originated with a Complaint filed by UTM on July 8, 2010, seeking a declaratory judgment stating that CNA was obligated to provide coverage and defense to UTM in the Mountain View Hospital case. (Dkt. 1). At the request of the parties, this matter was stayed[3] to await the outcome of the Mountain View case. In the meantime, Bingham was allowed to intervene, filing a Complaint on March 22, 2012. (Dkt. 58). The Mountain View Hospital case settled in May of 2012. In November of 2012, CNA and UTM filed a Stipulation to Dismiss all of UTM's claims against CNA. (Dkt. 60). On November 14, 2012, the Court dismissed UTM's claims.

All that remains is Bingham's Complaint for Declaratory Judgment, which seeks (1) a judgment declaring that Transportation (or CNA) has a duty to provide coverage and a defense to Bingham for the claims arising in the Mountain View Hospital case and (2) a judgment in favor of Bingham for breach of contract. Transportation seeks summary judgment on its Third, Fourth, and Sixth affirmative defenses[4] because, it argues, Bingham has not sustained damages recoverable under the policies. Def.'s Mot., p. 1 (Dkt. 74). Bingham responds that material disputes of fact exist to preclude summary judgment.

DISCUSSION

A. Preliminary Matters

1. Transportation's Request for Judicial Notice

Transportation requests the Court take judicial notice of pleadings, briefing, and exhibits filed in the underlying Mountain View Hospital litigation. (Dkt. 74-3). Bingham has not objected to the request and the Court may take judicial notice of documents in court proceedings. See, e.g., BP West Coast Products LLC v. Greene, 318 F.Supp.2d 987, 994 (E.D. Cal. 2004). See also Fed.R.Evid. 201(b). Accordingly, the Court has considered the filings in the Mountain View Hospital litigation-those cited by Transportation as well as others in the public record in that case-in ruling on Transportation's motion.

2. Transportation's Objections to Bingham's Supporting Affidavits

Transportation also requests that the Court strike portions of three affidavits and one exhibit submitted by Bingham in support of its response brief.

(i) Bailey Affidavit (Dkt. 78-3)

Eric Bailey's Affidavit describes his representation of UTM in the instant case and CNA's decision to partially indemnify and defend UTM in the underlying litigation. The information the Court has cited to from this Affidavit is based on Bailey's personal knowledge. However, the Court has given Bailey's Affidavit only limited consideration because the policies under which CNA/Transportation provided insurance to UTM may contain differing terms than those insuring Bingham and, in any event, exclusions may apply to Bingham but not UTM, in part because UTM did not perform the same work as Bingham so any exclusions based on "your work" may apply only to ...


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