St. Paul Mercury Insurance Co. v. THF Clarksburg Development Two
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:14-cv-00045-JPB Copies to all parties and the district court/agency. [999759828].. [15-1453]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1453
ST. PAUL MERCURY INSURANCE COMPANY,
Plaintiff – Appellee,
NATIONAL SURETY CORPORATION,
Defendant – Appellee,
v.
THF CLARKSBURG DEVELOPMENT TWO, LLC; MICHAEL H. STAENBERG,
Defendants – Appellants,
and
LOWE'S HOME CENTERS, LLC,
Defendant.
Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg. John Preston Bailey,
District Judge. (1:14-cv-00045-JPB)
Submitted:
January 27, 2016
Decided:
February 23, 2016
Before SHEDD and FLOYD, Circuit Judges, and Loretta C. BIGGS,
United States District Judge for the Middle District of North
Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion.
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James C. Stebbins, Brittany A. Fink, LEWIS, GLASSER, CASEY &
ROLLINS, PLLC, Charleston, West Virginia, for Appellants. Peter
G. Zurbuch, Jeffrey S. Zurbuch, BUSCH, ZURBUCH & THOMPSON, PLLC,
Elkins, West Virginia, for Appellee St. Paul Mercury Insurance
Company; John P. Fuller, Michael W. Taylor, BAILEY & WYANT,
PLLC, Charleston, West Virginia, for Appellee National Surety
Corporation.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
THF Clarksburg Development Two owns a large commercial real
estate development in Clarksburg, West Virginia.
In 2002, THF
entered into two agreements with Lowe’s Home Centers, Inc.
In
the first agreement, the ground lease, THF agreed to lease a
portion of the development to Lowe’s.
In the second agreement,
the Site Development Agreement, Lowe’s agreed to pay THF over
$4,000,000 to perform development work on the tract of land,
including
the
preparation
of
a
Lowe’s could build a store.
hired
by
THF,
prepared
building
pad
area
upon
which
CTL Engineering, a subcontractor
the
building
pad
and
provided
a
geotechnical certification confirming that the building pad had
been prepared in accordance with the Site Development Agreement
and that it would support the construction of the Lowe’s store.
CTL tendered the certified building pad to THF on April 9, 2002,
and THF delivered it to Lowe’s on April 15, 2002.
Lowe’s
Lowe’s
discovered
building.
problem
built
An
would
the
a
store,
settlement
engineer
likely
but
advised
cause
continued wall movement.
at
issue
the
that
Lowe’s
worsening
one-year
was
that
damaging
the
foundation
inspection
the
settlement
failure
and
Lowe’s notified Michael Staenberg, the
managing partner and half-owner of THF, of the problem on April
20, 2003.
THF then notified the subcontractors who had prepared
the building pad of the problem.
3
Although CTL had been involved
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in the preparation of the building pad, THF hired the firm again
to
determine
the
cause
of
settlement.
CTL
investigated
and
returned a report concluding that the settlement problem was
unrelated to the construction of the building pad and was likely
caused by an external force.
March
22,
2005.
Eight
THF sent CTL’s report to Lowe’s on
months
later,
having
not
received
a
response from Lowe’s, THF sent another letter stating that it
presumed from the lack of response that Lowe’s was in agreement
with CTL’s report.
Nearly two years later, Lowe’s sent THF a
letter explaining that it had delayed responding until its own
engineers
had
completed
tests.
It
further
stated
that
it
considered the underlying soil failures to be a latent defect to
which THF’s extended warranty applies and put THF on notice of
that claim.
On April 26, 2012, Lowe’s filed suit against THF
and Staenberg.
In June, 2012, THF notified its insurers, St. Paul Mercury
Insurance Company and National Surety Corporation (NSC), about
the
Lowe’s
lawsuit.
declaratory
judgment
On
March
action
13,
against
2014,
THF,
St.
NSC,
Paul
filed
Staenberg,
a
and
Lowe’s, seeking a determination of the existence and scope of
coverage afforded under St. Paul’s and NSC’s policies insuring
THF.
The district court granted summary judgment for NSC and
St. Paul’s, finding that THF is not afforded any coverage under
either policy because of its delay in notifying the insurers of
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Applying Missouri law *, the court explained
the potential claim.
that in order to succeed on a claim that delayed notice excuses
an obligation to an insured party, the insurer must “establish
it was prejudiced by the insured’s failure to provide timely
notice.”
St. Paul Mercury Ins. Co. v. National Sur. Corp., No.
1:14-cv-45,
2015
WL
222477,
at
*6,
(N.D.W.Va.
2015)
(citing
Weaver v. State Farm Mut. Auto Ins. Co., 936 S.W.2d 818, 821
(Mo. 1997)).
were
Here, the court held that the insurance companies
prejudiced
as
a
matter
of
law
because
a
West
Virginia
statute of repose would bar them from asserting claims against
the subcontractors who completed the work on the building pad.
THF
and
Staenberg
filed
a
Motion
to
Alter
or
Amend
Judgment, arguing that the court made a clear error of law when
it incorrectly applied the West Virginia statute of repose.
The
statute of repose at issue begins to run when “the improvement
to the real property, or the survey of the real property in
question has been occupied or accepted by the owner of the real
property, whichever occurs first.”
W.Va. Code § 55-2-6a (2014).
THF and Staenberg argued that because ownership of the property
was split between THF and Lowe’s, the statute of repose began to
run when Lowe’s accepted the pad from THF, and not, as the
*
Because the insurance policies were issued in Missouri,
Missouri law is controlling under West Virginia choice of law
rules.
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district court held, when THF accepted the pad from CTL.
If the
statute of repose began to run when Lowe’s accepted the pad, it
had not expired at the time that the insurers were notified, and
therefore
the
subcontractor.
insurers
would
have
been
able
to
sue
the
The district court rejected this argument and
denied the Motion to Alter or Amend Judgment.
The court held that THF owned the real property and the
building pad, noting that both parties agreed in the underlying
litigation that THF owned the real property and leased it to
Lowe’s.
Because
THF
owned
the
real
property
on
which
the
improvement was built, and the statute of repose begins to run
when an improvement is “occupied or accepted by the owner of the
real property,” the court held that it was THF’s acceptance of
the building pad that commenced the limitations period.
The
court further held that, because THF would not have delivered
the building pad to Lowe’s without first accepting it from CTL,
THF
accepted
the
building
pad
when
it
certification to Lowe’s on April 9, 2002.
tendered
the
pad
The insurers were not
notified until more than ten years after this acceptance date,
and were thus barred by the statute of repose from asserting a
claim against CTL.
The insurers were therefore prejudiced by
THF’s failure to provide timely notice.
Having
reviewed
the
record
and
the
applicable
law,
we
affirm the judgment based substantially on the reasoning of the
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district
facts
court.
and
materials
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legal
before
We
dispense
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with
oral
argument
contentions
are
adequately
this
and
argument
court
because
presented
would
not
the
in
the
aid
the
decisional process.
AFFIRMED
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