ACE American Insurance Company et al v. Toledo Engineering Co., Inc. et al
Filing
56
ORDER denying without prejudice 41 Motion for Partial Summary Judgment; denying without prejudice 42 Motion for Partial Summary Judgment. Signed by District Judge Arthur J. Tarnow. (MLan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ACE AMERICAN INSURANCE CO., ET
AL.,
Case No. 18-11503
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW
Plaintiffs,
v.
U.S. MAGISTRATE JUDGE
DAVID R. GRAND
TOLEDO ENGINEERING COMPANY, INC.
AND DREICOR, INC.,
Defendants.
/
ORDER DENYING DEFENDANTS’ MOTIONS FOR PARTIAL SUMMARY JUDGMENT
[41, 42] WITHOUT PREJUDICE
Plaintiffs are insurers who bring this diversity suit against Toledo Engineering
Company, Inc. (“TECO”) and Dreicor, Inc. (“Dreicor”) to recoup what they paid
following a June 3, 2017 explosion at a glass plant in Dewitt, Iowa. The plant was
operated by Guardian Industries Corp. and Guardian Industries, LLC (collectively,
“Guardian”), which were insured by Plaintiffs and are not parties to this lawsuit.
Plaintiffs allege that TECO and Dreicor—the contractors hired by Guardian to work
on the plant—are responsible for the explosion and subsequent fire. They brought
this suit as subrogees of Guardian and allege negligence, gross negligence, breaches
of contract, and breaches of warranty. Defendants have moved for partial summary
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judgment, arguing that the waivers of subrogation clauses in their Engineering
Services Agreements with Guardian bar all causes of action except those arising
from gross negligence.
Because the time allotted for discovery has not elapsed, the Court will deny
Defendants’ motions without prejudice. It will reach the merits of their defenses only
after the parties have had adequate time to gather evidence in support of their
positions.
PROCEDURAL BACKGROUND
Plaintiffs filed suit on May 11, 2018. [Dkt. # 1]. Defendants filed an Answer
on June 21, 2018 [7] and a Motion for Rule 11 Sanctions [24] on September 10,
2018. The Court entered a scheduling order [30] on November 2, 2018, providing
for discovery to end by May 1, 2019. On February 27, 2019, both Defendants filed
Motions for Partial Summary Judgment [41, 42]. On March 6, 2019, Defendants
filed a Notice of Withdrawal [47] their Motion for Rule 11 Sanctions, which covered
the same arguments as the motions for partial summary judgment. On March 14,
2019, the Court entered a stipulated amended scheduling order [48], providing for
discovery to extend until March 15, 2020. On August 13, 2019, the Court entered
another stipulated amended scheduling order [54] providing for discovery to extend
until September 15, 2019, with a dispositive motion cut-off set for October 15, 2020.
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A hearing on the motions for partial summary judgment is currently scheduled
for September 11, 2019 [53]. Because the Court finds the motions suitable for
determination without a hearing in accord with Local Rule 7.1(f)(2), that hearing
will be cancelled.
STANDARD OF REVIEW
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” FED. R. CIV. P. 56(c). Movant bears the burden
of establishing that there are no genuine issues of material fact, which may be
accomplished by demonstrating that the non-movant lacks evidence to support an
essential element of his case. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Non-movant cannot rest on the pleadings and must show more than “some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd., 475
U.S. at 586-87. Non-movant must “go beyond the pleadings and by . . . affidavits,
or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate
‘specific facts showing that there is a genuine issue for trial.’” Celotex Corp., 477
U.S. at 324 (quoting Rule 56(e)).
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PROCEDURAL ANALYSIS
Defendants’ position is that the Engineering Service Agreements between
Guardian and the Defendants bar the subrogation of claims to third parties except in
cases of gross negligence. In response, Plaintiffs argue that those contracts are not
controlling and that their purported waiver of subrogation provisions are ambiguous.
Plaintiffs also argue that the motions are premature, and that they should be able to
avail themselves of full discovery before being forced to defend their case on
summary judgment.
“Before ruling on summary judgment motions, a district judge must afford the
parties adequate time for discovery, in light of the circumstances of the case.” Plott
v. Gen. Motors Corp., Packard Elec. Div., 71 F.3d 1190, 1195 (6th Cir. 1995) (citing
Celotex Corp., 477 U.S. at 322, 326 (1986)). In this case, the Court need not
determine an “adequate time for discovery”, because it has already signed a
stipulated Order [54] providing for discovery to extend until September 15, 2020.
Defendants argue that an exception to this rule is warranted because the issue
of the waiver of subrogation clause is ripe for adjudication. They have provided no
authority, however, for their assumption that it is appropriate to grant summary
judgment on portions of a plaintiff’s suit as discovery proceeds. Defendants’
position—that Plaintiffs have not identified how what they are seeking to discover
would affect the arguments raised in Defendants’ motion—asks the Court, in effect,
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to add extra requirements to the discovery rules of FED. R. CIV. P. 26. Parties do not
need to show how the evidence they seek would disprove Defendants’ arguments in
order to be entitled to discovery.
Without getting into the substance of the arguments, it appears that the issues
raised in Defendants’ motions will turn on the applicability and/or scope of the
waiver of subrogation clause in the Engineering Services Agreements between
Guardian and the Defendants. Plaintiffs argue that Guardian’s Contract Terms for
Purchase Orders governs this contract. (Pl. Ex. A; Aff. of Kirk McMenamin).
Though Defendants’ position is that no possible extrinsic evidence could make a
difference in this analysis, the Court prefers to analyze the contract in light of the
actual evidence (extrinsic or otherwise) presented by Plaintiffs, rather than the
hypothetical evidence that could arise during the course of discovery.
On April 15, 2019, Plaintiffs’ attorney signed an affidavit stating that there
are numerous outstanding discovery requests, and tens of thousands of pages of
documents that have yet to be reviewed. (Pl. Ex. C; Aff. of Glenn Mattar). Though
these concerns may have been resolved in the prior five months, it is incumbent on
the parties to inform the Court if they complete discovery before the agreed-upon
close-of-discovery date.
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CONCLUSION
The Court declines to analyze the merits of the Defendants’ motions before
the close of discovery. Defendants have not articulated any prejudice they will suffer
by allowing discovery on the issue of gross negligence and ordinary negligence, as
opposed to only the former. Plaintiffs, by contrast, have provided the Court with
affidavit evidence that they have not had an adequate opportunity under Rule 56 to
gather evidence to rebut Defendants’ arguments. Defendants could be right that no
evidence that Plaintiffs could possibly find would enable them to resist the waiver
of subrogation clause in the Engineering Services Agreement. It is fairer and more
efficient, however, for the Court to consider Defendants’ arguments in light of the
evidence Plaintiffs actually produce, rather than any evidence they could possibly
produce.
Accordingly,
IT IS ORDERED that Defendant Toledo Engineering Co., Inc.’s Motion for
Partial Summary Judgment [41] is DENIED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that Defendant Dreicor, Inc.’s Motion for
Partial Summary Judgment [42] is DENIED WITHOUT PREJUDICE.
SO ORDERED.
Dated: August 20, 2019
s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge
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