Spirtas Company v. Liberty Surplus Insurance Corporation

Filing 48

MEMORANDUM AND ORDER: HEREBY ORDERED that Defendant Liberty Surplus InsuranceCorporation's Motion for Summary Judgment (ECF No. 15 ) is GRANTED, and Plaintiff's Complaint is DISMISSED with prejudice. A separate Judgment will accompany this Memorandum and Order. FURTHER ORDERED that Plaintiff Spirtas Company d/b/a Spirtas Wrecking Company's Motion for Summary Judgment (ECF No. 20 ) is DENIED. Signed by District Judge Jean C. Hamilton on 10/16/2012. (CLK)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
SPIRTAS COMPANY d/b/a
SPIRTAS WRECKING COMPANY,
Plaintiff(s),
vs.
LIBERTY SURPLUS INSURANCE
CORPORATION,
Defendant(s).

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Case No. 4:11CV2098 JCH

MEMORANDUM AND ORDER
This matter is before the Court on Defendant Liberty Surplus Insurance Corporation’s
(“Liberty”) Motion for Summary Judgment, filed May 22, 2012, and Plaintiff Spirtas Company d/b/a
Spirtas Wrecking Company’s (“Spirtas”) Motion for Summary Judgment, filed June 21, 2012. (ECF
Nos. 15, 20).
BACKGROUND
The history of this matter is as follows: In February, 2010, Spirtas entered into a contract with
Edward Kraemer & Sons, Inc. (“Kraemer”), for the demolition of the Seneca Bridge, located in
Seneca, Illinois (“Kraemer Contract”). (Spirtas’s Statement of Uncontroverted Material Facts in
Support of its Motion for Summary Judgment (“Spirtas’s Facts”), ¶ 11). The Kraemer Contract
contained a provision allowing Kraemer to issue backcharges to Spirtas, as follows:
In the event [Spirtas] shall fail to perform or furnish any of the subcontract
work or materials, or in the event [Kraemer] shall have to pay any Project
obligations of [Spirtas] or in the event [Kraemer] suffers any damage
whatsoever or is caused any expense, loss or liability by [Spirtas], all such
payments made and all related costs incurred by [Kraemer] shall be expenses
of [Spirtas] and may be deducted by [Kraemer] from amounts otherwise due
hereunder to [Spirtas]. [Kraemer] may deduct or offset from any amounts due
or to become due to [Spirtas] any sum or sums owing by [Spirtas] to [Kraemer]
under this or any other contract or subcontract.

(Id., ¶ 13, quoting Spirtas’s Exh. 5, ¶ 16). The Kraemer Contract further contained a provision
obligating Spirtas to pay for any property damage incurred on the Seneca Bridge demolition project,
as follows:
[Spirtas] shall be liable and responsible for damage or injuries to, or death of
all persons, whether employed by [Spirtas] or otherwise, and for damage or
injuries to any property whether belonging to [Spirtas], [Kraemer] or to others,
resulting or arising from acts, omissions and negligence of [Spirtas] or its
agents, employees or sub-subcontractors or suppliers. [Spirtas] shall
indemnify and hold [Kraemer] and its agents and employees harmless from any
and all loss, liability, penalties, damages, costs, attorneys’ fees, expenses,
causes of action, claims or judgments resulting (a) from damage, injury, harm
or death to any person, or (b) from damage, injury to or destruction of property
(including, but not limited to the loss of use of such property) arising out of,
sustained, or in any way connected with the performance of the subcontract
work under this Agreement, regardless of whether or not such damage, injury,
harm or death, affected by or results from the contributory or comparative
negligence of [Kraemer], its agents, servants and employees, but only the
extent caused by [Spirtas].
(Id., ¶ 14, citing Spirtas’s Exh. 5, ¶ 23).
On November 4, 2010, Spirtas entered into a subcontract with Dykon Explosive Demolition
Corp. (“Dykon”), under which Dykon was to demolish the main span of the Seneca Bridge in
accordance with the specifications contained in the Dykon subcontract. (Spirtas’s Facts, ¶ 15). Dykon
had in place a Commercial General Liability Policy issued by Liberty, Policy No. DGLCH184353-6,
for the period from October 6, 2010, through October 6, 2011 (the “Policy”). (Id., ¶ 1). Spirtas was
named as an Additional Insured under the Policy, with respect to the demolition project for the Seneca
Bridge. (Id., ¶ 2).
On or about November 17, 2010, Dykon attempted to detonate the Seneca Bridge. (Spirtas’s
Facts, ¶ 16). According to Spirtas, when Dykon set off the explosive charges it had placed to take
down the Seneca Bridge, numerous charges failed to detonate due to Dykon’s negligence in placing
and detonating the charges. (Id.). Spirtas maintains that as a result, the Seneca Bridge did not come
down as planned, causing damage to both the Seneca Bridge and the Seneca River. (Id.). According

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to Spirtas, as a result of a significant deviation from the demolition plan, the actual demolition and
concomitant closure of the Seneca River to barge traffic lasted approximately sixty hours, rather than
the sixteen hours contemplated by the plan. (Id., ¶¶ 17-28).
Spirtas alleges it was forced to pay $81,951.95 in additional costs (“Additional Costs”) on the
Seneca Bridge demolition job, because of property damage to the bridge and the Seneca River.
(Spirtas’s Facts, ¶ 29). Spirtas further alleges that on February 17, 2011, Kraemer informed Spirtas
it was withholding $150,328.97 from Spirtas as a backcharge (“Kraemer Backcharge”), because of the
property damage to the bridge and the Seneca River. (Id., ¶ 31).
In a letter dated March 31, 2011, Spirtas notified Liberty that it was making a claim as an
additional insured under the Policy, for a total of $232,280.92 (comprised of the $81,951.95 in
Additional Costs, and the $150,328.97 Kraemer Backcharge). (Spirtas’s Facts, ¶ 33). To date, Liberty
has refused to meet Spirtas’s demand for $232,280.92. (Id., ¶ 35). On December 2, 2011, Spirtas
brought a Declaratory Judgment action against Liberty in this Court, seeking a declaration that Liberty
is obligated under the terms of the Policy to indemnify Spirtas for the $81,951.95 in Additional Costs,
and the $150,328.97 Kraemer Backcharge. (ECF No. 1).
The liability policy at issue states in pertinent part as follows:
SECTION I--COVERAGES
COVERAGE A.

1.

BODILY INJURY
LIABILITY

AND

PROPERTY DAMAGE

Insuring Agreement
a.

We will pay 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.
However, we will have no duty to defend the insured against any “suit”
seeking damages for “bodily injury” or “property damage” to which
this insurance does not apply. We may, at our discretion, investigate
any “occurrence” and settle any claim or “suit” that may result.

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*****
b.

This insurance applies to “bodily injury” and “property damage” only
if:
(1)

The “bodily injury” or “property damage” is caused by an
“occurrence” that takes place in the “coverage territory”; and

(2)

The “bodily injury” or “property damage” occurs during the
policy period.
*****

2.

Exclusions
This insurance does not apply to:
*****
j.

Damage To Property
“Property damage” to:
*****
(5)

That particular part of real property on which you or any
contractors or subcontractors working directly or indirectly on
your behalf are performing operations, if the “property
damage” arises out of those operations; or

(6)

That particular part of any property that must be restored,
repaired or replaced because “your work” was incorrectly
performed on it.
*****
SECTION V--DEFINITIONS
*****

4.

“Coverage territory” means:
a.

The United States of America (including its territories and
possessions), Puerto Rico and Canada;
*****

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13.

“Occurrence” means an accident, including continuous or repeated exposure
to substantially the same general harmful conditions.
*****

17.

“Property damage” means:
a.

Physical injury to tangible property, including all resulting loss of use
of that property. All such loss of use shall be deemed to occur at the
time of the physical injury that caused it; or

b.

Loss of use of tangible property that is not physically injured. All such
loss of use shall be deemed to occur at the time of the “occurrence”
that caused it.
*****

21.

“Your work” means:
a.

Work or operations performed by you or on your behalf; and

b.

Materials, parts or equipment furnished in connection with such work
or operations.

“Your work” includes:
a.

Warranties or representations made at any time with respect to the
fitness, quality, durability, performance or use of “your work”; and

b.

The providing of or failure to provide warnings or instructions.

(ECF No. 1-1, PP. 5, 9, 19, 21, 22, 23).
SUMMARY JUDGMENT STANDARD
The Court may grant a motion for summary judgment 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 judgment as a matter of
law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The substantive law
determines which facts are critical and which are irrelevant. Only disputes over facts that might affect
the outcome will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.

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242, 248 (1986). Summary judgment is not proper if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party. Id.
A moving party always bears the burden of informing the Court of the basis of its motion.
Celotex, 477 U.S. at 323. Once the moving party discharges this burden, the nonmoving party must
set forth specific facts demonstrating that there is a dispute as to a genuine issue of material fact, not
the “mere existence of some alleged factual dispute.” Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at
247. The nonmoving party may not rest upon mere allegations or denials of his pleading. Anderson,
477 U.S. at 256.
In passing on a motion for summary judgment, the Court must view the facts in the light most
favorable to the nonmoving party, and all justifiable inferences are to be drawn in his favor. Id. at 255.
The Court’s function is not to weigh the evidence but to determine whether there is a genuine issue
for trial. Id. at 249.
DISCUSSION
The interpretation of an insurance policy is governed by state law. American Family Mut. Ins.
Co. v. Co Fat Le, 439 F.3d 436, 439 (8th Cir. 2006). “Under Missouri law, the insured has the burden
of proving coverage, and the insurer has the burden of proving that an insurance policy exclusion
applies.” Id. (citation omitted). The words of a policy are given their ordinary meaning, unless it is
obvious that a technical meaning was intended, and ambiguous language is construed against the
insurer. Gateway Hotel Holdings, Inc. v. Lexington Ins. Co., 275 S.W.3d 268, 275 (Mo. App. 2008).
Upon consideration, the Court finds it need not consider whether Spirtas has shown its losses
fall within the coverage provisions, because Policy exclusions 2.j.(5) and 2.j.(6) preclude coverage
under the Policy. In so holding, the Court adopts the reasoning of United States District Judge Audrey
G. Fleissig in Spirtas Company d/b/a Spirtas Wrecking Company v. Nautilus Insurance Company,
Cause No. 4:11CV829 AGF. (See Id., ECF No. 50, PP. 19-21).

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CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Liberty Surplus Insurance Corporation’s Motion
for Summary Judgment (ECF No. 15) is GRANTED, and Plaintiff’s Complaint is DISMISSED with
prejudice. A separate Judgment will accompany this Memorandum and Order.
IT IS FURTHER ORDERED that Plaintiff Spirtas Company d/b/a Spirtas Wrecking
Company’s Motion for Summary Judgment (ECF No. 20) is DENIED.

Dated this 16th day of October, 2012.

/s/Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

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