Long Painting Company v. General Electric Company
Filing
65
OPINION & ORDER re: 50 MOTION for Leave to File First Amended Complaint . filed by Long Painting Company, 32 MOTION for Partial Summary Judgment filed by Long Painting Company.For the reasons stated above, Long' ;s motion for partial summary judgment is hereby GRANTED. Before the Court rules on Long's motion to file an amended complaint, the parties are directed to meet and confer. Not later than July 20, 2018, they should inform the Court (via a joint letter filed on the docket) as to whether they would like to proceed in this District or in a district court in Washington State. The Court will entertain a motion to transfer the remainder of this matter to Washington State. The Clerk of Court is directed to close the open motion at ECF No. 32. (Signed by Judge Katherine B. Forrest on 7/9/2018) (tro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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LONG PAINTING COMPANY,
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Plaintiff,
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-v:
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GENERAL ELECTRIC COMPANY and
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ALSTOM RENEWABLE US LLC,
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Defendants.
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: July 9, 2018
17-cv-9975 (KBF)
OPINION & ORDER
KATHERINE B. FORREST, District Judge:
This is an action to recover invoice charges for work done by Long Painting
Company (“Long”) pursuant to a contract with defendants General Electric
Company (“GE”) and Alstom Renewable US LLC (“Alstom”) (collectively,
“defendants”). (ECF No. 1 (“Compl.”).) Defendants deny that they owe payment
and assert counterclaims against Long on several grounds, one of which alleges that
Long breached the contract by failing to procure insurance as required (the
“Counterclaim”). (ECF No. 21 (“Answer”) ¶ 99.)
Pending now before the Court is Long’s motion for partial summary judgment
as to whether, as a matter of law, Long did procure insurance and provide proof of
such insurance to defendants (and, accordingly, whether the Counterclaim must be
dismissed). (ECF No. 32.) The Court finds that Long did comply with its
contractual obligation to obtain insurance and provide proof of insurance to
defendants. Accordingly, the motion is GRANTED.
I.
BACKGROUND
On August 29, 2016, defendants’ representative sent one of Long’s Project
Managers a solicitation for a quote to perform cleaning and painting services on the
Priest Rapids Dam (the “Project”). (ECF No. 34, Decl. of Charles Pham in Supp. of
Pl.’s Mot. in Supp. of its Mot. for Partial Summ. J. Pursuant to F.R.C.P. 56 (“Pham
Decl.”) ¶¶ 2-4.) Defendants accepted Long’s quote for labor and materials and
transmitted a purchase order, along with GE’s Power Terms of Purchase and the
Priest Rapids Flow Down Provisions, on September 8, 2016. (Id. ¶ 5.) A modified
purchase order was transmitted on September 15, 2016. (Id. ¶ 6.) Both purchase
orders contained identical eight-page attachments entitled “GE Power Terms of
Purchase Rev. A. – U.S.” (the “Terms of Purchase”) and dated October 1, 2015, as
well as identical documents entitled “Attachment No. 1 Subcontractor Flow Downs
Provisions Priest Rapids Generator Rehabilitation Contract No. 230-3737” and
dated January 14, 2016. (Id. ¶¶ 7-8.)
The Terms of Purchase contain a section that states:
The terms set forth in this Order take precedence over any additional
or different terms in any other document connected with this
transaction unless such additional or different terms are: (a) part of a
written agreement (“Agreement”), which has been negotiated between
the parties and which the parties have expressly agreed may override
these terms in the event of a conflict; or (b) set forth on the PO to
which these terms are attached.
(Pham Decl. Ex. 1 at 11.) The Terms of Purchase also contain sections relating to
indemnity and insurance. Section 12.1., the indemnity provision, requires Long to
“defend, indemnify, release and hold Buyer [GE] and its Affiliates [Alstom]
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harmless from and against any and all claims . . . arising from any act or omission
of Supplier.” (Id. at 14.) Section 12.2,1 the insurance provision, requires that Long
maintains:
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The full text of Section 12.2 is as follows:
For the duration of this Order and for a period of six (6) years from the date of
delivery of the goods or performance of the services, Supplier shall maintain, through
insurers with a minimum A.M. Best rating of A- VII or S&P A or the equivalent in
those jurisdictions that do not recognize such rating classification and licensed in the
jurisdiction where goods are sold and/or where services are performed, the following
insurance: (a) Commercial General/Public Liability, on an occurrence form, in the
minimum amount of USD $5,000,000.00 per occurrence with coverage for: (i) bodily
injury/property damage; (ii) personal/advertising injury; and (iii) products/completed
operations liability, including coverage for contractual liability insuring the liabilities
assumed in this Order, with all such coverages in this Section 12.2(a) applying on a
primary basis, providing for cross liability, not being subject to any self-insured
retention and being endorsed to name General Electric Company, its Affiliates
(defined in Section 2.2(d)), directors, officers, agents and employees as additional
insureds; (b) Business Automobile Liability Insurance covering all owned, hired and
non-owned vehicles used in the performance of this Order in the amount of USD
$2,000,000.00 combined single limit each occurrence; (c) Employers’ Liability in the
amount of USD $2,000,000.00 each accident, injury or disease; (d) Property
Insurance of an “All-risk” basis covering the full replacement cost value of all of the
Buyer’s Property in Supplier’s care, custody or control, with such policy being
endorsed to name Buyer as “Loss Payee” as its interests may appear; and € [sic]
appropriate Workers’ Compensation Insurance protecting Supplier from all claims
under any applicable Workers’ Compensation or Occupational Disease Act. Supplier
shall obtain coverage similar to Workers’ Compensation and Employers’ Liability for
each Supplier employee performing work under this Order outside of the U.S. To the
extent that this Order is for professional services, Supplier shall maintain
Professional/ Errors and Omission Liability insurance in the minimum amount of
$5,000,000.00 per claim. If any insurance is on a claims-made basis, the retro date
must precede the date of issuance of this Order and Supplier must maintain
continuity of coverage for three (3) years following termination, expiration and/or
completion of this Order. Insurance specified in sub-sections 12.2(c), (d) and (e) shall
be endorsed to provide a waiver of subrogation in favor of Buyer, its Affiliates
(defined in section 2.2(d)) and its and their respective employees for all losses and
damages covered by the insurances required in such subsections. The application and
payment of any self-insured retention or deductible on any policy carried by Supplier
shall be the sole responsibility of Supplier. Should Buyer be called upon to satisfy
any self-insured retention or deductible under Supplier indemnification or
reimbursement from Supplier where allowed by Law. Upon request by Buyer,
Supplier shall provide Buyer with a certificate(s) of insurance evidencing that the
required minimum insurance is in effect. The certificate(s) of insurance shall
reference that the required coverage extensions are included on the required policies.
Upon request by Buyer, copies of endorsements evidencing the required additional
insured status, waiver of subrogation provision and/or loss payee status shall be
attached to the certificate(s) of insurance. Acceptance of such certificate(s), which are
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(1) Commercial general/public liability insurance on an occurrence form in the
minimum amount of $5,000,000 per occurrence (with coverage for bodily
injury/property damage, personal/advertising injury, and products/completed
operations liability);
(2) Business automobile liability insurance in the amount of $2,000,000 per
occurrence;
(3) Employers’ liability in the amount of $2,000,000 per accident;
(4) Property insurance of an “all-risk” basis covering the full replacement cost
value of all the GE’s property in Long’s care, custody, or control;
(5) Appropriate workers’ compensation insurance; and
(6) Professional/errors and omission liability insurance in the minimum amount
of $5,000,000 per claim.
(Pham Decl. Ex. 1 at 15-16.) Crucially, the Terms of Purchase allow additional
insurance policies (e.g., an excess/umbrella liability insurance policy) to be utilized
to meet the coverage requirements (of $2,000,000 to $5,000,000) outlined in the first
three sections listed above. (Id. at 15; Bucklin Decl. Ex. 3.)
Long procured insurance from Arch Insurance Company (“Arch”) that
provides commercial general liability coverage and products/completed operations
liability coverage to all parties where required by a written contract as additional
not compliant with the stipulated coverages, shall in no way whatsoever imply that
Buyer has waived its insurance requirements or any other obligations set forth
herein. The above-referenced insurance limits in subsections (a), (b) and (c) can be
met either via each policy or via a combination of these policies and an
excess/umbrella liability insurance policy.
(Pham Decl. Ex. 1 at 15.)
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insureds (the “Policy”). (ECF No. 33, Decl. of Denica Bucklin in Supp. of Pl.’s Mot.
in Supp. of its Mot. for Partial Summ. J. Pursuant to F.R.C.P. 56 (“Bucklin Decl.”)
Ex. 1 at 133; see also Bucklin Decl. Ex. 2 at 2, 4, 6 (certificate dated February 18,
2016); Bucklin Decl. Exs. 3-4 (certificates dated December 31, 2016 naming Alstom,
Grant County PUD, and “all parties where required by a written contract” as
additional insureds); Bucklin Decl. Ex. 5 (certificate dated December 31, 2017
naming Alstom and “all parties where required by a written contract” as additional
insureds).) The Policy also contains an endorsement providing commercial general
liability coverage to “any state or political subdivision requiring that they be named
as an additional insured on your policy solely because it has issued a permit with
respect to operations performed by you or on your behalf,” which includes Grant
County PUD. (Bucklin Decl. Ex. 1 at 72.) The policy also contains a “Designated
Construction Projects General Aggregate Limit” endorsement that provides
commercial general liability coverage to “all construction projects of the insured
unless otherwise excluded,” which includes the Project. (Id. at 119.)
The commercial general/public liability coverage limits in the policy are as
follows:
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(Bucklin Decl. Ex. 1 at 21.)
Long’s insurance broker, Propel Insurance (“Propel”), sent a copy of each
certificate of insurance to defendants at the address at the bottom of each form, and
it emailed a copy to Wendy Allan, an Alstom representative. (Bucklin Decl. ¶ 9; see
also Bucklin Decl. Ex. 6.) Long is required to ensure that defendants receive a copy
of the certificates; the Terms of Purchase note that acceptance of certificates by
defendants of a non-compliant policy does not imply that defendants waived any
requirements. (Pham Decl. Ex. 1 at 16.)
II.
LEGAL PRINCIPLES
A. Standard of Review
“The court shall grant summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial
burden of demonstrating “the absence of a genuine issue of material fact.” Celotex
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Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party does not bear
the ultimate burden on a particular claim or issue, it need only make a showing
that the non-moving party lacks evidence from which a reasonable jury could find in
the non-moving party’s favor at trial. Id. at 322-23.
In making a determination on summary judgment, a court must “construe all
evidence in the light most favorable to the nonmoving party, drawing all inferences
and resolving all ambiguities in its favor.” Dickerson v. Napolitano, 604 F.3d 732,
740 (2d Cir. 2010). Once the moving party has discharged its burden, the opposing
party must set out specific facts showing a genuine issue of material fact for trial.
Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). “[A] party may not rely on mere
speculation or conjecture as to the true nature of the facts to overcome a motion for
summary judgment,” as “[m]ere conclusory allegations or denials cannot by
themselves create a genuine issue of material fact where none would otherwise
exist.” Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (internal citations
omitted).
B. Breach of Contract
To succeed on a claim for breach of contract, a plaintiff must demonstrate “(1)
the existence of an agreement, (2) adequate performance of the contract by the
plaintiff, (3) breach of contract by the defendant, and (4) damages.” Eternity Glob.
Master Fund Ltd. v. Morgan Guar. Tr. Co., 375 F.3d 168, 177 (2d Cir. 2004)
(quoting Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996)). “Summary
judgment is generally proper in a contract dispute only if the language of the
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contract is wholly unambiguous.” Compagnie Financiere de CIC et de L'Union
Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 157 (2d
Cir. 2000). “Ambiguity . . . is defined in terms of whether a reasonably intelligent
person viewing the contract objectively could interpret the language in more than
one way.” Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008).
III.
DISCUSSION
The parties agree that the Terms of Purchase require Long to procure
insurance; they disagree over whether the Policy actually satisfies the requirements
of the Terms of Purchase. Defendants argue that the Policy does not comply as to
the particular types and amounts of insurance and that the Policy contains
provisions that are contrary to the provisions in defendants’ contract with Long.2
Defendants first claim that they required Long to obtain $5,000,000 in
insurance coverage that provided for “cross liability,” and that Long breached the
contract because its policy covered only up to $2,000,000. However, the last
sentence of Section 12.2 provides that the “above-referenced insurance limits . . .
can be either via each policy or via a combination of these policies and an
excess/umbrella insurance policy.” (Pham Decl. Ex. 2 at 28.) When Long’s excess
Defendants also assert that GE has made demand on Arch for costs and expenses, as well as
attorneys’ fees arising from litigation related to LPC’s contract work, and that Arch has claimed
these items are not covered by the Policy. But defendants’ reliance on Arch’s refusal to pay costs and
expenses to repair equipment allegedly damaged by Long is misplaced—this is not, as a matter of
law, indicative of any failure by Long to procure insurance. In fact, defendants state that “GE
believes that Arch has wrongfully denied GE’s claims to pay for the repairs to its Customer
equipment” and that Arc has not been relieved from its “responsibility under the Policy to reimburse
GE for amounts paid to repair this third-party property damage.” (ECF No. 40 at 12-13.) This, if
anything, acknowledges that Long did, in fact, procure the insurance.
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liability coverage is added to the various limits, the coverage limit meets its
contractual requirement of $5,000,000—thus, Long did not breach for failing to
obtain the minimum amount.3
Defendants also claim that Long failed to obtain “all-risk” property insurance
and professional/errors and omission liability insurance, as required by the Terms
of Purchase. However, none of the professional services described by the Policy
were related to the Project, so Long had no obligation to procure insurance for them.
(See Bucklin Decl. Ex. 1 at 49, 73, 118, 126.) Specifically, the Terms of Purchase
state: “To the extent that this Order is for professional services, Supplier shall
maintain Professional/ Errors and Omission Liability insurance in the minimum
amount of $5,000,000.00 per claim.” (Pham Decl. Ex. 1 at 15 (emphasis added).)
There is no evidence that the Project required professional services of the type
contemplated by the Terms of Purchase.
Finally, defendants argue that discovery is not complete and thus, summary
judgment is inappropriate at this time. However, defendants have neither raised
material disputes of fact nor pointed to specific areas that are expected to yield new
factual evidence but in which discovery is ongoing. To the contrary, the various
contract provisions that have been submitted to the Court are sufficient to allow a
legal ruling on this motion.
The Court also notes that defendant’s alleged damages are well below $2,000,000—even if Long’s
policies could not be aggregated to comply with the Terms of Purchase, GE would have no damages
for this alleged breach.
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IV.
CONCLUSION
For the reasons stated above, Long’s motion for partial summary judgment is
hereby GRANTED. Before the Court rules on Long’s motion to file an amended
complaint, the parties are directed to meet and confer. Not later than July 20,
2018, they should inform the Court (via a joint letter filed on the docket) as to
whether they would like to proceed in this District or in a district court in
Washington State. The Court will entertain a motion to transfer the remainder of
this matter to Washington State.
The Clerk of Court is directed to close the open motion at ECF No. 32.
SO ORDERED.
Dated:
New York, New York
July 9, 2018
____________________________________
KATHERINE B. FORREST
United States District Judge
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