Sauer Incorporated v. Lexington Insurance Agency, Inc.

Filing 45

ORDER denying 32 Motion for Summary Judgment; granting 34 Lexington's Rule 56(d) Motion. Counsel is reminded to read the order in its entirety for detailed information. Signed by Senior Judge James C. Fox on 4/1/2014. (Edwards, S.)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:13-CV-180-F

SAUER IN CORPORA TED,
Plaintiff
V.

LEXINGTON INSURANCE AGENCY
INC. d/b/a LEXINGTON INSURANCE
COMPANY,
Defendant.

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ORDER

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This matter is before the court on Lexington's Rule 56(d) motion to deny Sauer's motion

for summary judgment [DE-34] as prematurely filed. The motion has been fully briefed and is
ripe for resolution. For the following reasons, the motion is ALLOWED.

RELEVANTFACTUALANDPROCEDURALBACKGROUND
For purposes of deciding the instant motion, the court relates the facts as alleged in the
complaint [DE-1-1]. Lexington Insurance issued a "builders risk insurance policy" to Sauer
Incorporated, with effective dates ofMarch 19,2011 to March 19,2012. During that time, Sauer
served as the general contractor for a construction project at Fort Bragg, an army base located in
Fayetteville, NC. The project required installation of an underground storm water retention
system, referred to in the parties' submissions as the "Rain Tank System." The Rain Tank
System collapsed during the course of the project and Sauer submitted an insurance claim to
Lexington. Lexington denied coverage, and Sauer brought the instant breach of contract claim.

As amended by the court, the scheduling order provides that the parties have until May 1,
2014 to complete fact discovery. Despite this deadline, Sauer filed a motion for summary
judgment on November 26, 2013, approximately five months before the close of discovery.
Sauer argues the relevant material facts are not in dispute and that it is entitled to summary
judgment as a matter of law. Shortly thereafter, Lexington filed the instant motion to deny
Sauer's motion for summary judgment as prematurely filed. Lexington maintains that virtually
all of the material facts are in dispute and that it needs additional fact discovery before it can
properly respond to Sauer's motion.
DISCUSSION

Lexington's requests reliefunder Rule 56(d) ofthe Federal Rules of Civil Procedure.
Rule 56( d) provides "if a nonmovant shows by affidavit ... that, for specified reasons, it cannot
presents facts essential to justify its opposition, the court may: (1) defer considering the motion
or deny it .... " Fed. R. Civ. P. 56(d); Nader v. Blair, 549 F.3d 953, 961-62 (4th Cir. 2008).
"[W]here the nonmvoing party has not had the opportunity to discover information that is
essential to [its] opposition," the court should deny the motion for summary judgment. See

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,250 n.5 (1986). However, ifthe nonmoving party
has not been diligent in pursuing discovery or if additional discovery will not create a genuine
issue of material fact, a rule 56( d) motion is properly denied. Strag v. Bd. ofTrustees, Craven

Cmty. Coli., 55 F.3d 943,954 (4th Cir. 1995); Scott v. Nuwell Fin. Servs., 789 F. Supp. 2d 637,
641 (D. Md. 2011), rev'd on other grounds sub nom. Gardner v. Ally Fin. Inc., 514 F. App'x
378, 379 (4th Cir. 2013).

2

Sauer asserts that "[t]he material facts concerning coverage are not at issue and the matter
is appropriate for summary judgment." Sauer's Resp. [DE-36] at 12. To support this theory,
Sauer indicates that its motion for summary judgment relies almost exclusively on the facts
contained in Lexington's own pre-litigation investigative reports. In addition, Sauer asserts that
"all [of Lexington's] requested witnesses were produced for interviews [as part ofthe prelitigation investigative process]." !d. Although Sauer does not outright state this, Sauer is
apparently arguing that Lexington's application of the language of the insurance policy to the
allegedly undisputed facts was erroneous and contrary to the plain language of the policy.
Lexington, for its part, denies that the material facts are undisputed and requests the full
discovery period to which the parties originally agreed.
Lexington's motion is ALLOWED. Lexington is entitled to discovery regarding any
material facts that are relevant to this case. For example, Lexington disputes that the rain tank is
a component of the building that Sauer constructed, an issue that is obviously relevant because
coverage is limited to the "building under construction." See Sauer's Resp. [DE-36] at 3.
Sauer's response is that a drawing in the pre-litigation report 1 from one of Lexington's engineers
indicates the rain tank is connected to the building under construction. The court rejects Sauer's
theory that the pre-litigation report constitutes essentially an admission by Lexington that the rain
tank is connected to the building. At a minimum, Lexington is entitled to further authentication
of the drawing and a deposition under oath from Sauer's employees on this issue.

1

And "common sense ... that a drainage structure must be physically connected to the structure
it is draining." Resp. [DE-36] at 5.
3

And the same is true ofvirtually all of Lexington's asserted factual disputes. Lexington is
entitled to depose, under oath, the relevant witnesses to these events. The fact that some of
Sauer's employees were informally interviewed as part of the pre-litigation investigation is
immaterial. Unsworn witness statements are generally not proper summary judgment evidence.

See Orsi v. Kirkwood, 999 F.2d 86, 92 (4th Cir. 1993) ("It is well established that unsworn,
unauthenticated documents cannot be considered on a motion for summary judgment.").
Sauer also argues that Lexington has been dilatory in pursuing discovery. While that
circumstance may be grounds for denying a Rule 56(d) motion in some cases, see Strag, 55 F.3d
at 954, it is not sufficient in the context of this case. Here, Sauer and Lexington filed a consent
motion to amend the scheduling order on November 1, 2013 [DE-29], which extended the
deadline for completing fact discovery until May 1, 2014. Inexplicably, Sauer filed a motion for
summary judgment on November 26, 2013, less than four weeks after it consented to extending
the deadline for fact discovery by an additional four months. Lexington was entitled to rely on
the additional time the parties agreed to in their consent motion. Moreover, Sauer cannot now be
heard to argue that Lexington has been dilatory in pursuing discovery when it expressly stated in
the consent motion [DE-29] that both parties had engaged in "diligent efforts to complete fact
discovery." !d. at 2.
CONCLUSION

For the foregoing reasons, Lexington's Rule 56(d) motion [DE-34] is ALLOWED.
Sauer's motion for summary judgment [DE-32] is DENIED as prematurely filed, but without
prejudice tore-file the motion at the appropriate time.

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SO ORDERED.
This the_!_ day of April, 2014.

J1¢Es C. FOX
Senior United States District Judge

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