Hartford Casualty Insurance Company et al v. Blythe Development Company et al

Filing 116

ORDER granting in part and denying in part 109 Motion to Realign the Parties. Signed by Chief Judge Frank D. Whitney on 9/18/2014. (eef)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:14-cv-00028-FDW-DSC
HARTFORD CASUALTY INSURANCE )
COMPANY
AND
HARTFORD )
UNDERWRITERS
INSURANCE )
COMPANY.,
)
)
Plaintiffs,
)
)
vs.
)
)
BLYTHE DEVELOPMENT COMPANY, )
GREAT
AMERICAN
INSURANCE )
COMPANY,
ZURICH
AMERICAN )
INSURANCE COMPANY, AMERICAN )
GUARANTEE
AND
LIABILITY )
INSURANCE COMPANY, THE NORTH )
RIVER INSURANCE COMPANY, FCCI )
INSURANCE COMPANY, AND QBE )
INSURANCE CORPORATION,
)
)

ORDER

Defendants/Counterclaimants.

)
)
THIS MATTER is before the Court upon Defendant’s, Blythe Development Company
(“Blythe”), Motion to Realign the Parties pursuant to Federal Rules of Civil Procedure 7(b).
(Doc. No. 109).

For the reasons stated herein, Blythe’s Motion to Realign the Parties is

GRANTED in part and DENIED in part, and the parties shall be realigned in accordance with
this order.
BACKGROUND
In 2004, Blythe was subcontracted to design and build four retaining walls for North
Lake Mall in Charlotte, NC. (Doc. No. 1, ¶¶30-31). Issues were discovered with a retaining
wall, and after a settlement between North Lake Mall’s owners and the general contractor,
Blythe was again contracted to make repairs.

(Doc. No. 1, ¶34; Doc. No. 37, ¶¶26-32).

Subsequently, the general contractor filed suit against Blythe on August 30, 2011, and, after
agreeing to arbitration, an arbitrator awarded $4,800,000.00 against Blythe. (Doc. No. 1, ¶¶35,
39; Doc. No. 37, ¶48). Blythe sought coverage from its insurers for the award and the insurers
denied coverage. (Doc. No. 37, ¶¶49-55).
Hartford Casualty Insurance Company and Hartford Underwriters Insurance Company
(“Hartford”) filed the present declaratory judgment action in this Court against Blythe and
several other insurance companies seeking a declaration that Hartford’s policies do not afford
coverage for the arbitration award. (Doc. No. 1). The other insurance companies also assert that
coverage does not exist, either for similar reasons to Hartford or for reasons specific to their
policies. (Doc. Nos. 19, 27, 32, 35, 37, and 40). Subsequently, Blythe brought this Motion to
realign Hartford with the other insurance companies.
ANALYSIS

The Court should align the parties “according to their sides in the dispute.” United States
Fid. & Guar. Co. v. A&S Mfg. Co., 48 F.3d 131, 134 (4th Cir. 1995). Blythe contends that the
insurers should all be aligned because the insurers’ principal purpose is the same: denying
indemnity to Blythe for the arbitration award. “The Fourth Circuit has adopted the two-step
principal purpose test to assess the proper alignment of parties.” Wayne J. Griffin Elec., Inc. v.
Travelers Prop. Cas. Co. of Am., 1:13CV882, 2014 WL 842983 (M.D.N.C. Mar. 4, 2014) (citing
Palisades Collections LLC v. Shorts, 552 F.3d 327, 337 (4th Cir. 2008)). The principal purpose
test requires the Court to evaluate the primary reason the plaintiff filed the suit, then align the
parties accordingly. Id. The determining factor for realignment is the primary issue between all
the parties, and not that all the parties to be realigned are without issues between them. Id.
(citing Marsh v. Cincinnati Ins. Co., No. 4:08CV2441–RBH, 2008 WL 4614289, at *2 (D.S.C.
Oct. 15, 2008) (unpublished)).
Here, Hartford, Great American Insurance Company, Zurich American Insurance
Company, American Guarantee and Liability Insurance Company, The North River Insurance
Company, FCCI Insurance Company, and QBE Insurance Corporation (collectively “insurers”),
all seek to avoid indemnifying Blythe, and are therefore aligned in their principal purpose.
Tellingly, only FCCI and QBE (co-defendants) voiced opposition to the Motion, with Hartford
and the other insurers specifically agreeing to a realignment. (Doc. No. 114, ¶2). All the
insurers, albeit for different reasons, assert that their respective policies do not cover the alleged
loss in question. As such, the insurers are aligned in their principal purpose.
Accordingly, the Court will realign all the insurers as Plaintiffs with Hartford, and Blythe
as the sole Defendant. The Court will make a determination as to the order of trial after motions
for summary judgment are submitted and decided.

The Court declines to address the remaining issues argued by QBE and FCCI in the
memoranda in opposition regarding governing law and burden of proof, respectively. The
parties may reassert these arguments following summary judgment.
CONCLUSION
For the foregoing reasons, Blythe’s Motion to Realign the Parties (Doc. No. 109) is
GRANTED in part and DENIED in part.
IT IS SO ORDERED.
Signed: September 18, 2014