Southeastern Underwater Services Inc. et al v. National Union Fire Insurance Company of Pittsburgh, PA
Filing
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ORDER granting in part and denying in part 14 Motion for Judgment on the Pleadings. Plaintiffs' Third Claim for Relief is hereby dismissed. Signed by Senior Judge Graham Mullen on 3/15/2016. (tmg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:15CV317
SOUTHEASTERN UNDERWATER
SERVICES, INC. and CROWDER
CONSTRUCTION COMPANY,
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Plaintiffs,
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Vs.
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NATIONAL UNION FIRE INSURANCE )
COMPANY OF PITTSBURGH, PA,
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Defendant.
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____________________________________)
ORDER
This matter is before the Court upon Defendant’s Motion for Judgment on the Pleadings.
The matter is fully briefed and ripe for disposition.
This case arises out of a dispute regarding insurance coverage. Plaintiff Southeastern
Underwater Services, Inc. ("SEUS") was insured under a Commercial Marine Liability Policy
issued by Defendant National Union Fire Insurance Company ("NUFIC"). SEUS was hired as a
subcontractor by Co-Plaintiff Crowder Construction Company ("Crowder") to perform
construction work at a water treatment plant in Lenoir, North Carolina. Pursuant to the
subcontract, SEUS agreed to perform all necessary underwater welding to secure pipes.
SEUS’s work was defective and caused damage to and loss of use of the pipes. Crowder was
forced to expend funds to repair and replace the pipes. Crowder brought a claim in arbitration
against SEUS in order to recover those costs. Defendant NUFIC refused to defend SEUS in the
arbitration proceeding and refused coverage for damage to the pipes. Crowder ultimately
obtained a $479,000 arbitration award against SEUS that has been reduced to judgment.
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SEUS and Crowder filed this action against NUFIC seeking damages. The Complaint's
First Claim for Relief contends that NUFIC breached its duty under the Policy to defend SEUS
in the underlying arbitration against Crowder and to indemnify SEUS for any liability to
Crowder. The Second Claim for Relief alleges that Crowder as a judgment creditor is a third
party beneficiary of the Policy and that Crowder is entitled under the Policy for NUFIC to pay
its judgment. In the Third Claim for Relief, SEUS alleges NUFIC violated N.C.G.S. §§ 75-1.1
& -16 of the North Carolina Unfair and Deceptive Trade Practices Act ("NCUDTPA") in the
course of handling the claim. NUFIC filed its Amended Answer and Counterclaim denying
liability and seeking a declaration of non-coverage. NUFIC now seeks judgment on the
pleadings, contending that there is no coverage under the policy, and citing several policy
exclusions that it contends apply to the claim.
The analysis to be applied to a 12(c) motion is the same as that employed with Rule
12(b)(6) motions. See Walker v. Kelly, 589 F.3d 127,139 (4th Cir. 2009). That is, the complaint
must state claims for relief that are plausible. See Massey v. Ojaniit, 759 F.3d 343, 353 (4th Cir.
2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)).
Based upon the Court’s review of the pleadings, briefs, and exhibits, there appears to be
at least one key fact in dispute: whether the scope of SEUS’s work included placement of the
pipes or whether all work on the pipes was within the scope of Crowder’s work. The
determination of this fact is integral to the issue of coverage and cannot be determined at this
stage of this litigation. Accordingly, Defendant’s motion is denied with regard to Plaintiffs’
First and Second Claims for Relief.
Plaintiffs’ Third Claim for Relief is under the NCUDTPA. Defendant contends that this
claim must be dismissed because South Carolina law governs this claim. The North Carolina
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Supreme Court has not addressed the proper choice of law test for UDTPA claims, and the
North Carolina Courts of Appeal have employed both the lex loci test and the “most significant
relationship” test. This Court has previously determined that the lex loci test is the one that the
North Carolina Supreme Court would most likely apply. See United Dominion Indus., Inc. v.
Overhead Door Corp., 762 F.Supp. 126, 129 (W.D.N.C. 1991).
Application of the lex loci test requires the Court to determine where the injuries at issue
were sustained, and apply the law of that state. Id. The injuries herein are financial injuries, and
courts typically look to the location where the economic loss was felt. See Clifford v. American
Int’l Specialty Lines Ins. Co., No. 1:04CV486, 2005 WL 2313907, at *8 (M.D.N.C. Sept. 21,
2005). SEUS is headquartered in South Carolina and that is where the economic loss occurred.
Moreover, the demand for defense made to NUFIC was made from SEUS’s counsel in South
Carolina, and all NUFIC’s communications to SEUS regarding coverage of the claim were
directed to SEUS’s counsel in South Carolina. Finally, judgment against SEUS in favor of
Crowder was filed in South Carolina. The Court finds that the lex loci test results in the
application of South Carolina law to this claim. Therefore, the NCUDTPA does not apply and
the Third Claim for Relief must be dismissed.
IT IS THEREFORE ORDERED that Defendant’s Motion for Judgment on the Pleadings
is GRANTED IN PART AND DENIED IN PART. Plaintiffs’ Third Claim for Relief is hereby
dismissed.
Signed: March 15, 2016
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