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Inc. v. Colony Insurance Co.

United States District Court, D. New Hampshire

June 6, 2017

Fletch's Sandblasting and Painting, Inc.
v.
Colony Insurance Company Opinion No. 2017 DNH 097

          MEMORANDUM AND ORDER

          Paul Barbadoro United States District Judge

         Fletch's Sandblasting and Painting, Inc., seeks a determination in this declaratory judgment action that it is entitled to coverage under a commercial general liability insurance policy issued by Colony Insurance Company. Colony has filed a motion for summary judgment arguing that Fletch's cannot claim coverage for what amounts to a claim of defective workmanship.

         I. BACKGROUND

         A. The Insurance Policy

         Colony sold Fletch's a standard-form commercial general liability (“CGL”) insurance policy. See Doc. No. 16-3 [hereinafter “Ex. B”]. The policy provides in pertinent part that Colony “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.” Ex. B at 16, § I(1)(a). Coverage is available under the policy, however, only if the “bodily injury” or “property damage” is caused by an “occurrence.” See Ex. B at 16, § I(1)(b)(1). An “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Ex. B at 29, § V(13). The policy also contains an exclusion for “property damage” to “[t]hat particular part of any property that must be restored, repaired or replaced because ‘your work' was incorrectly performed on it.” Ex. B at 17, 19-20, § I(2)(j)(6). “Your work” includes “[w]ork or operations performed by you or on your behalf.” Ex. B. at 31, § V(22)(a)(1).

         B. The Underlying Action[1]

         Fletch's seeks a defense and indemnification with respect to a complaint filed against it by Thick Tech Systems, Inc., in the United States District Court for the District of Maine. See Amended Complaint, Thick Tech Systems, Inc. v. Methuen Construction Co., No. 2:15-cv-00076-DBH (D. Me. June 3, 2015); see also Doc. No. 16-2 [hereinafter “Ex. A”] (copy of Maine complaint). The complaint alleges that the United States Navy hired Methuen Construction Company as a general contractor to make repairs at the Portsmouth Naval Shipyard. Ex. A at 2-3.

         Methuen subcontracted with Fletch's to “strip, repair, prime and finish [certain structures] with an intumescent fireproofing product known as Albi Clad 800.” Ex. A at 3. Fletch's, in turn, subcontracted with Thick Tech to apply the fireproofing material, while Fletch's remained responsible for preparing (e.g., repairing and priming) the structures' surfaces beforehand. Ex. A at 3.

         Fletch's allegedly performed the surface preparation work “negligent[ly], ” “in an unworkmanlike manner, ” and “[not] in accordance with the job specifications.” Ex. A at 4. As a result, when Thick Tech later applied the fireproofing material, it failed to adhere. Ex. A at 4. “Fletch's [then] induced [Thick Tech] to expend and commit further time and resources needed to correct defects caused by [Fletch's] poor workmanship by promising [Thick Tech] that it would be paid for the additional work and supplies furnished . . . .” Ex. A at 4. But “Fletch's had no intention of paying, ” and after Thick Tech “devote[d] significant additional time and resources [to] performing corrective work made necessary due to Fletch's failure of performance, ” Fletch's failed to pay Thick Tech in full. Ex. A at 4-5.

         Thick Tech has sued Fletch's for breach of contract, quantum meruit, fraudulent inducement, and a claim “sounding in negligence.” See Ex. A at 5-8.[2] Only the negligence claim is relevant here. That claim asserts that “[a]s a contractor responsible for completing all surface preparation work . . . Fletch's owed [Thick Tech] a duty to complete said work in a competent manner.” Ex. A at 7. Fletch's was allegedly negligent because it “failed to properly prepare the surfaces, ” “failed to follow the job specifications, ” “made misrepresentations to [Thick Tech] concerning the adequacy and compatibility of the products Fletch's applied to [the] surfaces, ” and “failed to adequately protect the work while in progress from weather elements.” Ex. A at 7.

         II. STANDARD OF REVIEW

         Summary judgment is appropriate when the record reveals “no genuine dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The evidence in the record must be considered in the light most favorable to the nonmoving party, drawing all reasonable inferences in its favor. See Navarro v. Pfizer Corp., 261 F.3d 90, 94 (1st Cir. 2001).

         A party seeking summary judgment must first identify the absence of any genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A material fact “has the potential to change the outcome of the suit.” See Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). If the moving party satisfies this burden, the nonmoving party must then “produce evidence on which a reasonable finder of fact, under the appropriate proof burden, could base a verdict for it; if that party cannot produce such evidence, the motion must be granted.” See Ayala-Gerena v. Bristol Myers-Squibb Co., 95 F.3d 86, 94 (1st Cir. 1996); see also Celotex, 477 U.S. at 322-24.

         III. ...


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