United States District Court, S.D. West Virginia, Charleston Division
MEMORANDUM OPINION AND ORDER
E. JOHNSON UNITED STATES DISTRICT JUDGE
before the Court is Third-Party Defendants USI Insurance
Services, LLC (“USI”) and John Kehoe's
(“Kehoe”) Motion for Summary
Judgment. (ECF No. 99.) For the reasons discussed
more fully below, the Court GRANTS in part
and DENYS in part USI and Kehoe's Motion
for Summary Judgment. (ECF No. 99.)
insurance coverage action arises out of a warehouse fire that
occurred on October 21, 2017, in Parkersburg, West Virginia.
(ECF No. 100 at 1.) Original Plaintiff Gemini Insurance
Company (“Gemini”) filed this action against
various individuals and entities believed to have been
involved with the ownership and maintenance of the warehouse.
(Id. at 2.) These original defendants include: Rajiv
Naik; Intercontinental Export Import, Inc.; Sirnaik, LLC;
Upendra Naik; Dr. Saurabh Naik; Green Sustainable Solutions,
LLC; and Surnaik Holdings of WV, LLC (collectively
“Third-Party Plaintiffs”). (Id.)
Third-Party Plaintiffs sought defense and indemnity from
underlying lawsuits brought by plaintiffs who allege the
warehouse stored a variety of containments that were burned
and released during the fire. However, this Court previously
held that Third-Party Plaintiffs' commercial general
liability (“CGL”) policy's pollution
exclusion applied to these claims and, thus, the policy did
not afford coverage for the pollution claims made by the
plaintiffs in the underlying actions. (See generally
ECF No. 64.) As a result of this ruling, Gemini was dismissed
from this action. Subsequently, Third-Party Plaintiffs filed
a Third-Party Complaint against USI and Kehoe (collectively
“Third-Party Defendants”) who sold Third-Party
Plaintiffs the various insurance policies originally at
2014, Third-Party Plaintiffs acquired a portfolio of
properties which included the warehouse leading to this cause
of action. (ECF No. 106 at 2.) The Third-Party Plaintiffs
engaged a third-party insurance consultant, ICA Risk
Management Consultants (“ICA”), to assist in
determining the adequate levels of insurance needed to
protect these properties. (Id.) The Third-Party
Defendants are both insurance agents who were engaged by the
Third-Party Plaintiffs to procure the insurance policies.
(Id.) While Third-Party Defendants did procure
multiple insurance policies for Third-Party Plaintiffs, only
the CGL policy is at issue here. (ECF No. 106 at 3.)
created a document entitled “General Liability
Insurance Policy Specifications” (“Policy
Request”) and the parties dispute its use and purpose.
Third-Party Defendants procured a 2015-2016 CGL policy that
contained a complete pollution exclusion. (Id.)
Third-Party Plaintiffs continued to seek renewal of this
policy, in basically identical form, through Third-Party
Defendants until the warehouse fire occurred in October of
September 4, 2019, Third-Party Defendants filed their Motion
for Summary Judgment. (ECF No. 99.) On September 18, 2019,
Third-Party Plaintiffs filed their Response. (ECF No. 106.)
Third-Party Defendants issued their Reply on September 25,
2019. (ECF No. 111.) On September 27, 2019, Third-Party
Plaintiffs filed their Motion for Leave to File Sur-Reply.
(ECF No. 112.) As such, the motion is fully briefed and ripe
of the Federal Rules of Civil Procedure governs motions for
summary judgment. This rule provides, in relevant part, that
summary judgment should be granted if “there is no
genuine issue as to any material fact.” Summary
judgment is inappropriate, however, if there exist factual
issues that reasonably may be resolved in favor of either
party. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986). “Facts are ‘material' when
they might affect the outcome of the case, and a
‘genuine issue' exists when the evidence would
allow a reasonable jury to return a verdict for the nonmoving
party.” News & Observer Publ. Co. v.
Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th
Cir. 2010). When evaluating such factual issues, the Court
must view the evidence “in the light most favorable to
the opposing party.” Adickes v. S. H. Kress &
Co., 398 U.S. 144, 157 (1970).
moving party may meet its burden of showing that no genuine
issue of fact exists by use of “depositions, answers to
interrogatories, answers to requests for admission, and
various documents submitted under request for
production.” Barwick v. Celotex Corp., 736
F.2d 946, 958 (4th Cir. 1984). Once the moving party has met
its burden, the burden shifts to the nonmoving party to
“make a showing sufficient to establish the existence
of an element essential to that party's case, and on
which that party will bear the burden of proof at
trial.” Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). If a party fails to make a sufficient
showing on one element of that party's case, the failure
of proof “necessarily renders all other facts
immaterial.” Id. at 323.
Third-Party Complaint centers on the coverage provided in
Third-Party Plaintiffs' 2017-2018 CGL insurance policy
and Third-Party Defendants' procurement of that policy.
More specifically, Third-Party Plaintiffs allege they
explicitly requested a modified pollution exclusion in their
CGL policy and Third-Party Defendants instead procured a
total pollution exclusion. (ECF No. 106 at 1.) Coverage for
the warehouse fire was ultimately denied due to the total
pollution exclusion, and Third-Party Plaintiffs further
allege coverage would have been afforded under the requested
modified pollution exclusion. (Id.) The Third-Party
Complaint alleges four counts: negligent procurement,
negligent misrepresentation, breach of fiduciary duty, and
negligence and recklessness. (See generally ECF No.
30.) Third-Party Defendants' motion challenges all four
counts. Each is addressed in turn.
Third-Party Complaint alleges Third-Party Defendants
“negligently and recklessly breached their duty to
Third-Party Plaintiffs by. . . [f]ailing to negotiate and/or
procure insurance that Third-Party Plaintiffs expected and
believed would be procured, including insurance that insured
against the ...