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Gemini Insurance Co. v. Sirnaik, LLC

United States District Court, S.D. West Virginia, Charleston Division

October 16, 2019

SIRNAIK, LLC, et al., Defendants.



         Pending before the Court is Third-Party Defendants USI Insurance Services, LLC (“USI”) and John Kehoe's (“Kehoe”) Motion for Summary Judgment.[1] (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.)

         I. BACKGROUND

         This 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 issue.

         In 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.)

         ICA 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 2017. (Id.)

         On 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 for adjudication.


         Rule 56 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).

         The 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.


         The 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.

         A. Negligent Procurement

         The 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 ...

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