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Alaska Interstate Construction, LLC v. Crum & Forster Specialty Insurance Co., Inc.

United States District Court, D. Alaska

November 17, 2015

ALASKA INTERSTATE CONSTRUCTION, LLC, Plaintiff,
v.
CRUM & FORSTER SPECIALTY INSURANCE COMPANY, INC., Defendants,

ORDER GRANTING MOTIONS AT DOCKETS 77 AND 81 AND DENYING MOTIONS AT DOCKETS 34 AND 49

RALPH R. BEISTLINE UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff Alaska Interstate Construction, LLC (“AIC”) filed the present suit against Defendant Crum & Forster Specialty Insurance Company, Inc. (“C&F”) as a result of C&F’s refusal to provide liability insurance coverage. AIC sought coverage from C&F in response to a lawsuit filed by VC Sellers Reserve (“VC Sellers”) in the Superior Court for the State of Alaska ("Underlying Suit"). AIC asserts that its policy from C&F provides coverage for the Underlying Suit and C&F is therefore obligated to both defend and indemnify AIC. C&F has disclaimed any obligation to provide coverage under the suit. For the reasons set forth below, the Court now concludes that C&F has no duty to defend or indemnify AIC.

The parties previously filed cross motions for summary judgment at Dockets 15 and 24, which the Court addressed in its Order on December 23, 2014, at Docket 27. In that Order, the Court granted in part and denied in part both parties' motions for summary judgment. The Court found that C&F has no duty to indemnify AIC as to the first five causes of action in the Underlying Suit relating to the billing actions for multiple burns of the same soil or blending of remediated soil with contaminated soil. However, the Court did find a potential duty to indemnify AIC as to the sixth cause of action, relating to the use of an uncalibrated and uncertified belt scale. Therefore the Court concluded that C&F has a duty to defend AIC in the Underlying Suit in its entirety. With regard to indemnification in the sixth cause of action, the Court found in favor of AIC as to affirmative defenses 1, 2, 3, 5(a), 5(b), 5(c), 5(d), 5(f), 5(j), and 5(k) in part. The Court's Order did not address affirmative defenses 4, 5(e), 5(g), 5(h), 5(i), and 6 as they pertain to the uncertified and uncalibrated belt scale and there appeared to be disputed facts regarding these defenses.

AIC filed a Renewed Motion for Summary Judgment at Docket 34 seeking a final determination of the coverage issues unaddressed by the Court. C&F opposed the motion and responded with a Motion for Rule 60 Reconsideration and relief from the Court's previous Order, under Fed. R. Civ. Proc. 60(b)(3), at Docket 49. C&F alleges that AIC submitted false evidence and misrepresented the policy terms based on the false evidence. Docket 49 at 2. Upon direction from the Court, C&F has also filed a Motion for Summary Judgment Regarding Affirmative Defenses 5(E) and 5(H) at Docket 77. C&F also filed a Request for Judicial Notice at Docket 81, which the Court now grants.

II. BACKGROUND

AIC is a company providing engineering and construction-related services throughout Alaska, including heavy civil construction, bridge building, mining-support, oilfield services, and thermal soil remediation. AIC was approached by Restoration Science and Engineering ("RSE") in the spring of 2008 to provide thermal soil remediation services on the North Slope. RSE had been hired by VC Sellers to clean up three areas in Prudhoe Bay, but lacked the equipment and facilities to perform the remediation work. AIC eventually submitted a proposal to RSE on July 7, 2008, outlining its services and pricing, as well as details on its plant operations and operating parameters. The proposal provided that the price for removing the remediated soil from the AIC yard would be based on time and materials, with the material remediated at a price of $99 per ton. The weight and measurement of the material would be determined based on the calibrated belt scale which was attached to the conveyor belt that transported material from the hopper to the tumbler.

RSE accepted the proposal from AIC without modification, and the remediation project began on August 18, 2008. The amount of contaminated ground water in the material was allegedly problematic for AIC, as the "soupy" material had a moisture content that exceeded the operational parameters of AIC's machinery. AIC addressed this problem by reportedly utilizing portions of recently remediated soil to mix in with the contaminated soil, thereby lowering the moisture content of the soil to be remediated. The project was completed on September 19, 2010, but a dispute arose regarding an internal deadline of August 31, 2010, and payment for work after that date. A demand letter was sent by AIC to VC Sellers (through RSE) on November 3, 2011, requesting payment of the final bill and AIC filed suit against RSE on May 29, 2012. In meetings during the suit, VC Sellers complained about AIC’s practice of blending already remediated and contaminated soil, which they alleged led to inflated charges because material was being weighed and billed each time it was put on the conveyor belt. AIC eventually dropped their lawsuit on January 11, 2013. However, VC Sellers responded by filing its own lawsuit on June 14, 2013. In the Underlying Lawsuit VC Sellers alleges that it was overbilled due to AIC charging for multiple burning of the same soil, charged for burning soil blended from clean and contaminated material, utilized an uncertified scale, and used a scale that was uncalibrated.

Shortly after VC Sellers filed suit, AIC tendered a claim to C&F on June 20, 2013. C&F had previously issued AIC policy number EPK 100301, effective from December 1, 2011, to May 1, 2013, and policy number EPK 101290, effective from May 1, 2013 to May 1, 2014. Docket 16-19. These policies included a General Liability Policy ("GL"), a Contractors Pollution Liability Policy (“CPL”), and an Errors and Omissions Policy ("E&O"), of which only the E&O is here in dispute.[1]

C&F denied AIC's claim and disclaimed any liability, indicating that the allegations of VC Sellers were not "wrongful acts" committed in the course of "professional services." C&F also denied coverage because the claim was not reported during the policy period, because certain wrongful acts were committed prior to retroactive coverage, and because AIC knew of and failed to report the wrongful acts prior to renewal of the policy. AIC filed the present suit seeking a determination on the existence of coverage.

III. STANDARD OF REVIEW

A. Summary Judgment

Summary judgment avoids unnecessary trials when there is no dispute as to the facts in the matter before the court.[2] The evidence of the nonmoving party is to be believed and all reasonable inferences are drawn in his favor.[3] Summary judgment is appropriate where "the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.”[4]

"District courts unquestionably possess the power to enter summary judgment sua sponte" where there is prior reasonable notice that allows adequate time to develop the facts on which the opposing party would depend.[5] This includes a “full and fair opportunity to ventilate the issues ...


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