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National Union Fire Insurance Co. of Pittsburgh, PA v. Maritime Terminal, Inc.

United States District Court, D. Massachusetts

February 9, 2018

NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH, PA, Plaintiff,
v.
MARITIME TERMINAL, INC., Defendant.

          MEMORANDUM AND ORDER

          DENISE J. CASPER UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Plaintiff National Union Fire Insurance Co. of Pittsburgh, PA (“National Union”) has filed this lawsuit against Defendant Maritime Terminal, Inc. (“Maritime”) seeking a declaratory judgment that it is not obligated to defend and indemnify Maritime under Warehouse Legal Liability Policy No. 051766034 (“the Policy”) in connection with two civil actions in Bristol Superior Court (the “Underlying Actions”). D. 4; D. 50; D. 51 at 1 n.1; D. 54 at 1 n.1. National Union has moved for summary judgment. D. 50. For the reasons discussed below, the Court DENIES the motion without prejudice.

         II. Standard of Review

         The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Material facts are those that carry the potential “to affect the outcome of the suit under the applicable law.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000) (quoting Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “If he does so, the burden shifts to the nonmovant to establish that a genuine material dispute exists.” Harley-Davidson Credit Corp. v. Galvin, 807 F.3d 407, 411 (1st Cir. 2015). That is, the nonmoving party “must, with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor.” Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). In conducting this inquiry, the Court “constru[es] the record in the light most favorable to the non-movant and resolv[es] all reasonable inferences in that party's favor.” Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir. 2008).

         III. Factual Background and Procedural History

         National Union issued the Policy to Maritime for the period of April 1, 2013 to April 1, 2014 via a renewal certificate of a previously issued insurance policy. D. 51-1 at 2, 23-24. The Policy provides coverage from National Union to Maritime for liability resulting from “loss or damage to personal property owned by customers in the care, custody or control of [Maritime] for storage, under bills of lading, shipping or warehouse receipt” for specific locations operated by Maritime including 276 MacArthur Drive, Whalers Wharf, New Bedford, MA. D. 51-1 at 4, 7. Pursuant to the Policy, National Union agreed to “pay on behalf of [Maritime] all sums, not exceeding the limit of liability . . . which [Maritime] shall become legally obligated to pay as damages” as a result of the loss or damage to Maritime's customers' personal property. D. 51-1 at 5. As part of the Policy, National Union agreed to “[d]efend any suit against [Maritime] alleging such damage or destruction and seeking damages on account thereof” as well as pay “all costs taxed against [Maritime] in any such suit and all interest accruing after entry of judgment until [National Union] has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the Company's liability thereon.” Id. That is to say, National Union agreed to defend and indemnify National Union should Maritime incur liability for losses and damages covered under the terms of the Policy.

         The Policy also includes a number of exclusions from coverage. D. 51-1 at 5-6. Relevant to this litigation, exclusion (e) provides that the Policy does not cover Maritime if the “[l]oss, damage or expense” resulted “from insects, inherent vice, deterioration, dampness of atmosphere, inadequate warehouse temperature due to overcapacity, [or] for wear and tear.” D. 51-1 at 17. Pursuant to exclusion (s), the Policy also excludes coverage for liability or loss resulting from “[b]reakdown of, failure or improper operating of any refrigeration machinery or equipment” caused Maritime's liability, unless the legal liability resulted from “sudden and accidental breakdown of refrigeration equipment” or “incorrect or improper setting of temperature controls by [Maritime] or [Maritime's] employees.” D. 51-1 at 6, 18.

         In 2014, Kyler Seafood Inc. (“Kyler”) and Hygrade Ocean Products, Inc. (“Hygrade”) filed the Underlying Actions against Maritime, alleging that Kyler and Hygrade's seafood product had been compromised and spoiled in July and August of 2013 as a result of equipment breakdown at Maritime's warehouse. D. 51-2 at 6-7; D. 51-3 at 6-7. Each complaint additionally alleged that Maritime had had difficulty in maintaining proper temperatures in the warehouse and the deep freezer containers where the seafood product was stored. D. 51-2 at 7; D. 51-3 at 7. Accordingly, both Kyler and Hygrade sought damages from Maritime for a number of state claims. D. 51-2 at 10, 12-13, 15, 17; D. 51-3 at 8-11.

         Thereafter, on December 18, 2014, National Union instituted this action, requesting that this Court determine whether National Union was obligated under the Policy to defend and indemnify Maritime in connection with the Underlying Actions. D. 4 at 1. Maritime moved to dismiss or stay the action on February 10, 2015. D. 12. The Court allowed the motion to stay until December 15, 2016. D. 26; D. 34; D. 40. At a conference with the parties shortly thereafter, the Court lifted the stay, required initial disclosures and set a summary judgment schedule at National Union's request. D. 44. National Union subsequently filed a motion for summary judgment. D. 50. The Court heard the parties on the pending motion and took the matter under advisement. D. 61.

         IV. Discussion

         A. The Court Denies National Union's Motion for Summary Judgment

         1. The Court Denies National Union's Motion for Summary Judgment with Respect to its Duty to Defend Maritime Under the Policy

         National Union first seeks a declaration stating that it is not obligated under the Policy to defend Maritime in connection ...


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