Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

The Phoenix Insurance Co. v. Ragnar Benson Construction LLC

United States District Court, D. Massachusetts

September 10, 2019

THE PHOENIX INSURANCE COMPANY, Plaintiff and Defendant-in-Counterclaim,
v.
RAGNAR BENSON CONSTRUCTION LLC., Defendant and Plaintiff-in-Counterclaim, and CSX INTERMODAL TERMINALS, INC. and LOGISTICS CONCRETE LLC, Defendants.

          MEMORANDUM OF DECISION AND ORDER

          TIMOTHY S. HILLMAN UNITED STATES DISTRICT JUDGE.

         Introduction

         Plaintiff/Defendant-in-Counterclaim, The Phoenix Insurance Company (“Phoenix”), has brought an action seeking a declaration that it owes no coverage obligations. defense, or indemnity, in connection with a construction dispute involving its insured Logistics Concrete, LLC (“Logistics”), Ragnar Benson, LLC (“Ragnar”) and CSX Intermodal Terminals, Inc. (“CSX”).[1] Ragnar has filed a counterclaim against Phoenix seeking a declaration that Phoenix has an obligation to defend and indemnify Ragnar in connection with the arbitration of the underlying dispute with CSX.

         This dispute involves insurance coverage available to Ragnar as an additional insured on a policy of commercial general liability insurance Phoenix issued to Ragnar's subcontractor, Logistics as “Named Insureds.” Ragnar and Logistics were named in an arbitration brought in Florida by CSX, the owner of a project on which they worked- an intermodal terminal in Worcester, Massachusetts. CSX contends that certain pavement work was defective. Phoenix declined to defend Ragnar and Logistics in the arbitration, arguing that CSX does not seek “property damage” as a result of an “occurrence, ” which is required to trigger coverage under the Policy's insuring agreement. Phoenix also argues that four policy exclusions apply.

         In its counterclaim, Ragnar asserts that Phoenix owes it a defense because the arbitration pleadings establish that CSX is seeking to recover for damage to other contractor's work caused by Logistics, as well as for damage to CSX's equipment. Ragnar argues that such “property damage” is within the insurance policies' coverage and not excluded. Ragnar and Logistics also assert that there is coverage under the “insured contract” provisions of the insurance policies issued by Phoenix, which Phoenix also disputes.

         This Memorandum of Decision and Order addresses the Motion for Partial Summary Judgment of Ragnar Benson Construction, LLC and Request For Hearing (Docket No. 21), Plaintiff's Cross Motion For Summary Judgment Against Ragnar Benson Construction LLC (Motion 35) and the Motion for Partial Summary Judgement of Logistics Concrete, LLC (Docket No. 55). For the reasons set forth below, Ragnar's and Logistics' motions are granted and Phoenix's motion is denied.

         Facts

         The Project and CSX's Claims

         In 2010, CSX undertook the reconstruction and expansion of its rail and trucking intermodal in Worcester, Massachusetts (the “Project”). CSX has a principal place of business in Jacksonville, Florida. CSX entered into a contract (the “Prime Contract”)[2] with Ragnar for the Project work. CSX specified the use of “roller compacted concrete” (“RCC”) for the paving work. Ragnar hired Logistics as the RCC subcontractor. Logistics has a principal place of business in Joliet, Illinois. Logistics and Gallagher have operations in many states. The Prime Contract provided that any arbitration proceedings regarding disputes thereunder would be held in Duval Count, Florida unless another location was mutually agreed upon.

         On March 16, 2012, Ragnar and Logistics entered into a subcontract (“Subcontract”). The Subcontract stated that the “Subcontract Work” required of Logistics was “[t]o provide all labor, material, equipment, tools, supervision and insurance necessary to perform Roller Compacted Concrete Paving Work” in accordance with specific plans and requirements. Paragraph 3(a) of the Subcontract, “Indemnification” stated, in pertinent part:

[t]o the fullest extent permitted by law, the Subcontractor [Logistics] shall indemnify and hold harmless the Contractor [Ragnar], the Owner, and their respective officers, directors, agents, and employees from and against any and all loss, liability, damages, costs, attorneys fees, investigative costs, or other expenses of any kind (all of which are collectively referred to as ‘Costs'), arising in connection with … (ii) any claim or claims for injuries, for loss or damage to or destruction of property, real or personal, including loss of use, which arise out of the Subcontract Work or the actions of any Subcontractor Party ….

         Paragraph 4 of the Subcontract, “Insurance” required Logistics to obtain and maintain specific insurance coverage as set forth therein and required it to name “Ragnar Construction, LLC, [and] CSX Intermodal Terminals, Inc., 301 W. Bay Street, Jacksonville, FL, CSX Transportation, Inc … on a basis specific to the Project, as additional insureds under their Commercial General, Automobile & Umbrella/Excess liability policies.” The Subcontract further required that arbitration proceedings be held in Duval County, Florida unless another location was mutually agreed upon.

         On May 15, 2018, CSX filed a Demand for Arbitration (“CSX Arbitration”) with the American Arbitration Association (“AAA”) in Jacksonville, Florida, against Ragnar. On September 4, 2018, CSX submitted its Statement of Claim in the arbitration proceedings for damages of more than Fourteen Million Dollars ($14, 000, 000). In the Statement of Claim, CSX complained of the following deficiencies in the RCC used at the Project: “(A) structural failures at the craneways; (B) raveling at the paving joints; and (C) potholing and surface deterioration of the pavement.” CSX attributed those deficiencies to Ragnar's failure to perform its work at the Project appropriately in various ways.

         With respect to the structural failures at the craneways, CSX alleged that: “The deterioration in the craneways and the lack of bonding allows water intrusion. This water intrusion, combined with seasonal cycles, will result in continuing damage to the underlying sub-base and subgrade. In addition, operating the cranes over damaged RCC can cause damage to the cranes and potentially other equipment.” With respect to the potholing and RCC surface deterioration, CSX alleged that: “If the RCC is not corrected, its deterioration will lead to water intrusion and destruction of the underlying sub-base and subgrade layers. In addition, operating equipment over deteriorating RCC leads to further damage or destruction.” With respect to the vertical joint raveling, CSX alleged that: “joint failures have resulted in additional damage to CSX. Testing conducted both during and post-construction evidenced the strength of the soil fill layer beneath the concrete, but since the concrete deterioration has increased in magnitude the cracks have allowed water intrusion into the subgrade below the pavement, as well as between the pavement lifts, resulting in additional damage which will necessitate repairs.” CSX further alleged that “[d]eterioration continues to occur” and that its “damages continue to increase.”

         Although not in its Statement of Claim, CSX also alleges that cranes have been damaged due to problems with the RCC. CSX attributes the deficiencies and damages to Ragnar's failure to perform its work at the Project appropriately in various respects.

         On May 15, 2018, Ragnar filed a Demand for Arbitration (“Ragnar Arbitration”) against Logistics with the AAA. The CSX Arbitration and the Ragnar Arbitration have been consolidated and will hereafter be referred to collectively as the “Project Arbitration.” On August 31, 2018, Ragnar filed its Statement of Claim against Logistics in which it alleged that the work of Logistics was deficient with respect to its: (1) design of the RCC mix; (2) compaction of the RCC at its installation locations; (3) bonding of the multi-lift placements; and (4) connection of vertical joints. In its Statement of Claim, Ragnar stated that as a result of Logistics Concrete's deficiencies: “CSX alleges damages for the cracking and joint deterioration in the RCC pavement as well as derivative damage to other work performed by other contractors on the Project, i.e., the sub-base.” Ragnar further asserted that “CSX claims that demolition of the RCC layers, removal and replacement of the sub-base and reinstallation of PCC (instead of RCC) is required.” Ragnar noted that the sub-base was not within the scope of Logistics' work. Ragnar also stated that CSX had suffered damage because “cracked, shattered and missing RCC was in the wheel path of the RTG cranes and other wheeled traffic.”

         The Insurance Policies and Demands for Coverage/Defense

         Phoenix, which has a principal place of business in Hartford, Connecticut, issued a policy numbered DT-CO-6B52655-PHX-12 to Gallagher, as named insured, for the policy period May 1, 2012, to May 1, 2013 (“2012-13 Phoenix Policy”), which provides coverage of $1, 000, 000 per occurrence, $2, 000, 000 products-completed operations aggregate and $2, 000, 000 general aggregate. Phoenix also issued a policy numbered DT-CO-6B52655-PHX-13 to Gallagher, as named insured, for the policy period May 1, 2013, to May 1, 2014 (“2013-14 Phoenix Policy”), which provides coverage of $1, 000, 000 per occurrence, $2, 000, 000 products-completed operations aggregate and $2, 000, 000 general aggregate. Finally, Phoenix issued a policy numbered DT-CO-6B52655-PHX-14 to Gallagher, as named insured, for the policy period May 1, 2014, to May 1, 2015 (“2014-15 Phoenix Policy, ” and together with the 2012-13 Phoenix Policy and 2013-14 Phoenix Policy, the “Phoenix Policies”), All three of the Phoenix Policies' “Common Policy Declarations” identify “Gallagher Asphalt Corporation 18100 S. Indiana Ave. Thornton, IL 60476” as the “Named Insured.” All three of the Phoenix Policies contain a General Purpose Endorsement, which states in pertinent part:

Item 1 Named Insured to read:
Gallagher Asphalt Corporation ….
Logistics

         The 2012-13 Phoenix Policy includes a “Blanket Additional Insured (Contractors)” form (CG D2 46 08 05) which states (in relevant part):

This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
WHO IS AN INSURED -- (Section II) is amended to include any person or organization that you agree in a “written contract requiring insurance” to include as an additional insured on this Coverage Part, but:
a) Only with respect to liability for . . . “property damage” . . . and b) if, and only to the extent that, the injury or damage is caused by the acts or omissions or you or your subcontractor in the performance of “your work” to which the “written contract requiring insurance” applies. The person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.
5. The following is added to the DEFINITIONS Section:
“Written contract requiring insurance” means that part of any written contract or agreement under which you are required to include a person or organization as an additional insured on this Coverage Part, provided that the . . . “property damage” occurs:
a. After the signing and execution of the contract or agreement by you;
b. While that part of the contract or agreement is in effect; and
c. Before the end of the policy period.

         The 2012-13 Phoenix Policy also contains an Additional Insured endorsement which states in full as follows:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTOR SCHEDULED PERSON OR ORGANIZATION

         This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE NAME OF PERSON OR ORGANIZATION: ANY PERSON OR ORGANIZATION THAT YOU AGREE IN A WRITTEN CONTRACT TO INCLUDE AS AN ADDITIONAL INSURED ON THIS COVERAGE PART, PROVIDED THAT THE WRITTEN CONTRACT:
1. SPECIFICALLY REQUIRES YOU TO USE ISO COVERAGE FORM CG 20 10 10 01 TO INCLUDE SUCH PERSON OR ORGANIZATION AS ADDITIONAL INSURED.
2. IS IN EFFECT WHEN, THE “BODILY INJURY” OR “PROPERTY DAMAGE” OCCURS OR THE “ PERSONAL INJURY” OR “ADVERTISING INJURY” OFFENSE IS COMMITTED.

         The 2012-13 Phoenix Policy also contains an Additional Insured endorsement which states in full as follows:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTOR COMPLETED OPERATIONS

         This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
NAME OF PERSON OR ORGANIZATION:
ANY PERSON OR ORGANIZATION THAT YOU AGREE IN A WRITTEN CONTRACT TO INCLUDE AS AN ADDITIONAL INSURED ON THIS COVERAGE PART, PROVIDED THAT THE WRITTEN CONTRACT:
1. SPECIFICALLY REQUIRES YOU TO USE ISO COVERAGE FORM CG D3 73 11 05 TO INCLUDE SUCH PERSON OR ORGANIZATION AS ADDITIONAL INSURED.
2. IS IN EFFECT WHEN, THE “BODILY INJURY” OR “PROPERTY DAMAGE” OCCURS OR THE “PERSONAL INJURY” OR “ADVERTISING INJURY” OFFENSE IS COMMITTED.
LOCATION AND DESCRIPTION OF COMPLETED OPERATIONS:
ALL PROJECTS WHERE REQUIRED TO PROVIDE COVERAGE AS DESCRIBED IN THE ABOVE SCHEDULE.

         The 2013-14 Phoenix Policy contains an Additional Insured endorsement which states in full as follows:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTOR SCHEDULED PERSON OR ORGANIZATION

         This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
NAME OF PERSON OR ORGANIZATION:
ANY PERSON OR ORGANIZATION THAT YOU AGREE IN A WRITTEN CONTRACT TO INCLUDE AS AN ADDITIONAL INSURED ON THIS COVERAGE PART, PROVIDED THAT THE WRITTEN CONTRACT:
1. SPECIFICALLY REQUIRES YOU TO USE ISO COVERAGE FORM CG 20 10 10 01 TO INCLUDE SUCH PERSON OR ORGANIZATION AS ADDITIONAL INSURED.
2. IS IN EFFECT WHEN, THE “BODILY INJURY” OR
“PROPERTY DAMAGE” OCCURS OR THE “PERSONAL INJURY” OR “ADVERTISING INJURY” OFFENSE IS COMMITTED.

         The 2013-14 Phoenix Policy contains an Additional Insured endorsement ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.