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Bain Enterprises, LLC v. United Fire & Casualty Co.

United States District Court, W.D. Texas, El Paso Division

July 25, 2017

BAIN ENTERPRISES, LLC, d/b/a BAIN CONSTRUCTION, Plaintiff,
v.
UNITED FIRE & CASUALTY COMPANY, an Iowa Corporation, Defendant.

          FINDINGS OF FACT & CONCLUSIONS OF LAW

          ANNE T. BERTON UNITED STATES MAGISTRATE JUDGE.

         On this day, the Court commenced a Bench Trial on the Papers in the above-styled and numbered cause. Having duly considered the parties' pleadings, Agreed Stipulated Facts, trial briefs, and responses, the Court now enters its findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a)(1).[1]

         I. Procedural Background

         On December 31, 2014, Bain Enterprises, LLC. (“Bain”) filed suit against Mountain States Insurance Group (“Mountain States”) and United Fire & Casualty Company (“United Fire”) for declaratory judgment. (ECF. No. 1). On December 7, 2015, Mountain States filed a crossclaim against United Fire for contribution and subrogation. (ECF. No. 40). On April 29, 2016, the parties each filed Motions for Summary Judgment. (ECF. Nos. 51-53). On August 1, 2016, the District Court granted in part and denied in part the parties' Motions for Summary Judgment. (ECF. No. 67). Subsequently, on August 12, 2016, Bain and Mountain States filed a joint voluntary dismissal of all of Bain's claims against Mountain States, which the District Court granted. (ECF. Nos. 69, 70).

         Throughout the litigation, the parties filed numerous motions for trial date continuations. Following the District Court's denial of a fourth trial continuation, on October 25, 2016, the parties consented to magistrate judge jurisdiction pursuant to Local Rule CV-72 and 28 U.S.C § 636(c)(1). (ECF. No. 96). Thereafter, the litigation was reassigned to this Court for final disposition. (ECF. No. 97).

         Subsequently, on May 2, 2017, Mountain States voluntarily dismissed its cross-claims against United Fire. (ECF. No. 126). As no claims remained that were asserted by or against Mountain States, the Court dismissed Mountain States from the litigation. (ECF. No. 128). As such, following the District Court's ruling and the parties' voluntary dismissals, the only remaining claim is for declaratory judgment that United Fire had a duty to indemnify Bain. (See ECF. Nos. 67, 69, 70).

         The Bench Trial was originally scheduled for May 15, 2017. (ECF. No. 99). However, on May 9, 2017, the parties filed a “Joint Motion Requesting the Court to Decide the Case on Submissions by the Parties.” (ECF. No. 129). Therein, the parties represented that “they [would] be able to submit an agreed statement of facts to the Court . . . such that an evidentiary trial [would] not be necessary” and “[t]he Parties also represent[ed] to the Court that only legal questions remain[ed].” (Id.). Accordingly, on May 11, 2017, the Court directed the parties to submit their joint statement of facts. (ECF. No. 133). After receiving the parties' Agreed Stipulated Facts on May 12, 2017, the Court vacated the trial setting and directed the filing of trial briefs. (ECF. Nos. 134, 135).

         Prior to receiving the parties' trial briefs, the Court received a near 500 page lodgment in contravention of the parties' representation that “only legal questions remain.”[2] (See ECF. Nos. 129, 136). Nevertheless, although not required to do so, the Court will consider this additional non-stipulated evidence in the alternative. (See ECF. Nos. 137-140). Accordingly, as the issues are fully briefed, the matter is now ripe for the Court to adjudicate.

         II. Jurisdiction

         The Court has jurisdiction under 28 U.S.C § 1332(a), and following the parties' consent to magistrate judge jurisdiction, the Court is empowered to enter a final disposition pursuant to 28 U.S.C § 636(c)(1) and Local Rule CV-72.

         III. Findings of Fact[3]

         With respect to the stipulated facts between the parties, the Court ACCEPTS the parties' Agreed Stipulated Facts (“ASF”) (ECF. No. 134) and ENTERS the following findings of fact:

1. Bain is a general contractor that performs installation of utilities, earth moving, dirt work, paving, and miscellaneous concrete work.
2. Mountain States issued a Commercial General Liability Policy to Bain, Policy No. CPP 0116646 05, and a Commercial Umbrella Policy to Bain, Policy No. UMB 0116646 04, with a policy period from 12/08/2011 to 12/08/2012.
3. United Fire issued a Commercial General Liability Policy to Bain, Policy No. 85317910 (“United Policy”), with a policy period from 12/08/2012 to 12/08/2013. The United Policy provides, in part, as follows:
SECTION I - COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies….

b. This insurance applies to “bodily injury” and “property damage” only if:

(2) The “bodily injury” or “property damage” occurs during the policy period; and

(3) Prior to the policy period, no insured listed . . ., knew that the “bodily injury” or “property damage” had occurred, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the “bodily injury” or “property damage” occurred, then any continuation, change or resumption of such “bodily injury” or “property damage” during or after the policy period will be deemed to have been known prior to the policy period.

d. “Bodily injury” or “property damage” will be deemed to have been known to have occurred at the earliest time when any insured . . .

(1) Reports all, or any part, of the “bodily injury” or “property damage” to us or any other insurer;

(2) Receives a written or verbal demand or claim for damages because of the “bodily injury” or “property damage”; or

(3) Becomes aware by any other means that “bodily injury” or “property damage” has occurred or has begun to occur.

SECTION V - DEFINITIONS

13. “Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

4. In 2011, Bain entered into a contract with the Lower Valley Water District (“LVWD”), under which Bain began construction of “Phase I” of a sanitary sewer system within the Town of Clint. Phase I required (a) the installation of a sewer main, (b) the installation of residential yard lines, and (c) the decommissioning of septic tanks used by certain residents in specific areas of the Town of Clint.
5. Bain utilized the services of subcontractors for part of the work performed in Phase I. Specifically, Bain contracted with Double R Plumbing for plumbing work, which included installation of yard lines for residences adjacent to the streets. To install the yard lines, Double R Plumbing had to dig trenches, lay pipe and then backfill the trenches. Double R Plumbing performed the work needed starting from the street curb, connecting the sewer service lines installed by Bain, and then ran the yard lines to the houses. LVWD's representative on Phase I inspected the work that was being performed by both Bain and Double R Plumbing. Bain representatives were informed at a bi-weekly project meeting in June 2012 of deficiencies in Double R Plumbing's trench backfill soil compaction. Thereafter, Double R Plumbing changed its compaction methods and ultimately LVWD approved the overall project, which included the yard lines and work performed by Double R Plumbing. Under the plans and specifications, Bain was not required to test the soil compaction for the yard lines; instead, LVWD performed those tests, and approved the work being performed by both Bain and Double R Plumbing.
6. Bain completed Phase I work between July 28, 2011 and September 2012, at which time it received a certificate of substantial completion of Phase I from the LVWD.
7. The Town of Clint filed a lawsuit against Bain for structural damages allegedly caused by the construction of Phase I.
8. Bain tendered the Original Petition to Mountain States pursuant to its Mountain States policy. Mountain States agreed to defend Bain and hired its defense counsel, Michael McLean, in the underlying lawsuit.
9. When Bain applied for insurance coverage from United Fire, it submitted to United Fire a copy of the Mountain States Insurance Group Loss Run Report dated September 5, 2012, which listed claim number 201200289197 related to the claims made by ...

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