WENDY BEETLESTONE, District Judge.
This action involves a dispute between two insurers over which has the duty to defend general contractor Michael & Karen Palmieri Enterprises, Inc. d/b/a Lynmar Builders ("Lynmar") in personal injury litigation pending in a Pennsylvania state court and over the costs incurred in defending that litigation to date. Plaintiff, Citizens Insurance Company of America ("Citizens") — Lynmar's insurer — is seeking
On November 19, 2009, Lynmar contracted to perform construction work at a Save-A-Lot store located at 5601 Vine Street in Philadelphia, Pennsylvania. Compl. ¶ 11. Lynmar subcontracted with Integrity Plumbing & Heating ("Integrity") to perform a portion of the construction work. Id. ¶ 12. The parties' pleadings do not state when Integrity completed its work on the project. However, Selective has alleged in its Answer that "Integrity's ongoing operations performed for Lynmar [did not] cause[] the bodily injury" at issue in the state court personal injury litigation. Answer at 6 (Eighth Affirmative Defense).
That injury occurred on May 12, 2010, when an employee of Sav-A-Lot, Robert Tomlinson, allegedly "fell through an unidentified, unmarked and unguarded drop ceiling and/or floor in the vicinity of [the area in which Integrity performed its work] which appeared to be a floor," and sustained serious injuries. Compl. Ex. A ¶¶ 5, 30-31. Tomlinson filed suit in the Court of Common Pleas of Philadelphia County against, among others, Lynmar and Integrity (the "Tomlinson" action). In his complaint, Tomlinson alleges, inter alia, that the defendants were negligent in "failing to ensure adequate handrails and/or guardrails existed on the Premises," and in "failing to take proper measures to warn or guard the location of the accident." Id. Ex. A ¶¶ 66(n), (q).
Integrity is insured under a commercial general liability policy issued by the Defendant here, Selective (the "Policy"). Compl. ¶ 18. The Policy also insures as additional insureds any party who Integrity agrees to indemnify in one of its construction contracts. Id. Ex. A at 11. Integrity's subcontract with Lynmar requires Integrity to indemnify Lynmar with respect to liability arising from Integrity's work and required that Lynmar be added to the Policy as an additional insured. Id. ¶¶ 15-16. Lynmar complied with those requirements. See id. ¶¶ 15-19. The provision of the Policy that extends coverage to Lynmar only extends that coverage for liability that is "caused in whole or in part by ... [Integrity's]
Lynmar tendered its defense of the Tomlinson Court of Common Pleas action to Selective. Compl. ¶ 19. Selective, however, did not accept that tender. Id. ¶ 20; Answer ¶ 20. As a result, Citizens, as Lynmar's insurer, has defended Lynmar in the Tomlinson action. Compl. ¶ 23.
On a motion for judgment on the pleadings, "`judgment will not be granted unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.'" Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir.2008) (quoting Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 290-91 (3d Cir. 1988)). In deciding the motion, the court must "`view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party.'" Id.
This motion raises two primary issues: (1) whether Selective has a duty to defend Lynmar in response to the allegations regarding negligent construction stated in the Tomlinson complaint; and, (2) whether Selective has a duty to defend Lynmar in response to the Tomlinson complaint's failure to warn allegations. The parties dispute whether Pennsylvania or New Jersey law governs those issues. As an initial matter, the Court will address the choice-of-law issue.
As the forum state, Pennsylvania choice-of-law rules apply to this action. Hammersmith v. TIG Ins. Co., 480 F.3d 220, 226 (3d Cir.2007). Under those rules, a court must "assess[] each state's contacts under the Second Restatement of Conflict[] of Laws, bearing in mind that `[w]e are concerned with the contract of insurance' and not the underlying tort." Id. at 232-33 (quoting McCabe v. Prudential Prop. & Cas. Ins. Co., 356 Pa.Super. 223, 514 A.2d 582, 586 (1986)). "Section 193 of the Second Restatement specifically governs casualty insurance contracts, and provides that the" interpretation of a casualty insurance contract is "`determined by the local law of the state which the parties understood to be the principal location of the insured risk during the term of the policy unless ... some other state has a more significant relationship ... to the transaction and the parties ....'" Id. at 233 (quoting Restatement (Second) of Conflict of Laws § 193). Comment b to section 193 states that courts generally should give the location of the insured risk "greater weight than any other single contact." Id. (quoting Restatement (Second) of Conflict of Laws § 193 cmt. b).
Both Lynmar and Integrity are New Jersey companies. Compl. Ex. B at 1-2. Selective issued the policy from its office in Branchville, New Jersey. Id. Ex.
This conclusion is reinforced by an analysis of the additional Hammersmith factors: "(1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, nationality, place of incorporation and place of business of the parties." Id. at 233 (citing Restatement (Second) of Conflict of Laws § 188(2)).
New Jersey recognizes the general rule that a liability insurer is obligated to defend whenever the complaint against the policyholder contains allegations that, if proven true, would be covered under the policy. Burd v. Sussex Mut. Ins. Co., 56 N.J. 383, 267 A.2d 7, 9 (1970). The duty to defend exists even if the claim against the policyholder is completely without merit, so long as, if the claim pleaded in the action against the policyholder were to be proven valid, it would be covered by the policy. This is because to rule otherwise would deprive the policyholder of "`one of the basic purposes'" of obtaining liability insurance — "`protection of the insured from the expenses of litigation.'" Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 607 A.2d 1255, 1259 (1992) (quoting Solo Cup Co. v. Fed. Ins. Co., 619 F.2d 1178,
Sometimes, however, the issue that determines whether a claim is covered will not be resolved in the litigation against the policyholder. When that is the case, an insurer may bring a declaratory judgment action, like the one here, to determine whether it is obligated to cover the policyholder. Burd, 267 A.2d at 11. In such an action, the insurer is not limited to the facts pleaded in the complaint against the policyholder, but may introduce evidence to show that the claim against the policyholder is not covered by its policy. See Polarome, 961 A.2d at 48 (stating that insurer may introduce extrinsic evidence to show claim is not covered); see also Burd, 267 A.2d at 14 (stating that the carrier was entitled to try the issue of whether the injuries in fact were within the policy exclusion for intentional acts).
Thus, in Burd, the complaint in the underlying personal injury action contained separate counts alleging alternatively that the insured intentionally shot the plaintiff and that he did so negligently. Burd, 267 A.2d at 9. The issue whether the shooting was negligent or intentional was not resolved in the personal injury action, id., but it was critical to whether the insurer had a duty to defend. Accordingly, in a subsequent action seeking a declaration that the insurer owed coverage, the insurer was not limited to the terms of the personal injury complaint against its policyholder but was entitled to show that the shooting actually was intentional and, therefore, not covered by its policy. See id. at 9-11.
Here, Selective argues that it has no duty to defend Lynmar in Tomlinson because the injury Mr. Tomlinson alleges was not caused by Integrity's ongoing operations but happened after Integrity had completed operations at the site. The issue whether Mr. Tomlinson's injury was caused by Integrity's ongoing operations is not relevant to his tort claim and will not be resolved in the state court action. Thus, in this declaratory judgment action, Selective will be entitled to introduce evidence in a summary judgment motion or at trial to show when the injury occurred in relation to the completion of Integrity's operations. Polarome, 961 A.2d at 48; see also Burd, 267 A.2d at 11. The present motion, however, is under Rule 12(c), and for the purposes of this motion, only the factual allegations contained in the pleadings in this action, as well as certain documents "integral to or explicitly relied upon in the complaint," may be considered. U.S. Express Lines Ltd., 281 F.3d at 388 (citation and internal quotation marks omitted); see also supra note 1. It is Citizens' burden on this motion to show that those allegations reflect that there exists no issue of material fact and that it is entitled to judgment as a matter of law. Rosenau, 539 F.3d at 221.
A review of the pleadings shows that there is an issue of material fact that remains to be resolved. That issue arises from the parties' dispute over whether Tomlinson's injuries were caused by Integrity's ongoing operations. Mot. at 9;
E. Coast Residential Assocs., LLC v. Builders Firstsource-Ne. Grp., LLC, 2012 WL 75146, at *3 (N.J.Super.Ct.App.Div. Jan. 11, 2012) (quoting Owens-Ill. Inc. v. United Ins. Co., 138 N.J. 437, 650 A.2d 974, 981 (1994)); accord Deodato v. Hartford Ins. Co., 143 N.J.Super. 396, 363 A.2d 361, 365 (1976), aff'd, 154 N.J.Super. 263, 381 A.2d 354 (1977) (per curiam).
The parties are at odds as to whether Mr. Tomlinson's injuries happened during Integrity's "ongoing operations." Citizens' points to Mr. Tomlinson's allegations that the defendants, including Integrity, acted negligently in construction of the area around the water heater from which he fell, Compl. Ex. A ¶¶ 66(n), (q), and concludes from there that his injury occurred during Integrity's ongoing operations. Mot. at 10-11. Selective alleges in its Answer, to the contrary; that Integrity's ongoing operations performed for Lynmar did not cause Mr. Tomlinson's injuries. Answer at 6 (Eighth Affirmative Defense). Thus, Selective highlights a material question of fact regarding when Tomlinson's injury occurred in relation to when it completed its work.
Given this factual dispute found in the pleadings, the Court concludes that Citizens' has not met its burden to show "that no material issue of fact remains to be resolved and that [it] is entitled to judgment as a matter of law." Rosenau, 539 F.3d at 221 (citation and internal quotation marks omitted). As stated above, in addressing a Rule 12(c) motion the Court "view[s] the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Id. When a nonmoving defendant denies a material allegation in its answer, that denial creates a question of fact that prevents judgment on the pleadings. Inst. for Scientific Info., Inc. v. Gordon & Breach, Science Publishers, Inc., 931 F.2d 1002, 1008 (3d Cir.1991). The nonmoving party, Selective, has alleged in its Answer that Integrity's ongoing operations did not cause Tomlinson's injury. Answer at 6 (Eighth Affirmative Defense). If the injury was not caused by Integrity's ongoing operations, Lynmar is not entitled to coverage from Selective. In light of Selective's allegation, Citizens cannot show that there is not at least a question of fact regarding whether Lynmar
Citizens also argues that the allegations against Integrity in Tomlinson of failure to warn themselves alone impose on Selective a duty to defend Lynmar. The Tomlinson complaint alleges, inter alia, that Integrity "faile[d] to warn those lawfully on the Premises of the dangerous conditions existing thereon." Compl. Ex. A ¶ 66(k). Citizens relies on Pennsylvania case law to assert that allegation alleges an injury that is deemed, as a matter of law, to have been caused by ongoing operations regardless that the resultant injury — in this case, the fall — did not occur until after the work had been completed. Mot. at 11-12 (citing Bombar v. W. Am. Ins. Co., 932 A.2d 78, 88-89 (Pa.Super.Ct.2007); Keystone Spray Equip., Inc. v. Regis Ins. Co., 767 A.2d 572, 575 (Pa.Super.Ct.2001)).
As discussed above, however, New Jersey law governs the interpretation of the Policy, and it is to the contrary. Under New Jersey law, liability for a failure to warn that results in injury — like Mr. Tomlinson's fall — after the work has been completed is covered by completed operations coverage and not by coverage for ongoing operations. S.T. Hudson Eng'rs, Inc. v. Pa. Nat'l Mut. Cas. Co., 388 N.J.Super. 592, 909 A.2d 1156, 1164 (2006) ("[T]he acts that fall within products-completed operations coverage relate to the giving of information, i.e., instructions and warnings...."); see also Inductotherm Corp. v. N.J. Mfrs. Cas. Ins. Co., 83 N.J.Super. 464, 200 A.2d 358, 364 (1964) ("the allegations ... arising out of its failure to warn of a danger inherent in the use of its product ... are not sufficient to remove these claims from the exclusionary clause of the contract of insurance" for products — completed operations coverage). Thus, if Mr. Tomlinson fell after Integrity had completed its work because Integrity failed to warn him of a danger, that fall would not be caused by Integrity's ongoing operations. And, if the fall was not caused by Integrity's ongoing operations, liability for failure to warn about the drop ceiling/floor is not covered under the Policy.
Selective has proffered evidence to show that Mr. Tomlinson fell some months after Integrity had completed its work at the site. Opp'n at 15-16 Exs. A-C. That evidence consists of: (1) excerpts from Lynmar's summary judgment motion in Tomlinson, id. Ex. A ¶¶ 5, 6, 8; (2) excerpts from Integrity's summary judgment motion in Tomlinson, id. Ex. B ¶¶ 14, 15; and (3) a Final Waiver of Lien Form issued by Integrity to Lynmar indicating completion of, and full payment for, the work under the parties' subcontract, id. Ex. C. On this Rule 12(c) motion, the Court is unable to consider that evidence because none of those documents are "integral to or explicitly relied upon in the complaint." U.S. Express Lines, 281 F.3d at 388 (citation and internal quotation marks omitted). The Tomlinson complaint does not clearly state whether the fall happened before or after Integrity completed its operations at the site. Citizens argues that the fall happened during Integrity's operations, see Compl. ¶¶ 27-30, while Selective has alleged that it did not, see Answer at 6 (Eighth Affirmative Defense). Thus, at this stage in the proceedings, with respect to the failure to warn allegation — just as for the negligent construction allegations — there remains a factual question regarding when Integrity
For the foregoing reasons, Citizens' Motion will be denied. An appropriate Order follows.