United States District Court, W.D. North Carolina, Charlotte Division
PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Plaintiffs,
PORTRAIT HOMES-SOUTH CAROLINA, LLC, ET AL., Defendants.
KENNETH D. BELL, UNITED STATES DISTRICT JUDGE
insurance coverage matter is before the Court on Plaintiff
Pennsylvania National Casualty Insurance Company’s
(“Penn National”) and Defendants Portrait Homes-
South Carolina, LLC; Portrait Homes-Oak Bluff, LLC; and
Pasquinelli Homebuilding, LLC’s (collectively,
“Portrait”) cross motions for summary judgment.
(Doc. Nos. 13, 14). Penn National seeks a declaratory
judgment that it is not obligated to provide coverage to
Portrait under insurance policies issued by Penn National to
one of Portrait’s subcontractors, Jose Castillo d/b/a
JJA Framing Company and JJA Construction, Inc.
(“JJA”), for construction defect claims asserted
in connection with the construction of a townhome project in
Charleston, South Carolina. In turn, Portrait urges the Court
to find that Penn National is obligated to provide coverage
to Portrait as an “additional insured” under the
reasons discussed more fully below, the Court will
GRANT Penn National’s motion for
summary judgment and DENY Portrait’s
cross motion for summary judgment. While the parties have
raised numerous issues, there is one issue that mandates the
result being ordered by the Court. Regardless of the scope of
the insurance coverage potentially available to Portrait
under the Penn National policies, Portrait can only recover
under those policies if it still owes or has paid defense or
indemnity costs that have not yet been reimbursed,
i.e., it has suffered some loss or has some
continuing obligation for which it can pursue an insurance
claim. However, Portrait’s primary insurance carrier
fully paid Portrait’s defense costs and the agreed
settlement payment in the underlying construction defect
litigation. Therefore, Portrait does not have any monetary
loss that could be paid under the Penn National policies
without Portrait receiving a double recovery, which it is not
entitled to obtain as a matter of law.
urges the Court to find that Portrait (or more accurately its
assignee the Oak Bluff HOA (“HOA”) which is in
practical effect the party seeking the recovery from Penn
National) will not receive a double recovery. The HOA, who
was the plaintiff in the underlying lawsuit, argues that it
has not been made whole because its settlements with Portrait
and the subcontractors do not cover all the losses and
expenses that resulted from the construction defects. In sum,
the HOA argues that if Penn National had been at the
settlement tables as it should have been, then the
settlements would have been higher. However, the HOA
acknowledges that it “stands in the shoes” of
Portrait and thus cannot obtain any recovery beyond the
amount that Portrait would itself be entitled to receive from
Penn National. So, while the Court recognizes that the HOA
may well have a shortfall with respect to the construction
defect damages it suffered, Portrait has already been paid
all of its defense and indemnity costs so Portrait cannot
maintain a claim against Penn National as an additional
insured under the JJA policies. Accordingly, Penn National is
entitled to summary judgment in this action.
judgment must be granted “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56. A factual dispute is considered genuine
“if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
“A fact is material if it might affect the outcome of
the suit under the governing law.” Vannoy v.
Federal Reserve Bank of Richmond, 827 F.3d 296, 300 (4th
Cir. 2016) (quoting Libertarian Party of Va. v.
Judd, 718 F.3d 308, 313 (4th Cir. 2013)).
party seeking summary judgment bears the initial burden of
demonstrating the absence of a genuine issue of material fact
through citations to the pleadings, depositions, answers to
interrogatories, admissions or affidavits in the record.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); Bouchat v. Baltimore Ravens Football Club,
Inc., 346 F.3d 514, 522 (4th Cir.
2003). “The burden on the moving party
may be discharged by ‘showing’ ... an absence of
evidence to support the nonmoving party's case.”
Celotex, 477 U.S. at 325. Once this initial burden
is met, the burden shifts to the nonmoving party. The
nonmoving party “must set forth specific facts showing
that there is a genuine issue for trial, ” Id.
at 322 n.3. The nonmoving party may not rely upon mere
allegations or denials of allegations in his pleadings to
defeat a motion for summary judgment. Id. at 324.
ruling on a summary judgment motion, a court must view the
evidence and any inferences from the evidence in the light
most favorable to the nonmoving party. Tolan v.
Cotton, 572 U.S. 650, 657 (2014); see also
Anderson, 477 U.S. at 255. “Summary judgment
cannot be granted merely because the court believes that the
movant will prevail if the action is tried on the
merits.” Jacobs v. N.C. Admin. Office of the
Courts, 780 F.3d 562, 568-69 (4th Cir. 2015) (quoting
10A Charles Alan Wright & Arthur R. Miller et al.,
Federal Practice & Procedure § 2728 (3d ed.1998)).
“The court therefore cannot weigh the evidence or make
credibility determinations.” Id. at 569
(citing Mercantile Peninsula Bank v. French (In
re French), 499 F.3d 345, 352 (4th Cir. 2007)).
“[w]here the record taken as a whole could not lead a
rational trier of fact to find for the nonmoving party, there
is no genuine issue for trial.” Ricci v.
DeStefano, 557 U.S. 557, 586 (2009) (internal citations
omitted). “Only disputes over facts that might affect
the outcome of the suit under the governing law will properly
preclude the entry of summary judgment. Factual disputes that
are irrelevant or unnecessary will not be counted.”
Anderson, 477 U.S. at 248. Also, the mere argued
existence of a factual dispute does not defeat an otherwise
properly supported motion. Id. If the evidence is
merely colorable, or is not significantly probative, summary
judgment is appropriate. Id. at 249-50.
end, the question posed by a summary judgment motion is
whether the evidence as applied to the governing legal rules
“is so one-sided that one party must prevail as a
matter of law.” Id. at 252.
RELEVANT FACTS AND PROCEDURAL HISTORY
The Underlying Litigation
2013, Portrait was sued in the Underlying Litigation,
which it was alleged that Portrait was the developer and
general contractor of the townhome community known as Oak
Bluff in Charleston, South Carolina. Portrait allegedly
performed development, construction, repairs, and
modifications on the Oak Bluff project between 2002 and 2005.
of Portrait’s subcontractors and material suppliers on
the Oak Bluff project were also named as defendants in the
Underlying Litigation, including JJA Construction, Inc. d/b/a
JJA Framing and Jose Castillo d/b/a JJA Framing. The
subcontractors performed all types of work on the Oak Bluff
project, including framing, roofing, vinyl siding, masonry,
windows and doors, plumbing, painting, etc. With respect ...