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Gateway Residences at Exchange, LLC v. Illinois Union Insurance Co.

United States District Court, E.D. Virginia, Alexandria Division

April 3, 2018

GATEWAY RESIDENCES AT EXCHANGE, LLC, Plaintiff,
v.
ILLINOIS UNION INSURANCE COMPANY, Defendant.

          HON. JOHN F. ANDERSON JUDGE.

          MEMORANDUM OPINION & ORDER

          LIAM O GRADY UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on cross motions for summary judgment. See Dkt. 28 (Defendant's motion); Dkt. 30 (Plaintiffs motion). For the reasons explained below and for good cause shown, Defendant's motion is GRANTED and Plaintiffs motion is DENIED.

         I. Background

         Plaintiff Gateway Residences at Exchange, LLC ("Gateway") is seeking to recover insurance proceeds to satisfy a default judgment that Gateway obtained against Defendant Illinois Union Insurance Company's ('IUIC") insured, Mechanical Design Group Ltd ("MDG"). Gateway sued MDG in Fairfax Circuit Court on September 16, 2016, alleging negligent design by MDG during the design and construction of a building sometime in 2014. MDG did not appear in the lawsuit, and Gateway obtained a default judgment in the amount of $910, 148, plus approximately $22, 000 in attorney's fees and costs. See Dkt. 1, Ex. 13; Ex. 7 at ¶ 4-9. Gateway now seeks to recover that judgment from IUIC, claiming that IUIC is required to indemnify MDG.

         IUIC covered MDG under an insurance policy running from February 1, 2014 through February 1, 2015 ("the Policy"). The Policy is a "claims made and reported" policy, which requires as a condition of coverage that a claim must be made and reported to the insurer within the policy period. IUIC alleges that there is no coverage under the Policy because IUIC received no claim during the existence of the Policy, which was cancelled at the request of First Insurance Funding on September 5, 2014. First Insurance was the premium finance company for the insurance policy under which MDG had coverage, and First Insurance had power of attorney over the policy (and thus, according to IUIC, authority to request cancellation of the policy). Gateway disputes the validity of the policy's cancellation. In the alternative, IUIC argues that the Policy's natural termination date was February 1, 2015, and thus even in the absence of a proper cancellation, the Policy would have ended prior to IUIC's notification of Gateway's claim on September 2, 2016.

         The Court heard oral arguments on the motions on March 16, 2018. Counsel for both parties acknowledged that no genuine issues of material fact are in dispute, and that this matter is ripe for summary judgment. Having reviewed the pleadings and considered the parties' arguments, the Court agrees. See Minnesota Lawyers Mut., Ins. Co. v. Protostorm, LLC, 197 F.Supp.3d 876, 882 (E.D. Va. 2016) ("The interpretation of an insurance policy is a question of law that is particularly well suited for summary judgment.").

         II. Legal Standard

         The court shall grant summary judgment 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). Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celolex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A party moving for summary judgment has the initial burden of showing the court the basis for its motion and identifying the evidence that demonstrates the absence of a genuine issue of material fact. Id. Once the moving party satisfies its initial burden, the opposing party has the burden of showing, by means of affidavits or other verified evidence, that there exists a genuine dispute of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).

         In reviewing a summary judgment motion, the court must "draw all justifiable inferences in favor of the nonmoving party." United States v. Carolina Transformer Co., 978 F.2d 832, 835 (4th Cir. 1992). Summary judgment is not appropriate if the resolution of material issues depends on credibility determinations. Meyers v. Baltimore Cty., 713 F.3d 723, 730 (4th Cir. 2013).

         III. Analysis

         a. Plaintiffs Motion for Summary Judgment

         Gateway presents three arguments in favor of its motion. First, Gateway argues that IUIC has waived its "claims made and reported" defense because IUIC failed to notify Gateway of MDG's alleged breach of the Policy within 45 days of IUIC's discovery of a breach, thereby bringing IUIC under the coverage of Va. Code Ann. § 38.2-2226. Second, Gateway argues that the Policy was never cancelled or was inappropriately cancelled, and therefore the Policy remained in force at the time Gateway notified IUIC of its claim. Third, Gateway argues that MDG's coverage under the Policy continued through an "extended reporting period, " and that Gateway reported its claim to IUIC during the lifetime of this extended reporting period. All three arguments fail, for the reasons explained below.

         i. Waiver under Va. ...


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