United States District Court, E.D. Virginia, Newport News Division
OPINION & ORDER
Coke Morgan, Jr., Senior United States District Judge.
matter comes before the Court on Plaintiff Newport News
Holdings, LLC's ("Newport News Holdings" or
"Plaintiffs") Motion for Partial Summary Judgment
("Plaintiffs Motion"), Doc. 50, and Defendant,
Great American Insurance Company's ("GAIC", or
"Defendant") Motion for Summary Judgment
("Defendant's Motion"), Doc. 39 (collectively
"Motions for Summary Judgment). For the reasons stated
herein, the Court DENIES both Motions for Summary Judgment.
BACKGROUND & PROCEDURAL HISTORY
case involves Plaintiff, the owner of a hotel in Newport
News, suing Defendant, its insurance company, for denying
coverage of damage that occurred as a result of vandalism to
its hotel. See Doc. 1, Ex. 1 ("Compl.").
filed its complaint in the Circuit Court for the City of
Newport News on September 26, 2017. See Compl. Defendant
timely removed the case to this Court on October 31, 2017.
Doc. 1. On November 27, 2017, the Parties joints moved to
bifurcate the bad faith claims from the remainder of the
insurance claims. Doc. 13. The Court GRANTED that bifurcation
on November 28, 2017. Doc. 14.
November 30, Plaintiff filed a Motion to Quash
Defendant's subpoena duces tecum in regard to Plaintiffs
expert witness. Doc. 15. On January 31, 2018, this Court
entered an Order GRANTING Plaintiffs Motion to Quash. Doc.
March 9, 2018, Plaintiff filed a Motion to Compel Discovery
Responses from Defendant. Doc. 24. On April 12, 2018,
Defendant filed a Cross-Motion to Compel Discovery from
Plaintiff. Doc. 30. On April 26, 2018, the Court heard oral
argument on Plaintiff and Defendant's Motions to Compel.
Doc. 36. On May 3, 2018, this Court entered an Order GRANTING
Plaintiffs Motion to Compel IN PART and GRANTING
Defendant's Motion to Compel IN PART. Doc. 38. Defendant
and Plaintiff filed their respective Motions for Summary
Judgement and Partial Summary Judgment on May 14, 2018. Docs.
39, 50. On May 14, 2018, this Court also entered an Order for
Expedited Briefing on Plaintiff and Defendant's Motions
for Summary Judgment and Partial Summary Judgment. Doc. 49.
Plaintiff and Defendant filed responses in Opposition to
their respective Motions for Summary Judgment and Partial
Summary Judgment on May 24, 2018. Docs. 59, 60. Plaintiff and
Defendant replied on May 29, 2018. Docs. 61, 62.
judgment under Rule 56 is appropriate only when the court,
viewing the record as a whole and in the light most favorable
to the nonmoving party, determines that no genuine issue of
material fact exists and that the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56; see, e.g..
Celotex Corp. v. Catrett 477 U.S. 317, 322-24 (1986);
Anderson v. Liberty Lobby. Inc.. 477 U.S. 242,
248-50 (1986); Terry's Floor Fashions v. Burlington
Indus.. 763 F.2d 604, 610 (4th Cir. 1985). Once a party
has properly filed evidence supporting the motion for summary
judgment, the nonmoving party may not rest upon mere
allegations in the pleadings but must instead set forth
specific facts illustrating genuine issues for trial.
Celotex. 477 U.S. at 322-24. Such facts must be
presented in the form of exhibits and sworn affidavits.
Failure to rebut the motion with such evidence will result in
summary judgment when appropriate. "[T]he plain language
of Rule 56(c) mandates the entry of summary judgment. ..
against a party who fails to make a showing sufficient to
establish the existence of an element essential to that
party's case, and on which that party will bear the
burden of proof at trial." Id. at 322.
scintilla of evidence is insufficient to withstand a motion
for summary judgment. Rather, the evidence must be such that
the factfinder reasonably could find for the nonmoving party.
See Anderson. 477 U.S. at 252. Although the court
must draw all justifiable inferences in favor of the
nonmoving party, in order to successfully defeat a motion for
summary judgment, a nonmoving party cannot rely on "mere
belief or conjecture, or the allegations and denials
contained in his pleadings." Dovle v. Sentry
Ins.. 877 F.Supp. 1002, 1005 (E.D. Va. 1995) (citing
Celotex. 477 U.S. at 324).
federal court sitting in diversity jurisdiction must apply
the substantive law of the forum state, including that
state's choice of law rule. Erie R. Co. v.
Tompkins. 304 U.S. 64, 78 (1938). "Under Virginia
law, a contract is made when the last act to complete it is
performed, and in the context of an insurance policy, the
last act is the delivery of the policy to the insured."
Res. Bankshares Corp. v. St. Paul Mercury Ins. Co..
407 F.3d 631, 635-36 (4th Cir. 2005) (citing Seabulk
Offshore. Ltd. v. Am. Home Assurance Co.. 377 F.3d 408,
419 (4th Cir. 2004); Buchanan v. Doe, 246 Va. 67, 431 S.E.2d
289, 291 (1993) ("generally, the law of the place where
an insurance contract is written and delivered controls
issues as to its coverage.")). It is undisputed that the
contract for insurance was delivered and executed in
Virginia law, when the terms in a contract are clear and
unambiguous, then the contract is construed according to its
plain meaning. TravCo Ins. Co. v. Ward. 284 Va. 547,
552, 736 S.E.2d 321, 325 (2012). "Words that the parties
used are normally given their usual, ordinary, and popular
meaning. No word or clause in the contract will be treated as
meaningless if a reasonable meaning can be given to it, and
there is a presumption that the parties have not used words
needlessly." Id., (citing City of Chesapeake v.
States Self-Insurers Risk Retention Group. Inc.. 271 Va.
574, 579, 628 S.E.2d 539, 542 (2006) (internal quotations
question of whether a writing is ambiguous is a question of
law for the Court. Pennsylvania Nat. Mut. Cas. Ins. Co.
v. Block Roofing Corp.. 754 F.Supp.2d 819, 823-24 (E.D.
Va. 2010) (citing Riverton Investment Corp. v. United
States. 170 F.Supp.2d 608, 613 (W.D.Va.2001) (citing
Virginia law). "A contract is not ambiguous merely
because the parties disagree as to the meaning of the terms
used." TM Delmarva Power. L.L.C. v. NCP of Virginia.
L.L.C.. 263 Va. 116, 557 S.E.2d 199, 200 (2002). The
Court may not strain to find ambiguities in a policy
provision. Pennsylvania Nat. Mut. Cas. Ins. Co.. 754
F.Supp.2d at 823. A policy provision is ambiguous only when,
in context, it is capable of more than one reasonable
meaning. Id. Further, Virginia law construes
ambiguities in insurance contracts against the insurer:
Insurance policies are contracts whose language is ordinarily
selected by insurers rather than by policyholders. The
courts, accordingly, have been consistent in construing the
language of such policies, where there is doubt as to their
meaning, in favor of that interpretation which grants
coverage, rather than that which withholds it. Where two
constructions are equally possible, that most favorable to
the insured will be adopted. Language in a policy purporting
to exclude certain events from coverage will be construed
most strongly against the insurer.
Gov't Employees Ins. Co. v. Moore. 266 Va. 155,
165, 580 S.E.2d 823, 828 (2003).
November 13, 2015, Plaintiff purchased a property located at
6128 Jefferson Ave., Newport News, VA 23605 ("The
Hotel"), and obtained a one-year commercial property
policy from Defendant to insure the Hotel against all
casualty risks ("The Policy"). Doc. 51 at 5, 6; See
Doc. 40 at 6. Plaintiff paid the full premium for the
insurance. Doc. 51 at 6. In the process of obtaining the
insurance, Plaintiff, through insurance agents, told
Defendant that the Hotel was not currently operational, but
that Plaintiff expected to open the Hotel on January 1, 2016,
after Plaintiff was able to make "any minor/cosmetic
repairs necessary." Doc. 52-10 at 2; Doc. 41-4 at 3.
early December, Plaintiff had the property inspected by the
Health Department, and had a contractor visit the property to
evaluate how long it would take to complete repair work on
the property. Doc. 51 at 9-10. Between November 13, 2015 and
January 26, 2016, police visited the Hotel on several
occasions to investigate incidents of trespass and vandalism.
Doc. 51 at 11-12. During part of this time, two of the
Hotel's owners, Bharat Patel ("B. Patel"), and
Sanjay Patel ("S. Patel") (collectively "the
Hotel Owners"), were out of the country from
mid-December until late January. Doc. 51 at 10. Therefore,
they had an individual named Nick Sheth ("Sheth"),
visit the property while they were gone. Id. At
the end of December, Sheth became aware that there were
vandals on the property. Doc. 51 at 11. The police contacted
Sheth on December 30, 2015 regarding a possible theft at the
hotel. Id. On January 14, 2016, the police came to
the building again, this time in regard to a broken pipe that
had caused water to release in the kitchen. Id. at
12. At that time, Sheth cut off the water supply to the
kitchen. Doc. 51 at 12. B. Patel and S. Patel returned from
their trip on or about January 22 and January 25, 2016.
morning of January 26, 2016, two persons were arrested
leaving the hotel, and the following morning, Sheth
discovered that the water supply line of the toilet in room
510 had been cut, causing water to leak down to the first
floor (the "January 26 Loss"). Id; See
also Doc. 40 at 2. Plaintiff contacted GAIC on January
27, 2016, and Defendant hired an adjuster to inspect the
property. The adjuster inspected the property on January 29,
2016 and February 3, 2016. Doc. 40 at 2. On February 11,
2016, the adjuster provided Plaintiff with a timeline of
events based on their conversations regarding the January 26
Loss. Id. at 7. Defendant also hired various
individuals to provide an estimate for the scope of damage
related to the cut toilet supply line and the any repairs
related to the cut toilet supply line. Doc. 40 at 7. Their
report determined that the losses were valued at $657,
187.88. Doc. 51 at 15. On March 7, 2017, Plaintiff submitted
its Sworn Proof of Loss, in which it stated that the full
cost to repair or replace the Building damage caused by the
January 26, 2016 vandalism is $1, 582, 832.12 and the cost to
repair or replace the Business Personal Property is $405,
832.66. Doc. 40, Ex. 14. Their Sworn Proof of Loss was based
on an estimate they obtained from Atlantic Estimating, LLC
and Rollins Inventory. Doc. 40 at 9; Doc. 59 at 13. On May
25, 2017, Defendant denied Plaintiffs insurance policy citing
the following provisions:
Description of Terms
a. As used in the Vacancy Condition, the term building and
the term vacant have the following meaning set forth in (1)
and (2) below....
(2) When this policy is issued to the owner or general lessee
of a building, building means the entire building. Such
building is vacant unless at least 31% of its total square
(a) rented to a lessee or sub-lessee and used by the lessee
or sub-lessee to conduct its ...