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Zurich American Insurance Co. v. Acadia Insurance Co.

United States District Court, D. Colorado

August 12, 2014

ACADIA INSURANCE COMPANY, a New Hampshire corporation, Defendant.


CRAIG B. SHAFFER, Magistrate Judge.

THIS MATTER comes before the court on Defendant Acadia Insurance Company's Motion to Dismiss (For Change of Venue Transferring Cause to the District of Vermont) (doc. #12) filed on May 29, 2014. Plaintiffs Zurich American Insurance Company ("Zurich") and American Guarantee and Liability Insurance Company ("American Guarantee") filed their Response in Opposition (doc. #13) on June 23, 2014, and Acadia filed a Reply in Support of Motion to Dismiss (doc. # 15) on July 10, 2014. The parties filed a Joint, Stipulated Motion to Refer Motion to Change Venue to the Magistrate Judge (doc. #21) on July 30, 2014, requesting that the pending motion be referred to this magistrate judge "for determination pursuant to Rule 72.2, D.C.COLO.LCivR" which provides that a magistrate judge may be "designated specifically to conduct any or all proceedings in any jury or nonjury civil action" with the unanimous consent of the parties.[2] That Joint, Stipulated Motion was granted by Judge Arguello on July 30, 2014. See doc. #22. This court has reviewed the pending motion, the related briefs, and the applicable law, and is sufficiently advised in the premises. For the following reasons, the court hereby denies Defendant's motion.


This is an action for declaratory judgment pursuant to 28 U.S.C. § 2201, et seq., 28 U.S.C. § 2202, et seq., and Fed.R.Civ.P. 57, and for other relief. More specifically, Plaintiffs seek a declaration determining the obligations of Acadia to Plaintiffs for equitable subrogation and/or equitable contribution for amounts incurred by Plaintiffs with respect to the defense and indemnification of Intrawest Stratton Development Corporation ("Intrawest Stratton") and DEW Construction Corporation (DEW) in a lawsuit brought by the TreeTop at Stratton Condominium Association, Inc. against Intrawest Stratton, DEW and others in the Superior Court of Windham County, Vermont (the "Underlying Action"). Plaintiffs claim that to date they have paid $1, 342, 018.66 to defend DEW and Intrawest Stratton in the Underlying Action, and $3, 000, 000.00 to settle all claims against DEW and Intrawest Stratton in the Underlying Action - amounts that Plaintiffs allege should have been paid by Acadia.

The following factual allegations are set forth in Plaintiff's Complaint (doc. #1). On March 17, 2009, the Condominium Owners' Association commenced the Underlying Action, alleging, in part, that Intrawest Stratton and DEW were liable for various construction defects and resulting property damage. The complaint in the Underlying Action further alleged that Intrawest Stratton was liable for damages arising out of and/or caused by defects in certain aspects of the construction and design of the Project that were within the scope of DEW's work, including, without limitation, roads, drainage, waterproofing, retaining walls, driveways, walkways, roofs and boilers.

In the wake of these allegations, Intrawest Stratton and DEW tendered their defense to Zurich and American Guarantee. Zurich agreed to defend and indemnify both Intrawest Stratton and DEW under a policy providing primary coverage to Intrawest Corporation ("Intrawest") for bodily injury and property damage, with limits of liability of $2 million per occurrence and a $2 million aggregate for the products completed operations hazard. American Guarantee's policy provides excess coverage to Intrawest for all enrolled projects on a nationwide basis, with limits of $25 million per occurrence with a $25 million products completed operations hazard aggregate. Plaintiffs' policies provide coverage to the owner, developer, general contractor and subcontractors which were enrolled in the Owner Controlled Insurance program.

DEW Construction also tendered its defense and indemnification to Acadia under general liability policies having a $1 million per occurrence limit and a $2 million products completed operations hazard aggregate limit. The limits under the Acadia policies apply annually. Acadia also issued successive commercial umbrella policies to DEW from January 1, 2001 to January 1, 2009. These umbrella policies have a $5 million per occurrence limit and a products completed operations hazard aggregate limit, which also apply on an annual basis. On April 13, 2009, Acadia agreed to defend DEW under the foregoing policies. Despite that agreement, however, Acadia did not participate in or pay any money towards the defense or indemnification of DEW.

American Guarantee and Intrawest Stratton tendered Intrawest Stratton's defense to Acadia as an additional insured under the Acadia Policies for the Project. Acadia did not respond to these tenders. The Zurich policy exhausted in May of 2010 because of payment of other unrelated claims against Intrawest Stratton. Following exhaustion of the Zurich policy, American Guarantee began defending DEW and Intrawest Stratton pursuant to a reservation of rights. On May 17, 2012, American Guarantee agreed to pay $3 million to settle all claims by the Condominium Owners' Association against both Intrawest Stratton and DEW in the Underlying Action. In addition to the $3 million paid by American Guarantee, Zurich and American Guarantee paid a total of $1, 073, 766.17 in defense fees and costs on behalf of DEW, and a total of $268, 252.49 in defense fees and costs on behalf of Intrawest Stratton.

Despite its acknowledged obligation to defend DEW in its April 13, 2009 letter, Acadia has not reimbursed any of DEW's defense and indemnity costs related to the Underlying Action that were paid or reimbursed by Zurich and American Guarantee. Acadia also failed to respond to Zurich's and American Guarantee's tender of defense and indemnity to Acadia regarding Acadia's obligations to Intrawest Stratton. Acadia generally denies that Plaintiffs are entitled to the equitable relief they seek, and denies liability to the Plaintiffs.

It is undisputed by the parties that Zurich and American Guarantee are New York corporations with principal places of business in Illinois, and Acadia is a New Hampshire corporation with its principal place of business in Maine. DEW is a Vermont corporation with its principal place of business in Woodstock, Vermont. The Underlying Action was a lawsuit for construction defects related to a project in Stratton, Vermont.

In moving to transfer this action to the District of Vermont, Defendant argues that the lawsuit Plaintiffs allege

Acadia should have paid to defend and settle, the underlying project at issue, and the named defendants alleged to be common insureds, are all in Vermont, not in Colorado.... Neither Plaintiffs nor Acadia are either domiciled or have their principal place of business in Colorado. None of the producers that issued the insurance policies at issue in this case are in Colorado. The relevant witnesses are likely to be overwhelmingly in Vermont or elsewhere on the East Coast, not in Colorado. Nothing, at least nothing alleged in the Complaint as a relevant fact, occurred in the District of Colorado.

See Defendant's Motion to Dismiss, at 5. Defendant insists that determination of coverage under its policies will require more than "a sterile reading of the policies and applicable contracts, " but also will turn on whether claims and defenses against the insured fall under any applicable exclusions. Those issues will be "inherently fact specific, requiring investigation and discovery of such questions as whose property was allegedly damaged, when did the damage occur, was that damage during ongoing' or during completed' operations of the insured, was the property damage' to the insured's own work or to other property, and/or was any of the insured's work done by subcontractors?" See Defendant's Reply, at 5.

Plaintiffs argue, in opposition, that their insured, Intrawest Corporation, is a Colorado corporation with its principal place of business in Denver, Colorado. Moreover, Plaintiffs contend that Acadia has not sustained its burden as the moving party, because it "not only fails to list specific witnesses in Vermont or the materiality of their potential testimony, " but also because Defendant "fails to consider the substantive nature of this litigation - an insurer vs. insurer contribution and indemnity case." In that respect, Plaintiffs insists that "the only relevant facts to determine the outcome of this matter have already been developed in the Underlying Action, and the only relevant ...

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