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Thompson v. National Union Fire Insurance Co. of Pittsburgh, PA

United States District Court, D. Connecticut

April 6, 2017

JAMES THOMPSON, et al., Plaintiffs,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant.

          MEMORANDUM OF DECISION ON CROSS MOTIONS FOR SUMMARY JUDGMENT

          WARREN W. EGINTON SENIOR UNITED STATES DISTRICT JUDGE

         This is an insurance policy coverage dispute stemming from the February 7, 2010, Kleen Energy Systems power plant explosion in Middletown, Connecticut.

         Plaintiffs are individuals and estates harmed by the blast. After obtaining judgment against subcontractor Bluewater Energy Systems, Inc., in the amount of $13.5 million, plaintiffs instituted this action to enforce Bluewater's claim of insurance coverage against defendant.

         Defendant contends that (1) the commercial umbrella insurance policy it issued to Bluewater excluded coverage for “any liability arising out of any project insured under a ‘wrap-up' or any similar rating plan;” and (2) the power plant project was insured under such a “wrap-up” plan. Plaintiffs respond that the term “wrap-up, ” not defined by the policy, is ambiguous and should be construed in favor of the insured.

         Both sides have moved for summary judgment. For the following reasons, summary judgment will be granted in favor of plaintiffs.

         DISCUSSION

         A motion for summary judgment will be granted where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Only when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert. denied, 502 U.S. 849 (1991).

         The burden is on the moving party to demonstrate the absence of any material factual issue genuinely in dispute. American International Group, Inc. v. London American International Corp., 664 F.2d 348, 351 (2d Cir. 1981). In determining whether a genuine factual issue exists, the court must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         If a nonmoving party has failed to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof, then summary judgment is appropriate. Celotex Corp., 477 U.S. at 323. If the nonmoving party submits evidence which is "merely colorable, " legally sufficient opposition to the motion for summary judgment is not met. Anderson, 477 U.S. at 249.

         The Wrap-Up Exclusion

         The parties agree that Georgia law applies to interpretation of the policy.

         Defendant argues that plaintiffs are not entitled to indemnity under the commercial umbrella insurance policy issued to Bluewater, as Endorsement 7 to its policy clearly and unambiguously excludes coverage for plaintiffs' claims. Endorsement 7 provides, in relevant part:

         “This insurance does not apply to . . . any liability arising out of any project insured under a ‘wrap-up' or similar rating plan[.]”

         Defendant asserts that the Kleen Energy Systems Project was insured under a contractor controlled insurance program, which it contends is a type of “wrap-up” program.[1] Plaintiffs respond that there are multiple reasonable interpretations of Endorsement 7 that would allow for coverage in this case. Moreover, under the principle of contra proferentem, where the exclusion is drafted by the insurer, the operative language must be read strictly against the insurer and in favor of providing coverage. See Lunceford v. Peachtree Cas. Ins. Co., 495 S.E.2d 88, 90 (Ga.Ct.App. 1997) (holding that where a rational ...


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