United States District Court, D. Connecticut
RULING DENYING MOTION FOR SUMMARY JUDGMENT
Jeffrey Alker Meyer United States District Judge.
case concerns an insurance dispute stemming from the
notorious explosion that occurred in February 2010 at the
Kleen Energy power plant in Middletown, Connecticut.
See Doc. #200 (describing background of this
litigation). Plaintiff North River Insurance Company (North
River) has filed this action against defendant Keystone
Construction and Maintenance Services, Inc. (Keystone). North
River primarily contends that Keystone breached the terms of
its insurance policy such that North River no longer has any
obligations to Keystone under the policy. The intervenors
(Intervenors) in this actions are several dozen individuals
who suffered losses from the explosion, and by filing of a
counterclaim complaint against North River they seek the
benefit of Keystone's insurance policy with North River.
North River in turn has moved for summary judgment on all
claims and counterclaims. For the reasons set forth below, I
conclude that many genuine issues of fact remain for trial.
Accordingly, I will deny North River's motion for summary
judgment on all claims.
was a subcontractor hired to install, test, and flush the
above-ground piping system for the power plant. On February
7, 2010, Keystone attempted to clean pipes at the
construction site by performing a “natural gas
blow” procedure, which allegedly provoked an explosion
that killed and injured workers and caused extensive property
damage. The explosion prompted many legal actions against
Keystone, and Keystone held multiple insurance policies,
including a second-layer excess policy with North River.
North River filed this lawsuit for declaratory relief that
Keystone violated the cooperation terms of the insurance
policy, thus relieving North River of any further obligations
to Keystone for claims arising from the explosion.
River's third amended complaint alleges three counts
against Keystone. Doc. #203. Count One seeks a declaratory
judgment that Keystone materially breached the policy's
cooperation clause. Count Two seeks a declaratory judgment
that Keystone violated the policy's consent-to-settle
clause by admitting liability and entering settlements
without North River's consent. Count Four alleges a
breach of the covenant of good faith and fair
amended counterclaim complaint alleges five counts against
North River. Doc. #225. Counterclaim One alleges that North
River breached its insurance contract with Keystone.
Counterclaim Two alleges that North River acted in bad faith
with respect to its duties under the insurance policy.
Counterclaim Three alleges that North River was negligent in
its dealings with Keystone. Count Four alleges that North
River engaged in unfair practices in violation of
Massachusetts law. Counterclaim Five alleges that North River
engaged in unfair practices in violation of the Connecticut
Unfair Trade Practices Act (CUTPA) and the Connecticut Unfair
Insurance Practices Act (CUIPA).
principles governing the Court's review of a motion for
summary judgment are well established. Summary judgment may
be granted only if “the movant shows that there is no
genuine dispute as to any material fact and the movant is
entitled to a judgment as a matter of law.”
Fed.R.Civ.P. 56(a). I must view the facts in the light most
favorable to the party who opposes the motion for summary
judgment and then decide if those facts would be enough-if
eventually proved at trial-to allow a reasonable jury to
decide the case in favor of the opposing party. My role at
summary judgment is not to judge the credibility of witnesses
or to resolve close contested issues of fact but solely to
decide if there are enough facts that remain in dispute to
warrant a trial. See generally Tolan v. Cotton, 134
S.Ct. 1861, 1866 (2014) (per curiam); Pollard v.
New York Methodist Hosp., 861 F.3d 374, 378 (2d Cir.
One - Breach of Cooperation Clause
River's insurance contract with Keystone includes
condition G.3 that states: “YOU and any other involved
insured must . . . Cooperate with U.S. in the investigation,
settlement or defense of the claim or suit.” Doc.
#394-1 at 45-46. To void an insurance policy for a violation
of a cooperation clause, an insurer must demonstrate that the
insured's non-cooperation was material or substantial; a
lack of prejudice to the insurance company indicates that a
failure to cooperate was neither material nor substantial.
See Double G.G. Leasing, LLC v. Underwriters at
Lloyd's, London, 116 Conn.App. 417, 433 (2009).
River alleges that Keystone violated the cooperation clause
by failing to provide adequate documentation and information
relating to claims made against Keystone by various
claimants, by colluding with the power plant's general
contractor O&G Industries, Co. (O&G) to exhaust
Keystone's underlying insurance coverage, by failing to
provide information regarding settlements made by
Keystone's underlying insurers, and by entering into
settlements with O&G in which Keystone stipulated to its
liability. Doc. #392 at 39-41.
assume without deciding for the purposes of this ruling that
Keystone failed to cooperate with North River. Nonetheless,
North River has failed to establish that there are no genuine
issues of material fact as to whether any of the alleged
breaches were material or substantial. There is substantial
evidence in the record that North River had much information
at its disposal indicating Keystone's liability for the
explosion. Such information included documentation provided
by Keystone (Docs. #401-16, 402-1, 402-2, 402-3, 402-5,
402-8), and information relating to citations issued by OSHA
against Keystone (Docs. #401-6 at 13-14, 402-7).
Additionally, it is undisputed that North River had a
significant amount of time in which to investigate
Keystone's role in the explosion if it had chosen to do
so. A material issue of fact remains whether Keystone's
alleged failure to provide adequate information about claims
and settlements inhibited North River's ability to
evaluate or potentially to defend claims against Keystone.
even assuming Keystone engaged in collusive conduct with O&G,
it is undisputed that Keystone's underlying insurers had
discretion to settle claims against Keystone without
Keystone's consent. Doc. #394 at 146 (primary policy);
Doc. #394-1 at 17 (first layer excess insurer follow-form
policy); Doc. #401-1 at 6-7 (North River adjuster
acknowledging underlying carriers' discretion to settle).
Additionally, there is substantial evidence in the record
that the underlying insurers engaged in independent
investigation and evaluation of claims against Keystone and
concluded that the claims were meritorious and covered under
their policies. Doc. #401-3 (primary insurer testimony); Doc.
#401-8 at 4-8 (first layer excess insurer testimony). Because
there is a genuine issue of fact about whether the underlying
insurers made independent decisions that resulted in the
exhaustion of their policies, North River has not shown as a
matter of law that Keystone's alleged collusive conduct
caused it any harm.
addition, North River has not shown that Keystone's
stipulation to liability prejudiced North River, because it
has not demonstrated that absent the stipulation Keystone
would not have been found liable for similar damages. Indeed,
because there is ample evidence in the record indicating
Keystone's responsibility, it is possible that Keystone
would have been found liable for the same or higher damages
than that stipulated to in the settlement. Because North
River has failed to show an absence of a genuine issue of