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Vigilant Insurance Company v. American Mechanical Services of Maryland

October 7, 2011


The opinion of the court was delivered by: James E. Boasberg United States District Judge


Plaintiff Vigilant Insurance Company insured the property of the law firm Venable, LLP in the District of Columbia. After Defendant American Mechanical Services of Maryland, L.L.C. caused a fire that damaged that property, Vigilant paid Venable under the policy. Now subrogated to Venable's rights, Vigilant brings the current action seeking to recoup from Defendant its payments to Venable. As Vigilant has ignored a mandatory arbitration clause in Venable's contract with AMS, it cannot recover.


The Amended Complaint alleges that Plaintiff insured Venable's property at 575 7th St., N.W., in the District of Columbia. Id. at 2. On Dec. 5, 2008, Defendant's employees were working to repair the HVAC air-handling system at the firm. Id. The welding torch they were using "ignited nearby combustible materials," causing a fire that severely damaged Venable's property. Id. Pursuant to the insurance policy, Plaintiff paid Venable over $75,000 to repair the damage. Id. Vigilant then filed the current action to recover from AMS what it had paid out to Venable. Defendant has now moved to dismiss under Fed. R. Civ. P. 12(b)(6) or, in the alternative, for summary judgment under Fed. R. Civ. P. 56.*fn1

II.Legal Standard

Rule 12(b)(6) provides for the dismissal of an action where a complaint fails "to state a claim upon which relief can be granted." When the sufficiency of a complaint is challenged under Rule 12(b)(6), the factual allegations presented in it must be presumed true and should be liberally construed in plaintiff's favor. Leatherman v. Tarrant Cty. Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993). The notice pleading rules are "not meant to impose a great burden on a plaintiff," Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005), and he or she must thus be given every favorable inference that may be drawn from the allegations of fact. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 584 (2007). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion, Twombly, 550 U.S. at 555, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation omitted). Plaintiff must put forth "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Though a plaintiff may survive a 12(b)(6) motion even if "recovery is very remote and unlikely," Twombly, 550 U.S. at 555 (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)), the facts alleged in the complaint "must be enough to raise a right to relief above the speculative level." Id. at 555.

Summary judgment may be granted 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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by citing to particular parts of materials in the record." Fed. R. Civ. P. 56(c)(1)(A). "A fact is 'material' if a dispute over it might affect the outcome of a suit under the governing law; factual disputes that are 'irrelevant or unnecessary' do not affect the summary judgment determination." Holcomb, 433 F.3d at 895 (quoting Liberty Lobby, Inc., 477 U.S. at 248). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Liberty Lobby, Inc., 477 U.S. at 248; Holcomb, 433 F.3d at 895. The party seeking summary judgment "bears the heavy burden of establishing that the merits of his case are so clear that expedited action is justified." Taxpayers Watchdog, Inc., v. Stanley, 819 F.2d 294, 297 (D.C. Cir. 1987). "Until a movant has met its burden, the opponent of a summary judgment motion is under no obligation to present any evidence." Gray v. Greyhound Lines, East, 545 F.2d 169, 174 (D.C. Cir. 1976). When a motion for summary judgment is under consideration, "the evidence of the non-movant[s] is to be believed, and all justifiable inferences are to be drawn in [their] favor." Liberty Lobby, Inc., 477 U.S. at 255; see also Mastro v. Potomac Electric Power Co., 447 F.3d 843, 849-50 (D.C. Cir. 2006); Aka v. Washington Hospital Center, 156 F.3d 1284, 1288 (D.C. Cir. 1998) (en banc); Washington Post Co. v. U.S. Dep't of Health and Human Services, 865 F.2d 320, 325 (D.C. Cir. 1989). On a motion for summary judgment, the Court must "eschew making credibility determinations or weighing the evidence." Czekalski v. Peters, 475 F.3d 360, 363 (D.C. Cir. 2007).

The nonmoving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits, declarations, or other competent evidence, setting forth specific facts showing that there is a genuine issue for trial. FED. R. CIV. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). They are required to provide evidence that would permit a reasonable jury to find in their favor. Laningham v. United States Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987). If the nonmovants' evidence is "merely colorable" or "not significantly probative," summary judgment may be granted. Liberty Lobby, Inc., 477 U.S. at 249-50; see Scott, 550 U.S. at 380 ("[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is 'no genuine issue for trial.'") (quoting Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).


In moving to dismiss or for summary judgment, Defendant argues that Vigilant's claim is "barred . . . because neither Venable nor Vigilant initiated a demand for arbitration within the one (1) year contract limitation period from the date when the dispute arose." Mot. at 2. Vigilant counters that it has abided by the contract and that, in any event, the doctrines of estoppel and waiver defeat Defendant's argument. See Opp. at 5.

Before addressing the merits of the parties' positions, the Court must deal with two preliminary matters. First, neither side contests the applicability of District of Columbia law to this diversity action. This makes sense, given that the injury, the conduct causing the injury, and the relationship between the parties are all centered in the District. See Jaffe v. Pallotta Teamworks, 374 F.3d 1223, 1227 (D.C. Cir. 2004) (setting out choice-of-law test). Second, Plaintiff never argues that summary judgment is procedurally premature at this juncture of the case. For instance, Vigilant does not attach a Rule 56(d) affidavit showing it cannot yet present facts, and it does not otherwise contend that additional discovery is necessary before the Court can appropriately rule on Defendant's Motion. Plaintiff's argument focuses on the merits of the Motion, and that is where the Court will turn.

Having paid Venable under the policy, Vigilant now stands in Venable's shoes in seeking to recover that payment from AMS; it may recover only what Venable could have recovered. See Water Quality Ins. Synd. v. United States, 522 F. Supp. 2d 220, 231 n.8 (D.D.C. 2007) ("an insurer can take nothing by subrogation but the rights of the insured, and is subrogated to only such rights as the insured possesses") (quoting Quarles Petroleum v. United States, 551 F.2d 1201, 1207 (Ct. Cl. 1977)). That recovery is determined by the contract between Venable and AMS. As Vigilant itself points out, "Defendant's work at the subject premises was done pursuant to a 'Project Agreement' between it and [Venable]." Opp. at 1. Both Vigilant and AMS agree that that Agreement contained an Alternative Dispute Resolution provision, which stated:

Alternative Dispute Resolution - If a dispute arises out of or relates to this Agreement, the parties agree that senior management shall attempt in good faith to settle the dispute to the satisfaction of all parties. If the parties are unable to settle the dispute within thirty (30) days from the time it arises, the parties agree to submit the dispute to arbitration. Upon expiration of the thirty-day period, the aggrieved party shall serve a written demand for arbitration upon the opposing party and the American Arbitration Association, and the parties shall select a mutually acceptable arbitrator with knowledge of the commercial construction and/or service industry. Arbitration shall occur in the metropolitan area in which the work was performed and shall be in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as such rules shall be in effect at the time of arbitration. The decision of the arbitrator shall be final, conclusive and binding upon all parties and judgment may be entered upon the award in the highest state or federal court having jurisdiction over the dispute. The arbitrator shall award the prevailing party all costs and expenses of such arbitration, including without limitation, reasonable attorneys' fees. Failure to serve a demand for arbitration within one (1) year from the date the dispute arises shall be deemed to be a waiver of the aggrieved party's claim.

Mot., Exh. A (Project Agreement) at 2 (emphasis added); Opp. at 2 n.1. Defendant argues that Vigilant's failure to comply with ...

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