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Cincinnati Ins. Co. v. All Plumbing, Inc.

United States District Court, D. Columbia.

August 18, 2014

THE CINCINNATI INSURANCE COMPANY, Plaintiff,
v.
ALL PLUMBING, INC. SERVICE, PARTS INSTALLATION, et al., Defendants

Page 70

For Cincinnati Insurance Company, Plaintiff, Counter Defendant: Thomas Simpson Garrett, HARMAN, CLAYTOR, CORRIGAN & WELLMAN, Richmond , VA.

Kabir Shafik, Defendant, Pro se, Arlington , VA.

For Fds Restaurant, Inc., Defendant, Counter Claimant: Stephen Howard Ring, LEAD ATTORNEY, LAW OFFICE OF STEPHEN H. RING, P.C., Rockville , MD.

Page 71

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, UNITED STATES DISTRICT JUDGE.

Presently before the Court is Plaintiff's [38] Motion for Reconsideration and Clarification. Upon consideration of the pleadings,[1] the relevant legal authorities, and the record as a whole, the Court GRANTS IN PART and DENIES IN PART Plaintiff's motion. Specifically, the Court DENIES Plaintiff's request for reconsideration of the conclusions in its previous Memorandum Opinion and Order. However, the Court clarifies two issues left

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unaddressed by its previous Memorandum Opinion and Order. First, Plaintiff's failure to properly reserve its rights in the FDS action does not prevent it from asserting the $1,000 deductible with regard to Coverage A under the Primary Coverage Part of the Policy. Second, even though it failed to properly reserve its rights under the Primary Coverage Part of the Policy, Plaintiff is not precluded from asserting coverage defenses under the Excess Coverage Part of the Policy.

I. BACKGROUND

The Court draws the following facts from the Joint Stipulation of Facts filed by the parties in conjunction with their cross-motions for summary judgment. See Joint Stipulation of Facts (" Stip." ), ECF No. [27]. Cincinnati Insurance issued a commercial insurance policy to All Plumbing effective from March 3, 2006, to March 3, 2007, providing general liability coverage up to $1 million for each occurrence and $2 million in aggregate. Stip. ¶ 3. In September 2010, Love the Beer, Inc., (" Love" ) filed a putative class action against All Plumbing and Shafik in the Superior Court of the District of Columbia (" Superior Court" ) alleging that on or about September 22, 2006, All Plumbing and Shafik sent unsolicited faxes to Love the Beer and others in violation of the Telephone Consumer Protection Act (" TCPA" ), 47 U.S.C. § 227. Id. at ¶ 6; see Stip., Ex. B ( Love the Beer Compl.).

The Love the Beer action was served on All Plumbing and Shafik on November 5, 2010. Stip. ¶ 7. Cincinnati Insurance alleges that All Plumbing and Shafik never notified Cincinnati Insurance of the Love the Beer action, but that counsel for Love contacted Cincinnati Insurance on November 15, 2011, and asked Cincinnati Insurance to defend the action. Stip. ¶ 12. By letter dated November 18, 2011, Cincinnati Insurance notified counsel for Love that coverage for the Love the Beer action may be barred under the Policy, asserting that All Plumbing and Shafik failed to comply with certain of the Duties in the Event of a Claim or Suit conditions of the Policy. Stip. ¶ 14. On December 2, 2011, Cincinnati Insurance informed All Plumbing and Shafik that it was assuming the defense of the Love the Beer action pursuant to a full and complete reservation of rights. Stip. ¶ 15; see Stip., Ex. J (Reservation of Rights letter).

On December 2, 2011, FDS Restaurant filed a second putative class action against All Plumbing and Shafik in Superior Court based on the same allegation of unsolicited faxes as at issue in the Love the Beer action. Stip. ¶ 16; see Stip., Ex. K ( FDS Restaurant Compl.). A few weeks later, Cincinnati Insurance received a copy of the FDS complaint from FDS' counsel -- the same counsel as in the Love the Beer action. Stip. ¶ 17. Cincinnati Insurance subsequently chose and retained counsel to defend All Plumbing and Shafik in the FDS action. Stip. ¶ 23.

On December 22, 2011, Love, in the Love the Beer action, moved for leave to file an amended complaint to eliminate the class action allegations from the Love the Beer action, limiting the claims to those of the named plaintiff. Stip. ¶ 18. The Superior Court granted Love's motion. Stip. ¶ 19. The Superior Court docket indicates the action was never certified as a class action, and was voluntarily dismissed by the plaintiff in advance of trial. Love the Beer, Inc. v. All Plumbing Inc. Serv., Parts, Installation, No. 2010 CA 006880 (D.C. S.Ct. dismissed June 11, 2012).

By letter dated February 16, 2012, Cincinnati Insurance informed counsel for FDS that coverage may be barred under the Policy due to the " terms, provisions, conditions and exclusions of the Policy,

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including the insured's failure to comply with the conditions requiring the prompt reporting of offenses, claims and suits." Stip. ¶ 21; see Stip., Ex. P. Cincinnati Insurance did not send a separate letter or oral communication to All Plumbing and Shafik that the defense of the FDS action that was being provided by Cincinnati Insurance was pursuant to a reservation of rights. Stip. ¶ 22.

All Plumbing and Shafik removed the action to this court on March 9, 2012. FDS Restaurant, Inc. v. All Plumbing, Inc., Serv., Parts, Installation, No. 12-394 (D.D.C. removed Mar. 9, 2012). Before this court, defense counsel for All Plumbing and Shafik filed an answer to FDS' complaint, see Defendant's Answer, FDS Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No. 12-394 (D.D.C. March 19, 2012); an opposition to FDS' Motion for Class Certification, see Defendant's Opposition to Plaintiff's Amended Motion for Class Certification, FDS Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No. 12-394 (D.D.C. March 19, 2012); an opposition to FDS' Motion to Remand the case to Superior Court, see Defendant's Opposition to Plaintiff's Motion to Remand to State Court, FDS Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No. 12-394 (D.D.C. April 16, 2012); and agreed to stay the case pending resolution of FDS' Motion to Remand, see FDS Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No. 12-394, Minute Order (D.D.C. April 4, 2012). Judge Rosemary M. Collyer remanded the case to Superior Court on September 14, 2012. FDS Restaurant, Inc. v. All Plumbing, Inc., Service, Parts, Installation, No. 12-394, Op. & Order (D.D.C. Sept. 14, 2012). The case was reopened by Superior Court in December 2012. FDS' Motion for Class Certification is now pending in Superior Court. Amended Motion for Class Certification, FDS Restaurant v. All Plumbing Inc. Serv., Parts, Installation, No. 2011 CA 009575 (D.C. S.Ct. Mar. 1, 2012). Cincinnati Insurance filed this action on May 21, 2012, seeking a declaratory judgment that it has no duty to defend All Plumbing and Shafik in the FDS Superior Court action. On May 9, 2013, the FDS action was stayed in Superior Court pending resolution of this declaratory judgment action. FDS Restaurant v. All Plumbing Inc. Serv., Parts, Installation, No. 2011 CA 009575, (D.C. S.Ct. May 9, 2013).

The parties subsequently filed Cross-Motions for Summary Judgment in this case. See Pl.'s Mot. for Summ. J., ECF No. [30]; Def.'s Mot. for Summ. J., ECF No. [31], As part of its motion for summary judgment, FDS contended that Cincinnati Insurance had waived any defense that coverage is barred under the Policy by assuming control of All Plumbing and Shafik's defense without a proper reservation of rights. Def.'s Mot. for Summ. J., ECF No. [31] at 32. In ruling on these cross-motions, the Court recognized that the question of whether Cincinnati Insurance has waived its right to disclaim coverage of the FDS action was a threshold question in this litigation. See Mem. Op., ECF No. [37] at 4. The Court concluded that Cincinnati Insurance did not properly reserve its rights to disclaim coverage in the FDS action, and therefore the Court did not address the parties' other arguments. Id.

Cincinnati Insurance subsequently filed the present [38] Motion for Reconsideration and Clarification. Plaintiff seeks reconsideration of this Court's prior conclusions on two grounds. First, Plaintiff argues that the Lov ...


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