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Philadelphia Indemnity Insurance Co. v. Lend Lease U.S. Construction, Inc.

United States District Court, District of Columbia

March 18, 2016

PHILADELPHIA INDEMNITY INSURANCE CO., A/S/O 1441 RHODE ISLAND AVE CONDOMINIUM ASSOCIATION, Plaintiffs,
v.
LEND LEASE U.S. CONSTRUCTION, INC. Defendant.

MEMORANDUM OPINION

Emmet G. Sullivan, United States District Judge

In January 2014, a water sprinkler line burst inside the condominium property located at 1441 Rhode Island Ave. in Washington, D.C. Compl., Docket 1-2 at ¶ 7. The condominium Association’s insurer, Philadelphia Indemnity Insurance Company (“Plaintiff”), compensated the Association for all losses, totaling $107, 552.74. Id. ¶ 10.[1] Plaintiff filed this lawsuit against Defendant Lend Lease (U.S.) Construction, Inc. (“Defendant”) for breach of contract and negligence due to its alleged faulty construction of the condominium between 2002 and 2004. Id. ¶¶ 13-20. Plaintiff now concedes that its breach of contract claim fails, but argues discovery should proceed on its negligence claim.[2] Pl.’s Mem. Opp., Docket No. 11 at 6. Defendant moves for Judgement on the Pleadings arguing that the Association is a successor of the original owner of the property, Fairfield D.C. Limited Partnership (“Fairfield”), who signed a 2002 construction contract (“Contract”) with the Defendant. Def.’s Mem. Supp. Mot. J. Pleadings, Docket No. 10. Defendant argues a finding that the Association is a successor prohibits Plaintiff’s negligence claim pursuant to the Contract’s waiver-of-subrogation clause. Id. Upon consideration of the motion, the response and reply thereto, the applicable law, the entire record, and for the reasons stated below, Defendant’s motion is DENIED.

I. BACKGROUND

A. The Contract

On June 19, 2002, Defendant signed a Contract with Fairfield to construct a nine-story apartment building and refurbish an adjacent townhouse located at 1441 Rhode Island Avenue NW. Pl.’s Mem. Opp. at 1. Defendant completed its construction in late 2004, at which time the units were ready for occupancy. Compl. ¶ 5. At some point in 2004, Fairfield sold the Building to 1441 Rhode Island Avenue, LLC (“1441 LLC”). Def.’s Statement of Points at 2. The property was later conveyed to the Association. Id.[3]

The 2002 Contract signed by Fairfield and Defendant includes the following provisions:

. . . [I]f after final payment property insurance is to be provided on the completed Project through a policy or policies other than those insuring the Project during the construction period, the Owner shall waive all rights in accordance with the terms of Subparagraph 11.4.7 for damages caused by fire or other cause of loss covered by this separate property insurance. All separate policies shall provide this waiver of subrogation by endorsement or otherwise.[4]

Contract, Docket No. 10-1, Sec. 11.4.5. (emphasis added). The Waiver of Subrogation clause states:

[t]he Owner and Contractor waive all rights against (1) each other . . . for damages caused by fire or other causes of loss to the extent covered by property insurance . . . A waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise.

Id. at Sec. 11.4.7. (emphasis added). The Contract also includes a “Successors and Assigns” provision, which states:

“[t]he Owner and Contractor respectively bind themselves, their partners, successors, assigns and legal representatives to the other party hereto and to partners, successors, assigns and legal representatives of such other party in respect to covenants, agreements, and obligations contained in the Contract Documents.”[5]

Id. at Sec. 13.2.1. (emphasis added).

II. STANDARD OF REVIEW

A Rule 12(c) motion is “functionally equivalent” to a Rule 12(b)(6) motion and governed by the same standard. Rollins v. Wackenhut Servs., Inc., 703 F.3d 122, 130 (D.C. Cir. 2012). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal sufficiency of a complaint.” Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation marks omitted; ...


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