United States District Court, District of Columbia
RANDOLPH D. MOSS United States District Judge.
case arises from a plumbing accident at the Delaware vacation
home of Francesca Dahlgren and her husband Vasilli Katopothis
(“Plaintiffs”), who are residents of the District
of Columbia. Dkt. 5-1 at 3. While Plaintiffs were in the
District, a pipe failure flooded their Delaware residence,
leading to an infestation of mold and, Plaintiffs say,
necessitating the demolition of the home. They allege losses
of more than $800, 000. Dkt. 35 at 6, 12.
now seek to recover from two defendants. First, they have
sued their home insurance provider, Windsor-Mount Joy Mutual
Insurance Co. (“Windsor”), a Pennsylvania
corporation with its principal place of business in
Pennsylvania. Dkt. 5-1 at 3. Plaintiffs claim that Windsor
breached their insurance contract by refusing to cover
Plaintiffs' loss. Dkt. 35 at 2- 6 (Am. Compl.
¶¶ 5-33). Second, Plaintiffs have sued the company
they hired to mitigate the flood damage, R.W. Home Services,
Inc. doing business as Gale Force Cleaning and Restoration
(“Gale Force”), which is a Delaware corporation
with its principal place of business in Delaware. Dkt. 42-5
at 2 (McCreary Decl. ¶ 2). Alleging that Gale Force
failed adequately to remediate the loss, Plaintiffs assert
claims against it for breach of contract, negligence,
negligent misrepresentation, and violations of the Delaware
Consumer Protection Act. Dkt. 35 at 7-12 (Am. Compl.
¶¶ 39-72). In addition, Windsor has filed a third
party complaint against Gale Force. Dkt. 28. That complaint
alleges that, to the extent Windsor is liable to Plaintiffs,
it is subrogated to Plaintiffs' claims against Gale Force
for breach of contract and negligence claims and that it is
also entitled to recover as a matter of common law indemnity
and contribution. Id.
sets of motions are now before the Court. First, Plaintiffs
and Windsor have filed cross-motions for summary judgment.
Plaintiffs have moved for partial summary judgment against
Windsor as to liability-that is, they seek to establish
coverage. Dkt. 36. Windsor, in turn, has cross-moved for
summary judgment, arguing that the policy's
“Exclusions for Unoccupied Residences” exclude
Plaintiffs' loss from coverage. Dkt. 46. Second, Gale
Force has moved to dismiss all claims against it for lack of
personal jurisdiction, and has moved to dismiss Windsor's
subrogation counts for failure to state a claim. Dkt. 42.
Plaintiffs and Windsor oppose the motion to dismiss for lack
of personal jurisdiction and, in the alternative, request
leave to conduct additional jurisdictional discovery. Dkts.
48 & 49. Windsor further requests that, if personal
jurisdiction over Gale Force is lacking, that the Court
“vouch-in” Gale Force or transfer the case to
Delaware. Dkt. 48-1 at 7-14. Finally, Windsor opposes the
motion to dismiss the subrogation counts. Id. at
reasons discussed below, the Court concludes that the
insurance policy unambiguously excludes coverage of
Plaintiffs' claims. As a result, Plaintiffs' motion
for partial summary judgment will be denied and Windsor's
motion for summary judgment will be granted. The Court
further concludes that it lacks personal jurisdiction over
Gale Force with respect to Plaintiffs' claims against it,
and that further jurisdictional discovery is unwarranted. The
Court will therefore transfer the case to the U.S. District
Court for the District of Delaware pursuant to 28 U.S.C.
following facts are undisputed, except where specifically
spring of 2000, Plaintiffs purchased a second home in
Rehoboth Beach, Delaware. Dkt. 40-1 (Dahlgren Dep.
23:9-23:15). They have since used it periodically throughout
each year, spending close to forty percent of their time
there. Id. at 15:11-15:17. They spend the remainder
of their time in Washington, D.C., where they live and work.
Id. at 15:11-15:14, 18:16-18:18; accord
Dkt. 40-15 (Katopothis Dep. 7:2-7:13). While Plaintiffs were
in the District for a ten-day period in February 2013, a
plumbing accident caused significant damage to their Delaware
home. Dkt. 40-1 (Dahlgren Dep. 102:1-103:3).
The Insurance Policy
contracted with Windsor to insure the Delaware property on an
annual basis starting on June 15, 2000. Dkt. 40 at 13. The
policy thereafter renewed every year, with the operative
policy covering the period between June 15, 2012, and June
15, 2013. Dkt. 40 at 13- 16. It consists of two relevant
forms: a twenty-seven-page “Special Form, ” Dkt.
40-21 at 3-27, and a one-page endorsement, labeled
“ML-508D (04-06), ” id. at 30. Windsor
added form ML-508D to the policy in 2004 and then modified it
in 2006. Dkt. 40 at 14-15.
Special Form defines the policy's rules of coverage,
which differ for real and personal property. For real
property, the policy has what is commonly known as an
“all risk” structure. This means that any direct
physical damage to the insured building is covered, unless
the policy specifically identifies the risk of such loss as
an “exclusion.” Dkt. 40-21 at 11. For personal
property, the policy has what is known as a “named
peril” structure. This means that personal property is
insured only against risks expressly listed in the policy
and, even then, only against risks that are not otherwise
excluded. Dkt. 40-21 at 13-14. The “accidental
discharge or overflow” of water from a plumbing system
is a risk to personal property expressly covered by the
policy, subject to applicable exclusions. Dkt. 40-21 at 14.
Special Form also contains three types of exclusions. They
are: (1) exclusions applicable only to real property,
see Dkt. 40-21 at 12-13; (2) exclusions applicable
to both real and personal property, and which are subject to
an additional “anti-concurrent causation” clause,
see Id. at 15-16; and (3) exclusions applicable to
both real and personal property, and which contain an
explicit exception allowing coverage for “ensuing
loss[es], ” see Id. at 16-17. Neither party
contends that Plaintiffs' insurance claim falls within
any of these Special Form exclusions.
parties dispute only the proper interpretation of the
freestanding ML-580D endorsement, titled “Additional
Exclusions for Unoccupied Residences.” Id. at
30. It provides:
ADDITIONAL EXCLUSIONS FOR UNOCCUPIED RESIDENCES
In addition to exclusions found elsewhere in your policy, if
the insured residence is vacant, unoccupied (meaning an
absence of 72 hours), or under construction and unoccupied,
the Insured must:
a. Maintain Heat in the residence and shut off the water
supply where it enters the residence. If the residence is
heated by a hot water system, the water supply to the heating
system must be maintained and the water supply to the rest of
the residence must be shut off.
b. Shut off the water supply where it enters the residence
and completely empty liquids from any plumbing, heating, air
condition system, water heater, or domestic appliance.
If this is not done, we do not pay for loss caused by
freezing of or discharge, leakage, or overflow from any
plumbing, heating, or air conditioning system or any
appliance or other equipment attached to it.
Dkt. 40-21 at 30. The Delaware Department of Insurance
approved this endorsement, see Dkt. 40-22, as
required by Delaware law, see Del. Code tit. 18,
same page on which Windsor printed the endorsement also
includes an “important policyholder notice, ”
labeled “WB-27D (07-11).” See Dkt. 40-21
at 30. Unlike the ML-580D endorsement, the notice was not
submitted for regulatory approval, and, as Windsor itself
agrees, it is not part of the contract. Dkt. 40-3 (Underwood
Dep. 87:8-88:13). According to Windsor's corporate
designee, Windsor included the notice “to help the
insured to realize the provisions of the [ML-508D]
exclusion.” Id. The notice that accompanied
the operative policy stated:
IMPORTANT POLICYHOLDER NOTICE
FAILURE TO FOLLOW THE REQUIREMENTS OF THE POLICY COULD COST
YOU THOUSANDS OF DOLLARS
Be aware that damage from water which escapes from plumbing
and heating systems and appliances is a frequent cause of
loss and can cause large claims and great damage particularly
when the leak goes undetected and the water keeps running and
running for long periods of time. In the past we have paid
water damage claims in excess of $100, 000! There are some
simple, common sense steps you can take to minimize these
claims and thus save yourself the cost of your deductible and
the inconvenience of major damage to your property. At the
same time, in the long run, minimizing claims can keep
insurance rates down and protect your insurability.
Please read form ML-508D (04-06) which is a part of your
policy and states that if you fail to take one of two steps
when the insured property is vacant or unoccupied (meaning an
absence in excess of 72 hours) or under construction and
unoccupied, you will have no coverage for the kinds of water
damage described in the form. We interpret
“occupancy” to mean that someone stays there
overnight. Other visits to the premises do not constitute
If your home does not currently have a means to shut off
the water supply where it enters the home or to shut off the
water to the rest of the home if you have a heating system
which uses water, it is your responsibility to have a plumber
accommodate this need.
Therefore, every time the property is going to be unoccupied
for more than three days be sure to take the required
If you have any questions, please contact your agent.
Dkt. 40-21 at 30 (emphasis added). Windsor included similar
notices in the policies covering the years 2006 to 2012, but
those notices lacked the italicized language. Dkt. 40 at
14-15; see Dkts. 40-4, 40-5 & 40-6 (previous
copies of notice and form ML-580D).
did not read the ML-580D exclusion or the WB-27D notice until
after they submitted the insurance claim that is the subject
of this case. Dkt. 40-1 (Dahlgren Dep. 249:13).
February 16, 2013, Francesca Dahlgren returned to her
Delaware residence to find water gushing “[like] a
waterfall” from a hole in the ceiling, flooding the
house with about two inches of water. Dkt. 40-1 (Dahlgren
Dep. 102:1-102:3, 105:19-107:13, 110:5-110:13). A pressurized
water pipe had failed at the joint, causing the leakage and
subsequent flooding. Dkt. 36-1 at 11; Dkt. 40 at 19. The
flooding later resulted in the proliferation of mold. Dkt.
36-1 at 11. In or around May 2013, Plaintiffs demolished the
residence and built a new home on the property, Dkt. 40 at
19, allegedly as a result of the water damage and mold
infestation, Dkt. 35. at 3 (Am. Compl. ¶ 13).
person was present at the Delaware property during the six
days prior to February 16, 2013. Dkt. 40-1 (Dahlgren Dep.
102:19-104:8, 198:19-199:8). The last person at the property
had been Plaintiffs' friend Carol McCann, who checked the
doors and checked for mail at the house on February 10, but
did not go inside. Id. Plaintiffs themselves were
last at the property on February 6, 2013. Id. Their
belongings, however, including food, medicine, and clothing,
remained in the house throughout the relevant period.
Id. at 198:6-198:14.
Plaintiffs did leave the heating system on during their
absence, they did not “shut off the water supply where
it enters the residence.” Dkt. 40-21 at 30. Indeed, as
Plaintiffs now emphasize, the house “did not have a
water supply valve on the main water supply where the water
enters the home.” Dkt. 36-1 at 7. The record discloses
only two means by which Plaintiffs could have prevented water
from flowing into the house's plumbing: (1) requesting
that a city official turn off the water manually, Dkt. 36-13
at 3; or (2) hiring a plumber to install a master shutoff
valve for an estimated onetime cost of $815, Dkt. 40-10 at 4.
Plaintiffs took neither step. Their only actions with respect
to the water supply were to shut off “the water supply
to the outside shower” and “the water supply to
the outside hose, ” Dkt. 40-1 (Dahlgren Dep.
199:16-199:18)-that is, to prevent water from flowing
out of the house's plumbing system. Dahlgren
testified that she believed she “did everything within
[her] power to secure the house” before leaving it on
February 6, 2013. Id. at 199:20-200:1.
timely filed a claim under their policy with Windsor. Dkt.
1-2 at 6 (Compl. ¶ 22); Dkt. 2-2 at 2 (Answer ¶
13). Windsor hired a third-party adjuster, Tim Stapf, to
assess the claim and to investigate the “occupancy of
the property prior to the loss.” Dkt. 36-10 at 2;
accord Dkt. 36-1 at 11. According to Windsor's
guidelines, third-party adjustors make initial
recommendations as to coverage, but Windsor retains final
decisionmaking authority. Dkt. 40-18 at 2. Stapf reported to
Windsor's in-house adjustor, Cheryl Ackley, who in turn
reported to Windsor's general claims manager, Ed
Campbell. Dkt. 36-1 at 11-12; Dkt. 40-19 (Campbell Decl.
¶¶ 2, 3); Dkt. 40-20 (Ackley Dep. at 6:13-6:20).
March 3, 2013, Stapf filed a draft report, Dkt. 36-13, in
which he recommended that Windsor approve Plaintiffs'
insurance claim because the house lacked a shutoff valve. He
It is this writer's opinion that coverage would be
afforded for this loss, as the property was constructed in
such a way that restricts your insured from complying with
the water supply requirements in your ML-508D endorsement.
Simply put, it is not logical or reasonable to require your
insured to turn off a water supply valve that does not exist.
Id. at 3. The report did acknowledge, however, that
Plaintiffs could have “compl[ied] with [the ML-508D]
requirement” by “calling the water company and
arrang[ing] to have them shut off the supply line.”
Id. at 2-3. (Stapf was unfamiliar with the WB-27(D)
notice, recited above, which referred to the additional
possibility that an insured party could have a shutoff valve
installed.) Dkt. 40-17 (Stapf Dep. 63:15-65:11). Because
Ackley was out of town at the time, Stapf escalated this
“tricky” issue directly to Campbell. Dkt. 40-20
(Ackley Dep. 87:14-88:7).
next day, Campbell requested that Stapf change his report to
conform to Windsor's standing interpretation of the
policy. Dkt. 36-14. Campbell explained that “even [in
cases in which] the insured has no way in which to shut off a
portion of the water supply [and] does not have the system
modified to allow this to be done, ” the policy
“is clear” that “we are not to afford
coverage for this type of loss.” Id. at 2. He
said that Plaintiffs had a “duty” to
“realize [that] modifications need[ed] to be done to
meet [Windsor's] requirements” and to
“contact a qualified plumber” if necessary.
Id. He then added that, although he personally is
“not in agreement with the position taken by [Windsor],
” he had his “marching orders.”
Id. Campbell later testified that he was not
commenting on the proper interpretation of the policy, but
rather describing his view that Windsor should not sell
policies with the ML-508D (04-06) exclusion at all. Dkt.
40-19 (Campbell Decl. ¶ 6). Stapf deleted the quoted
language from his report, and modified it to opine that
Windsor could either grant or deny coverage. See
Ackley later returned from vacation, she expressed confusion
regarding the status of the claim. Dkt. 40-20 (Ackley Dep.
90:3-90:16, 91:10-91:15). She wrote in the case file:
“This is the one [where] the [insured] cannot turn off
[the] water . . . ??? [H]ow should this one be
handled?” Dkt. 36-13 at 3; Dkt. 40-20 (Ackley Dep.
80:10-81:7). Upon learning that Campbell had resolved the
issue, she added “per [manager, ] denial.” Dkt.
36-13 at 3.
March 11, 2013, Windsor denied Plaintiffs' insurance
claim. Dkt. 36-17. Windsor cited the ML-508D exclusion as the
reason for the denial, but reserved the right to invoke other
policy terms that might also preclude coverage. Id.
Plaintiffs' Contract with Gale Force
hired Gale Force to remediate the water damage from the burst
pipe. Dkt. 28 at 2 (Third Party Compl. ¶¶ 4-5);
Dkt. 35 at 7 (Am. Compl. ¶ 40). Gale Force is a Delaware
corporation, with its principle place of business in
Delaware. Dkt. 42-5 at 2 (McCreary Decl. ¶ 2). The
company has no office in the District, has no registered
agent in the District, and is not registered to do business
in the District. Id. at 2-3 (¶¶ 3-10).
According to Gale Force's president and owner,
“[n]o employee or representative of Gale Force traveled
to the District of Columbia in connection with services