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Greenwich Insurance Co. v. Capsco Industries, Inc.

United States District Court, S.D. Mississippi, Southern Division

September 14, 2017

GREENWICH INSURANCE COMPANY and INDIAN HARBOR INSURANCE COMPANY PLAINTIFFS
v.
CAPSCO INDUSTRIES, INC., and GROUND CONTROL, LLC DEFENDANTS GROUND CONTROL, LLC COUNTER-PLAINTIFF
v.
GREENWICH INSURANCE COMPANY and INDIAN HARBOR INSURANCE COMPANY COUNTER-DEFENDANTS

          ORDER DENYING GROUND CONTROL'S MOTION FOR RECONSIDERATION

          LOUIS GUIROLA, JR., CHIEF U.S. DISTRICT JUDGE.

         BEFORE THE COURT is Ground Control, LLC's Motion for Reconsideration [140] of this Court's Memorandum Opinion and Order [139] granting partial summary judgment in favor of Greenwich Insurance Company and Indian Harbor Insurance Company (hereafter collectively referred to as “the Insurers”) as to the duty to defend Capsco Industries, Inc., in a state court action filed by Ground Control. The parties have fully briefed the Motion. After reviewing the submissions of the parties, the record in this matter, and the applicable law, the Court finds that the Motion for Reconsideration should be denied.

         BACKGROUND

         The underlying state court action remains pending after approximately eight years of litigation, extensive motion practice, one trial, and two appeals to the Mississippi Supreme Court.[1] Ground Control sued Capsco and others seeking payment for work performed on the Margaritaville Spa and Hotel construction project in Biloxi, Mississippi. After the first appeal, Ground Control attempted to amend its complaint to add numerous tort, contractual, and statutory claims against several defendants. As a result, the Mississippi Supreme Court emphatically stated:

Based on what transpired following our mandate in Ground Control I, we feel compelled to make ourselves very clear. The only plaintiff on remand is Ground Control. The only defendant is Capsco. The only issue is quantum meruit damages. And the only options available to Ground Control and Capsco are to agree to a $199, 096 damages award or proceed to a new trial on quantum meruit damages.

Ground Control, LLV v. Capsco Indus., Inc., 214 So.3d 232, 249 (¶74) (Miss. 2017) (hereafter referred to as “Ground Control II”). The parties have decided to proceed to a new trial on quantum meruit damages. Ground Control has once again filed a Motion to Amend its Complaint in state court. This time, it claims that it merely wants to clarify its quantum meruit damages claims.

         In this declaratory judgment action, Capsco's Insurers argued that they do not owe a duty to defend Capsco in the lawsuit filed by Ground Control because Ground Control's remaining claim for quantum meruit does not seek recovery for “property damage” or “bodily injury” as required by the insurance policies at issue. The Insurers also argued that Ground Control's remaining claim does not constitute an “occurrence” under the policies. It is undisputed that no “bodily injury” is alleged in Ground Control's Supplemental Complaint, but Ground Control claims that it has alleged “property damage” caused by an “occurrence.” This Court granted the Insurers' Motion for Partial Summary Judgment, finding that the Insurers have no duty to defend Capsco in the state court action.[2]

         DISCUSSION

         As this Court previously explained, the policies at issue are commercial general liability (CGL) policies that require the Insurers to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury' or ‘property damage'” caused by an “occurrence.” (Insurers' Mot., Ex. G at 36, Ex. H at 35, ECF Nos. 131-7, 131-8). The policies further provide that the Insurers “will have the right and duty to defend the insured against any ‘suit' seeking those damages.” (Id.) “Property damage” under the policies means “[p]hysical injury to tangible property, including all resulting loss of use of that property[, ]” as well as the “[l]oss of use of tangible property that is not physically injured.” (Insurers' Mot., Ex. G at 49, Ex. H at 48, ECF Nos. 131-7, 131-8). Ground Control alleges that it has asserted claims for both damage to tangible property and loss of use of tangible property. The Court will once again discuss these types of alleged property damage separately. The parties agree that Alabama law governs this insurance dispute.

         I. DAMAGE TO TANGIBLE PROPERTY

         Ground Control argues that this Court incorrectly classified its claims against Capsco as breach of contract claims. However, this Court noted the Mississippi Supreme Court's mandate that only quantum meruit claims remain multiple times in its Memorandum Opinion and Order. (Mem. Op. & Order at 3, 4, 7, & 15, ECF No. 139). It was impossible to analyze this case, however, without referencing the sub-subcontract between Capsco and Ground Control as well as Capsco's alleged failure to pay Ground Control in accordance with that sub-subcontract, because the relationship between these parties and this lawsuit itself arose out of that sub-subcontract. The Court recognizes that the Mississippi Supreme Court subsequently voided the sub-subcontract pursuant to Miss. Code Ann. § 31-3-15 and reformed Ground Control's claims as quantum meruit claims.

         Ground Control also argues that this Court erred by relying on Westfield Insurance Co. v. Nautilus Insurance Co., 154 F.Supp.3d 259, 262 (M.D. N.C. 2016), because the Westfield decision concerned a breach of contract claim and the present case involves a quantum meruit claim. However, a quantum meruit claim is not so distinct from a breach of contract claim as Ground Control claims. The Mississippi Supreme Court has explained that “[q]uantum meruit is the measure of liability for a contract implied in law . . . .” McLain v. W. Side Bone & Joint Ctr., 656 So.2d 119, 123 (Miss. 1995).[3] It has also held that “[q]uantum meruit recovery is a contract remedy which may be premised either on express or implied contract, and a prerequisite to establishing grounds for quantum meruit recovery is claimant's reasonable expectation of compensation.” In re Estate of Smith, 69 So.3d 1, 7 (¶22) (Miss. 2011). The elements of a quantum meruit claim are:

(1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) which services and materials were accepted by the person sought to be charged, used and enjoyed by him; and (4) under such circumstances as reasonably notified [the] person sought to be charged that [the] plaintiff, in ...

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