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David A. Bramble, Inc. v. Old Republic Gen. Ins. Corp.

Superior Court of Delaware

January 20, 2017

David A. Bramble, Inc.
v.
Old Republic Gen. Ins. Corp.

          John S. Spadaro, Esquire John Sheehan Spadaro, LLC

          James W. Semple, Esquire Cooch and Taylor, P.A

         Dear Counsel:

         This is my decision on Plaintiff David A. Bramble, Inc.'s Motion for Partial Summary Judgment and Defendant Old Republic General Insurance Corporation's Motion to Dismiss in this declaratory judgment action where the issue is whether Old Republic has a duty to defend Bramble pursuant to the terms of a comprehensive general liability insurance policy issued by Old Republic to Bramble in a breach of contract and warranty case brought by the Town of Georgetown against Bramble over Bramble's allegedly defective construction of a spray irrigation system for Georgetown. Bramble argues that there is a duty to defend because the Georgetown Complaint alleges that the town's soils have been damaged by Bramble's defective spray irrigation system. Old Republic argues that Georgetown's Complaint makes no such allegation. I agree. Georgetown's Complaint makes no such allegation and instead only alleges typical breach of contract and breach of warranty damages against Bramble, which are not covered by Old Republic's policy.

         The Spray Irrigation System

         Georgetown and Bramble entered into a contract on July 12, 2012, wherein Bramble agreed to construct for Georgetown a spray irrigation system on a wooded site in Georgetown, Delaware, for $1, 212, 786.85. Bramble and Liberty Mutual entered into a performance bond with Georgetown. Bramble agreed to correct any work found to be defective within one year of substantial completion of the spray irrigation system and longer if specified in the contract. Lee Rain, Inc., worked for Bramble as a subcontractor for the installation of the above-ground aluminum pipes, associated fittings and gaskets. Bramble started work on August 20, 2012. Bramble substantially completed the spray irrigation system on February 12, 2013. Bramble finally completed the spray irrigation system on June 7, 2013.

         The spray irrigation system was operated one day in October 2013, three days in November 2013, zero days in December 2013, and only occasionally in January 2014.

         On or about January 16, 2014, Georgetown's representatives noticed several splits in some of the spray irrigation system's piping joints.

         In the second half of January and into early February 2014, Georgetown's representatives continued to inspect the spray irrigation system, finding additional broken pipes and couplers. It became apparent that the spray irrigation system was not self-draining as contemplated in the design specifications. It was also discovered that the gaskets installed in the spray irrigation system were "10-6-4M" "slow drain" gaskets, and not the "10-6-4L" "fast drain" gaskets as specified in the design documents.

         When unaltered areas of the original pipes were examined and opened they were found to contain large amounts of water, even after periods of prolonged inactivity, due to the spray irrigation system's failure to drain.

         In or around September 2014, Georgetown's representatives at the site noted excessive standing water in some areas, and discovered pinhole perforations along the bottom of certain sections of aluminum pipe. They also discovered corrosion on the inside of certain pipes when they were removed. The spray irrigation system was not in operation during the months of July or August 2014. As a result, a significant amount of water remained in the pipes due to the apparently systemic drainage failure, which caused the pipes to corrode.

         The Georgetown Complaint

         Georgetown filed a three-count complaint against Bramble and Liberty Mutual Insurance Company in the Sussex County, Delaware, Superior Court on June 3, 2015. Count I is against Bramble for Breach of Contract. Count II is against Bramble for Breach of Warranty. Count III is against Liberty Mutual for Breach of Performance/Surety Bond. Georgetown seeks for all three counts the same monetary damages for the damaged and defective spray irrigation system. The Georgetown Complaint alleges that the spray irrigation system has the following problems:

1) the system is not self-draining; 2) the pipes have large amounts of water in them because they are not draining properly; 3) there are splits in the piping joints; 4) there are broken pipes and couplers; 5) Bramble and/or its subcontractor installed "10-6-4M" slow drain gaskets instead of "10-6-4L" fast drain gaskets; 6) about 90 sections of aluminum pipe are corroded and have pinhole perforations along the bottom of the pipes because water is not properly running out of them; and 7) there are also pinholes in some sections of the 6-inch and 4-inch pipes.

         The following is Georgetown's prayer for relief for all three counts:

As a direct and proximate result of Bramble's breaches of Contract, Plaintiff Town of Georgetown has incurred and will continue to incur substantial monetary damages and costs in connection with the damaged and defective system, including but not limited to:
a) expenses, including manpower and labor costs, for repair and correction of defects, and remediation of defects, in the Pettyjohn Woods system;[1]
b) expenses, including manpower and labor costs, for repair or replacement of damaged or defective materials, including latent damages and defects, the full extent of which may still be unknown;
c) legal, engineering, testing, consulting and other professional costs and fees incurred as a result of Defendants' breaches, actions or inactions, delay, and denials of responsibility;
d) court costs, attorney fees and other costs of this action, and
e) other costs and damages.

         The Georgetown case was subsequently removed to the United States District Court for the District of Delaware.

         Standard of Review - Summary Judgment

         This Court will grant summary judgment only when no material issues of fact exist, and the moving party bears the burden of establishing the non-existence of material issues of fact.[2] Once the moving party meets its burden, the burden shifts to the non-moving party to establish the existence of material issues of fact.[3] The Court views the evidence in a light most favorable to the nonmoving party.[4] Where the moving party produces an affidavit or other evidence sufficient under Superior Court Civil Rule 56 in support of its motion and the burden shifts, the non-moving party may not rest on its own pleadings, but must provide evidence showing a genuine issue of material fact for trial.[5] If, after discovery, the non-moving party cannot make a sufficient showing of the existence of an essential element of the case, then summary judgment must be granted.[6] If, however, material issues of fact exist or if the Court determines that it does not have sufficient facts to enable it to apply the law to the facts before it, then summary judgment is not appropriate.[7]

         Standard of Review - Motion to Dismiss

         The standards for a Rule 12(b)(6) motion to dismiss are clearly defined. The Court must accept all well-pled allegations as true.[8] The Court must then determine whether a plaintiff may recover under any reasonable set of circumstances that are susceptible of proof.[9] When deciding a motion to dismiss, the Court accepts as true all well-pleaded allegations in the complaint, and draws all reasonable inferences in favor of the plaintiff.[10] As a general rule, when deciding a Rule 12(b)(6) motion, the Court is limited to considering only the facts alleged in the complaint and normally may not consider documents extrinsic to it. There are two exceptions, however, to this general rule.[11] "The first exception is when the document is integral to a plaintiffs claim and incorporated into the complaint. The second exception is when the document is not being relied upon to prove the truth of its contents."[12] "Where allegations are merely conclusory, however, (i.e., without specific allegations of fact to support them) they may be deemed insufficient to withstand a motion to dismiss."[13]Dismissal will not be granted if the complaint "gives general notice as to the nature of the claim asserted against the defendant."[14] A claim will not be dismissed unless it is clearly without merit, which may be either a matter of law or fact.[15] Vagueness or lack of detail in the pleaded claim are insufficient grounds upon which to dismiss a complaint under Rule 12(b)(6).[16] If there is a basis upon which the plaintiff may recover, the motion is denied.[17]

         The Insurance Contract

         Old Republic sold to Bramble its Commercial General Liability insurance contract no. A-3CG-037713-01 for the period July 1, 2012, to July 1, 2013, later renewed for July 1, 2013, to July 1, 2014. The Old Republic policy provides limits of insurance in the amount of $1 million for each occurrence. The policy sets forth a "Commercial General Liability Coverage Form, " including (under Section "A") the following insuring agreement:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insurance against any "suit" seeking those damages.
This insurance applies to "bodily injury" and "property damage" only if:
(1) The bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";
(2) The "bodily injury" or "property damage" first takes place during the policy period, regardless of when such "occurrence" giving rise to "bodily injury" or "property damage" takes place.

         The Old Republic policy sets forth a number of specially defined terms. "Property damage" is defined as [p]hysical injury to tangible property, including all resulting loss of use of that property... or... [l]oss of use of tangible property that is not physically injured." The term "suit" is defined as "a civil proceeding in which damages because of 'bodily injury, ' 'property damage' or 'personal and advertising injury' to which this insurance applies are alleged."

Pursuant to a dedicated amendatory endorsement, "occurrence" is defined as:
an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
For claims or "suits" seeking damages that are within the "Products -Completed Operations Hazard, " an "Occurrence" shall also include a defect in "your work, " where the defect is neither expected nor intended from the standpoint of any insured.
The "products - completed operations hazard" is defined in turn as follows:
"Products - completed operations hazard":
a. Includes all "bodily injury" and "property damage" occurring away from premises your own or rent and arising out of "your product" or "your work" except:
(1)Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned. However, "your work" will be deemed completed at the earliest of the following times:
(a)When all of the work called for in your contract has been completed.
(b)When all the work to be done at the job site has been completed if your contract calls for work at more than one job site.
(c) When that part of the work done at a j ob site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.
Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will ...

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