Catlin Insurance Company v. Champ Construction Company

Background

Catlin sought a declaratory judgment about which parties had duties to defend or indemnify Catlin’s insureds in an underlying New York state-court construction lawsuit. That lawsuit concerned construction of a condominium building and alleged damage to a neighboring building.

Catlin’s amended complaint sought declarations concerning the obligations of Champ Construction Company and its insurers, GZA GeoEnvironmental, Inc. and its insurers, and Gilsanz, Murray, Steficek and its insurer. The opinion refers to Gilsanz, Murray, Steficek as “Gilsanz.”

Gilsanz moved under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6) to dismiss for lack of subject-matter jurisdiction and failure to state a claim, or alternatively to stay the case. Ace American Insurance Company separately moved under Rule 12(b)(6) to dismiss. Catlin cross-moved under Rules 15 and 16 for permission to file a second amended complaint.

Gilsanz’s Motion

Gilsanz argued that Catlin’s claims were not ripe, meaning that the dispute was not yet ready for judicial decision. Gilsanz’s agreement allegedly required it to indemnify, but not defend, Broadway 371 and made indemnity conditional on a finding that Gilsanz had negligently performed its services. No such finding had occurred in the underlying action.

Catlin did not dispute that Gilsanz had no duty to defend, that its indemnity obligation depended on a finding of negligence, or that the claims had not yet become ripe. The court therefore granted Gilsanz’s motion.

Ace’s Motion and Catlin’s Motion to Amend

Ace argued that Catlin failed to state a claim because the policy identified in the amended complaint covered property damage occurring during a period from February 28, 2012, through February 28, 2013, while the underlying complaint alleged that the relevant violations and damage began on or after July 1, 2013. Ace also argued that the policy provided excess coverage only after specified underlying insurance and loss conditions were satisfied, which Catlin had not alleged.

Catlin proposed adding an allegation, made on information and belief, that Ace might have issued one or more other policies covering the relevant period. The court held that this was a guess unsupported by additional facts and did not plausibly allege that such a policy existed. Because the proposed amendment would be futile, the court granted Ace’s motion to dismiss and denied Catlin’s motion for leave to amend. The court did not need to decide whether Catlin had shown good cause to amend after the scheduling deadline.

“Interested Party” Argument

Catlin argued that Gilsanz and GZA should remain in the action as “interested parties” even if claims against them were dismissed. The court rejected the argument. It explained that the cited declaratory-judgment language did not create a separate, undefined status allowing a party to remain in the case without a viable claim. The court also stated that Gilsanz and GZA were aware of the action and that their interests would not be unprotected if they were absent. The court denied the related request to amend.

Disposition

The court granted the motions to dismiss filed by Gilsanz and Ace and denied Catlin’s motion to amend. The opinion expressly states that it did not address GZA’s separate motion to dismiss, which remained pending. The Clerk was directed to close the docket entries for the Gilsanz motion, the Ace motion, and Catlin’s motion to amend.