Court Opinion

ID: 9408846
Source: CourtListenerOpinion
Date Created: 2023-07-13 21:00:31.513474+00
Date Added: 2024-06-11T17:20:47.234215
License: Public Domain

USCA4 Appeal: 19-1498       Doc: 52        Filed: 07/12/2023     Pg: 1 of 11

                                              PUBLISHED

                               UNITED STATES COURT OF APPEALS
                                   FOR THE FOURTH CIRCUIT

                                               No. 19-1498

        SELECTIVE INSURANCE COMPANY OF AMERICA,

                             Defendant - Appellant,

                      v.

        WESTFIELD INSURANCE COMPANY,

                             Plaintiff - Appellee,

                      v.

        ZURICH AMERICAN               INSURANCE        COMPANY;       WEAVER        COOKE
        CONSTRUCTION, LLC,

                             Defendants - Appellees,

                      and

        PENN NATIONAL INSURANCE COMPANY,

                             Defendant.

        Appeal from the United States District Court for the Eastern District of North Carolina, at
        Raleigh. W. Earl Britt, Senior District Judge. (4:15−cv−00169−BR)

        Argued: May 5, 2023                                               Decided: July 12, 2023

        Before RUSHING and BENJAMIN, Circuit Judges, and KEENAN, Senior Circuit Judge.
USCA4 Appeal: 19-1498     Doc: 52        Filed: 07/12/2023     Pg: 2 of 11

        Dismissed by published opinion. Senior Judge Keenan wrote the opinion, in which Judge
        Rushing and Judge Benjamin joined.

        ARGUED: Matthew Adams Abee, NELSON MULLINS RILEY & SCARBOROUGH
        LLP, Columbia, South Carolina, for Appellant. Morgan Stuart Templeton, WALL
        TEMPLETON & HALDRUP, P.A., Charleston, South Carolina; Michael Terry Medford,
        MANNING, FULTON & SKINNER, PA, Raleigh, North Carolina, for Appellees. ON
        BRIEF: Robert C. Calamari, NELSON MULLINS RILEY & SCARBOROUGH LLP,
        Myrtle Beach, South Carolina, for Appellant. Sanford W. Thompson, IV, SANFORD
        THOMPSON, PLLC, Raleigh, North Carolina, for Appellee Weaver Cooke Construction,
        LLC. J. Mark Langdon, WALL TEMPLETON & HALDRUP, P.A., Raleigh, North
        Carolina, for Appellee Westfield Insurance Company. Phillip E. Reeves, Greenville, South
        Carolina, James M. Dedman, IV, GALLIVAN, WHITE, & BOYD, P.A., Charlotte, North
        Carolina, for Appellee Zurich Insurance Company.

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        BARBARA MILANO KEENAN, Senior Circuit Judge:

               This dispute involves several insurers and one defendant insurer’s alleged duty to

        defend a lawsuit brought against a general contractor of a residential building project. The

        district court entered partial summary judgment, holding that the defendant insurer had a

        duty to defend the general contractor in the underlying action for construction defects. The

        court also issued a stay of other issues raised by the parties, and administratively closed the

        case. After the defendant insurer filed the present appeal, the underlying action was

        resolved in a settlement agreement.

               We conclude that we lack jurisdiction to consider the present interlocutory appeal

        challenging the defendant insurer’s duty to defend the general contractor. Therefore, we

        dismiss the appeal.

                                                      I.

               In 2006, Weaver Cooke Construction, LLC (Weaver Cooke) entered into a contract

        with New Bern Riverfront Development, LLC (New Bern) to serve as general contractor

        for a condominium complex to be built in North Carolina (the project). Weaver Cooke

        later executed contracts with various subcontractors to work on the project, including one

        contract with William H. Dail d/b/a/ DD Plumbing Company (DD Plumbing). DD

        Plumbing was responsible for installing piping and plumbing fixtures for the project,

        including kitchen and bath faucets. In 2009, New Bern, which had filed for bankruptcy,

        initiated an adversary proceeding in bankruptcy court against Weaver Cooke and other

        defendants alleging defective construction on the project (the underlying action).

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               Weaver Cooke was a “named insured” under two commercial liability policies, one

        issued by Westfield Insurance Company (Westfield) and another by Zurich American

        Insurance Company (Zurich). DD Plumbing was a “named insured” under a commercial

        liability policy issued by Selective Insurance Company of America (Selective). When

        Weaver Cooke entered into its contract with DD Plumbing, Weaver Cooke became an

        “additional insured” under DD Plumbing’s policy with Selective (the Selective policy).

               The Selective policy provided coverage for property damage, stating that Selective

        would “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.” In the

        policy, Selective further acknowledged that it had a “duty to defend the insured against any

        ‘suit’ seeking those damages.”

               After New Bern filed the underlying action, Weaver Cooke and Westfield requested

        that Selective provide a defense for Weaver Cooke as an “additional insured” under the

        Selective policy. Although the parties dispute the details of the timing and notice of the

        requests to Selective, it is undisputed that Selective was notified of the request in

        September 2013. Selective did not comply with the request to defend Weaver Cooke in

        the underlying action.

               Westfield filed the present action in the Eastern District of North Carolina against

        Selective, Weaver Cooke, and Zurich, 1 seeking, among other alternative relief: (1) a

               1
                Westfield also named Penn National Insurance Company (Penn National) as a
        defendant. Penn National is not a party to this appeal.

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        declaration that Selective had a duty to defend Weaver Cooke in the pending underlying

        action; and (2) “equitable subrogation/contribution” against Selective for reimbursement

        of defense costs that Westfield had incurred in defending Weaver Cooke in the underlying

        action. Zurich, which also had been defending Weaver Cooke in the underlying action,

        filed similar crossclaims against Selective. Finally, Weaver Cooke filed a counterclaim

        against Selective alleging statutory claims of unfair trade practices under N.C. Gen. Stat.

        §§ 58–63–15(11), based on Selective’s claim settlement practices. Weaver Cooke also

        asserted a right to indemnification; the district court stayed the indemnification claim

        pending the resolution of factual issues in the underlying action and further order of the

        court.

                 After completing discovery on the duty to defend and unfair trade practices claims,

        the parties filed cross-motions for summary judgment. Upon reviewing the record, the

        district court held that the underlying action “implicate[d] . . . DD Plumbing’s work,”

        which possibly had caused damage to interior finishes on the project as a result of water

        intrusion or waste discharge. The court concluded that this constituted “property damage”

        under the Selective policy, and, thus, that Selective had a duty to defend Weaver Cooke as

        an additional insured under the policy.

                 The district court accordingly awarded partial summary judgment in favor of

        Westfield, Zurich, and Weaver Cooke on the duty to defend issue. The court denied both

        Weaver Cooke’s and Selective’s cross-motions for summary judgment on Weaver Cooke’s

        unfair trade practices claims, holding that disputed facts precluded entry of summary

        judgment at that time. The district court further concluded that the “issue of damages

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        regarding the duty to defend[,] and liability and damages on the remaining unfair trade

        practices claims,” would be “stayed until the [u]nderlying [a]ction is resolved.” The court

        directed that the case be administratively closed subject to any party’s motion to dissolve

        the stay after conclusion of the underlying action. No such motion has been filed.

               Selective filed the present appeal in this Court, asserting that the district court erred

        in concluding that Selective owed a duty to defend because the allegations in the underlying

        action involved only “non-covered economic damages” and suggested only a need for

        “further investigation” regarding potential property damage resulting from DD Plumbing’s

        work. 2 Several months after Selective filed the present appeal, the bankruptcy court issued

        an order approving a settlement agreement reached in the underlying action. As part of

        that settlement agreement, the parties resolved the defective construction claim alleged by

        New Bern against Weaver Cooke and other parties. The bankruptcy court thereafter

        entered a final decree and closed the underlying action.

                                                      II.

               Before we can review the merits of Selective’s argument, we first must determine

        whether we have jurisdiction over this appeal. Williamson v. Stirling, 912 F.3d 154, 168

               2
                  Selective also argues on appeal that the district court erred in failing to award
        Selective summary judgment on the unfair trade practices claims, contending that we
        should assert “pendant appellate jurisdiction” over this issue because it is “inextricably
        intertwined” with the duty to defend issue. See Rux v. Republic of Sudan, 461 F.3d 461,
        475 (4th Cir. 2006) (citation omitted). However, based on our conclusion that we lack
        jurisdiction over the duty to defend issue, we necessarily do not have pendant jurisdiction
        to consider Selective’s additional argument regarding the unfair trade practices claim.

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        (4th Cir. 2018) (recognizing an “independent obligation to verify the existence of appellate

        jurisdiction”). Selective, agreeing that the district court did not enter a final judgment in

        the present case, contends that we have jurisdiction under 28 U.S.C. § 1292(a)(1), which

        permits appeals of interlocutory orders granting injunctions. 3 Citing the Third Circuit’s

        decision in Ramara, Inc. v. Westfield Ins., 814 F.3d 660, 669 (3d Cir. 2016), Selective

        argues that the district court’s partial award of summary judgment against Selective

        effectively is “an injunction requiring [Selective] to provide a defense” to Weaver Cooke

        in the underlying action. We disagree that Section 1292(a)(1) provides a basis for

        jurisdiction here.

               As an initial matter, we agree with Selective that the district court has not entered a

        final judgment that would allow review of this appeal under 28 U.S.C. § 1291. 4 See

        Kinsale Ins. v. JDBC Holdings, Inc., 31 F.4th 870, 873 (4th Cir. 2022) (explaining that a

        final judgment “ends the litigation on the merits and leaves nothing for the court to do but

               3
                 The appellees, Weaver Cooke, Westfield, and Zurich, likewise maintain that we
        have jurisdiction to decide the duty to defend issue under to 28 U.S.C. 1292(a)(1).
               4
                  We observe that in other instances, parties disputing a district court’s holding
        before final judgment concerning an insurer’s duty to defend have obtained certification
        for immediate appeal under Federal Rule of Civil Procedure 54(b). See Res. Bankshares
        Corp. v. St. Paul Mercury Ins., 407 F.3d 631 (4th Cir. 2005) (deciding interlocutory appeal
        after district court entered certification under Rule 54(b) in 323 F. Supp. 2d 709, 723 (E.D.
        Va. 2004)); Ramsay v. OmniBank, 215 F.3d 503, 504 (5th Cir. 2000). Rule 54(b) permits
        a district court to certify a judgment for appeal “[w]hen an action presents more than one
        claim of relief,” and the court directs “entry of a final judgment as to one or more, but fewer
        than all, claims,” so long as “the court expressly determines” there “is no just reason for
        delay[ing]” the appeal. Fed. R. Civ. P. 54(b); see Kinsale, 31 F.4th at 873 (discussing Rule
        54(b)); Penn-America Ins. v. Mapp, 521 F.3d 290, 296 (4th Cir. 2008) (same). However,
        Selective did not seek, and the district court did not direct entry of, such a certification in
        the present case.
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        execute the judgment” (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)). Issues

        of damages, as well as the unfair trade practices claims and indemnification claim, remain

        pending in the district court. See id. at 873 (explaining that when damages have not been

        assessed, a judgment is not final (citing Liberty Mut. Ins. v. Wetzel, 424 U.S. 737, 744

        (1976)); see also Penn-America Ins. v. Mapp, 521 F.3d 290, 296 (4th Cir. 2008) (explaining

        that administrative closure of pending claims by the district court did not “convert” the

        “otherwise non-final [judgment] into a final judgment” under Section 1291).

               We therefore turn to address 28 U.S.C. § 1292(a)(1). This statutory exception to

        the final judgment rule confers jurisdiction on courts of appeal to review interlocutory

        orders “granting, continuing, modifying, refusing or dissolving injunctions.” 28 U.S.C.

        § 1292(a)(1); see Carson v. Am. Brands, Inc., 450 U.S. 79, 82 (1981). Although the district

        court’s judgment in the present case was not styled as an “injunction,” the question whether

        an order “amounts to an injunction” requires that we look to “the practical effect of the

        order rather than the label ascribed to it.” U.S. ex rel. Lutz v. United States, 853 F.3d 131,

        139 (4th Cir. 2017). Generally, an injunction commands or prevents a specified action.

        See Injunction, Black’s Law Dictionary (11th ed. 2019); see also U.S. ex rel. Rahman v.

        Oncology Assocs., P.C., 198 F.3d 502, 507 (4th Cir. 1999) (explaining that to qualify as

        injunctive relief, an order must “prohibit or command specific conduct”).

               To be immediately appealable under Section 1292(a)(1), “a litigant must show more

        than that the order has the practical effect” of commanding or preventing action. Carson,

        450 U.S. at 83 (explaining that we construe Section 1292(a)(1) “narrowly,” because

        Section 1291(a)(1) “was intended to carve out only a limited exception to the final-

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        judgment rule”).      We have said that an appealable injunctive order under Section

        1292(a)(1) is one that “(1) may have a ‘serious, perhaps irreparable consequence’ and (2)

        can only be ‘effectually challenged’ through immediate appeal,” rather than upon final

        judgment. Lutz, 853 F.3d at 139 (quoting Carson, 450 U.S. at 84). 5 Without satisfying

        these elements, “the general congressional policy against piecemeal review” precludes our

        jurisdiction to consider an interlocutory appeal under Section 1292(a)(1). Carson, 450 U.S.

        at 84.

                 In the present case, we will assume, without deciding, that at the time of its entry,

        the district court’s order was in the nature of an injunction in that the order required

        Selective to take prospective action in the underlying litigation. See James River Ins. v.

        Ultratec Special Effects Inc., 22 F.4th 1246, 1251, 1252-53 (11th Cir. 2022) (holding order

        appealable when district court ordered insurer “to continue defending” the insureds),

        Ramara, 814 F.3d at 668-69 (same, when district court ordered insurer to “prospectively

        . . . provide defense” to insured in ongoing action). However, because the underlying

        action now has been resolved, there is no possible present or prospective requirement for

        Selective to act by providing a defense to Weaver Cooke. Instead, any breach by Selective

        in failing to provide Weaver Cooke a defense can be remedied at this juncture by an award

        of damages.

                 In Lutz, we held that an order freezing a party’s assets during litigation was not
                 5

        immediately appealable under Section 1292(a)(1) because, although the party was
        prevented from disposing of its property, the party’s property rights were not permanently
        affected at that time and the party could “obtain complete relief after final judgment.” Id.
        at 140.

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               The district court’s holding that Selective had a duty to defend thus does not

        presently produce any immediate or pressing event. See Carson, 450 U.S. at 84. And this

        appeal does not present an issue requiring consideration separate from the pending issues

        in this case. See Lutz, 853 F.3d at 139; see also Carson, 450 U.S. at 84-85. We can review

        after final judgment the question of Selective’s duty to defend without ensuing

        consequence.     Therefore, we conclude that Section 1292(a)(1) does not provide a

        jurisdictional basis for consideration of this appeal. Lutz, 853 F.3d at 140 (explaining that

        there was “no harm in preserving the status quo” and that the appellants could “obtain

        complete relief after final judgment”); see Carson, 450 U.S. at 84-85.

               Our conclusion is not altered by Selective’s reliance on the Third Circuit’s decision

        in Ramara. 814 F.3d 660. There, an insured sought a declaratory judgment that the

        defendant insurer owed a duty to defend and a duty to indemnify the insured in an

        underlying suit seeking damages for injuries caused by a construction accident. Id. at 665,

        669, 671. The district court awarded the insured partial summary judgment, ordering that

        the insurer “prospectively” provide a defense in the underlying action while withholding a

        ruling on the indemnification claim until later in the litigation. Id. at 668, 669 n.3.

               The Third Circuit held that it had jurisdiction to consider an appeal from this non-

        final order under Section 1292(a)(1). Id. at 670-672. The court explained that the district

        court’s order holding that the insurer had a duty to defend a party in the underlying action

        “granted forward-looking,” “prospective” relief, which was “immediately appealable.” Id.

        This relief thus was injunctive in nature and had not been affected by any actions of the

        parties pending appeal.

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               The same cannot be said in the present case. While the relief granted in the district

        court’s order originally may have been prospective in nature, the resolution of the

        underlying action has eliminated from that order any forward-looking mandate. Thus, the

        order before us in this appeal currently lacks the character of an injunction and does not

        require us to consider any question separate from issues that may be appealed after entry

        of a final judgment in the district court.

               We therefore conclude that, given the resolution of the underlying action, the district

        court’s award of partial summary judgment in favor of the defendants on Selective’s duty

        to defend is not appealable under Section 1292(a)(1). We are able to consider this question

        along with the related issue of damages on appeal of a final judgment, furthering our goal

        of avoiding “[p]iecemeal” appeals in the absence of any immediate or pressing

        consequence. See Lutz, 853 F.3d at 140; Carson, 450 U.S. at 84.

                                                     III.

               For these reasons, we conclude that we lack jurisdiction to consider Selective’s

        appeal. Accordingly, we dismiss the appeal.

                                                                                        DISMISSED

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