EER Systems Corp. v. Armfield, Harrison & Thomas, Inc.

51 Va. Cir. 84, 1999 Va. Cir. LEXIS 507
CourtFairfax County Circuit Court
DecidedNovember 4, 1999
DocketCase No. (Law) 178727
StatusPublished
Cited by2 cases

This text of 51 Va. Cir. 84 (EER Systems Corp. v. Armfield, Harrison & Thomas, Inc.) is published on Counsel Stack Legal Research, covering Fairfax County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
EER Systems Corp. v. Armfield, Harrison & Thomas, Inc., 51 Va. Cir. 84, 1999 Va. Cir. LEXIS 507 (Va. Super. Ct. 1999).

Opinion

By Judge Jane Marum Roush

This case is before the court on the Defendants’ Motion to Compel and on the Plaintiff’s Motion for Protective Order. The Court has fully considered the matter, including the parties’ pleadings and their points and authorities. For the reasons set forth below, the Defendants’ Motion to Compel is granted, and the Plaintiffs Motion for Protective Order is denied.

The fact that AH&T’s and Tri-City’s Motion to Dismiss remains under advisement does not affect the scope of discovery. Thus, AH&T is permitted to continue the deposition of Mr. Shaughnessy and shall do so without a presiding magistrate. This Court has instructed counsel as to the proper form of objection at deposition and expects the parties to adhere to those instructions.

This Court entered an order on August 16,1999, permitting the deposition of Dr. Jai Gupta. The order set forth this Court’s “ground rules” for taking his [85]*85deposition. His testimony need not be limited, given his knowledge of relevant events and transactions.

The deposition of Messrs. Pawlick and Garrison are not wasteful and burdensome. These witnesses have knowledge of the CSTAR contract, the Thiokol contract, and the insurance policy that is at issue in this case. This Court’s granting EER’s Motion to Dismiss AH&T’s Amended Counterclaim does not negate Defendants’ need to depose these witnesses.

An appropriate order has been entered by the Court.

December 31, 1999

This matter came on for hearing on September 3, October 1, and December 10, 1999, on various motions filed by the parties. Several of the motions were ruled on from the bench, and appropriate orders have been entered reflecting those rulings. The following motions were taken under advisement:

AH&T’s Motion to Dismiss Amended Motion for Judgment;

AH&T’s Renewed Motion to Dismiss and Tri-City’s Joinder in the Motion to Dismiss;

AH&T’s Plea of the Statute of Limitations;

Tri-City’s Plea of the Statute of Limitations;

AH&T’s Demurrer to Amended Motion for Judgment;

Tri-City’s Demurrer to Amended Motion for Judgment;

AH&T’s Motion in Limine to Exclude All Evidence of EER’s Damages and Tri-City’s Joinder in that Motion.

The Court has now had the opportunity to consider fully the arguments and briefs of counsel. For the following reasons, the Court will enter an order ruling on the pending motions as follows:

AH&T’s and Tri-City’s Motion to Dismiss Amended Motion for Judgment (as renewed) is granted;

AH&T’s and Tri-City’s Demurrers to Amended Motion for Judgment are sustained in part and overruled in part;

AH&T’s and Tri-City’s Pleas of the Statute of Limitations are sustained in part (as to Counts DI and IV) and overruled in part (as to Counts n, VI, VII, VIH, and IX);

AH&T’s Motion to Exclude All Evidence of EER’s Damages and TriCity’s Joinder in that Motion are granted in part.

[86]*86 Facts

The facts of this case alleged in the Amended Motion for Judgment are as follows. The plaintiff, EER Systems, Inc. (“EER”), entered into an agreement with the University of Tennessee-Calspan Center for Space Transportation and Applied Research (“CSTAR”) to provide launch services for a NASA-funded program to develop a vehicle known as a Commercial Experiment Transporter (“COMET”). Amended Motion for Judgment ¶ 6.1 In turn, EER entered into two contracts in 1993 with Thiokol Corporation (“Thiokol”) whereby Thiokol would provide EER with rocket motors and related services for use in connection with the COMET program. ¶ 7. EER agreed to pay Thiokol in increments for some of Thiokol’s non-recurring costs of developing the rocket motors. ¶ 8.

In 1992, prior to signing the contracts with Thiokol, EER asked defendant Armfield, Harrison & Thomas, Inc., (“AH&T”) to act as EER’s insurance broker and procure an insurance policy. ¶ 9. EER told AH&T that it wanted a policy that would fully protect EER from contractual liability to Thiokol in the event funds were no longer available to EER from its customers under the COMET program. In addition, EER told AH&T that the policy must provide that the insurer would have no right to recover from EER if the insurer were called upon to pay Thiokol pursuant to the policy. In other words, the policy must contain a waiver of subrogation. ¶ 10. AH&T agreed to act as EER’s broker in obtaining such a policy for EER. ¶ 11.

AH&T then asked defendant Tri-City Insurance Brokers, Inc., (“TriCity”) to act as the agent and insurance broker for the EER policy. ¶ 13. TriCity agreed to act as an agent and broker for an insurance policy that would meet EER’s specific needs. ¶ 14. Tri-City then contacted The Fenchurch Group (“Fenchurch”), a London-based broker for Lloyd’s of London (“Underwriters”), to obtain insurance for EER. ¶ 16.

On July 2,1993, Underwriters issued an insurance policy naming Thiokol as the assured party. ¶ 18. In response to an interrogatory, EER admits that it received the final policy in December 1993. Contrary to EER’s instructions, the event triggering coverage under the policy was if EER could not pay Thiokol “solely in the event of the cancellation or termination of the COMET project by NASA during the policy period.” Id. Also contrary to EER’s instructions, the final policy included subrogation rights in favor of [87]*87Underwriters. ¶ 19. Tri-City represented to AH&T, and AH&T represented to EER, that the coverage EER desired was contained in the policy. ¶¶ 20-22.

On January 12,1993, AH&T met with EER in order to present to EER the policy and obtain EER’s agreement to purchase the policy. ¶ 23. At the time of that meeting, AH&T, Tri-Cily, and Fenchurch believed the policy to be insufficient for EER’s needs in that the draft policy contained subrogation rights in favor of Underwriters and the event triggering coverage was too narrowly drawn. ¶ 24. Employees of AH&T, Tri-City, and Fenchurch agreed and conspired to conceal from EER the defects in the policy. ¶¶ 25-30.

EER paid a premium for the policy of $315,000.00 to Underwriters, from which AH&T and Tri-City received commissions. ¶ 31. The policy was effective from March 12,1993, through March 11,1995. ¶ 34.

In May 1994, during the policy period, NASA terminated funding for the COMET program. CSTAR terminated its contract with EER. Therefore, funding was no longer available to EER from its customer under the COMET program. ¶ 36. Thiokol filed a claim with Underwriters, which initially was denied. ¶¶ 37, 38.

In December 1994, Thiokol sued EER in the United States District Court for the Eastern District of Virginia (the “Virginia Federal Litigation”) to recover the sums due under their contracts. The Virginia Federal Litigation was dismissed without prejudice in May 1995. In connection with the dismissal of the Virginia Federal Litigation, EER and Thiokol stipulated that Thiokol contended that additional sums are due from EER related to Thiokol’s non-recurring development costs and that Thiokol preserved all its claims related to those costs. EER incurred substantial legal fees in defending against Thiokol’s claim in the Virginia Federal Litigation. ¶¶ 40-47.

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51 Va. Cir. 84, 1999 Va. Cir. LEXIS 507, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eer-systems-corp-v-armfield-harrison-thomas-inc-vaccfairfax-1999.