First Mercury Insurance Company v. Babcock Enterprises, Inc.

CourtDistrict Court, W.D. Kentucky
DecidedAugust 29, 2025
Docket3:21-cv-00672
StatusUnknown

This text of First Mercury Insurance Company v. Babcock Enterprises, Inc. (First Mercury Insurance Company v. Babcock Enterprises, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First Mercury Insurance Company v. Babcock Enterprises, Inc., (W.D. Ky. 2025).

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION CIVIL ACTION NO. 3:21-CV-00672-GNS

FIRST MERCURY INSURANCE CO. PLAINTIFF

v.

BABCOCK ENTERPRISES, INC. et al. DEFENDANTS

MEMORANDUM OPINION AND ORDER This matter is before the Court on Plaintiff’s Motion for Summary Judgment (DN 119) and Defendant’s Motion for Leave to File Sur-Reply (DN 136). The motions are ripe for adjudication. I. STATEMENT OF FACTS AND CLAIMS An off-campus student housing project, known as the Clubhouse Apartments, was constructed near the University of Louisville campus, which was substantially completed in 2015. (Compl. ¶¶ 6, 8, DN 1). Subsequently, a dispute arose over the work performed on the project, and the project owner, HRB Louisville, LLC (“HRB”), filed an arbitration styled HRB Louisville LLC v. Doster Construction Company, Inc., Case No. 01-20-0005-1064 (pending before the American Arbitration Association) (“Underlying Arbitration”). Doster Construction Company, Inc. (“Doster”) was the general contractor for the project, and Babcock Enterprises, Inc. d/b/a R&B Construction (“Babcock”) was a subcontractor which worked on exterior siding and cladding for the project. (Compl. ¶ 8; Def.’s Am. Answer & Countercl. 2, DN 23 [hereinafter Doster’s Am. Answer & Countercl.]). Several other lawsuits were filed relating to the project. (Pl.’s Mot. Summ. J. Ex. A, at 12-13, DN 119-1 [hereinafter Settlement Agreement]). First Mercury had issued four consecutive one-year insurance policies to Babcock that were in effect from December 2014 to December 2018. (Compl. ¶ 10, DN 1). The contract between Doster and Babcock allegedly required that Doster be added as an additional insured to Babcock policies throughout the project and for two additional years following its completion. (Compl. ¶ 12). First Mercury defended Babcock for claims of defective work asserted by HRB under a reservation of rights. (Compl. ¶ 11). Doster then tendered its defense of the Underlying Arbitration to First Mercury, which agreed to defend Doster as an additional insured under Babcock’s policies subject to its reservation of rights under the initial, second, and third First Mercury Policies. (Compl. ¶ 12). Each First Mercury policy issued to Babcock contained an endorsement captioned “Independent Contractors Limitation of Coverage” providing that independent contractors hired by Babcock must name Babcock as an additional insured under the subcontractors’ policies with specified amounts of coverage. (Compl. ¶ 13). First Mercury contends that Babcock hired Robert Montgomery

and/or Montgomery Village, Inc. (“Montgomery”) as a subcontractor on the project without a written contract defining the scope of Montgomery’s work. (Compl. ¶ 14). First Mercury claims that Montgomery disputes the scope of the work it was to perform under its unwritten contract with Babcock. (Compl. ¶ 14). First Mercury asserts that Babcock tendered the defense of the Underlying Arbitration to Auto Owners Insurance Company (“Auto Owners”), which insured Montgomery Village on the project. (Compl. ¶ 15). First Mercury further alleges that Auto Owners declined Babcock’s tender on the basis that Babcock was not an insured under policies Auto Owners issued to Montgomery Village. (Compl. ¶ 16). First Mercury further claims Babcock did not satisfy conditions precedent to coverage under its policies because none of the individuals or entities that Babcock used directly or indirectly to complete work on the project had insurance naming Babcock as an additional insured. (Compl. ¶ 18). On November 5, 2021, First Mercury filed this action against Babcock and Doster seeking declaratory relief regarding First Mercury’s duty to defend or indemnify Defendants in the Underlying Arbitration. (Compl. ¶¶ 23-27). Babcock asserted counterclaims against First Mercury, including breach of contract, common-law bad faith, Kentucky Unfair Claims Settlement Practices Act (“KUCSPA”), Georgia Unfair Claims Settlement Practices Act (“GUCSPA”), and breach of fiduciary duties. (Def.’s Answer & Countercls. 5-6, DN 8). Doster also filed an amended answer and counterclaim seeking declarations of First Mercury’s duty to defend or indemnify it in the Underlying Arbitration. (Doster’s Am. Answer & Countercl. 12-14). The Court subsequently dismissed Babcock’s counterclaims for breach of fiduciary duty and under the GUCSPA. (Order 6-7, DN 40). During the pendency of the action, the parties to this action and related lawsuits (including the insurers) negotiated a global settlement of claims, subject to specific excepted claims. (Settlement Agreement 1-91). Representatives of First Mercury, Babcock, and Doster then executed the Settlement Agreement. (Settlement Agreement 36, 43-44). First Mercury has now moved for summary judgment on the remaining counterclaims asserted by Babcock.1 (Pl.’s Mot. Summ. J., DN 119). Babcock

moved for leave to file a sur-reply. (Def.’s Mot. Leave File Sur-Reply, DN 136). II. JURISDICTION The Court has subject matter jurisdiction over this action under 28 U.S.C. § 1332 as there is complete diversity between Plaintiff and Defendants and the amount in controversy exceeds the sum of $75,000.00. III. DISCUSSION A. Plaintiff’s Motion for Summary Judgment2 Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “[A] party moving for summary judgment may satisfy its burden [of] show[ing] that there are no genuine issues of material fact simply ‘by pointing out to the court that the [non-moving party], having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case.’” Minadeo v. ICI Paints, 398 F.3d 751, 761 (6th Cir. 2005) (quoting Street v. J.C. Bradford &

1 As a result of the global settlement, Doster has dismissed its counterclaim against First Mercury. (Stipulation Dismiss in Part, DN 118). 2 Under LR 7.1(d), motions and responses to motions are limited to 25 pages. Babcock’s response exceeded that limitation, and it failed to seek leave from the Court. Co., 886 F.2d 1472, 1479 (6th Cir. 1989)). Similarly, the movant may meet its burden by offering evidence negating an essential element of the non-moving party’s claim. See Dixon v. United States, 178 F.3d 1294, 1999 WL 196498, at *3 (6th Cir. 1999). After the movant either shows “that there is an absence of evidence to support the nonmoving party’s case,” or affirmatively negates an essential element of the non-moving party’s claims, the non- moving party must identify admissible evidence that creates a dispute of fact for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). While the Court must view the evidence in a light most favorable to the non-moving

party, the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (citation omitted).

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First Mercury Insurance Company v. Babcock Enterprises, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-mercury-insurance-company-v-babcock-enterprises-inc-kywd-2025.