Continental Western Insurance Co. v. Hanover Insurance Co.

STATE OF MAINE SUPERIOR COURT

CUMBERLAND, ss. Civil Action
Docket No. CV-23-54

CONTINENTAL WESTERN
INSURANCE CO.,

ORDER ON PLAINTIFF’S MOTION TO

Plaintiff, |
DISMISS

Vv.

HANOVER INSURANCE CO.,

meme eee ee ee ee ee ee ee ee ee

Defendant.

Before the Court is Plaintiff Continental Western Insurance Co.
(“Continental”)’s Motion to Dismiss without Prejudice and Without Costs.
Continental seeks dismissal without prejudice of its Complaint and Request for
Declaratory Judgment against Defendant Hanover Insurance Co, (“Hanover”)
pursuant to MLR. Civ. P. 41(a)(2). Hanover objects to this Motion and requests
the Court deny the Motion and decide its Motion for Summary Judgment in
due course. For the reasons discussed below, Continental’s motion is
GRANTED.

I. Facts

Continental commenced this action for declaratory judgment on the duty
to defend and for contribution against Hanover on February 8, 2023, (Compl)
Both Continental and Hanover have provided commercial general liability
insurance to O’Hara Corporation d/b/a Journey’s End Marina (“Journey’s

End”). (Compl. { 3-4.) Continental insured Journey’s End from 2016 through

2018 and Hanover insured Journey’s End from 2019 through 2021. (Compl. 7f
3-4.) On July 31, 2020, Journey’s End filed a complaint in the Rockland
District Court against David McMahan (“McMahan”) for unpaid invoices for
work Journey’s End performed on McMahan’s lobster fishing vessel, “Provider.”
(Compl. {{ 5-8.) McMahan removed the case to Knox County Superior Court
and filed a counterclaim against Journey’s End asserting several claims for
installing an allegedly faulty valve in Provider’s exhaust system resulting in
damage and inability to fish to earn a living. (Compl. 44 9-14.)

Journey’s End tendered the defense of McMahan’s counterclaim to both
Continental and Hanover. (Compl. | 15.) Continental agreed to defend
Journey’s End against the counterclaim under a reservation of rights and
Hanover denied defense and indemnity. (Compl. {J 16-17.) Continental claims
that Journey’s End performed work on Provider’s exhaust system, which is
what McMahan claims is defective, during 2019 while Hanover was the insurer
for Journey’s End. (Compl. { 19-21.) Journey’s End also serviced Provider in
2016, while Continental insured Journey’s End. (Compl. ¢ 11.) The underlying
litigation between Journey’s End and McMahan is ongoing, and Continental
has been paying for the entirety of the costs of defending McMahan’s
counterclaim. (Compl. 22.) Continental seeks declaratory judgment on whether
Hanover owes a defense to Journey’s End and should contribute to the defense
and seeks contribution from Hanover for the defense. (Compl. J 25-30.)

‘Hanover denies that it owes Journey’s End a duty to defend. (Answer 25.)

Hanover filed its answer to the Complaint on February 13, 2023.
(Answer.) On the same day, Hanover issued a short set of document requests to
Continental. (Def.’s Opp’n Pl.’s Mot. Dismiss (“Opp’n”) 1.) Continental provided
responses on April 5, 2023. (Opp’n 1.) The parties then developed a plan to file
simultaneous motions for summary judgment on a stipulated or partially
stipulated record. (Opp’n 1-2.) Pursuant to this plan, Hanover prepared a draft
motion for summary judgment which was substantially completed by the end
of May 2023. (Opp’n 2.) In early June, Continental asked Hanover to agree to
its Motion to Dismiss without Prejudice, but Hanover refused to agree due to
the work it had already undertaken on its motion for summary judgment.
(Opp’n 2.) Continental filed this Motion on June 22, 2023, and it was docketed
on June 26, 2023. (Opp’n 2; Mot. Dismiss.) Hanover filed its Motion for
Summary Judgment on June 23, 2023 and it was docketed on the same day.
(Opp’n 2; Mot. Summ. J.)

II. Discussion

A plaintiff may dismiss their suit without the court’s permission if the
adverse party has not yet served an answer or a motion for summary
judgment, or if all parties that have appeared in the action have signed a
stipulation of dismissal. M.R. Civ. P. 41(a}(1). Here, where Hanover has served
both an answer and a motion for summary judgment and has declined to
stipulate to dismissal, Continental’s action cannot be dismissed on its own
instance “save upon order of the court and upon such terms and conditions as

the court deems proper.” M.R. Civ. P. 41(a}(2).

The Superior Court (Oxford County, McKeon, J.) has observed that there
does not appear to be “any case law providing significant guidance on when a
court should grant a Rule 41f [motion to dismiss without prejudice.” US Bank,
NA v. Am. Home Mortg., No. CV-19-34, 2020 WL 9256602, at *1 (Me. Super. Ct.
Mar. 2, 2020), When a Maine Rule of Civil Procedure is substantially similar to
the comparable federal rule, constructions and comments on the federal rule
provide appropriate aids in construing the Maine rule. Bean v. Cummings, 2008
ME 18, 7 11, 939 A.2d 676 (quoting Me. Cent. R.R. Co. v. Bangor & Aroostook
R.R. Co., 395 A.2d 1107, 1114 (Me. 1978)}.

Maine Rule of Civil Procedure 41(a)(2} is substantially similar to Federal
Rule of Civil Procedure 41(a}(2). Compare MLR. Civ. P. 41(a)(2), with Fed. R. Civ.
P. 41(a}(2). The First Circuit has articulated four factors to consider when
deciding on a motion under Rule 41(a)(2): “the defendant's effort and expense
of preparation for trial, excessive delay and lack of diligence on the part of the
plaintiff in prosecuting the action, insufficient explanation for the need to take
a dismissal, and the fact that a motion for summary judgment has been filed
by the defendant.” Doe v. Urohealth Sys., Inc, 216 F.3d 157, 160 (ist Cir.
2000) (quoting Pace v. S. Express Co., 409 F.2d 331, 334 (7th Cir, 1969)).
Courts need not consider each factor or limit the consideration to these factors
exclusively. Id. This Court focuses its analysis on the amount of prejudice to
the defendant, bearing in mind that the mere prospect of facing a second
lawsuit is not “plain legal prejudice.” Id. {quoting Grover v, Eli Lilly & Co., 33

F.3d 716, 718 (6th Cir. 1994)); US Bank, NA, 2020 WL 9256602, at *1.

4

As to the first Urohealth factor, the Court observes that although Hanover
has prepared and filed a motion for summary judgment, the motion did not
require considerable effort or expense to prepare when compared to summary
judgment motions involving extensive issues of fact. The issue sought to be
decided on summary judgment here is whether Hanover has a duty to defend
Journey’s End, which is a question of law. Penney v. Capitol City Transfer, Inc.,
1998 ME 44, 9 4, 707 A.2d 387. The preparations involved exchanging
documents and preparing arguments on coverage, but no in-depth discovery or
depositions were undertaken. At the time Continental filed this Motion, this
matter had only been pending for approximately four months. Hanover’s effort
and expense in preparing its case for this matter is minimal compared to the
defendant in Urohealth. See Urohealth Sys., Inc., 216 F.3d at 161 (defendant
had invested considerable financial resources, produced numerous documents,
deposed several purported experts, and filed several protective orders in
response to the plaintiffs conduct).

Under the second factor, the Court does not see any basis for concluding
that Continental has delayed the matter from moving forward or did not pursue
the matter with diligence, let alone excessive delay or lack of diligence. Under
the fourth factor, the court accepts the parties’ assertions that there was no
race to the court and that there was a miscue between the parties on timing.
For this reason, the Court does not weigh heavily the fact that the summary

judgment motion was filed after, but docketed before, this Motion.
Although it is true that nothing has changed with the underlying
litigation between Journey’s End and McMahan from the time Continental filed
this action, the Court accepts Continental’s explanation for filing this Motion.
Hanover argues that judicial efficiency would be better served by denying this
Motion and deciding on its motion for summary judgment because if it prevails
on the duty to defend, this action would be resolved entirely and the Court
would not need to reach whether it has a duty to indemnify. Hanover argues
that it is better to keep the players on the field, at least until its duty to defend
is determined. However, all players are not on the same field. Absent to this
action is the insured and McMahan, a potential judgment creditor. Even if this
Court determines that Hanover has no duty to defend, J ourney’s End and
McMahan would not necessarily be bound by that determination and the issue
may be relitigated later. The interests of judicial efficiency are better served by
deciding all coverage issues at a later date once the underlying litigation is
completed.

Il. Order

For the reasons discussed above, Continental’s Motion to Dismiss Without
Prejudice and Without Costs is GRANTED.

The Clerk is requested to enter this Order on the docket for this case by

incorporating it by reference. M.R. Civ. P. 79{a).

DATED: Je honbe 1B WU

Deborah P. Cashman
Justice, Maine Superior Court

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