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Evanston Insurance Co. v. AJ's Electrical Testing & Service

United States District Court, D. South Carolina, Aiken Division

January 25, 2016

Evanston Insurance Co., Plaintiff,
v.
AJ's Electrical Testing & Service d/b/a Southern Substation, LLC; Roy Johnson; Carrie Ann Johnson; George Schultz, Defendants. AJ’s Electrical Testing & Service d/b/a Southern Substation, LLC, Counter Claimant,
v.
Evanston Insurance Co., Counter Defendant.

ORDER

I. INTRODUCTION

Plaintiff Evanston Insurance Co. (“Evanston Insurance”) seeks a declaratory judgment that it has no duty to defend in two underlying lawsuits filed in the Edgefield County Court of Common Pleas (hereinafter “Underlying Lawsuits”). (ECF No. 1 at 7, 9.) This matter is before the court on Defendant AJ’s Electrical Testing & Services, LLC’s (d/b/a “Southern Substation”)Motion for Summary Judgment[1] (ECF No. 35). For the reasons below, this court DENIES Defendants’ Motion for Summary Judgment (ECF No. 35).

II. JURISDICTION

Because the amount of controversy exceeds the jurisdictional requirement, [2] and because the citizens in this action are of different states, [3] this court has original subject matter jurisdiction. See 28 U.S.C. § 1332 (2012). Furthermore, under 28 U.S.C. § 2201 (2012), this court has personal and subject matter jurisdiction, and venue is proper in the Aiken Division of the United States District Court for the District of South Carolina.

III. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

On June 9, 2014, Defendants (and Underlying Plaintiffs) Roy Johnson and George C. Schultz, Jr. inspected and tested circuit breakers at a Trantech facility in response to an overhead light outage. (ECF No. 1 at 3.) The Underlying Lawsuits concern arc flash explosions that occurred during their inspection. (Id.)

Prior to the explosions, Trantech had hired Shealy Electrical Wholesalers, Inc. (“Shealy Electrical”) to perform an arc flash hazard analysis and switchgear testing to comply with Occupational Safety and Health Administration (“OSHA”) regulations and National Fire Protection Association (“NFPA”) Standards. (Id. at 3-4.) Shealy Electrical then subcontracted this work to Defendant Southern Substation, (Id.), which describes itself as an electrical contractor whose business involves electrical testing, maintenance, and repair at commercial and industrial facilities. (ECF No. 35-2 at 2.) Defendant Southern Substation performed the arc flash hazard analysis and OSHA arc flash hazard training seminar in December 2013. (ECF No. 1 at 4.)

Defendant Southern Substation made a claim against the policies for the allegations in the Underlying Lawsuits, where Plaintiff Evanston Insurance is participating in the defense. (Id. at 4-5.) Plaintiff has two insurance policies with Defendant Southern Substation. (Id. at 5.) Evanston Policy 3C05547 (hereinafter “Liability Policy”) is a commercial general liability policy with effective dates of February 16, 2014 through February 16, 2015. (ECF No. 39 at Ex. C.) Evanston Excess Policy XOVA785814 (hereinafter “Excess Policy”) is an excess liability policy also with effective dates of February 16, 2014 through February 16, 2015. (Id. at Ex. D.)

The Liability Policy contains an “Absolute Professional Liability Exclusion, ” which states, in relevant part:

This insurance does not apply to any liability arising out of the rendering of or failure to render professional services or any error or omission, malpractice, or mistake of a professional nature committed or alleged to have been committed by on or your behalf.
This exclusion applies to all injury sustained by any person, including emotional distress, whether alleged, threatened, or actual, including but not limited to your negligence or other wrongdoing.

(Id. at Ex. C.) The Excess Policy also contains a professional liability exclusion that states the “policy shall not apply to ultimate net loss for any loss, cost and/or expense arising out of, resulting from, caused by, or in any way contributed to the rendering of or failure to render any professional service.” (Id. at Ex. D.)

All of the claims against Defendant Southern Substation in the Underlying Lawsuits arise out of the rendering of the arc flash hazard analysis and training. (ECF No. 1 at 4-5.) Plaintiff seeks a declaratory judgment that it has no duty or obligation under the Liability Policy or the Excess Policy to defend and/or indemnify Southern Substation for any matters related to the Underlying Lawsuits. (ECF No. 1 at 5, 9.)

Defendants move for summary judgment. (ECF No. 35.) Plaintiff replied with a Response in Opposition (ECF Nos. 39, 54). Defendant Southern Substation later submitted a Reply to Response in Opposition (ECF Nos. 44, 59), to which Plaintiff responded (ECF No. 60). This court held a hearing on November 18, 2015, taking under advisement Defendants’ Motion for Summary Judgment. (ECF No. 55.)

IV. LEGAL STANDARDS

A. Declaratory Relief

In this case, Plaintiff requests a declaratory judgment. (ECF No. 1 at 5, 9.) Federal courts have discretion to decline to exercise jurisdiction over a declaratory judgment pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. ยง 2201, and ...


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