District Judge Paul A. Engelmayer


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Britain’s Keller Group PLC (KG) is corporate parent of Maryland-based Delaware-incorporated construction firms Keller Foundations LLC (Keller) and Hayward Baker Inc. (HBI). Keller and HBI—but not KG—were named insureds under a policy issued by Zurich Am. Ins. Co. Plaintiffs’ action against Zurich—alleging contract breach and breach of the contractual and statutory implied covenants of good faith and fair dealing—arose from Zurich’s 2013 settlement with a third party under the subject policy. The court dismissed suit, without prejudice, for failure to state a claim. Applying operative Delaware substantive law the court determined that as it was neither an insured, nor an intended beneficiary, under the subject policy, KG lacked standing to assert contract breach. Further, on the facts pleaded, Zurich did not breach any duty to named insureds Keller and HBI. Plaintiffs’ complaint did not allege any breach of Zurich’s two contractual obligations to Keller and HBI as named insureds. Nor did they identify any policy provision requiring Zurich to notify Keller or HBI of, or obtain their consent to, settlement of claims by an alleged third-party insurer. Rather, the policy gave Zurich broad authority to settle claims.