Why a Judge Denied HITT Contracting's $24M Insurance Claim on a Museum Expansion
Jury trial was abandoned for an unusual reason in this unusual case
HITT Contracting was accused of damaging parts of the Glenstone Museum in Potomac, Md.,during a $200-million renovation project. Photo (cropped): Sdkb via Wikimedia Commons under C.C. License 4.0.
A state court judge in Virginia recently upheld insurer St. Paul Fire and Marine's denial of HITT Contracting's $24 million insurance claim, involving damage HITT allegedly caused during a museum expansion finished in 2018, because the contractor allegedly failed to meet the timely notification requirement in its policy.
Falls Church, Va.-based HITT says the judge ignored much evidence that it deserved the insurance coverage and said that it is appealing the decision and expects an appeals court decision in early 2026.
The judge's ruling provides his summary of how the unusual case played out.
In 2014 HITT Contracting had won the prime contract in a $200-million expansion of the Gwathmey Siegel-designed Glenstone Museum in Potomac, Md., which opened in 2018. In August that year HITT sued Glenstone for $18 million in unpaid work.
Glenstone countersued for $36 million. The museum claimed HITT's work and subs had inflicted significant damage, including causing numerous roof leaks and shattering imported glass panels.
HITT had a $2-million primary layer of liability insurance, a $25-million first layer of excess insurance and a second excess layer on top of that for $25 million, with St. Paul.
Just one day before a trial over the alleged building damage was to begin in June 2023, HITT and Glenstone settled for a total of $51 million from HITT and its insurers. The primary insurer and first level excess insurer agreed to pay a combined $12 million and HITT agreed to pay $21 million, but HITT sought $24 million from St. Paul—an amount that would have covered HITT's loss.
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But St. Paul refused to pay.
Part of the recent decision upholding the denied claim was to have been based partly on Judge David Oblon's analysis of whether HITT had exhausted lower level policies before making its claim to St. Paul. But the judge essentially threw up his hands and said that figuring that out would end up as guesswork, so he based his decision on the notification issue.
The fact that the case was decided by Oblon at all, in a bench trial, was also unusual, because the case had been set to be decided by a jury. The jury trial was abandoned because HITT was at work on a project in the Fairfax., Va., courthouse where the insurance case was being tried and there was concern, first raised by the museum's attorneys, that the jury could interpret HITT"s work on the courthouse as a implicit endorsement of HITT by the court.
Judge Oblon's decision involved an interpretation of the notice provisions in the insurance policy and the interplay between HITT and St. Paul. What happened in 2018 and 2019 was crucial. HITT did not notify St. Paul when Glenstone filed its counterclaim against HITT in October, 2018, Oblon wrote. Without notice the next year, HITT and Glenstone mediated their dispute and couldn't come to an agreement. Glenstone had offered to settle for $11 million plus HITT's $18 million waiver for unpaid work, Oblon wrote.
A week after the mediation failed, "and five months after Glenstone filed its counterclaim," HITT notified its agent of the potential claim to St. Paul.
"Did HITT timely notify St. Paul of a likely insurance claim?" Oblon wrote. No, he ruled, and that alone "mandates judgment in favor of St. Paul."
HITT says Oblon made numerous mistakes.
"The trial judge," the company says in a statement, "disregarded uncontested, unimpeached and stipulated evidence demonstrating excess insurance coverage against St. Paul under follow-form policies where both the primary and first excess carriers covered HITT's claims."
