Insurance: Coverage suit for construction damages is dismissed

RICHMOND, VA — Where a general contractor sued its insurers over coverage for damages in connection with a construction project gone awry, but its first amended complaint failed to state a claim, there was no basis to reconsider the dismissal and the proposed amendment would be futile, the suit was dismissed.

Background

John C. Grimberg Company Inc. brought this diversity action against its excess insurers, including XL Specialty Insurance Company and XL Insurance America, Inc., seeking insurance coverage for damages in connection with a construction project gone awry.

The United States Navy contracted with Grimberg to build a school on a military base in Quantico, Virginia. To carry out the work, Grimberg entered into a subcontract for the construction of insulated concrete form, or ICF, walls to support the framing of the school.

Unfortunately, even before the project was completed, the ICF walls were found to have been poorly constructed. The Navy raised concerns that the entire structure was compromised and demanded that Grimberg fix the problems. Grimberg incurred significant costs for demolition and reconstruction of the school’s framing in carrying out the repairs.

The district court granted XL’s motion to dismiss Grimberg’s first amended complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Grimberg then moved to alter or amend the dismissal pursuant to Rule 59(e) and for leave to file a second amended complaint under Rule 15(a). The district court denied both requests, finding no basis to reconsider the dismissal and concluding that amendment would be futile.

Choice of law

The parties dispute whether Maryland or Virginia state law applies. Virginia common law would require that this court apply the laws of the State of Maryland because the insurance policies were delivered to Grimberg in Maryland. Grimberg contends, however, that a Virgina statute modifies that common law rule by requiring all “insurance contracts on or with respect to the ownership, maintenance or use of property” in Virgina to “be deemed to have been made in” Virginia and therefore construed under Virgina law.

The district court declined to reach the question of whether the Virgina statute applied, having found that the same result would yield under either Maryland or Virgina law. This court agrees, and affirms the district court’s choice of law analysis.

Analysis

Having carefully reviewed the record, including Grimberg’s proposed second amended complaint, and having considered the parties’ appellate briefs and oral argument, this court discerns no reversible error in the rulings challenged on appeal.

Affirmed.

John C. Grimberg Company, Inc. v. XL Specialty Insurance Company, Case No. 24-1977, Nov. 18, 2025. 4th Circuit (per curiam), from EDVA at Alexandria (Trenga). Edward Dane Manchester for Appellant. Ezra S. Gollogly for Appellees. VLW 025-2-424. 4 pp.