Red Roof Inns, Incorporated v. Scottsdale Insurance Company

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case numbers: 8:08-cv-01841-WGC, 8:07-cv-02926-WGC. Copies to all parties and the district court/agency. [998550144]. [09-1697, 09-1760]

Red Roof Inns, Incorporated v. Scottsdale Insurance Company

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 09-1697

RED ROOF INNS, INCORPORATED, Plaintiff - Appellant, v. SCOTTSDALE INSURANCE COMPANY, Defendant - Appellee.

No. 09-1760

RICKI KEYE; WARREN KEYE, Plaintiffs, v. RED ROOF INNS, INCORPORATED; ACCOR NORTH AMERICA, INCORPORATED; RED ROOF FRANCHISING, LLC; RRI ACQUISITION COMPANY, INCORPORATED, Defendants ­ Appellants, v. S & W PROTECTIVE SERVICES, INCORPORATED, Third Party Defendant ­ Appellee.

Appeals from the United States District Court for the District of Maryland, at Greenbelt. William Connelly, Magistrate Judge. (8:08-cv-01841-WGC; 8:07-cv-02926-WGC)

Dockets.Justia.com

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Argued:

January 28, 2011

Decided:

March 22, 2011

Before DUNCAN and WYNN, Circuit Judges, and Irene C. BERGER, United States District Judge for the Southern District of West Virginia, sitting by designation.

Reversed by unpublished opinion. Judge Duncan opinion, in which Judge Wynn and Judge Berger joined.

wrote

the

ARGUED: Angus R. Everton, MORGAN CARLO DOWNS & EVERTON, PA, Hunt Valley, Maryland; Stephen Salvatore McCloskey, SEMMES, BOWEN & SEMMES, Baltimore, Maryland, for Appellants. Kevin Bock Karpinski, KARPINSKI, COLARESI & KARP, PA, Baltimore, Maryland, for Appellees. ON BRIEF: Eric M. Leppo, SEMMES, BOWEN & SEMMES, Baltimore, Maryland, for Appellants. Michael B. Rynd, KARPINSKI, COLARESI & KARP, PA, Baltimore, Maryland, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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DUNCAN, Circuit Judge: This whether consolidated appeal arises Roof out of a Inc. dispute ("Red over Roof

Plaintiff-Appellant

Red

Inns,

Inns") 1 is entitled to indemnity and insurance coverage for a personal injury claim filed against it. Red Roof Inns appeals

the grant of summary judgment in favor of Defendant-Appellees S&W Protective Services, Inc. ("S&W") and Scottsdale Insurance Company reverse. ("Scottsdale"). 2 For the reasons that follow, we

I. S&W provides security guard services to Red Roof Inns The

pursuant to a Security Services Agreement ("Agreement").

Agreement provides that S&W "shall defend, protect, indemnify and hold [Red Roof Inns] harmless" for any claim for damages which may "arise out of or in connection with" S&W's performance of the Agreement, J.A. 42 (¶ 11), including specifically any "claims or suits arising out of injury to . . . any of [S&W's] employees . . . in connection with their performance under this

"Red Roof Inns" refers to the four entities sued in the underlying action: Red Roof Inns, Inc., Accor North America, Inc., Red Roof Franchising, LLC, and RRI Acquisition Co., Inc. 2 The matter was heard by a United States magistrate judge, acting by consent and agreement of the parties pursuant to 28 U.S.C. § 636(c), whom we shall refer to hereafter as the district court. 3

1

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Agreement," J.A. 44 (¶ 12).

S&W's indemnification obligations

under the Agreement "extend to any damages resulting from any action or omission of [Red Roof Inns], negligent or otherwise." Id. at 42 (¶ 11); see also id. at 44 (¶ 12) (extending

indemnification to Red Roof Inns for claims of personal injury, "whether or not caused or contributed by the negligence of [Red Roof Inns]"). 3

3

The full text of the relevant provisions provides:

11. Indemnity and Insurance. . . . Contractor [S&W] shall defend, protect, indemnify and hold Customer [Red Roof Inns] harmless from and against any liability, loss, cost, threat, suit, demand, claim and expense . . . for damages to property or person which may arise out of or in connection with any negligent act or omission of Contractor in connection with its performance under this Agreement . . . . It is intended by the parties hereto that the indemnification obligations of Contractor under this Section shall extend to any damages resulting from any action or omission of Customer, negligent or otherwise, except for damages arising out of the intentional or willful misconduct of Customer. 12. Injury or Death. . . . In addition, Contractor, its employees and agents hereby waive and release Customer . . . from any and all claims, demands, causes of action for injury to property or person . . . arising out of or in connection with Contractor's performance under this Agreement . . . whether or not caused or contributed to by the negligence of Customer . . . . Contractor further agrees to defend, protect, indemnify, and hold Customer harmless from and against any and all costs, losses, claims and expenses . . . as a result of claims or suits arising out of injury to or death of any of Contractor's employees . . . in connection with their performance under this Agreement, whether or not (Continued) 4

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S&W

also

purchased

a

general

liability

insurance

policy

("Policy") from Scottsdale that contained an endorsement naming Red Roof Inns as an additional insured. Roof Inns "with respect to liability The Policy insured Red arising out of [S&W's]

ongoing operations performed for [Red Roof Inns]." On October 14, 2004, Warren Keye, an S&W

J.A. 95. employee, was

working as a security guard at a motel owned and operated by Red Roof Inns. As Mr. Keye was ascending an exterior staircase to

investigate suspected criminal activity on an upper floor of the motel, the metal rim of a concrete step on the stairway Red Roof of our

collapsed, and he fell backward down several steps. Inns does not dispute its negligence for purposes

inquiry. In October of 2007, Mr. Keye and his wife filed a personal injury action against Red Roof Inns. Red Roof Inns made a

formal demand to S&W to defend and indemnify it under their Agreement, and to Scottsdale to defend and indemnify it pursuant to the Policy naming Red Roof Inns as an additional insured. Both S&W and Scottsdale declined to defend or indemnify, and Red

caused or contributed by the negligence of Customer, its employees or agents . . . . J.A. 42-43. 5

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Roof Inns brought suit against both. summary judgment. On May 20, 2009, the district

All parties moved for

court

granted

summary

judgment in favor of S&W and Scottsdale and dismissed Red Roof Inns' claims. The district court reasoned that "it [was] not

plainly evident from the face of the Agreement that S&W agreed to indemnify Red Roof Inns for damages resulting from [its]

negligent inspection and maintenance of exposed exterior steel stairwells." extrinsic S&W's J.A. 787. in Finding ambiguity, the court considered the form of deposition Officer, testimony who denied under from any the

evidence and

President by for

Chief

Executive to hold

intention Agreement

the

parties

S&W or

responsible structural

building

maintenance

inspections.

The court held that the parties did not intend to shield Red Roof Inns from its own negligence in this circumstance. In response to Red Roof Inns' request for reconsideration, 4 on June 16, 2009, the court issued an order holding that

Scottsdale did not owe Red Roof Inns indemnity and a defense. The court observed but only that if the the Policy bodily covers injury claims is of "bodily by an

injury,"

caused

"occurrence."
4

J.A. 816.

An "occurrence" is defined in the

Red Roof Inns requested reconsideration of the May Order on the grounds that the court did not address the issue of whether Scottsdale was obligated to provide coverage by virtue of Red Roof Inns' status as an additional insured. 6

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Policy

as

"an

accident,

including

continuous

or

repeated

exposure to substantially the same general harmful conditions." J.A. 76. accident, Although the court determined Mr. Keye's fall was an it nonetheless found that Mr. Keye's fall did not

qualify as an "occurrence" under the Policy.

It reasoned that

the Policy's coverage was restricted to liability "arising out of S&W's ongoing operations" performed for Red Roof Inns, and because the court had already determined in its May Order that Mr. Keye's fall did not arise out of the security services

provided by S&W under the Agreement, the Policy's coverage did not extend to Red Roof Inns as an additional insured. 18. J.A. 817-

II. Red Roof Inns challenges the district court's

determinations in both cases, which have been consolidated for appeal. As to S&W, Red Roof Inns asserts that the Agreement provides for coverage irrespective of its

unambiguously negligence. qualifies as

As to Scottsdale, Red Roof Inns argues that it an "additional insured" under the Policy. The

issues are governed by the laws of the District of Columbia and Maryland, respectively, and we consider each in turn. As to

both, we review the grant of summary judgment de novo, resolving all doubts and inferences in favor 7 of the non-moving party.

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Seabulk Offshore, Ltd. v. Am. Home Assurance Co., 377 F.3d 408, 418 (4th Cir. 2004). When reviewing cross-motions for summary

judgment, we consider "each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law." Bacon v. City of Richmond, 475 F.3d 633, 638 In

(4th Cir. 2007) (internal citations and quotations omitted).

such cases, "we may, if appropriate, direct entry of judgment in favor of the party whose motion was denied by the district

court." Fund v.

Bakery & Confectionery Union & Indus. Int'l Pension Ralph's Grocery Co., 118 F.3d 1018, 1020 (4th Cir.

1997). A. We first consider whether the Agreement requires S&W to defend and indemnify Red Roof Inns for a claim alleging its own negligence. contract Under District of Columbia law, 5 the first step in is determining "the intent of the

interpretation

parties entering into the agreement."

Steele Founds., Inc. v. The

Clark Constr. Grp., Inc., 937 A.2d 148, 154 (D.C. 2007).

question of intent is resolved by deciding "what a reasonable person in the position of the parties would have thought the

Both parties agree that, pursuant to a choice of law provision in the Agreement (Section 15), the laws of the District of Columbia govern the interpretation of the security services contract. See J.A. 774; Appellant's Br. at 16, Appellee's Br. at 12. 8

5

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disputed language meant."

Psaromatis v. English Holdings I,

LLC, 944 A.2d 472, 481 (D.C. 2008) (quoting 1010 Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 205 (D.C. 1984)). In so doing, the contractual provisions "must be interpreted as a whole," id., "so as to give effect, if possible, to all of the provisions in the contract," Steele Founds., 937 A.2d at 154. If the instrument is facially unambiguous, "its language should be relied upon as providing the best objective

manifestation of the parties' intent." at 205. extrinsic

1010 Potomac, 485 A.2d

Only in the event of ambiguity may a court consider evidence of the parties' subjective intent. Id.

Whether a contract's language is ambiguous is a question of law. Steele Founds., 937 A.2d at 153. Ambiguity exists "only if the

court determines that the proper interpretation of the contract cannot be derived from the contractual language exclusively, and requires consideration of evidence outside the contract itself." Id. Parties are free to enter into indemnification contracts under District of Columbia law. v. Md. Drywall Co., Inc., 673 See A.2d W.M. Schlosser Co., Inc. 647, 653 (D.C. 1996).

However, indemnity provisions should be construed to permit an indemnitee to recover for its own negligence only if "the court is firmly convinced that such an interpretation reflects the intention of the parties." 9 Id. (internal quotations and

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citation omitted).

The question here becomes, then, whether the

Agreement "clearly reflects" the parties' intention to indemnify Red Roof Inns for claims involving its own negligence. find that it does. The Agreement requires S&W to defend and indemnify Red Roof Inns for "any injury to any person . . . resulting from or arising out of any act . . . in connection J.A. 42 with (¶ [S&W's] It Id. We

performance

under

this

Agreement."

11).

expressly states that the indemnification "is intended by the parties" to "extend to any damages resulting from any action or omission of [Red Roof Inns], negligent or otherwise." Id.

(emphasis added). specific,

Paragraph 12 of the Agreement is even more providing that S&W will defend and

explicitly

indemnify Red Roof Inns for any claims or suits brought by S&W employees against Red Roof Inns for injuries "arising out of or in connection with [S&W employees'] performance under this

Agreement . . . whether or not caused or contributed [to] by the negligence of [Red Roof Inns]." J.A. 44 (emphasis added).

S&W argues that the language in the Agreement is, at best, ambiguous because it is "susceptible to more than one reasonable interpretation." Appellees' Br. at 20. S&W contends that a

reasonable person could interpret the Agreement to mean that S&W agreed to defend and indemnify Red Roof Inns for "the potential hazards that would normally attend the performance of a contract 10

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for security services."

Id. at 17-18.

As support for this

proposition, S&W cites Paragraph 11(b) of the Agreement, which requires S&W to maintain Comprehensive General Liability insurance (with independent contractor's coverage and coverage for liability assumed under contract, for libel, slander, defamation, false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, invasion of privacy, and for any claim for loss of property of Customer caused by a dishonest or fraudulent act of an employee of Contractor) . . . . J.A. 43. S&W asserts that this description of the liability

insurance coverage S&W is responsible for procuring for Red Roof Inns limits the scope of S&W's indemnification to "the list of specifically covered events" enumerated in Paragraph 11(b).

Appellee's Br. at 17-18.

However, a plain reading of Paragraph

11(b) in no way suggests that the examples listed are meant to be exhaustive, or that the type or scope of liability insurance coverage is intended to limit the general indemnification

provisions found in Paragraphs 11 and 12. Recognizing the Agreement's specificity with respect to

negligence, S&W contended at oral argument that the language was too specific. In response to the question of what more the

Agreement would have to say to demonstrate its intent to cover negligence, counsel asserted that the indemnification provisions would need to be so broad and inclusive as to state that "the Contractor [S&W] agrees to defend and indemnify the Customer

11

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[Red Roof Inns] for any and all negligence claims by an S&W employee," Agreement." unworkable. If the and to S&W's not include the qualifier is "under this and

proposed

language

unrealistic

The fallacy of its contention is readily apparent. provisions Agreement, S&W were would not be limited required to to

indemnification under this

performance

defend and indemnify Red Roof Inns for any and all claims of negligence brought by S&W employees, whether or not they worked for Red Roof Inns. As written, Paragraphs 11 and 12 of the Agreement

specifically and unambiguously evidence an intent by the parties to indemnify Red Roof Inns for its negligence. Columbia law confirms this reading. For District of in W.M.

example,

Schlosser Co., Inc. v. Md. Drywall Co., Inc., 673 A.2d 647 (D.C. 1996), serious an employee of the subcontractor-indemnitor through a sustained opening

injuries

after

falling

door-sized

three stories high on a construction site.

The employee sought

damages from the general contractor, Schlosser, whose site did not meet safety standards. indemnification language from the Id. at 649. Schlosser sought under all contractual . . .

subcontractor for "any and

providing

indemnity

claims

arising out of . . . or in connection with the execution of the work" contemplated by the contract. Id. at 653. The Schlosser

court viewed the provision as "clear and certain in its terms 12

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giving rise to no ambiguity."

Id. at 654.

It was "satisfied

that the language of the contract is sufficiently clear that [indemnitor] is responsible not only for its own negligence, but that its liability also stretches to encompass [indemnitee's] negligence as well." Similarly, in Id. (internal quotations omitted).

N.P.P. Contractors, Inc. v. John Canning &

Co., 715 A.2d 139 (D.C. 1998), the general contractor sought indemnification "negligence in from the subcontractor maintaining for and/or its own alleged the

erecting,

inspecting

scaffolding [which] was a proximate cause of" injuries suffered by the subcontractor's employee. Id. at 140. The

indemnification clause required the subcontractor-indemnitor to "indemnify and save harmless the [indemnitee] from any and all claims and liability for property damage and personal

injury . . . arising out of or resulting from or in connection with the execution of the work." Id. The court found this Id. at 142 (agreeing it is "so broad and

language "unambiguous and enforceable." that the indemnification clause before

sweeping" as to cover damages "incurred in whole or in part by the negligence of the indemnitee") (emphasis omitted); 6 see also

S&W argues that because the above-cited cases construction law cases, they are distinguishable because of "differing natures of the work to be executed, and respective frame of reference of the parties." Appellees' at 27. It cites no law to support its proposition, nor do (Continued) 13

6

are the the Br. the

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Princemont Constr. Corp. v. Baltimore and Ohio R.R. Co., 131 A.2d 877, 877-78 (D.C. 1975) (deeming an indemnification clause for "all liability for any and all loss and damage to property and claims for injury to or death of persons in connection with or growing out of" the contract to be "broad and comprehensive" enough "to exonerate the [indemnitee] from liability for its own negligent acts"). In short, if the indemnification language in the abovecited cases the unambiguously indemnitee's evidenced negligence, the parties' the intent to

encompass

surely

Agreement's

indemnification language does here as well.

For the Agreement

goes one step further by expressly stating that it is "intended by the parties" that S&W's indemnification obligations extend to any damages resulting from Red Roof Inns' acts or omissions, "negligent or otherwise." J.A. 42 (¶ 11). In other words, even

if the "negligent or otherwise" phrases were missing from the Agreement, District of Columbia precedent establishes that the remaining provisions, with their repeated use of "any," are

sufficiently broad and comprehensive to find indemnification of damages acts. or injuries resulting from an indemnitee's negligent

See Schlosser, 673 A.2d at 654 (finding that clauses at

challenged cases themselves suggest that apply in the construction law context. 14

their

holdings

only

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issue in other cases--such as "indemnify . . . from any and all claims," "indemnify against any loss," or "assume all liability for any and all loss"--were all "sufficiently comprehensive as to include indemnification for damages resulting from the

negligence of [indemnitee]") (emphasis added).

Because we find

that the Agreement's indemnification language is not susceptible to more than one reasonable interpretation, we need not consider the testimony of S&W's President and CEO, or any other extrinsic evidence. The Agreement's defense and indemnification provisions are unambiguous and clearly show that the parties agreed S&W would bear the financial burden for injuries sustained in connection to S&W's performance "from any of the or Agreement--even omission of those injuries Inns],

resulting

action

[Red

Roof

negligent or otherwise."

J.A. 42.

As a result, S&W must defend J.A. 43

and indemnify Red Roof Inns against Mr. Keye's claim.

(requiring S&W to "defend," "indemnify," and "hold harmless" Red Roof Inns "from and against any and all costs, losses, claims and expenses" resulting from "claims or suits arising out of injury to . . . any of [S&W's] employees . . . in connection

with their performance under this Agreement").

It is undisputed

that Mr. Keye was injured while working as an employee for S&W. Moreover, S&W conceded at oral argument that there is no dispute Mr. Keye was ascending the staircase in the performance of his 15

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duties as a security guard, as he was investigating suspected criminal activity on an upper floor. security service contemplated by the This is the very type of Agreement. We see no

reasonable interpretation under District of Columbia law other than that Mr. Keye's injury "ar[o]se out of or in connection with" S&W's performance under the Agreement. See, e.g.,

Schlosser, 673 A.2d at 653 (holding that injuries sustained by indemnitor's employee while performing contract work on

indemnitee's work site arose out of or "in connection with the execution of the work" despite being caused by indemnitee's own negligence); Grunley Constr. Co. v. Conway Corp., 676 A.2d 477, 477-78 (D.C. 1996) (same). Pursuant to the terms of the

Agreement, Red Roof Inns is entitled to both indemnity and a defense from S&W as a matter of law. B. We next consider Red Roof Inns' argument that the district court erred by finding that Scottsdale does not have a duty to defend or indemnify it in the underlying Keye action. Applying

the same de novo standard of review, we determine whether an insurer has a duty to defend an insured by following the twopart inquiry set forth under Maryland law. 7 We first assess the

Maryland law governs the insurance policy issued by Scottsdale. The primary purpose in construing insurance contracts under Maryland law "is to ascertain and give effect to (Continued) 16

7

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nature of the coverage and terms of the insurance policy, and then determine whether the allegations in the tort action

potentially bring the tort claim within the insurance policy's coverage. Aetna Cas. & Surety Co. v. Cochran, 651 A.2d 859,

862 (Md. 1995); see also Walk v. Hartford Cas. Ins. Co., 852 A.2d 98, 106 (Md. 2004). In undertaking this analysis, we look

to (1) the language and requirements of the liability insurance policy and (2) the allegations of the complaint. Surety Co., 651 A.2d at 862. i. With regard to the first step of the inquiry--the nature of the insurance policy's terms--the Policy here provides coverage for Red Roof Inns "with respect to liability arising out of [S&W's] ongoing operations performed for [Red Roof Inns]." 95. J.A. Aetna Cas. &

Paragraph 1(a) of Section I of the Policy specifically

states: [Scottsdale] will pay those sums that [Red Roof Inns] becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. [Scottsdale] will have the right and duty to defend [Red Roof Inns] against any "suit" seeking those damages. However, [Scottsdale] will have no duty to defend [Red Roof Inns] against any

the intentions of the parties at the time of contracting," which requires construing the instrument "as a whole." Catalina Enter., Inc. Pension Trust v. Hartford Fire Ins. Co., 67 F.3d 63, 65 (4th Cir. 1995) (internal citations and quotations omitted). 17

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"suit" seeking damages for "bodily injury" or "property damages" to which this insurance does not apply. [Scottsdale] may, at [its] discretion, investigate any "occurrence" and settle any claim or "suit" that may result. J.A. 63 (¶ 1(a)). The Policy covers claims of "bodily injury," Id. (¶

but only if the injury is caused by an "occurrence." 1(b)(1)). accident,

According to the Policy, an "occurrence" means "an including continuous or repeated exposure to

substantially the same general harmful conditions."

J.A. 76.

The Policy does not define the word accident, but the Court of Appeals of Maryland an has held under that a "an act of negligence policy

constitutes

`accident'

liability

insurance

when the resulting damage . . . is unforeseen or unexpected by the insured." Sheets v. Brethren Mut. Ins. Co., 679 A.2d 540, As

548 (Md. 1996) (internal citations and quotations omitted).

the district court found, Mr. Keye's fall was an "accident"--it was not within Red Roof Inns' foresight or expectation, nor that of anyone else. And an "accident" in the Scottsdale policy is, But Scottsdale asserts Red Roof It reasons that

by definition, an "occurrence."

Inns is nonetheless precluded from coverage.

the Policy limits Red Roof Inns' coverage to "liability arising out of [S&W's] ongoing operations performed for [Red Roof

Inns]," J.A. 80, and an occurrence/accident resulting from Red Roof Inns' negligent maintenance of the stairs is not a failure that arose out of the work which S&W was contracted to perform. 18

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While the phrase "arising out of" has been the subject of prior interpretation "settled by Maryland that courts, applies it to does not have a

single, policy.

meaning"

every

insurance

Phila. Indem. Ins. Co. v. Md. Yacht Club, Inc., 742 The phrase "arising out

A.2d 79, 86 (Md. Ct. Spec. App. 1999).

of" must be construed on a "contract by contract or case by case basis." Id. Scottsdale argues that the phrase "arising out of"

in this particular case requires a more stringent, direct link between the cause of the injury and the resulting injury--that is, proximate causation. We agree with Red Roof Inns, however,

that under Maryland law, a "but for" causal link--that is, a loose cause and result relationship--is enough to satisfy the Policy's "arising out of" requirement. The Maryland Court of Appeals has not construed the

"arising out of" language in a case which specifically involves the endorsement clause of a general liability insurance policy. The court has, however, interpreted this language with respect to other insurance contract clauses. For example, in Northern

Assurance Co. of America v. EDP Floors, Inc., 533 A.2d 682 (Md. 1987), the court construed an exclusionary clause of a general business bodily liability injury policy which of excluded the from coverage any

"arising

out

ownership,

maintenance,

operation, use, loading or unloading of . . . any automobile." Id. at 686. An employee of an EDP Floors customer was injured 19

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while assisting with the unloading of an EDP Floors truck, and the employee filed suit against EDP Floors, alleging liability for negligent supervision. The Maryland Court Id. at 684. of Appeals explained that the words

"arising out of" must be afforded "their common understanding, namely, to mean originating from, growing out of, flowing from, or the like." causal Id. at 688. of some "While these words plainly import a read in context, they do not

relation

kind,

require that the unloading of the truck be the sole `arising out of' cause of the injury." Id. In other words, the court

"reasoned that an injury could arise from various sources, but that the exclusion from coverage would apply as long as the clause covered at least one of the sources." Teletronics Int'l,

Inc. v. CNA Ins. Co., 302 F. Supp. 2d 442 (D.Md. 2004), reversed on other grounds, 120 F. App'x 440 (4th Cir. 2005) (interpreting EDP Floors and other Maryland cases). argument, much like the one Scottsdale EDP Floors rejected an makes here, that the

employer's negligence broke the chain of causation.

Instead it

adopted a more lenient, "but for" causation approach, finding that "if [claimant's] bodily injury arose out of EDP's

employee's unloading of the truck, then that injury is excluded from coverage . . . regardless of whether the injury may also be said to have arisen out of other causes further back in the sequence of events." EDP Floors, 533 A.2d at 689. 20

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Similarly

instructive

is

the

court's

decision

in

Mass

Transit Administration v. CSX Transportation, Inc., 708 A.2d 298 (Md. 1998). an While the court in CSXT was called on to interpret provision and not a liability insurance

indemnification

policy, it noted that, "[i]nasmuch as the indemnification was intended . . . to serve as liability insurance for . . . CSXT's liability, it is in appropriate the same to interpret as and apply the

indemnification policies."

manner

liability

insurance

Id. at 304.

CSXT was under contract to the Mass

Transit Administration of Maryland ("MTA") to provide commuter rail service, and the MTA agreed to indemnify and defend CSXT for liability "arising out of the Contract Service under this Agreement." Id. at 300. CSXT hired a contractor to pave

several of its public road crossings.

The contractor's backhoe

was subsequently destroyed when a CSXT commuter train struck it. The sought contractor brought from suit the against MTA, CSXT, who in that turn the

indemnification

averring

contractor's claim against it "arose out of" contract service because the commuter train was the direct physical cause of the damage to the backhoe. argued that CSXT's caused more The MTA, much like Scottsdale here, "further Id. back at in 305. the chain The of

negligence the

causation, rejected

accident."

court and

this

stringent

proximate out

cause of"

requirement the

interpreted

the

phrase

"arising 21

in

CSXT-MTA

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agreement to require only "but for" causation.

It reasoned that

CSXT's own negligence in failing to warn the contractor of an approaching train "d[id] not diminish the fact that the damage to the backhoe arose out of the collision with the [commuter] train." Id.

Scottsdale contends, however, that the Maryland Court of Appeals' decision in Phila. Indem. Ins. Co. v. Md. Yacht Club, Inc., 742 A.2d 79 (Md. Ct. Spec. App. 1999) demonstrates that a stronger required. nexus between the injury and policy provision is

In that case, an insurance company unsuccessfully

attempted to avoid defense and indemnification for an employee's claim of wrongful discharge, which the employee contended was motivated by his "having sought [workers compensation] benefits for a leg injury." Id. at 83-84. Contrary to Scottsdale's

insistence that Md. Yacht Club is relevant to our analysis here, we believe a claim for wrongful discharge is analytically

distinct from a claim expressly for bodily injury, and do not find the case instructive. 8 Instead, we believe the court's

Apart from its citation to Md. Yacht Club, Scottsdale relies almost exclusively on cases interpreting "arising out of" in the context of the Maryland Uninsured Motorist Act. We do not find these decisions relevant to our inquiry, given that uninsured motorist claims implicate a distinctive type of insurance coverage that is not at issue here. Scottsdale also urges us to follow G.E. Tignall & Co. v. Reliance National Insurance Co., 102 F. Supp. 2d 300 (D. Md. 2000), a federal district court case applying Maryland state law (Continued) 22

8

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rulings

in

EDP

Floors

and

CSXT

are

more

applicable

to

the

context, and Policy terms, found in the case at bar.

There,

like here, the damage/injury would not have occurred but for the claimant's performance of its duties pursuant to the underlying contract, and the existence of other reasons or sources of the damage/injury did not diminish the "arising out of" causal link that had been established. Accordingly, we conclude, just as

those cases did, that the Policy's "arising out of" language in this case requires no more than "but for" causation. The causal

requirement is met regardless of whether Mr. Keye's injury may also be said to have arisen out of Red Roof Inns' negligent failure to maintain the stairwell.

to a disputed endorsement clause that contains an "arising out of" provision similar to the disputed language here. The court found that the endorsement clause was unambiguous and that the insurance policy did not cover Tignall for its own negligent acts. Significantly, the district court did not discuss Maryland case law finding the phrase "arising out of" ambiguous, or those decisions requiring only "but for" causation. As a result, we are not persuaded by its reasoning. In short, Scottsdale fails to cite any Maryland case that indicates we must adopt a proximate cause approach. It merely contends that "[n]othing in the more recent cases precludes this Court from applying a standard other than `but for' causation to the instant circumstances." Appellees' Br. at 40 (emphasis added). We disagree and find that Maryland case law establishes that "but for" causation satisfies the Policy's "arising out of" requirement here. 23

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ii. Having examined the terms of the Policy, we now turn to the second step of the Aetna inquiry, which considers whether the facts alleged in the complaint bring Mr. Keye's tort claim

within the Policy's coverage.

The complaint alleges that Mr.

Keye was injured while "working at a motel as a security guard for S&W Protective Services, Inc. a security company contracted by [Red Roof Inns]." J.A. 17. It further claims that "[a]t

that time, while Plaintiff was ascending one of the stairways at the motel, the metal rim on the edge of a concrete step on the stairway collapsed when Plaintiff put his foot on said step" and he fell, sustaining multiple injuries. J.A. 17-18. In other

words, S&W was employed to provide security services at Red Roof Inns, and at the time he sustained his injury, Mr. Keye was an S&W employee providing the sort of security service work that S&W was contracted to perform. As explained above, the Policy covers claims for "bodily injury" caused by "occurrences" (or, accidents). Mr. Keye's

allegations in the complaint not only indicate that he suffered bodily injury as the result of an accident, just as the district court found; they also establish that he would not have been injured on the Red Roof stairway that day but for his presence on the stairway as a result of his employment with S&W and his carrying out of security services pursuant to his employer's 24

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contract with Red Roof Inns.

This "but for" causal link is

sufficient under the terms of the Policy irrespective of any negligence on Red Roof Inns' part that could be characterized as an additional in reason for the injury. out Mr. of Keye's injury--as ongoing Red Roof

alleged

his

complaint--"ar[ose]

[S&W's]

operations performed for [Red Roof Inns]."

J.A. 95.

Inns is entitled to both coverage and a defense from Scottsdale as a matter of law. 9

III. For the foregoing reasons, we reverse and vacate the

judgment of the district court granting summary judgment to S&W and Scottsdale. On remand, the district court should enter

summary judgment in favor of Red Roof Inns. REVERSED

Scottsdale's argument that "there are no provisions in the Policy permitting Red Roof to gain coverage for negligence that predated the policy," Appellee's Br. at 44, is meritless. The Policy's coverage is triggered not by the date when Red Roof Inns' alleged negligence began, but by the date when "bodily injury" occurred. J.A. 63. 25

9