W.C. and A.N. Miller Developme v. Continental Casualty Company

Filing

AMENDED OPINION filed amending and superseding opinion dated 12/30/2015. Originating case number: 8:14-cv-00425-GJH Copies to all parties.. [14-2327]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-2327

W.C. AND A.N. MILLER DEVELOPMENT COMPANY,
Plaintiff - Appellant,
v.
CONTINENTAL CASUALTY COMPANY,
Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt.
George J. Hazel, District Judge.
(8:14-cv-00425-GJH)

Argued:

October 28, 2015
Amended:

Decided:

December 30, 2015

February 19, 2016

Before GREGORY, DUNCAN, and FLOYD, Circuit Judges.

Affirmed by published opinion.
Judge Floyd wrote the opinion,
in which Judge Gregory and Judge Duncan joined.

ARGUED: Paul Joseph Kiernan, HOLLAND & KNIGHT, LLP, Washington,
D.C., for Appellant.
Richard A. Simpson, WILEY REIN LLP,
Washington, D.C., for Appellee.
ON BRIEF: Gary P. Seligman,
Ashley E. Eiler, WILEY REIN LLP, Washington, D.C., for Appellee.

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FLOYD, Circuit Judge:
In this case we must determine whether an insurance company
properly denied coverage to its insured.

In 2006, entities and

individuals related to Appellant W.C. & A.N. Miller Development
Company (Miller) were sued in a contract dispute.

Subsequently,

in 2010, Miller entered into a liability insurance contract with
Appellee
itself

Continental

was

sued

Casualty
2010

in

Company
a

in

(Continental).

fraudulent

Miller

conveyance

action

seeking recovery on the judgment entered in the 2006 lawsuit.
Miller tendered the 2010 suit to Continental, seeking coverage
of defense costs.

Continental, however, determined that the

2010 lawsuit alleged “interrelated wrongful conduct” with the
allegations made in the 2006 lawsuit brought against entities
related to Miller.
wrongful

conduct

Because allegations of such interrelated

constituted

a

“claim”

first

made

in

before the policy period, Continental denied coverage.

2006,
Miller

went on to successfully defend the 2010 lawsuit at its own cost.
In

2014,

Miller

sued

Continental

for

breach

of

the

insurance contract and sought as damages the costs it incurred
defending itself in the 2010 lawsuit.

The crux of the parties’

dispute is whether the allegations in the 2006 and 2010 lawsuits
are,

indeed,

interrelated

wrongful

acts

as

defined

by

the

insurance policy. The district court determined that Continental
properly denied coverage.

We now affirm.
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I.
A.
In the early 2000s, one of the principals of Miller, Edward
J. Miller, Jr., founded a land development company, Haymount
Limited Partnership (Haymount).

Miller owned upwards of 80% of

Haymount at all relevant times.

Edward J. Miller, Jr., is the

chairman

of

Miller

as

well

as

the

President

of

Haymount.

Haymount’s goal was to develop 1,700 acres of land along the
Rappahannock River in Virginia’s Caroline County.
In

order

to

develop

considerable financing.

the

property,

Haymount

required

On September 10, 2002, Haymount entered

into an agreement with International Benefits Group, Inc. (IBG).
IBG

agreed

to

introduce

Haymount

to

third-party

lenders

in

exchange for a finder’s fee of $3 million if Haymount secured a
loan as a result of IBG’s introductions.
Haymount

entered

into

a

similar

Property Consultants, Ltd. (APC).

On November 8, 2002,

arrangement

with

American

This agreement provided that

APC, too, would receive a finder’s fee if a loan to Haymount
resulted from any of APC’s introductions to lenders.
Haymount eventually secured a $14 million loan from General
Motors Acceptance Corporation Residential (GMAC).

Haymount then

paid a finder’s fee to APC and terminated their agreement.

Upon

learning of the GMAC loan, IBG also sought payment of its fee
and sent Haymount a list of lenders to whom IBG had introduced
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Haymount.

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The

list

of

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introduced

lenders

included

GMAC.

Haymount refused to pay the $3 million fee and terminated its
agreement with IBG on June 25, 2004.

IBG filed for Chapter 11

bankruptcy less than a month later, allegedly as a direct result
of Haymount’s failure to pay its fee.

B.
In 2006, IBG sued in the District of New Jersey seeking
payment of the $3 million fee it claimed it was owed under the
agreement

with

Haymount. 1

IBG

named

several

defendants:

Haymount; Westminster Associates II, Inc. (Westminster), another
development company that invested in Haymount; John A. Clark
(Clark), the owner of Westminster; Edward J. Miller, Jr.; and
APC.

IBG asserted causes of action for breach of contract,

unjust

enrichment,

tortious

interference,

common

conspiracy, and state law statutory conspiracy.
motions

to

dismiss

and

for

summary

judgment,

law

civil

Through their
the

defendants

successfully narrowed the claims to one: IBG’s claim for breach
of contract.

On January 8, 2010, the district court entered

judgement against Haymount, among others, on IBG’s breach of

1

Technically, the bankruptcy trustee, Jonathan Kohn, was
the plaintiff in the action; however, for simplicity’s sake, we
refer to IBG as the plaintiff in both the 2006 and 2010 actions
even though both were brought by the trustee.

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contract claim for the sum of $3 million plus interest, for a
total judgment of $4,469,158.
Eight months after the judgment in the 2006 lawsuit, on
October 29, 2010, IBG again sued Haymount and related parties.
The 2010 lawsuit alleged that the defendants took actions to
render themselves judgment proof so that IBG could not collect
on the judgment entered in its favor after the 2006 lawsuit.
this

second

suit,

IBG

named

as

defendants,

among

In

others,

Haymount, Miller, Edward J. Miller, Jr., and Clark.

The causes

of

fraudulent

action

asserted

transfer,

in

fraudulent

conspiracy,

creditor

the

2010

lawsuit

conveyance,

common

fraud,

and

aiding

included
law
and

and

statutory

abetting.

The

complaint in the 2010 action detailed the Haymount development
project, the ownership structure of Haymount, the events leading
to the contract between IBG and Haymount, and the course of the
2006 lawsuit giving rise to the judgment in IBG’s favor.
Miller

entered

into

Continental in 2010.
Continental
denied

seeking

coverage

as

a

liability

insurance

contract

with

Miller tendered this second lawsuit to
coverage
being

of

defense

outside

the

costs.

scope

of

Continental
the

policy.

Miller therefore proceeded with the defense at its own expense.
The

district

defendants.

court

granted

summary

judgment

to

the

The court concluded that the challenged transfers

were legitimate transfers to a secured creditor senior to IBG
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and

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were

not,

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therefore,

defeat IBG’s judgment.

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fraudulent

conveyances

designed

The Third Circuit affirmed.

to

Kohn v.

McGuire Woods, 541 F. App’x 163 (3rd Cir. 2013).

C.
Miller filed the lawsuit that is the subject of this appeal
on

February

wrongfully

12,

denied

2014.

Miller

coverage

under

alleges
the

that

policy

Continental

and

should

be

required to pay the costs Miller incurred defending the 2010
lawsuit.
The

policy,

provisions.
practices

The

J.A.
policy

liability,

entity liability.

35-75,

contains

includes

directors

and

several

relevant

coverage

for

employment

officers

liability,

and

General terms and conditions at the beginning

of the policy apply throughout.

Under the policy, Continental

will provide coverage to Miller for claims against Miller made
during the coverage period for a wrongful act by an insured
person.

The policy coverage period is November 1, 2010 through

November 1, 2011. 2

A “claim” is a demand for damages or relief,

2

Although the 2010 complaint was filed on October 29, 2010,
the policy provides that a claim is “deemed made . . . on the
earliest of the date of service upon or other receipt by any
Named Company Insured of a complaint . . . .”
J.A. 43.
The
record indicates that Miller was served the 2010 complaint “on
or about November 4, 2010.” J.A. 123. Thus, the October filing
(Continued)
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including a civil action, against an insured.

The insurance

policy covers claims made against subsidiaries of Miller such as
Haymount.
The

policy

provides,

however:

“More

than

one

Claim

involving the same Wrongful Act or Interrelated Wrongful Acts
shall be considered as one Claim which shall be deemed made on
. . . the date on which the earliest such Claim was first made.
. . .”
than

J.A. 43 (emphases in original).

one

against

claim
Miller

involving
or

its

In other words, if more

interrelated

subsidiaries,

wrongful

the

acts

multiple

is

claims

made
are

considered a single claim made on the date on which the earliest
of the claims was made.

Further, the policy expansively defines

“interrelated wrongful acts” as “any Wrongful Acts which are
logically or causally connected by reason of any common fact,
circumstance,

situation,

(emphasis

original).

reasoned

in
that

the

acts

transaction
From
alleged

or

this
in

the

event.”

language,
2006

J.A.

39

Continental

lawsuit

and

the

fraudulent conveyance and other acts alleged in the 2010 lawsuit
were interrelated wrongful acts constituting a single “claim.”
Under the terms of the policy, such a claim should be deemed to
have been made in 2006, before the policy coverage period began

date of the 2010 lawsuit did not itself automatically preclude
coverage under the policy.

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on November 1, 2010.

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Continental therefore concluded the claim

was not insured by the policy.
After

some

limited

discovery,

Continental

moved

for

judgment on the pleadings and Miller moved for summary judgment.
On November 7, 2014, the district court granted Continental’s
motion and denied Miller’s motion.
that

the

allegations

in

the

The district court found

2010

lawsuit

were

“interrelated

wrongful acts” with the allegations in the 2006 lawsuit and,
therefore,

pursuant

to

the

policy,

that

the

2010

claim

was

deemed to have been made in 2006.
The district court agreed with Continental that under the
policy’s

“broad[]”

definition

of

interrelated

wrongful

acts,

J.A. 298, the 2006 and 2010 lawsuits were related and “shared a
common

nexus”

because

they

involved

allegations

of

a

common

scheme involving the same claimant, the same fee commission, the
same contract, and the same real estate transaction.
In

addition

to

finding

the

existence

of

an

J.A. 300.

alleged

common

scheme, the district court found that the alleged common scheme
“logically and causally” connected the 2006 and 2010 actions:
“but

for

the

alleged

actions

of

[Haymount],

Mr.

Miller,

and

others trying to avoid payment to IBG, the 2010 Lawsuit would
never have been filed.”

J.A. 303.

Accordingly, the district

court concluded that the 2010 lawsuit constitutes part of the
claim

brought

in

2006

and

that
8

Continental

properly

denied

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coverage because the claim was made before the commencement of
the policy period on November 1, 2010.
This appeal followed.

II.
We review de novo the district court’s ruling on a motion
for judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c), and in doing so, apply the standard for a Rule
12(b)(6) motion.

Butler v. United States, 702 F.3d 749, 751-52

(4th Cir. 2012).

“To survive a motion to dismiss, a complaint

must contain sufficient factual matter, accepted as true, to
state

a

Ashcroft

claim
v.

to

Iqbal,

relief
556

that

U.S.

internal quotations omitted).

is

662,

Turnbaugh,

463

F.3d

678

on

(2009)

its

face.”

(citation

and

We review the district court’s

denial of summary judgment de novo.
v.

plausible

325,

329

See Nat’l City Bank of Ind.
(4th

Cir.

2006).

Summary

judgment is appropriate “if the movant shows that there is no
genuine

dispute

as

to

any

material

fact

entitled to judgment as a matter of law.”
56(a).

9

and

the

movant

is

Fed. R. Civ. P.

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III.
A.
In this case, we must determine whether the district court
properly interpreted and applied the provisions of the insurance
contract.

The district court sat in Maryland and, therefore,

Maryland choice of law rules apply.
505, 521 (4th Cir. 1999).

Wells v. Liddy, 186 F.3d

In the absence of a contractual

choice of law provision, Maryland applies the doctrine of lex
loci contractus.
(Md. 1992).

Allstate Ins. Co. v. Hart, 611 A.2d 100, 101

“The locus contractu of an insurance policy is the

state in which the policy is delivered and the premiums are
paid.”

Cont’l Cas. Co. v. Kemper Ins. Co., 920 A.2d 66, 69 (Md.

2007) (citation and internal quotations omitted).
policy was delivered to Miller in Maryland.

Here, the

Maryland’s law of

contracts governs interpretation of the policy.
“Under Maryland law, insurance policies are interpreted in
the same manner as contracts generally; there is no rule in
Maryland

that

insurance

policies

strongly against the insurer.”

are

to

be

construed

most

Catalina Enters., Inc. Pension

Tr. v. Hartford Fire Ins. Co., 67 F.3d 63, 65 (4th Cir. 1995)
(citing Collier v. MD–Individual Practice Ass’n, 607 A.2d 537,
539 (Md. 1992)).

“Clear and unambiguous language, however, must

be enforced as written and may not yield to what the parties
later say they meant.”

Id. (citing Board of Trs. of State
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Colls. v. Sherman, 373 A.2d 626, 629 (Md. 1977)).

Unless there

is an indication that the parties intended to use words in a
special

technical

sense,

the

words

in

a

policy

should

accorded their “usual, ordinary, and accepted meaning.”

be

Bausch

& Lomb, Inc. v. Utica Mut. Ins. Co., 625 A.2d 1021, 1031 (Md.
1993) (citations omitted). “A word’s ordinary signification is
tested

by

what

meaning

attach to the term.”

a

reasonably

prudent

Id. (citation omitted).

layperson

would

However, where an

insurance contract is ambiguous, “any doubt as to whether there
is a potentiality of coverage under [the] insurance policy is to
be resolved in favor of the insured.”
Fire

Ins.

Co.,

889

A.2d

387,

internal quotations omitted).
policy

language

is

394

Clendenin Bros. v. U.S.

(Md.

2006)

(citation

and

Finally, under Maryland law, when

unambiguous

a

judge

applicability of a coverage provision.

may

determine

the

Faw, Casson & Co. v.

Everngam, 616 A.2d 426, 429 (Md. Ct. Spec. App. 1992).
As noted above, the policy’s definition of “interrelated
wrongful

acts”

is

expansive:

“any

wrongful

acts

which

are

logically or causally connected by reason of any common fact,
circumstance, situation, transaction or event.”

J.A. 39.

We do

not find this definition to be ambiguous, particularly on the
facts

before

us,

and

will

apply

ordinary meaning of the words used.

11

it

in

accordance

with

the

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We conclude that the conduct alleged in the 2006 and 2010
lawsuits

share

a

common

nexus

of

fact

and

are,

therefore,

interrelated wrongful acts under the policy’s definition.

As

the district court observed, the two lawsuits are linked by (1)
a multitude of common facts: in particular, that Haymount did
not

pay

IBG

transaction:
common

the
the

$3

million

contract

circumstances:

finder’s

between

Haymount

a

IBG;

and

(3)

financing for its land development project in Virginia.

These

Absent

Haymount’s

and

causally

breach

of

its

connect
contract

attempts

common

secure

logically

Haymount’s

and

(2)

to

elements

namely,

fee;

the
and

two

lawsuits.

other

alleged

torts, IBG would not have sued for damages in 2006, nor would it
have sued for enforcement of the 2006 judgment in 2010.

Thus,

we agree with the district court that the 2006 and 2010 lawsuits
share

a

common

nexus:

“an

alleged

scheme

involving

the

same

claimant, the same fee commission, the same contract, and the
same real estate transaction.”

J.A. 300.

B.
Miller attempts to avoid this straightforward conclusion by
characterizing the allegations in the two lawsuits as alleging
merely a “common motive” which is insufficient to establish the

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interrelatedness of the 2006 and 2010 lawsuits. 3

In support,

Miller urges us to adopt the reasoning of ACE Am. Ins. Co. v.
Ascend One Corp., 570 F. Supp. 2d 789 (D. Md. 2008).
The insured in ACE was the subject of an investigation by
state

attorneys

general

for

allegedly

continuing

harmful

business practices related to the marketing of consumer credit
repair products which had already been the subject of a U.S.
Senate investigation and a consumer class-action.
92.
its

Id. at 791-

When the insured tendered the investigative subpoenas to
insurer

for

coverage

of

its

defense

costs,

the

insurer

denied coverage on the grounds that the business practices being
investigated by the state attorneys general were the same as
those giving rise to the earlier consumer class action.

Id.

The district court in ACE, however, disagreed with the insurer
and held that a subsequent lawsuit based on similar wrongful
business practices, but differing in time and factual specifics
from

the

original

wrongful

defined in the policy at issue.

acts,

were

not

interrelated

as

Id. at 794.

3

Ultimately, it is immaterial that Miller prevailed on many
of the causes of action in the 2006 lawsuit and on all of the
causes of action in the 2010 lawsuit.
For the purposes of
determining interrelatedness, we look only to “wrongful acts” as
alleged in the 2006 and 2010 complaints, not as ultimately
adjudicated on the merits. J.A. 57 (defining “wrongful act” as
“any actual or alleged” act) (emphasis added).

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In reaching its conclusion, the ACE court distinguished the
facts underlying the two allegedly related claims there from the
claims in other cases where courts found a sufficient factual
nexus

to

render

two

claims

interrelated.

The

distinguished by the ACE court are instructive here.

cases

In those

cases, the interrelated claims were based on the same misleading
statement, Zunenshine v. Exec. Risk Indem., Inc., No. 97 Civ.
5525 (MBM), 1998 WL 483475, at *5

(S.D.N.Y. Aug. 17, 1998),

aff’d, 182 F.2d 902, 1999 WL 464988 (2d Cir. 1999); the same
agreement

to

sell

stocks,

Home

Ins.

Co.

of

Ill.

(N.H.)

v.

Spectrum Info. Techs., Inc., 930 F. Supp. 825, 850 (E.D.N.Y.
1996);

the

same

omissions

in

the

same

proxy

literature,

Ameriwood Indus. Int’l Corp. v. Am. Cas. Co. of Reading, Pa.,
840

F.

Supp.

1143,

1152

(W.D.

Mich.

1993);

and

the

same

development of an industrial park and one party’s attempts to
interfere with the development, Bensalem Twp. v. Int’l Surplus
Lines Ins. Co., Civ. A. No. 01-5315, 1992 WL 142024, at *2 (E.D.
Pa. June 15, 1992), rev’d on other grounds, 38 F.3d 1303 (3d
Cir. 1994).
Contrary to Miller’s protestations, this case has more in
common factually with the cases distinguished by the ACE court

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than with ACE itself. 4

Pg: 15 of 16

Here, the allegations in the 2006 and

2010 lawsuit arise out of the same land development project,
involve

the

dispute

over

same
the

contract
same

to

fee,

secure
and

were

financing,
brought

implicate
by

the

a

same

claimant.

This factual web creates a common nexus sufficient to

make

claims

the

interrelated

brought

under

against

the

Miller

policy’s

in

broad

2006

and

definition

2010
of

“interrelated wrongful acts.” 5
Because they involve interrelated wrongful acts, the 2010
lawsuit and the 2006 lawsuit are part of the same claim under
the policy.

Pursuant to the policy provisions, we deem the

claims in the 2010 lawsuit “first made,” J.A. 43, on the date on

4

We find the other main cases cited by Miller, FDIC v.
Mmahat, 907 F.2d 546 (5th Cir. 1990), and Eureka Fed. Sav. &
Loan Ass’n v. Am. Cas. Co. of Reading, Pa., 873 F.2d 229 (9th
Cir. 1989), similarly unpersuasive.
Miller wishes us to
construe the current case as a “common business practices” or
“common motive” case, but we decline to do so because of the
factual congruence underlying the allegations in both the 2006
and 2010 lawsuits.
5

Miller also argues that the breach of contract claim in
the 2006 lawsuit cannot serve as a foundational “wrongful act”
for the interrelatedness analysis because the policy does not
cover loss from breaches of contract.
See J.A. 59.
Assuming
Miller is correct on this point—and we are not convinced that it
is—the facts alleged to support the other causes of action in
the 2006 lawsuit—unjust enrichment, tortious interference, and
civil conspiracy—are sufficiently related to those pleaded in
the 2010 lawsuit, alleging fraudulent conveyance, fraud, and
civil conspiracy, to render the conduct alleged in both lawsuits
“interrelated” pursuant to the policy’s definitions.

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which

Doc: 32

the

2006

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lawsuit

was

Pg: 16 of 16

filed—March

17,

2006.

As

the

district court determined, because March 17, 2006 is outside the
policy period, Continental properly denied coverage.
For the foregoing reasons, we affirm.
AFFIRMED

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