Brawner Builders, Inc. v. Northern Assurance Company of America

Filing 22

MEMORANDUM. Signed by Judge Catherine C. Blake on 7/9/14. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

BRAWNER BUILDERS, INC.

v.

NORTHERN ASSURANCE COMPANY
OF AMERICA

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Civil No. CCB-13-1042

MEMORANDUM
Plaintiff Brawner Builders, Inc. (“Brawner”) filed this action against Northern Assurance
Company of America (“Northern”) seeking damages for breach of contract arising out of
Northern’s refusal to defend and indemnify Brawner in litigation brought by Dino Kalandras, a
Brawner employee, for injuries he suffered in the course of his employment. (Compl., ECF No.
1.) Northern’s motion for summary judgment is now pending before the court. Brawner filed an
opposition that it would like the court to construe as a cross-motion for summary judgment. The
parties have fully briefed the issues, and no hearing is necessary. See Local Rule 105.6 (D. Md.
2011). For the reasons set forth below, Northern’s motion will be granted and Brawner’s crossmotion will be denied.
BACKGROUND
Brawner is a construction contractor working in marine and maritime construction.
(Compl. ¶ 6.) It was a named insured under Policy Number N5JH11345 (“the Policy”) issued by
Northern to MBP Management, Inc., a company with which Brawner is affiliated. (Brawner
Resp. to Interrog., Pl.’s Opp’n Ex. 1, ECF No. 20-2, at 4-5, 12-13; Policy, Def.’s Mem. Ex. E,

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ECF No. 15-8, at 23.) The Policy provided hull and machinery and protection and indemnity
coverage for various vessels that Brawner uses in its business. (Policy at 1, 22.)
The Policy includes and is subject to a “Special Conditions” endorsement. (Policy at 1,
11.) At the time of Kalandras’s injury, the endorsement included a “Crew” condition which
stated:
“It is a condition of this Policy that the named crew members covered under this policy is
Robert Tormollan, Robert Baker, Jr., Francis Lauer, Robert W. Waldron, James F. Guess
and Stephen Austin.
However it is a condition of this policy that there shall not be more than two (2) crew
members aboard the insured vessel at any one time.
In the event additional crew is to be employed the assured shall give prior notice to this
company and pay such additional premium as is required. If the assured shall fail to give
such prior notice and at the time of loss in respects to crew there are more crew
employed, the insurance shall respond only in the proportion that the stated number of
crew bears to the number on board at the time of the accident.”
(Id. at 11.) There appears to be no dispute that this provision was part of the Policy from the
time it was first issued on February 15, 2008, through February 15, 2012. (See Swanson Dep.,
Def.’s Mem. Ex. D, ECF No. 15-7, at 105:10-16.)
On September 14, 2011, Kalandras, a Brawner employee, allegedly was injured on a
covered vessel. (Compl. ¶ 12-14; Brawner Resp. to Interrog. at 5.) Brawner hired Kalandras as
a safety boat captain in May 2011, and, from that time, he had been operating vessels covered by
the Policy. (Brawner Resp. to Req. for Admis., Def.’s Mem. Ex. C, ECF No. 15-6, at 7-8.)
Despite the fact that he had been operating vessels for four months, however, Brawner had never
added Kalandras to the Policy as a crew member. (Id. at 8.) When Kalandras sued Brawner for
his injuries, see Kalandras v. Brawner Builders, Inc., Civil No. WMN-11-3642, Northern denied
coverage, claiming that, because Kalandras was not listed as a crew member on the Policy,
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indemnification and defense in the lawsuit were not available. (Compl. ¶ 26; Def.’s Mem., ECF
No. 15-1, at 9.) Kalandras and Brawner eventually settled the suit. (Brawner Resp. to Interrog.
at 10.)
Brawner claims the Policy contemplates coverage for crew members not expressly listed
in the “Crew” condition as long as there are six or fewer total crew members and two or fewer
crew members on the vessel at the time of any loss. According to Brawner, because it only
employed five crew at the time of Kalandras’s injury and because Kalandras was the only
employee on the vessel when he was injured, the policy requires Northern to have defended and
indemnified Brawner. Northern claims that only those crew expressly listed in the Policy are
covered and that, without prior notice and the opportunity to approve Kalandras’s coverage as a
crew member, Northern is not required under the Policy to indemnify or defend Brawner.
ANALYSIS
Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted
“if the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a) (emphasis added). Whether a fact
is material depends upon the substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247–48 (1986). Accordingly, “the mere existence of some alleged factual dispute between the
parties will not defeat an otherwise properly supported motion for summary judgment.” Id. “A
party opposing a properly supported motion for summary judgment ‘may not rest upon the mere
allegations or denials of [his] pleadings,’ but rather must ‘set forth specific facts showing that
there is a genuine issue for trial.’” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d
514, 522 (4th Cir. 2003) (alteration in original) (quoting Fed. R. Civ. P. 56(e)). The court must

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view the evidence in the light most favorable to the nonmovant and draw all justifiable
inferences in his favor. Scott v. Harris, 550 U.S. 372, 378 (2007) (citation omitted); see also
Greater Baltimore Ctr. for Pregnancy Concerns, Inc. v. Mayor and City Council of Baltimore,
721 F.3d 264, 283 (4th Cir. 2013) (citation omitted). At the same time, the court must not yield
its obligation “to prevent factually unsupported claims and defenses from proceeding to trial.”
Bouchat, 346 F.3d at 526 (citation and internal quotation marks omitted).
Maryland law1 requires courts to apply the terms of the insurance contract itself when
determining the issue of coverage. Bausch & Lomb Inc. v. Utica Mut. Ins. Co., 625 A.2d 1021,
1031 (Md. 1993). In doing so, the court construes the instrument as a whole and accords words
their ordinary meaning. Id.; Pacific Indem. Co. v. Interstate Fire & Cas. Co., 488 A.2d 486, 488
(Md. 1985). “The test is what meaning a reasonably prudent layperson would attach to the
term.” Pacific Indem. Co., 488 A.2d at 488. Where an insurance contract’s language is
unambiguous, the court may construe it as a matter of law based on its language alone. Id. at
489. Where a contract is ambiguous, the court may consider extrinsic evidence to determine its
meaning. Bausch & Lomb, 625 A.2d at 1031. If there is no factual dispute presented by the
extrinsic evidence, the court may construe an ambiguous contract as a matter of law. Mutual
Fire Ins. Co. v. Ackerman, 872 A.2d 110, 113 (Md. App. 2005) (quoting Nationwide Mut. Ins.
Co. v. Scherr, 647 A.2d 1297, 1300 (Md. App. 1994)). The construction given to the terms by
the parties, before the dispute arose, is “an important aid to interpretation of uncertain terms.”
Pacific Indem. Co., 488 A.2d at 489. A contract’s language is ambiguous where it is “‘general’
and may suggest two meanings to a reasonably prudent layperson.” Id.

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The parties do not dispute that Maryland law governs the issues in this case.

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I.

Interpreting the Policy
The court finds that a layperson could understand the Policy to provide coverage as

Northern argues—that a vessel operator2 must be listed in the “Crew” condition in order for
Northern to insure Brawner against liability for his injuries. The Policy clearly states that
coverage is “SUBJECT TO CONDITIONS OF FORM ATTACHED HERETO,” and the Special
Conditions endorsement, which includes the “Crew” condition, is listed as one of the
endorsements to which the Policy is subject. (Policy at 8; see also id. at 11 (stating the
endorsement is “to be attached to and made part of Policy No. N5JH11345”).) Thus, although
the Policy provides protection and indemnity coverage for bodily injury to “any person,” (Id. at
8), a reasonable layperson could interpret the language of the Policy to limit coverage for injuries
to crew members to only those crew members listed in the “Crew” condition. (Id. (stating that
the protection and indemnity coverage is “[s]ubject to all exclusions and other terms of this
Policy”).)
Giving the word “covered” in the “Crew” condition its ordinary meaning also supports
such an interpretation. See “Cover” Definition, Merriam-Webster Dictionary, (defining “to
cover” as “to have sufficient scope to include or take into account”)3; “Cover” Definition,
Oxford Dictionary, (defining “to cover” as to “protect against a liability, loss, or accident
involving financial consequences”)4; accord. Pacific Indem. Co., 488 A.2d at 488 (noting that
the Maryland Court of Appeals has consulted dictionaries to determine the ordinary and accepted
meanings of contract terms). By listing those crew members that are “covered”—i.e. protected
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Brawner does not appear to dispute that Kalandras held the same position as those employees expressly listed in
the Policy under the “Crew” condition.
3
Available at http://www.merriam-webster.com/dictionary/cover (last visited July 1, 2014).
4
Available at http://www.oxforddictionaries.com/us/definition/american_english/cover (last visited July 1, 2014).

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against liability, loss, or accident—the Policy would seem to require a conclusion that operators
not listed are not included in the scope of the Policy’s protection.
Brawner puts forth several arguments as to why Northern’s interpretation of the Policy is
precluded, but they are all unavailing. First, Brawner claims that Northern’s interpretation
requires the court to read the “Crew” condition in isolation, which is contrary to Maryland law
requiring courts to read contracts as a whole. Brawner is correct that insurance contracts should
be read as a whole. See Pacific Indem. Co., 488 A.2d at 488; see also Prince George’s Cnty. v.
Local Gov’t Ins. Trust., 879 A.2d 81, 88 (Md. 2005) (“[T]he main insurance policy and an
endorsement constitute a single insurance contract.”). As evident from the court’s discussion
above, however, a reasonable layperson, considering the entire Policy, could find it does not
provide coverage for Kalandras’s injuries.5 (See, e.g., Policy at 8 (stating coverage is subject to
the Special Conditions endorsement).) In addition, Northern’s interpretation does not ignore the
rest of the “Crew” condition, as Brawner claims. Nowhere in the “Crew” condition does the
Policy say coverage is limited only by the prohibition on having more than two crew aboard a
vessel at one time. (See Policy at 11.) Further, only providing coverage for the operators listed
does not conflict with or depend on the provision limiting coverage where more than two crew
members are on a vessel at once. Brawner offers no reason why the second part of the “Crew”
condition would preclude a finding that only those operators listed are covered.
Second, Brawner claims that understanding the “Crew” condition to preclude coverage
would render other provisions of the Policy superfluous, a result the court should avoid under
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Sallie v. Tax Sale Investors, Inc., 814 A.2d 572 (Md. App. 2002), on which Brawner relies to support its position,
does not preclude such a finding. The opinion explains that where a reasonable layperson could find two meanings
in the language of an insurance contract, considering the standard policy forms as limited by the endorsements, the
contract is ambiguous. 814 A.2d at 582. It does not require the court to reject Northern’s interpretation simply
because it is based primarily on the language of an endorsement.

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Maryland law. See Bausch & Lomb, 625 A.2d at 1033. Brawner points to two types of clauses
that would be rendered superfluous. First, Brawner focuses on conditions placed on the Policy
which include express statements that “[i]f there is a failure to comply with this condition there is
not coverage under this policy.” (See Policy at 11.) According to Brawner, if the “Crew”
condition were to exclude coverage for those crew not specifically listed, the express exclusion
of coverage in the other conditions would be superfluous. The court disagrees. The language in
other conditions can reasonably be read to preclude coverage entirely should the condition be
violated. By contrast, that liability for a crew member’s injuries may not be covered by the
Policy because he is not listed under the “Crew” condition does not mean there is no coverage
under the Policy at all. For example, if an entire vessel sank, the vessel itself, passengers, or
other crew members expressly listed may be covered, even though an unlisted crew member’s
injuries are not. Language voiding coverage entirely in other conditions is not, therefore,
superfluous.
Brawner also claims Northern’s interpretation renders superfluous clauses in other
conditions that state those conditions control notwithstanding any terms to the contrary in the
Policy. (See, e.g., Policy at 12 (stating that “[n]otwithstanding anything to the contrary, this
policy excludes any liability imposed on the assured as punitive or exemplary damages”).)
According to Brawner, Northern’s interpretation of the “Crew” condition is contrary to the broad
indemnity provision that provides Brawner shall be indemnified for sums paid or owed as a
result of “bodily injury to . . . any person.” (Policy at 8.) As already discussed, however, the
“Crew” condition reasonably can be read to limit the scope of the indemnity provision. 6 Thus, it

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The court notes that, to the extent Brawner is claiming Northern’s interpretation fails because it conflicts with the
broader indemnity provision, Maryland law holds that an endorsement conflicting with the main policy controls.
See Prince George’s Cnty., 879 A.2d at 88.

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is not that the “Crew” condition is contrary to the indemnification section of the policy; instead,
it can be read to further define it. Thus, clauses in other conditions, stating they control
notwithstanding other provisions to the contrary, are not superfluous.
Finally, Brawner claims Northern’s interpretation cannot stand because the “Crew”
condition is an exclusion that must be read narrowly and Northern is attempting to extend it
beyond the narrow construction required. (Pl.’s Opp’n, ECF No. 2, at 30-31 (citing Megonnell v.
United Servs. Auto. Ass’n, 796 A.2d 758, 772 (Md. 2002)).) To the extent exclusion clauses
must be read narrowly under Maryland law, Brawner fails to recognize that the “Crew” condition
listing covered vessel operators is not an exclusion. Instead, it lists who is covered. If the court
were to apply the narrowing principle Brawner advocates, Kalandras’s injuries would be
unambiguously precluded from coverage because he is not listed as a covered crew member. To
avoid this conclusion, Brawner attempts to characterize the entire condition as an exclusion
based on the language prohibiting more than two crew members on a vessel at one time. To
construe the condition in that way, however, would make the list of covered crew members
meaningless and essentially read it out of the Policy. As Brawner pointed out many times in its
memorandum, Maryland law requires courts to avoid such a result. See Bausch & Lomb, 625
A.2d at 1033.
For all the foregoing reasons, Brawner’s arguments do not dissuade the court from
finding that a reasonably prudent person could interpret the Policy to provide coverage only for
injuries suffered by those crew members expressly listed in the “Crew” condition.

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II.

The Extrinsic Evidence
Given that a reasonably prudent layperson could understand the Policy’s language to

preclude coverage for Kalandras’s injuries, even if the court were to assume a reasonable person
could also interpret the Policy to provide coverage, as Brawner claims, the contract is, at best,
ambiguous.7 Thus, the court will look to the extrinsic evidence to determine whether the
contract required Northern to indemnify and defend Brawner for Kalandras’s injuries.8 See
Bausch & Lomb, 625 A.2d at 1031 (noting that where a contract’s language is ambiguous, the
court can consider extrinsic evidence to clarify its meaning). Here, the undisputed evidence
clarifies the ambiguity and demonstrates that the Policy does not provide insurance coverage for
Kalandras’s injuries because he was not listed as a covered crew member on the Policy.
The Special Conditions endorsement, with the “Crew” condition, was included with the
Policy from the time it was first issued in February 2008. (Def.’s Mem. Ex. F, ECF No. 15-9, at
2.) In April 2008, a Northern representative told Teresa Swanson, Brawner’s insurance broker,
that Northern would only insure operators who “[know] how to operate boats and [are] willing to
take a boat safety course.” (Pl.’s Opp’n. Ex. 4, ECF No. 20-5, at 1.) From the very first operator
it added, Brawner complied with these requirements. (See, e.g. Def.’s Mem. Ex. F at 5
(requesting to add Robert Tormollan to the Policy at the time of issuance and forwarding his

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Brawner puts forward several arguments as to why the Policy provides coverage. For example, Brawner claims
that because indemnity for bodily injury is not conditioned on the status of the person injured, as is other coverage,
the Policy clearly contemplates coverage for injuries suffered by anyone on a covered vessel. (Compare Policy at 8
(providing coverage for medical and hospital expenses associated with bodily injury of “any person”) with
id.(providing indemnification for “crew member burial expense” and “repatriation expenses of crew member”).)
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At times, Brawner appears to argue that the insurance contract must be construed against Northern if the court
were to find the Policy’s language ambiguous. (See Pl.’s Opp’n at 18, 22-24.) Maryland does not follow the rule
that an insurance policy must always be construed against the insurer. Bausch & Lomb, 625 A.2d at 1031. Instead,
the contract is only construed against the insurer where it is ambiguous and there is no extrinsic evidence or the
extrinsic evidence does not resolve the ambiguity. Cheney v. Bell Nat’l Life Ins. Co., 556 A.2d 1135, 1138 (Md.
1989). Because the extrinsic evidence clarifies any ambiguity here, the court does not need to construe the contract
against the insurer.

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credentials); id. at 6 (requesting on April 9, 2008, that Andrew Ingalls be added as an
“authorized operator” to the Policy and attaching a certificate as to Ingalls’ qualifications9); id. at
13 (requesting on May 1, 2008, that Robert Baker, Jr., be added as a “qualified boat operator[ ]”
and attaching “information to support [Brawner’s] request”).) In fact, after the Policy was first
issued, Brawner had Northern update the “Crew” condition ten times in four years to add or
remove crew members. (See id. at 8, 10, 12, 15-19, 23; Def.’s Mem. at 7-8.) Further, Brawner’s
representatives indicated an understanding that only those operators listed on the Policy were
covered to operate Brawner’s vessels. (See Def.’s Mem. Ex. F at 20 (requesting the addition of a
new employee to the Policy and noting “I’d like to get him added to the Crew policy to operate
our boats” (emphasis added)).) In addition, Swanson reaffirmed the names of the covered crew
members in emails with Brawner representatives multiple times over the years of coverage.
(See, e.g., id. at 11.) Just twelve days before Kalandras was injured, she asked Brawner if it had
any new operators to add and reaffirmed that “[w]ith regard to any new operators, we would
need their boating experience, boating safety courses & their drivers [sic] license information.
They must be approved by the carrier before they can operate the vessel.” (Id. at 25.) There is
no evidence Brawner ever attempted to add Kalandras.
As the Maryland Court of Appeals has noted, the construction given to the terms by the
parties, before the dispute arose, is “an important aid to interpretation of uncertain terms.”
Pacific Indem. Co., 488 A.2d at 489. Here, the parties’ conduct over the course of the three
years before Kalandras’s injury clearly demonstrates that both parties understood the Policy to
require vessel operators to be approved by Northern and listed on the Policy before the insurance

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Although the record does not specify to what the certificate related, Northern characterizes it as related to Ingalls’
boating experience, (see Def.’s Mem. at 4), and Brawner does not dispute such a characterization.

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covered liability arising from their employment. Brawner offers no facts to support a different
finding. Brawner attempts to rely on a statement by a Northern representative that “[t]he most
important aspect” of the policy was its insurance for only a limited number of crew on a vessel at
one time. (Pl.’s Opp’n Ex. 5, ECF No. 20-6, at 1.) It also points to the fact that the insurance
premium was calculated based on the total number of crew allowed on a vessel at one time, not
on the total number of crew listed in the “Crew” condition. (Pl.’s Opp’n at 1; see also Swanson
Dep. at 42:13-43:9 (stating that after the Policy was first issued, there was no charge to add an
additional operator as long as only one crew member was on a vessel at a time).) Yet, Brawner
fails to explain how this evidence demonstrates the Policy covered crew members not listed in
the Policy. Just because the Policy limited the number of crew allowed on a vessel at one time,
and even if this was the most important limitation on coverage, it does not mean the parties
intended to insure anyone that happened to be operating a vessel or that other limitations did not
also apply to coverage. The extrinsic evidence demonstrates that only those crew included in
the Policy were covered, and there is no evidence from which to conclude otherwise.
CONCLUSION
For the reasons stated above, Northern’s motion for summary judgment will be granted.
A separate order follows.

7/9/14

/s/
Catherine C. Blake
United States District Judge

Date

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