National Liability & Fire Insurance Company v Rooding
AMENDED MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 1/20/2017. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
NATIONAL LIABILITY & FIRE
Civil Action No.: ELH-15-2572
AMENDED MEMORANDUM OPINION
National Liability & Fire Insurance Company (“National”), plaintiff, filed suit against
defendant Ronald Rooding on August 31, 2015, seeking a declaratory judgment as to its
obligations under two marine insurance policies that National had issued to Rooding. ECF 1.1
In particular, National seeks a declaration that it is not obligated to provide coverage to Rooding
with respect his claim for damages, arising out of the loss of the vessel MARGARITAVILLE
(the “Vessel”). Rooding reported the loss on May 1, 2015. But, according to National, Vessel
sank prior to that date, when the policies were not in effect. ECF 1. Further, National seeks a
declaration that the policies are “null and void ab initio,” on the grounds that Rooding breached
the implied warranty of seaworthiness; breached the duty established by the doctrine of
uberrimae fidei; and/or because Rooding breached the terms of the “Fraud and Concealment”
clause of the policies Id.
An Amended Complaint was filed on November 10, 2015, to correct the address of
defendant. ECF 11.
Now pending is National’s “Motion for Attorneys’ Fees and Costs” (ECF 35), supported
by a Memorandum of Law (ECF 35-1, collectively, “Motion for Fees”). In the Motion for Fees,
filed pursuant to Fed. R. Civ. P. 4(d)(2), National seeks to recover $2,690 in attorney’s fees and
costs, incurred, inter alia, in attempting to serve Rooding with the suit.
several exhibits with its Motion for Fees. See ECF 35-2 through ECF 35-8. Rooding requested
additional time to respond to the Motion for Fees (ECF 41), which I granted by Order of
November 2, 2016. ECF 42. Despite the extension, Rooding did not respond to the Motion for
Fees and the time to do so has expired. See Local Rule 105.2; ECF 42.
In addition, National has filed a “Second Motion for Entry of Default Judgment.” ECF
36. It is supported by a Memorandum of Law (ECF 36-1) (collectively, “Motion” or “Motion for
Default”) and two exhibits. ECF 36-2 and ECF 36-3. Rooding has not responded to the Motion
for Default and the time to do so has expired. See Local Rule 105.2.
No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons
that follow, I shall grant the Motion for Default. Furthermore, I shall grant the Motion for Fees,
but in an amount to be determined after further submissions from National.
Factual and Procedural Background2
On or about August 16, 2014, Rooding purchased the Vessel from Jack Franklin for the
sum of $9,515.00. ECF 1 ¶ 9. The Vessel was a 30-foot 1978 Trojan yacht. Id. ¶ 4. However,
Rooding did not obtain a Certificate of Title to the vessel from the Maryland Department of
Natural Resources until April 29, 2015.
Id. ¶ 9.
Rooding allegedly represented on his
Application for Title that he had paid $3,500 for the Vessel. Id. Rooding kept the Vessel in a
The facts are drawn from the Complaint. They are uncontested.
slip located at River Watch Marina in Middle River, Maryland, on a tributary of the Chesapeake
Bay. Id. ¶ 10.
Rooding endeavored to procure insurance for the Vessel on or about August 15, 2014,
and contacted National’s underwriting agent. Id. ¶ 11. According to plaintiff, Rooding was told
that the Vessel could be insured only for Rooding’s “financial investment” in the Vessel. Id.
However, Rooding allegedly sought coverage of $25,000 on the hull. Id. On August 16, 2014,
National issued Policy No. 3792430-14 (ECF 1-2, the “First Policy”), with the effective date of
August 16, 2014 through August 16, 2015. Id. It provided hull liability coverage of $25,000.
Id.; see ECF 1-2.3
National alleges, id. ¶ 12:
The cover letter enclosing the First Policy informed Rooding that to
maintain the coverage, Rooding needed to provide: (1) an acceptable condition
and value marine survey; (2) a copy of the “sales agreement” for the Vessel; and
(3) a completed and signed Marine Insurance Application. The Marine Insurance
Application provided to Rooding contained certain pre-filled information,
including an entry of “$25,000” as the “Boat Purchase Price.” Rooding never
signed or returned the Application or the Bill of Sale. He also did not send a
survey to the underwriter until many months later.
National alleges that a marine survey of the Vessel was conducted in late August or early
September of 2014. It indicated that a valve leading to the intake hoses for the head and “wash
down system” was “missing a required dedicated handle to open and close the valve.” Id. ¶ 13.
And, the “hull valve (or seacock) with the missing handle was later determined to have
been stuck in the open position” when the First Policy was issued, “unknown and unreported” to
Id. ¶ 14.
As a result, National contends that the Vessel was “defective and
unseaworthy” when the First Policy was issued on August 16, 2014. Id.
According to National, its agent, BoatUS, is also a party to the contract. BoatUS
services boat and yacht insurance. ECF 1 ¶ 3.
On December 4, 2014, the First Policy was terminated for non-payment of the premium.
Id. ¶ 16. Rooding requested another insurance policy from National on January 22, 2015. Id. ¶
18. On January 26, 2015, National “determined that the Vessel could be insured under a no
navigation (‘port risk’) policy, so long as Rooding removed a 110 volt electrical outlet from the
aft cockpit compartment. . . .”, because that was considered “a safety hazard . . . .” Id. On
January 23, 2015, National sent Rooding an insurance application, which reflected a “Boat
Purchase Price of $25,000.” Id. ¶ 19. Rooding signed and submitted the application. Id.
The outlet was removed on or about April 3, 2015. ECF 1 ¶ 20. Thereafter, National
issued Policy No. 3842216-15. ECF 1-3 (“Second Policy”). It insured the vessel on a “‘no
navigation’ basis” from March 31, 2015 to March 31, 2016. ECF 1 ¶ 21.
Rooding executed another version of the Marine Insurance Application form for the
Second Policy, dated April 8, 2015. ECF 1 ¶ 22. “On this version of the form, Rooding
removed the $25,000 figure placed on the ‘Boat Purchase Price’ subject line, and left the line
blank.” Id. According to National, it subsequently increased Rooding’s Hull insurance to
$26,500, based on representations by Rooding as to the installation of equipment on the Vessel.
Id. ¶ 23. It also provided coverage of $6,200 for Rooding’s personal effects. Id.
On May 1, 2015, in Claim No. 1502226, Rooding notified plaintiff that the Vessel had
sustained “significant water damage due to a sinking incident of an unknown cause that occurred
on an unknown date.” Id. ¶ 24. However, Rooding was unable to offer plaintiff an explanation
of how or when the Vessel sank. Id. ¶ 25. Moreover, he did not provide the actual date of the
National retained an expert marine surveyor, Michael J. McCook, to inspect the Vessel.
Id. ¶¶ 27-28. McCook “concluded to a reasonable degree of certainty [that] the [V]essel sank
after the first freeze in the Middle River area . . . after January 1, 2015 . . . and prior to March,
2015,” because of “ice breaking the sea strainer serving the head.” ECF 1 ¶ 31. McCook
explained: “When the ice broke the strainer, due to the open valve (seacock) on the supply hose,
water entered the Vessel, overwhelmed the bilge pumps and the Vessel ultimately sank.” Id.
McCook opined, id.: “There is no evidence to support any other reasonable cause of the sinking.”
Thus, National’s investigation revealed defects in the Vessel that, in National’s view,
rendered the Vessel defective and unseaworthy before either policy was issued. National asserts,
based on McCook’s investigation, id. ¶ 31: “Had the boat been properly winterized, the failure
would not have occurred.” National also asserts, id. at ¶ 34:
After performing the investigation referred to above, National Liability
determined that there was no coverage available to Rooding under the Policies for
the reasons set forth in the claim denial letter dated August 5, 2015, which is
attached hereto as Exhibit C [ECF 1-4] and incorporated herein by reference. In
sum, coverage was not extended for Rooding’s claim because Rooding could not
establish that the reported sinking occurred during the periods that the Policies
were in force, or on or between August 16, 2014 and December 4, 2014 or on or
between March 31, 2015 and the date the loss was reported, May 1, 2015.
On August 27, 2015, National sent Rooding a letter denying his claim.
National advised that the Policies were void ab initio because, in National’s view, Rooding had
(1) breached the implied warranty of seaworthiness; (2) breached the doctrine of uberrimae fidei;
and (3) breached the “Fraud and Concealment” clause of the Policies. Id. Notably, the letter
also stated that the “Date of Loss” was “Undetermined.” Id.4
National contends that Rooding “violated his duty to National Liability by
misrepresenting material facts and by omitting material facts.” Id. ¶ 45. In particular, plaintiff
contends that defendant misrepresented the purchase price of the vessel as $25,000 when the
In addition, the letter stated that National was returning $540.40 to Rooding,
“representing a return of the premium paid on both of the” Policies. Id.
actual purchase price “was $9,515.00 or $3,500.” Id. ¶¶ 45a, 45b. Plaintiff also asserts that
defendant failed “to disclose unseaworthy conditions aboard the Vessel prior to the inception of
coverage on August 17, 2014 and again prior to the inception of coverage on March 31, 2015.”
Id. ¶ 45g. According to plaintiff, there is no coverage under the policies because “the Insured 
failed to indicate or rely upon any cause for the sinking and cannot demonstrate that the claimed
loss occurred during the effective policy dates.” Id. ¶ 49.
On September 1, 2015, the Clerk issued a summons for service of the suit on defendant.
ECF 5. On October 28, 2015, pursuant to Rule 4(d), National sent a “‘Request for the Waiver of
Service of Summons’ along with all required enclosures and notifications, to Defendant, Ronald
Rooding, by first class mail, postage prepaid.” ECF 10. Then, on November 10, 2015, plaintiff
filed an amended complaint, correcting the zip code for defendant. ECF 11. On the same date,
plaintiff sent a second “Request for the Waiver of Service of Summons” to defendant, using the
corrected zip code. ECF 13. Thereafter, on November 13, 2015, the Clerk issued a new
summons. ECF 14.
According to National, both attempts to serve Rooding by mail under Fed. R. Civ. P. 4(d)
were unsuccessful. ECF 35-1 at 3-4; ECF 15-1 at 14-15 (facsimile of returned envelopes).
National submits that its first envelope was returned to it on November 9, 2016 [sic]. ECF 35-1
at 3. It states, id.: “On the outside of the envelope, in black ink, the zip code was changed to
21222 (from 21224) and in red ink someone had drawn X’s through the address and had written
‘Return to sender’ and ‘Unknown’ on the envelope.” See id. at 3; ECF 35-2 ¶ 5 (Affidavit of
Stephen F. White, Esquire). According to White, the envelope had been opened, although the
contents were still inside. ECF 35-2 ¶ 5. Furthermore, National asserts that the other envelope
was returned on November 17, 2015, with handwriting on the envelope that said: “Unkown [sic]
return to sender.” ECF 35-1 at 4; see ECF 35-2 ¶ 6.
On December 11, 2015, plaintiff filed a “Motion for Order Extending Time for Service of
Process and to Permit Alternative/Substituted Service of Process as to Defendant Ronald
Rooding.” ECF 15 (the “Motion for Alternative Service”).
In support of the Motion for
Alternative Service, National submitted an “Affidavit of Evasion Pursuant to Federal Rule 4, and
Maryland Rule 2-121(c)” (ECF 15-1), signed by three process servers, describing their futile
efforts to serve Rooding. Id.
In the Motion for Alternative Service, plaintiff requested a 120-day extension for service
and permission to use alternative methods of service, including “posting the Summons and
Complaint upon the door of Defendant's residence” and “sending the Summons and Complaint
by both certified mail, return receipt requested, and by first class mail, to Defendant . . . .” Id. ¶¶
5a, 5b. Plaintiff stated, id. at ¶ 2:
Plaintiff’s counsel initially attempted to serve the Defendant at  German Hill
Road, Dundalk, Maryland on September 9, 2015 and continued to make multiple
attempts to serve the Defendant at this location as well as the location of the
Defendant's boat the “Margaritaville” located at Deckelman's Boat Yard, 201 Oak
Avenue, Essex, Maryland 21221.
Further, plaintiff posited, id. at ¶ 4:
Although Plaintiff has also attempted twice to serve Defendant Rooding
by first class mail using the waiver procedure set forth in FRCP4(d), on each
attempt the envelope was returned without any official Post Office sticker or seal,
but with annotations closely resembling the handwriting of the Defendant . . . .
The first envelope had been opened.
In the Affidavit (ECF 15-1), the process servers averred that they approached Rooding’s
home on German Hill Road in Dundalk, Maryland on four occasions. Id. ¶¶ 5, 11, 14, 15. In
addition, an attempt was made to serve Rooding at the boatyard where the Vessel was docked.
Id. ¶¶ 6-9.
To illustrate, J. Matthews Manlich claimed that he attempted to serve Rooding on
September 12, 2015, but did not receive any response after knocking on Rooding’s door. Id. ¶ 5.
He noted that “the mailbox was overflowing with mail.” Id. At that time, Manlich was “unable
to determine if the Defendant resided at the address.” Id.
Stephen Folcher attempted to serve Rooding at his home on October 12, 2015. Id. ¶ 11.
Folcher did not receive a response but, a neighbor “stated that the Defendant had been in
Chicago, but had recently returned.” Id. According to Folcher, the neighbor observed that
Rooding’s “pickup truck was parked in front of her house,” with Illinois tags. Id. As Folcher
was leaving, he encountered a delivery person who had arrived with food, presumably for
Rooding. Id. ¶ 12. Folcher stated: “The delivery person waited several minutes and attempted to
call the Defendant, but he did not answer.” Id. Folcher left a note on the door asking for
Rooding to call him. Id. Rooding did not call. Id. ¶ 13.
Folcher returned to Rooding’s home on October 18, 2015, and noticed that the letter that
he had previously posted was not on the door. Id ¶ 14. Folcher noted that the pickup truck that
had been described by the neighbor as belonging to Rooding was parked across the street. Id.
But, he received no response when he knocked on the door. Id. Folcher left a letter on the door,
again asking Rooding to contact him. Id. Folcher returned to Rooding’s home later on October
18, 2015, and observed that his letter was not on the door. Id. ¶ 15. Folcher knocked on
Rooding’s door, but nobody answered. Id. Folcher left yet another letter asking Rooding to call
him. Id. Rooding did not call. Id. ¶¶ 13, 20.
The process servers learned that Rooding had two active addresses – one where service
was attempted and another in Antioch, Illinois. Id. ¶ 17. However, they could not locate
Rooding’s place of employment. Id. ¶ 19.
On December 11, 2015, I issued an Order granting a sixty-day extension for service and
permission for alternative service, to include posting the summons and complaint on the
defendant’s door at the Dundalk address, and mailing the summons and complaint by first class
mail and by certified mail, return receipt requested, to that address. ECF 16. Rooding was
served by posting on December 19, 2015 (ECF 20) and by both first class and certified mail on
January 13, 2016. ECF 21.
On February 4, 2016, plaintiff submitted “Motion for Entry of Default of Defendant.”
ECF 22. The Clerk entered an order of default on February 5, 2016. ECF 23.
Then, on March 16, 2016, through counsel, defendant filed a skeletal Motion to Vacate
Default Judgment (ECF 25, “Motion to Vacate”), seeking to set aside the Clerk’s “Entry of
Default” and to “Allow Defendant to Respond to the Complaint.” Id. at 2. The Motion to
Vacate stated: “Defendant was not present at the address where alternative service is said to have
taken place during the periods in question. Debtor [sic] was either in Florida or Chicago,
Illinois.” Id. ¶ 5. Defendant also explained that although he was aware of the pending case, he
was not represented by counsel when plaintiff attempted to effect service (id. ¶ 6) and “was not
aware of any service until he approached Counsel about entering an appearance in his case . . . .”
Id. ¶ 7. At that time, “Counsel examined the docket and saw the entry of default.” Id. Notably,
defendant stated: “Defendant can and will posit good faith defenses to Plaintiff’s Complaint.”
Id. ¶12. And, defendant stated that he “will accept service through counsel.” Id. ¶ 8.
The next day, March 17, 2016, plaintiff filed a Motion for Default Judgment ( ECF 27),
supported by exhibits. See ECF 27-2 and ECF 27-3. Curiously, defendant never responded to
the Motion for Default Judgment.
And, on April 1, 2016, National filed an
opposition to the Motion to Vacate. ECF 29.
By Memorandum and Order of September 21, 2016 (ECF 31; ECF 32), I granted the
Motion to Vacate and denied the Motion for Entry of Default Judgment. My ruling was
predicated largely on the strong interest of courts in deciding cases on the merits. In my Order, I
directed Rooding to respond to the suit by October 7, 2016, and allowed National until October
14, 2016, to submit a Motion for Attorneys’ Fees and Costs. ECF 32.
Rooding never responded to the Complaint. See docket. On October 11, 2016, National
docketed its “Second Motion for Entry of Default of Defendant.” ECF 33. The Clerk entered
default on October 13, 2016. ECF 34. Thereafter, National submitted its Motion for Fees (ECF
35) and its Motion for Default. ECF 36. Rooding did not respond to either motion.
Motion for Default Judgment
A. Standard of Review
Fed. R. Civ. P. 55(b) governs default judgments. Rule 55(b)(1) provides that where the
plaintiff’s claim is for a “sum certain or a sum that can be made certain by computation,” the
Clerk must enter judgment for that amount. Rule 55(b)(2) provides: “In all other cases, the party
must apply to the court . . . . If the party against whom a default judgment is sought has appeared
personally or by a representative, that party or its representative must be served with written
notice of the application at least 7 days before the hearing.”5
National has met the service requirements of Rule 55(d)(2) by filing its Motion for
Default by way of the CM/ECF system. See Local Rule 102.2(c) (“If a document is filed
electronically, the notice of electronic filing constitutes a certificate of service as to all parties to
To be sure, the United States Court of Appeals for the Fourth Circuit has a “strong policy
that cases be decided on the merits.” United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th
Cir. 1993); see Tazco, Inc. v. Director, Office of Workers’ Compensation Program, 895 F. 2d
949, 950 (4th Cir. 1990); Disney Enters. v. Delane, 446 F. Supp. 2d 402, 405 (D. Md. 2006).
But, that policy is not absolute. Default judgment “‘is appropriate when the “adversary process
has been halted because of an essentially unresponsive party.’” Entrepreneur Media, Inc. v.
JMD Entertainment Group, LLC, 958 F. Supp. 2d 588, 593 (D. Md. 2013) (quoting SEC v.
Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005)).
As noted, defendant did not respond to the suit. Therefore, all of plaintiff’s factual
allegations, other than those pertaining to damages, are deemed admitted. See Fed. R. Civ. P.
8(b)(6); see also Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (stating
that the court accepts as true the well pleaded factual allegations in the Complaint as to liability).
But, the court must determine whether the undisputed factual allegations constitute a legitimate
cause of action. Id. at 780-81; see also 10A C. Wright and A. Miller, FEDERAL PRACTICE AND
PROCEDURE § 2688.1 (4th ed.) (“Wright and Miller”) (“[L]iability is not deemed established
simply because of the default . . . [and] the court, in its discretion, may require some proof of the
facts that must be established in order to determine liability.”).
Here, plaintiff seeks declaratory relief, as opposed to monetary damages. And, “default
judgment is appropriate if the well-pleaded allegations of the complaint establish the plaintiff’s
right to such relief.” Nautilus Ins. Co. v. REMAC Am., Inc., 956 F. Supp. 2d 674, 679 (D. Md.
2013) (Chasanow, J.) (citing, inter alia, Nautilus Ins. Co. v. BSA Ltd. P'ship, 602 F. Supp. 2d
641, 645-46 (D. Md. 2009)).
whom electronic notice is sent.”). The CM/ECF receipt for ECF 36 indicates that notice was
sent to Mr. Rooding’s counsel. See docket.
National seeks a declaration from the Court that “the Policies of insurance were null and
void at their inception (void ab initio) . . .” and that “the Policies of insurance do not provide
coverage for the claim asserted by Defendant Rooding.” ECF 1 at 19. Accepting as true the
facts alleged in the Complaint, National has established its right to the declaratory relief that it
1. Coverage for Rooding’s Claim
National claims that there is no coverage for Rooding’s insurance claim (no. 1502226)
because Rooding did not provide any evidence that the sinking occurred while an insurance
policy was in effect. As an initial matter, I note that there can be no dispute that the policies are
subject to federal admiralty jurisdiction. See United States v. Tug Marine Venture, 101 F. Supp.
2d 378, 381 (D. Md. 2000).
The Supreme Court’s decision in Wilburn Boat Co v. Fireman’s Fund Ins. Co., 348 U.S.
310 (1955), governs the applicable law for interpreting marine insurance policies. There, the
Court determined that state law applies unless (1) a federal statute speaks to the question or (2)
there is an applicable judicially-created admiralty rule. Id. at 313-14. The Supreme Court said,
id. at 314: “Congress has not taken over the regulation of marine insurance contracts and has not
dealt with the effect of marine insurance warranties at all; hence there is no possible question
here of conflict between state law and any federal statute.” See also Byrd v. Byrd, 657 F.2d 615,
617 (4th Cir. 1981).
To my knowledge, there is no specific and controlling federal rule.
interpretation of a contract of marine insurance is–in the absence of a specific and controlling
federal rule–to be determined by reference to appropriate state law.” Ingersoll-Rand Fin. Corp.
v. Employers Ins. of Wausau, 771 F.2d 910, 912 (5th Cir. 1985) (citing Wilburn Boat, 348 U.S. at
312-16). Therefore, the First Policy and the Second Policy must be interpreted in accordance
with Maryland law.
Maryland law is well settled that “the interpretation of an insurance policy is governed by
the same principles generally applicable to the construction of other contracts.” Mitchell v.
AARP, 140 Md. App. 102, 116, 779 A.2d 1061, 1069 (2001); see Moscarillo v. Prof'l Risk Mgmt.
Servs., Inc., 398 Md. 529, 540, 921 A.2d 245, 251 (2007); State Farm Mut. Ins. Co. v. DeHaan,
393 Md. 163, 193, 900 A.2d 208, 225-26 (2006); Cole v. State Farm Mut. Ins. Co., 359 Md. 298,
305, 753 A.2d 533, 537 (2000). Accordingly, “‘ordinary principles of contract interpretation
apply.’” Megonnell v. United Servs. Automobile Ass’n, 368 Md. 633, 655, 796 A.2d 758, 772
(2002) (citation omitted); see Dutta v. State Farm Ins. Co., 363 Md. 540, 556, 769 A.2d 948, 957
In “‘deciding the issue of coverage under an insurance policy, the primary principle of
construction is to apply the terms of the insurance contract itself.’” Universal Underwriters Ins.
Co. v. Lowe, 135 Md. App. 122, 137, 761 A.2d 997, 1005 (2000) (quoting Bausch & Lomb, Inc.
v. Utica Mut. Ins. Co., 330 Md. 758, 779, 625 A.2d 1021 (1993)). However, the court bears
responsibility for ascertaining the scope and limitations of an insurance policy. See Fister v.
Allstate Life Ins. Co., 366 Md. 201, 210, 783 A.2d 194, 199 (2001); Lloyd E. Mitchell, Inc. v.
Maryland Casualty Co., Inc., 324 Md. 44, 56, 595 A.2d 469, 475 (1991).
The Maryland Court of Appeals has explained that judicial “interpretation of insurance
contracts to determine the scope and limitations of the insurance coverage, like any other
contract, begins with the language employed by the parties.” MAMSI Life & Health Ins. Co. v.
Callaway, 375 Md. 261, 279, 825 A.2d 995, 1005 (2003). Generally, Maryland courts “analyze
the plain language of [an insurance] contract according to the words and phrases in their ordinary
and accepted meanings as defined by what a reasonably prudent lay person would understand
them to mean.” Universal Underwriters Ins. Co., 135 Md. App. at 137, 761 A.2d at 1005; see
Capital City Real Estate, LLC v. Certain Underwriters at Lloyd’s London, 788 F.3d 375, 379
(4th Cir. 2015) (quoting Kendall v. Nationwide Ins. Co., 348 Md. 157, 166, 702 A.2d 767, 771
(1997)); Walk v. Hartford Cas. Ins. Co., 382 Md. 1, 14-15, 852 A.2d 98, 106 (2004); Litz v. State
Farm, 346 Md. 217, 224, 695 A.2d 566, 569 (1997).
“If the policy’s language is clear and unambiguous, the Court will assume the parties
meant what they said.” Capital City, 788 F.3d at 379 (quoting Perini/Tompkins Joint Venture v.
Ace Am. Ins. Co., 738 F.3d 95, 101 (4th Cir. 2013)). “‘Unless there is an indication that the
parties intended to use words in the policy in a technical sense, they must be accorded their
customary, ordinary, and accepted meaning.’” Maryland Cas. Co. v. Blackstone Intern. Ltd., 442
Md. 685, 695, 114 A.3d 676, 681 (2015) (quoting Lloyd E. Mitchell, Inc., 324 Md. at 56, 595
A.2d at 475). However, if there is evidence that the parties intended to ascribe a special or
technical meaning to certain words used in an insurance contract, those words are construed in
accordance with that understanding. Valliere v. Allstate Insurance Co., 324 Md. 139, 142, 596
A.2d 636, 638 (1991) (“When a policy defines a term in a manner which differs from the
ordinary understanding of that term, the policy definition controls.”); see also Walk, 382 Md. at
14-15, 852 A.2d at 106; Dutta, 363 Md. at 556, 769 A.2d at 957.
If the court deems the provisions of an insurance policy unambiguous, the meaning of the
terms is determined by the court as a matter of law. Clendenin Bros. Inc. v. United States Fire
Ins. Co, 390 Md. 449, 459, 889 A.2d 387, 393 (2006); see Pa. Nat. Mut. Cas. Ins. Co. v. Roberts,
668 F.3d 106, 118 (4th Cir. 2012) (applying Maryland law). In that circumstance, “‘a court has
no alternative but to enforce those terms.’” Megonnell, 368 Md. at 655, 796 A.2d at 772
(quoting Dutta, 363 Md. at 557, 556 A.2d at 1138). But, if a contractual term is ambiguous, the
court may consult “extrinsic sources” to ascertain the meaning. Cole, 359 Md. at 305, 753 A.2d
at 537. A policy term is considered “ambiguous if, to a reasonably prudent person, the term is
susceptible to more than one meaning.” Id. at 306, 753 A.2d at 537.
“‘[U]nlike the majority of other states, Maryland does not follow the rule that insurance
policies are to be most strongly construed against the insurer.’” Capital City, 788 F.3d at 379
(quoting Empire Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co., 117 Md. App. 72, 97, 699 A.2d
482, 494 (1997)); see Megonnell, 368 Md. at 655, 796 A.2d at 771; Bushey v. Nothern Assurance
Co. of America, 362 Md. 626, 632, 766 A.2d 598, 601 (2001); Collier v. MD-Individual Practice
Ass’n, 327 Md. 1, 5, 607 A.2d 537, 539 (1992). But, “if ambiguity is determined to remain after
consideration of extrinsic evidence, ‘it will ordinarily be resolved against the party who drafted
the contract,’ where no material evidentiary factual dispute exists.” Clendenin Bros., 390 Md. at
459-60, 889 A.2d at 394; see Callaway, 375 Md. at 280, 825 A.2d 995, 1005-06 (“[W]hen a term
in an insurance policy is found to be ambiguous, the court will construe that term against the
drafter of the contract which is usually the insurer.”). In other words, where ambiguous language
remains, the court “construe[s] that language ‘liberally in favor of the insured and against the
insurer as drafter of the instrument.’” Connors v. Gov't Employees Ins. Co., 442 Md. 466, 481–
83, 113 A.3d 595, 603–05 (2015) (emphasis in original) (quoting Megonnell, 368 Md. at 655,
796 A.2d at 772).
Here, the relevant terms of the policies are unambiguous. The First Policy (No. 379243014) (ECF 1-2), had an effective date of August 16, 2014 through August 16, 2015. Id. However,
the First Policy was terminated on December 4, 2014, for non-payment of the premium. See,
e.g., ECF 1 ¶¶ 16, 20. Therefore, no coverage was available to Rooding until the Second Policy
(No. 3842216-15) (ECF 1-3) went into effect on March 31, 2015. Id. The Second Policy was to
remain in effect until March 31, 2016.
Both policies provided that National would only provide coverage for incidents that
occurred during the effective dates. ECF 1-2 at 14; ECF 1-3 at 5. In particular, the policies
stated, id.: “We will provide the coverages shown on the Declarations Page, contained in this
policy and any endorsements, for any covered loss that occurs during the policy period, on the
condition that you pay the premium and comply with the policy provisions.”
As noted, Rooding reported the loss on May 1, 2015 (ECF 1 ¶ 24), without any indication
of the actual date of loss. Id. According to National, “[t]here is absolutely no evidence that the
boat sank before December 4, 2014”, while the First Policy, Policy No. 3792430-14, was still in
effect. ECF 36-1 at 8. Unless the Vessel sank prior to December 4, 2014, there is no coverage
under the First Policy. Further, National asserts: “There has never been any evidence presented
by Mr. Rooding, or discovered in Plaintiff’s investigation, which would establish” that the
Vessel sank after March 31, 2015, when the Second Policy, Policy No. 3842216-15, went into
effect. ECF 36-1 at 8-9.
I am satisfied that plaintiff has demonstrated that the sinking of the Vessel occurred after
the termination of the First Policy on December 4, 2014, and prior to the effective date of the
Second Policy on March 31, 2015. Therefore, no coverage is available to Rooding under either
2. The Policies are Void Ab Initio
National also seeks a declaration that the two policies are void ab initio,6 due to
Rooding’s breach of the implied warranty of seaworthiness; breach of the doctrine of uberrimae
fidei; and breach of the “Fraud and Concealment” clause of the Policies. ECF 36-1 at 13-19. I
shall address the doctrine of uberrimae fidei.
Under federal maritime doctrine, marine contracts are “uberrimae fidei–the highest
degree of good faith is exacted of those entering it, for the underwriter often has no practicable
means of checking on either the accuracy or the sufficiency of the facts furnished him by the
assured before the risk is accepted and the premium and conditions set.” G. GILMORE AND C.
BLACK, THE LAW
ADMIRALTY, § 2-6 at 62 (2d ed. 1975) (“Gilmore and Black”); see also
Commercial Union Ins. Co. v. Detyens Shipyard, Inc., 147 F. Supp. 2d 413, 423 (D.S.C. 2001)
(“[T]he doctrine of uberrimae fidei is a firmly entrenched federal doctrine . . . .”). Thus, “failure
by the insured to disclose conditions affecting the risk, of which he is aware, makes the contract
voidable at the insurer’s option.” Stipcich v. Metropolitan Life Ins. Co., 277 U.S. 311, 316
(1928) (citing, inter alia, Livingston v. Md. Ins. Co., 6 Cranch (10 U.S.) 274 (1810)); see also,
Gilmore and Black § 2-6 at 62 (“[T]he underwriter may avoid the policy if a willful
misrepresentation, or an innocent one of a material fact, made by the assured in connection with
the formation of the contract, has been one of the inducements to the underwriter’s entering it.”).
In other words, “[u]nder uberrimae fidei, when the marine insured fails to disclose to the
marine insurer all circumstances known to it and unknown to the insurer which ‘materially affect
the insurer's risk,’ the insurer may void the marine insurance policy at its option.” Catlin at
Lloyd's v. San Juan Towing & Marine, 778 F.3d 69, 83 (1st Cir. 2015). But, for a contract to be
Ab initio means “from the beginning.” Blacks L. Dictionary (10th Ed. 2014).
voidable, the fact that is either misrepresented or not disclosed must be “material.” See, e.g.,
Catlin at Lloyd’s, 778 F.3d at 83; Certain Underwriters at Lloyds, London v. Inlet Fisheries Inc.,
518 F.3d 645, 648 (9th Cir. 2008); HIH Marine Servs., Inc. v. Fraser, 211 F.3d 1359, 1362 (11th
Cir. 2000); N. Am. Specialty Ins. Co. v. Savage, 977 F. Supp. 725, 728 (D. Md. 1997); see also
McLanahan v. Universal Ins. Co., 1 Pet. (26 U.S.) 170, 298 (1828) (“If [an omission is]
accidental, it would not prejudice the insurance, unless material to the risk.”). Materiality is
determined by considering whether, given the circumstances of the case, the information omitted
could “reasonably have affected the determination of the acceptability of the risk.’” N. Am.
Specialty Ins. Co., 977 F. Supp. at 729 (quoting Nationwide Mut. Ins. Co. v. McBriety, 246 Md.
738, 744, 230 A.2d 81, 84 (1967)).
Various courts have found that the misrepresentation of the purchase price of a vessel by
the insured constitutes a “material” breach, and thus permits the insurer to void the contract. See,
e.g., AGF Marine Aviation and Transport v. Cassin, 544 F.3d 255, 264-266 (3rd Cir. 2008);
Certain Underwriters at Lloyds v. Montford, 52 F.3d 219 (9th Cir. 1995); see also New
Hampshire Insurance Co. v. C’Est Moi, Inc., 519 F.3d 937 (9th Cir. 2008) (“‘The fact that the
insurer has demanded answers to specific questions in an application for insurance is in itself
usually sufficient to establish materiality as a matter of law.’”) (citation omitted). For example,
in Cassin, in evaluating whether an insured’s misrepresentation of the purchase price of a vessel
was material, the Third Circuit stated, 544 F.3d at 265: “We conclude that when a marine insurer
asks for the purchase price, it is a fact material to the risk, the misrepresentation of which
violates uberrimae fidei.” And, in Montford, 52 F.3d at 222, the Ninth Circuit determined that
the insurance company could void a contract where the insured inserted the present market value
of a vessel rather than the actual purchase price, when the application specifically requested the
Here, National claims that Rooding misrepresented the purchase price of the Vessel as
$25,000 when “he had paid no more than $9,500 . . . .” ECF 36-1 at 18. National states that
Rooding’s misrepresentation resulted in the issuance of a policy covering the Vessel for $25,000.
Id. According to National, Rooding’s misrepresentation was a material breach of his obligations
under the doctrine of uberrimae fidei, which “justifies the actions taken by the Plaintiff to void
the policies ab initio . . . .” Id.
I am satisfied that National’s undisputed allegations in the Complaint are sufficient for
the Court to conclude that Rooding materially breached his obligations under the doctrine of
uberrimae fidei. As noted, Rooding advised “National Liability that he purchased the Vessel for
$25,000 after he was told that he could only insure the Vessel for the amount of his investment in
the Vessel,” and he failed “to disclose to National Liability that the actual purchase price of the
Vessel was either $9,515.00 or $3,500.00 . . . .” ECF 1 ¶ 45. Additionally, with respect to the
Second Policy, the Complaint indicates that Rooding omitted the purchase price of the Vessel,
although it was requested on the application. ECF 1 ¶ 22. As a result, the policies are void ab
Motion for Attorneys’ Fees and Costs
Fed. R. Civ. P. 4(d) provides the procedures for waiver of service. Rule(4)(d)(1) states:
“An individual, corporation, or association that is subject to service under Rule 4(e), (f), or (h)
has a duty to avoid unnecessary expenses of serving the summons. The plaintiff may notify such
Having determined that both policies are void ab initio under the doctrine of uberrimae
fidei, I need not reach plaintiff’s claims that the policies are void ab initio as a result of
Rooding’s breach of the warranty of seaworthiness or for breach of the “Fraud and
Concealment” clause of the Policies. Id. at 19.
a defendant that an action has been commenced and request that the defendant waive service of a
summons.” According to Rule 4(d)(1)(F), the request for waiver must “give the defendant a
reasonable time of at least 30 days after the request was sent . . . to return the waiver.”
Rule 4(d)(2) provides remedies for the failure of a defendant to waive service. It says, id.
If a defendant located within the United States fails, without good cause, to sign
and return a waiver requested by a plaintiff located within the United States, the
court must impose on the defendant:
(A) the expenses later incurred in making service; and
(B) the reasonable expenses, including attorney's fees, of any motion
required to collect those service expenses.
In 4A C. WRIGHT AND A. MILLER, FED. PRAC. & PROC. CIV. § 1092.1 (4th ed.) (“Wright
& Miller”), it states: “Under Rule 4(d)(2), the defendant is liable for the costs and expenses of
follow-up service when the attempt to secure a waiver of formal service has been refused, as well
as the reasonable expenses of any motion required to collect the costs of the follow-up service.”
(Emphasis added). However, a defendant “who fails to comply with the request for a waiver of
formal service can avoid liability for these costs only by showing ‘good cause’ for its failure to
comply. The most obvious illustration of good cause would be never having received the notice
and request for waiver and the complaint.” Id.
Here, National claims that it is entitled to “the sum of $2,690 for reasonable attorneys’
fees and costs incurred by Plaintiff in effectuating service upon Defendant, Ronald Rooding.”
ECF 35 at 2. The docket reflects that National sent Rooding a request for a waiver of service to
his home address, with the proper zip code, in accordance with the many requirements of Rule
4(d)(1). See ECF 13; ECF 35-2, ¶¶ 3, 6. The envelope was returned to National. See ECF 35-1
at 3-4; ECF 15-1 at 14-15. National alleges that it was Rooding who did so. ECF 35-1 at 3.
Moreover, National maintains that Rooding evaded service. See, e.g., ECF 35-2; see also, e.g.,
ECF 15-1. As a result, National asked the Court for leave to serve Rooding by posting the
summons and complaint at his residence, and by sending the summons and complaint, by
certified mail and also by first class mail, to his Maryland address. ECF 16; see ECF 15 at 2.
The Court granted that request. ECF 16.
Notably, Rooding has not responded to the Motion for Attorneys’ Fees. However, in
Rooding’s Motion to Vacate (ECF 25), Rooding said, through counsel: “Defendant was not
present at the address where alternative service is said to have taken place during the periods in
question. Debtor [sic] was either in Florida or Chicago, Illinois.” Id. at 1. And, he stated, id. at
2: “Defendant was not aware of any service until he approached Counsel about entering an
appearance in his case, as Defendant was unaware of any activity in the case.”
In the Motion to Vacate, Rooding did not address the two requests for waivers, sent on
October 28, 2015 (ECF 10) and November 11, 2015 (ECF 13). The dates of alternative service
are not relevant to waiver. Thus, Rooding’s alleged absence from his home address at the time
of alternative service on December 19, 2015 (ECF 20, posting) and January 13, 2016 (ECF 21,
first class and certified mail) are of no moment.
Furthermore, with respect to Rooding’s contention that he was “unaware of any activity
in the case”, Rooding does not dispute that the German Hill Road address in Dundalk is correct,
nor does he challenge National’s claims that he received and returned the two envelopes to
National. See ECF 15-1; ECF 25; ECF 29. And, the Affidavit of Evasion (ECF 15-1 at 1-4),
previously submitted by plaintiff in support of the Motion for Alternative Service, suggests that
Rooding was present at his Maryland address on October 18, 2015, ten days before the first
request for waiver was sent. ECF 15-1 ¶ 15.
In light of the foregoing, I am satisfied that National properly requested a waiver of
service, pursuant to Rule 4(d), and that Rooding has not shown good cause for his failure to
waive service. I turn to the amount of National’s fee request.
As noted, National claims that it is entitled to a total of $2,690.00 as a result of Rooding’s
failure to waive service. ECF 35-1 at 7-8. That sum includes $2,535 for attorneys’ fees and
$155.00 for process server’s fees. Id.
Under Rule 4(d), a plaintiff may only recover costs after a defendant has failed to waive
service. See Wright & Miller § 1092.1. National’s second request for waiver of service was
docketed November 11, 2015. ECF 13.8 Under Rule 4(d)(1)(F), a defendant has 30 days to
respond. Therefore, plaintiff cannot recover for costs that were incurred prior to December 11,
The documentation furnished by plaintiff in support of its request for fees and costs
shows that plaintiff seeks $85.00 for efforts at service that began on September 12, 2015, nearly
two months before National sent a request for waiver of service to the proper address. See ECF
35-8 at 2. Moreover, plaintiff does not provide a sufficient breakdown for the Court to determine
what expenses were incurred prior to December 11, 2015, and what expenses, if any, were
incurred after that date. Accordingly, plaintiff may only recover $70.00 for service of process
that was attempted beginning on December 19, 2015. Id. at 1.
Furthermore, National is not entitled to the $2,535 in attorneys’ fees that it has requested.
Rule 4(d)(2)(B) limits the available attorneys’ fees to “the reasonable expenses, including
attorney's fees, of any motion required to collect those service expenses.” (Emphasis added).
The first request for waiver of service (ECF 10), filed October 29, 2015, apparently was
sent to Rooding using the wrong zip code. Although National suggests that Rooding received it
(ECF 35-1 at 3), National resubmitted the request for waiver, using the correct zip code.
The records that National submitted are not limited to the legal fees that National incurred in
filing the Motion for Attorneys’ Fees and to “collect” for “service expenses.” See ECF 35-7.
For example, ECF 35-7 at 5 includes time incurred to review the motion for entry of default.
Other fees pertain to the motion for alternative service. Id. at 4. These fees are not recoverable
under the plain language of the rule, which limits recovery of fees to those attorneys’ fees
required to collect the service expenses. See Menke v. Monchecourt, 17 F.3d 1007, 1011-12 (7th
Cir. 1994), superseded on other grounds; U.S. Engine Prod., Inc. v. AGCS Marine Ins. Co., 769
F. Supp. 2d 626, 629 (S.D.N.Y. 2011).
As the court said in U.S. Engine Prod. Inc., “any
attorneys' fees incurred in the process of effecting service are not recoverable under Rule
4(d)(2).” 769 F. Supp. 2d at 629.
Accordingly, by February 3, 2017, National shall submit a statement detailing the
breakdown of the fees incurred in drafting its Motion for Attorneys’ Fees and Costs (ECF 35),
and any other fees to which it believes it is entitled under Rule 4(d)(2). National may also
submit a corrected account of the costs it incurred in attempting to serve Rooding.
For the reasons set forth above, I shall grant the Motion for Default (ECF 36), in part,
with respect to plaintiffs’ claims that the policies did not apply coverage to the sinking of the
Vessel and that the policies were void ab initio under the doctrine of uberrimae fidei. And, I
shall grant ECF 35, in part. In particular, I shall award attorney’s fees and costs, in an amount to
be determined, provided that National submits appropriate documentation detailing the
reasonable legal fees and costs that it is entitled to recover under Rule 4(d)(2), due by February
An Order follows, consistent with this Memorandum Opinion follows.
Date: January 20, 2017
Ellen L. Hollander
United States District Judge
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