Nautilus Insurance Company v. REMAC America, Inc. et al
Filing
23
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 7/9/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
NAUTILUS INSURANCE COMPANY
:
v.
:
Civil Action No. DKC 13-0169
:
REMAC AMERICA, INC., et al.
:
MEMORANDUM OPINION
Presently pending and ready for review in this insurance
coverage dispute are two motions filed by Plaintiff Nautilus
Insurance
Company
(“Nautilus”):
(1)
a
motion
for
default
judgment against Defendants REMAC America, Inc. (“REMAC”) and
Mark
V.
Soresi
(ECF
judgment (ECF No. 4).
No.
22);
and
(2)
a
motion
for
summary
The issues have been fully briefed, and
the court now rules, no hearing being deemed necessary.
Rule 105.6.
Local
For the following reasons, Nautilus’s motions will
be granted.
I.
Background
A.
The Policy
This case involves a commercial general liability insurance
policy issued by Nautilus to REMAC for the policy period of
December 21, 2009 to December 21, 2010 (“the Policy”).
The
Policy identifies REMAC as the “Named Insured” with a mailing
address in Potomac, Maryland.
(ECF No. 1-3, at 4, Common Policy
Declarations).1
Under the heading “Location of All Premises You
Own, Rent, or Occupy,” the same Potomac address is the only
address
listed.
(Id.
at
12,
Coverage Part Declarations).
Commercial
General
Liability
The Policy defines “insured” to
include the “‘executive officers’ and directors” of REMAC, but
only “with respect to their duties as [REMAC’s] officers or
directors.”
Likewise,
(Id.
REMAC’s
at
21,
Section
stockholders
are
their liability as stockholders.”
II,
Who
insureds
Is
An
“with
Insured).
respect
to
(Id.).
The Policy generally requires Nautilus to “pay those sums
that the insured becomes legally obligated to pay as damages
because of ‘bodily injury’ or ‘property damage’ to which this
insurance applies” and to “defend the insured against any ‘suit’
seeking
those
Coverages,
Liability).
damages.”
Coverage
A
(ECF
No.
Bodily
1-3,
Injury
at
and
13,
Section
Property
I
–
Damage
The Policy also requires Nautilus to “pay medical
expenses . . . for ‘bodily injury’ caused by an accident . . .
(3)
Because
of
your
operations.”
(Id.
at
Coverages, Coverage C Medical Payments).
19,
Section
I
–
“Bodily injury” is
defined as “bodily injury, sickness or disease sustained by a
person,
time.”
including
death
resulting
from
any
(Id. at 24, Section V – Definitions).
1
of
these
at
any
“Suit” is defined
All citations to page numbers in this Memorandum Opinion
refer to CM/ECF pagination.
2
as
“a
civil
proceeding
in
which
damages
because
of
‘bodily
injury’, ‘property damage’ or ‘personal and advertising injury’
to which this insurance applies are alleged.”
(Id. at 27).
The Policy also contains a number of exclusions.
Relevant
here, the Policy includes an endorsement titled “Exclusion Injury to Employees, Contractors, Volunteers and Workers.”
No.
1-3,
at
Exclusion”).
36,
Form
L205)
(“the
Employer’s
(ECF
Liability
With respect to Coverage A for Bodily Injury and
Property Damage Liability, the Employer’s Liability Exclusion
provides that:
This insurance does not apply to:
e. Employer’s Liability
“Bodily injury” to:
(1) An “employee” of any insured arising out
of and in the course of:
(a) Employment by any insured; or
(b) Performing duties related to the
conduct of any insured’s business;
or
(2) The spouse, child, parent, brother or
sister of that “employee” arising out of
Paragraph (1) above.
This exclusion applies:
(1) Whether any insured may be liable as an
employer or in any other capacity; and
(2) To any obligation to share damages with
or repay someone else who must pay damages
because of the injury.
3
(Id.)
(emphasis
in
original).
The
Employer’s
Liability
Exclusion defines “employee” as follows:
[A]ny person or persons who provide services
directly or indirectly to any insured,
regardless of whether the services are
performed or where the “bodily injury”
occurs including, but not limited to, a
“leased worker”, a “temporary worker”, a
“volunteer worker”, a statutory employee, a
casual
worker,
a
seasonal
worker,
a
contractor, a subcontractor, an independent
contractor, and any person or persons hired
by, loaned to, employed by, or contracted by
any insured or any insured’s contractor,
subcontractor, or independent contractor.
(Id.).
Elsewhere, the Policy contains a provision that makes
all exclusions to Coverage A applicable to Coverage C Medical
Payments.
(Id. at 19, Coverage C Medical Payments, Section 2,
Exclusion G).
B.
The Underlying Action
On January 24, 2012, Joseph Friend filed a lawsuit against
REMAC in the Circuit Court for Berkley County, West Virginia
(“the
Underlying
Underlying
Action
Action”).
alleges
Mr.
that,
Friend’s
on
March
complaint
26,
2010,
in
the
he
was
working on a job site located near Martinsburg, West Virginia,
as a REMAC employee.
(ECF No. 1-1 ¶ 5).
Mr. Friend avers that,
on the day in question, REMAC required him “to operate heavy
construction equipment that was attached to a similar piece of
heavy construction equipment by a chain.”
(Id.).
Mr. Friend
asserts that, while following REMAC’s instructions to use the
4
first piece of equipment to tow the second piece, the chain
attaching the equipment “broke, or came loose, and came flying
back at a high rate of speed and struck [him] in the head,
severely injuring him.”
(Id.).
In Count I, Friend alleges that REMAC “negligently, grossly
negligent[ly],
carelessly,
willfully,
wantonly,
wrongfully,
and/or otherwise [unlawfully]” engaged in a number of acts or
omissions that directly and proximately caused him to sustain
the following harms:
temporary and permanent bodily injury;
past and future medical expenses; past and future lost income;
physical
pain
distress;
and
loss
humiliation;
suffering;
of
and
mental
enjoyment
of
embarrassment.
anguish
life;
(ECF
and
emotional
permanent
scarring;
No.
1-1
¶¶
1-11).
Specifically, Mr. Friend alleges that REMAC failed to use a
chain that was appropriate and safety-rated for towing; failed
to provide him with an enclosed cab to prevent him from being
struck by flying debris; failed to perform a hazard assessment
of the work site; and created or permitted unsafe and hazardous
working
conditions
by,
inter
alia,
required personal protective equipment.
not
providing
him
with
In Count II, Mr. Friend
alleges that REMAC failed to follow federal workplace safety
rules and that this failure proximately caused his injuries and
damages.
(Id. ¶¶ 12-14).
In Count III, Mr. Friend alleges that
REMAC knew about the unsafe and hazardous conditions at the work
5
site;
knew
that
such
conditions
violated
“a
safety
statute,
rule, regulation or . . . a commonly accepted and well-known
safety
standard”;
employees
to
the
and
nonetheless
unsafe
working
intentionally
conditions,
exposed
its
directly
and
proximately causing Mr. Friend’s injuries and damages.
¶¶ 15-19).
(Id.
Mr. Friend also seeks punitive damages in connection
with Counts I and II.
On March 1, 2012, REMAC removed the Underlying Action to
the United States District Court for the Northern District of
West Virginia.
(N.D.W.Va.).
See Friend v. REMAC Am., Inc., No. 12-cv-17
On November 15, 2012, Mr. Friend moved for leave
to file an amended complaint in the Underlying Action to add
Mark V. Soresi as a defendant.
Mr. Friend’s proposed amended
complaint alleged that Mr. Soresi is the “owner, operator, and
sole shareholder” of REMAC.
(ECF No. 1-2 ¶ 3).
On February 14,
2013, Judge Groh denied Mr. Friend’s motion for leave to amend
on futility and prejudice grounds.
No.
12-cv-17,
---
F.Supp.2d
----,
Friend v. REMAC Am., Inc.,
2013
WL
591346,
at
*5-6
(N.D.W.Va. Feb. 14, 2013).
C.
The Coverage Action
On January 15, 2013, Nautilus filed a complaint in this
court that names REMAC and Mr. Soresi as Defendants and Mr.
Friend as an “Interested Party.”
(ECF No. 1).
Nautilus seeks a
judgment declaring (1) that it has no duty under the Policy to
6
defend REMAC or Mr. Soresi against any claim asserted by Mr.
Friend in the Underlying Action or that otherwise arises out of
the “Occurrence,” defined by Nautilus as the March 26, 2010
incident
during
which
Mr.
Friend
was
allegedly
injured;
and
(2) that it has no duty under the Policy to indemnify REMAC or
Mr. Soresi for any sums that either Defendant becomes liable to
pay Mr. Friend in the Underlying Action or that otherwise arise
out of the Occurrence.
(Id. at 11).
On January 25, ten days
after filing its complaint, Nautilus moved for summary judgment.
(ECF No. 4).
On January 29, Nautilus served REMAC, Mr. Soresi,
and Mr. Friend with a copy of the complaint, the summons, and
its motion for summary judgment.
(ECF Nos. 6, 8, & 10).
On March 7, 2013, Mr. Friend filed an answer to Nautilus’s
complaint (ECF No. 14), a jury trial demand (ECF No. 13), and a
response
to
the
motion
for
summary
judgment
(ECF
No.
11).
Nautilus filed a reply in support of its motion for summary
judgment (ECF No. 16) and moved for entry of default against
REMAC and Mr. Soresi (ECF Nos. 17, 19, & 20).
On May 15, 2013,
the clerk entered default against REMAC and Mr. Soresi. (ECF No.
21).
On May 22, Nautilus moved for default judgment against
REMAC and Mr. Soresi, incorporating its summary judgment motion
by reference.
(ECF No. 22).
7
II.
Motion for Default Judgment
A.
Standard of Review
Federal
Rule
of
Civil
Procedure
55(b)(2)
authorizes
the
entry of default judgment against a properly served defendant
who fails to file a timely responsive pleading.
motion
for
default
judgment,
the
In reviewing a
well-pleaded
factual
allegations in the complaint as to liability are accepted as
true.
Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780–81
(4th Cir. 2001).
It must still be determined, however, “whether
these unchallenged factual allegations constitute a legitimate
cause of action.”
Agora Fin., LLC v. Samler, 725 F.Supp.2d 491,
494 (D.Md. 2010).
Where, as here, a plaintiff seeks declaratory relief rather
than monetary damages, default judgment is appropriate if the
well-pleaded
allegations
of
the
plaintiff’s right to such relief.
v.
BSA
Ltd.
P’ship,
602
complaint
establish
the
See, e.g., Nautilus Ins. Co.
F.Supp.2d
641,
645–46
(D.Md.
2009)
(awarding default judgment in declaratory judgment action); Am.
Select Ins. Co. v. Taylor, 445 F.Supp.2d 681, 684 (N.D.W.Va.
2006) (same); cf. Penn Am. Ins. Co. v. Valade, 28 F.App’x 253,
257-58
(4th
Cir.
2002)
(unpublished
per
curiam
opinion)
(affirming summary judgment in favor of insurer, against third
party, following entry of default judgment against insured in
declaratory judgment action).
8
B.
Analysis
Taking
as
true
the
well-pleaded
allegations
of
the
complaint, Nautilus states a claim for the declaratory relief it
seeks.
As set forth below, Nautilus is entitled to a judgment
declaring that it has no duty to defend or indemnify REMAC or
Mr. Soresi in connection with the Underlying Action or any other
claims
asserted
by
Mr.
Friend
arising
from
the
duty
to
injuries
he
purportedly suffered on March 26, 2010.
1.
Nautilus’s Duty to Defend
Under
Maryland
“contractual
duty
law,
an
arising
insurer’s
out
of
the
terms
defend
of
a
is
a
liability
insurance policy” and is “broader than the duty to indemnify.”
Litz v. State Farm Fire & Cas. Co., 346 Md. 217, 225 (1997).2
Whereas
the
insurer’s
duty
to
indemnify
only
attaches
upon
liability, “‘[a]n insurance company has a duty to defend its
insured for all claims that are potentially covered under the
policy.’”
Cowan Sys. v. Harleysville Mut. Ins. Co., 457 F.3d
368, 372 (4th Cir. 2006) (quoting Walk v. Hartford Cas. Ins. Co.,
382 Md. 1, 15 (2004)).
Determining whether an insurer has a duty to defend is a
two-step process.
St. Paul Fire & Marine Ins. Co. v. Pryseski,
2
As explained below in Section III.B., Maryland choice of
law rules require the Policy to be interpreted pursuant to the
substantive law of Maryland.
9
292 Md. 187, 193 (1981).
First, the policy must be reviewed to
determine the scope of, and any limitations on, coverage.
Id.;
Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98, 103-04 (Md. 1995).
Insurance policies are to be construed pursuant to “ordinary
principles
of
contract
interpretation.”
Megonnell
v.
United
Servs. Auto. Ass’n, 368 Md. 633, 655 (2002) (internal quotations
marks omitted).
Thus, the words used in a policy should be
given “their usual, ordinary, and accepted meaning” – i.e., the
“meaning
term.”
a
reasonably
prudent
layperson
would
attach
to
the
Bausch & Lomb Inc. v. Utica Mut. Ins. Co., 330 Md. 758,
779 (1993).
Where the provisions of an insurance policy are
unambiguous, the meaning of the terms is determined by the court
as a matter of law.
Cole v. State Farm Mut. Ins. Co., 359 Md.
298, 305 (2000).
As
the
allegations
second
of
the
step
in
underlying
the
duty-to-defend
complaint
must
be
inquiry,
analyzed
the
to
determine whether they would potentially be covered under the
subject policy.
103-04.
If
Pryseski, 292 Md. at 193; Cochran, 337 Md. at
there
is
any
doubt
as
to
“whether
or
not
the
allegations of a complaint against the insured state a cause of
action within the coverage of a liability policy sufficient to
compel the insurer to defend the action, such doubt will be
resolved in insured’s favor.”
Id. at 107 (quoting U.S. Fid. &
Guar. Co. v. Nat’l Paving Co., 228 Md. 40, 54 (1962)).
10
Application
of
this
two-step
standard
here
establishes
Nautilus’s entitlement to a declaration that it has no duty to
defend.
As to the scope of coverage afforded by the Policy, the
Employer’s Liability Exclusion unequivocally excludes coverage
for “bodily injury” to “an employee of any insured arising out
of and in the course of (a) Employment by any insured; or (b)
Performing
duties
business.”
related
to
the
(ECF No. 1-3, at 36).3
conduct
of
any
insured’s
The same exclusion broadly
defines “employee” to include “any person or persons who provide
services directly or indirectly to any insured.”
(Id.).
With
respect to the allegations asserted in the Underlying Action,
each of Mr. Friend’s causes of action is based on the bodily
injuries he suffered on March 26, 2010.
Mr. Friend specifically
avers that he “was an employee of [REMAC] and was working on a
jobsite”
on
March
bodily injuries.
injuries
therefore
26,
2010,
when
he
allegedly
suffered
(ECF No. 1-1 ¶ 5; ECF No. 1-2 ¶ 9).
necessarily
“arise
out
of”
Mr.
his
Such
Friend’s
employment by REMAC and his performance of duties relating to
3
Indeed, several courts in other jurisdictions have
concluded that the very same endorsement, Form L205, is
unambiguous on its face. See, e.g., Nautilus Ins. Co. v. Design
Build Interamerican, Inc., No. 11-20772, 2012 WL 4025614, at *56 (S.D.Fla. Sept. 12, 2012); Nautilus Ins. Co. v. S. Vanguard
Ins. Co., 899 F.Supp.2d 538, 546-47 (N.D.Tex. 2012); Nautilus
Ins. Co. v. Triple C Constr., Inc., No. 10-2164, 2011 WL 42889,
at *5 (D.N.J. Jan. 6, 2011); Nautilus Ins. Co. v. K. Smith
Builders, Ltd., 725 F.Supp.2d 1219, 1225 (D.Haw. 2010).
11
REMAC’s business.
Thus, a straightforward comparison of the
pleadings in the Underlying Action with the unambiguous terms of
the Policy compels the conclusion that there is no possibility
of coverage for any claims that Mr. Friend asserts against REMAC
in connection with the March 26, 2010 incident.
The same is true of any claims arising out of the March 26,
2010 incident that Mr. Friend might attempt to assert against
Mr. Soresi in his capacity as an executive officer, director, or
stockholder of REMAC.4
Because such claims would also be based
on bodily injuries that arise out of Mr. Friend’s employment by
REMAC, and because the Employer’s Liability Exclusion applies
regardless
of
“[w]hether
any
insured
4
may
be
liable
as
an
Nautilus filed its complaint in this coverage lawsuit
while Mr. Friend’s motion for leave to amend his complaint in
the Underlying Action was still pending. As noted above, Judge
Groh later denied Mr. Friend’s motion, meaning that Mr. Soresi
is not actually a defendant in the Underlying Action.
In some
circumstances, the absence of pending litigation against an
insured
is
a
factor
that
counsels
against
exercising
jurisdiction over an insurer’s declaratory judgment action. For
example, in Empire Fire & Marine Insurance Co. v. Gross, Judge
Blake declined to exercise jurisdiction where the possibility of
litigation against the policyholder was so remote that “setting
out the rights of the parties . . . would come precariously
close to being an advisory opinion.”
No. CCB–11–3598, 2013 WL
524766, at *2-3 (D.Md. Feb. 12, 2013).
Here, by contrast, the
threat of litigation against Mr. Soresi is both real and
imminent, as evidenced by Mr. Friend’s efforts to amend his
complaint.
These efforts create an actual, live controversy
about the scope of defense and indemnity coverage that would be
available to Mr. Soresi under the Policy.
Accordingly, it is
appropriate to award Nautilus’s requested declaratory relief as
to Mr. Soresi notwithstanding the absence of any pending
litigation against him.
12
employer or in any other capacity,” there is no possibility of
coverage to the extent that Mr. Friend seeks to hold Mr. Soresi
liable
as
an
executive
officer,
director,
or
stockholder.5
Accordingly, Nautilus’s complaint establishes its entitlement to
a judgment declaring that it owes no duty to defend either REMAC
or Mr. Soresi against Mr. Friend’s claims.6
2.
Nautilus’s Duty to Indemnify
As noted above, the duty to defend is broader than the duty
to
indemnify.
Because
the
well-pleaded
allegations
of
the
complaint establish that Nautilus owes no duty to defend, they
necessarily
indemnify
also
REMAC
establish
or
Mr.
that
Soresi
Nautilus
(in
his
owes
capacity
no
as
duty
a
to
REMAC
executive director, officer, or stockholder) for any sums they
may become liable to pay to Mr. Friend in the Underlying Action
or as a result of any other claim arising out of the March 26,
2010, incident.
Thus, Nautilus’s motion for default judgment
against REMAC and Mr. Soresi will be granted.
5
To the extent Mr. Friend seeks to hold Mr. Soresi liable
in his individual capacity, the Policy would not afford coverage
in the first instance because Mr. Soresi would not qualify as an
“insured” with respect to such claims. (See ECF No. 1-3, at 20,
Section II - Who Is an Insured).
6
Because the Employer’s Liability Exclusion supports
Nautilus’s entitlement to declaratory relief, the additional
allegations in the complaint regarding the Policy’s exclusion
for punitive and exemplary damages need not be considered.
13
Mr. Friend, however, is “‘not bound by the default judgment
because, as an injured third party, [he is] entitled to defend
on the merits in the declaratory judgment proceeding.’”
Ltd.
P’ship,
F.App’x
at
602
256
F.Supp.2d
n.*).
at
When
646
an
n.2
insurer
(quoting
brings
Valade,
a
BSA
28
declaratory
judgment action against the insured and the injured third party,
the third party “acquires standing – independent of that of the
insured
–
to
proceeding.”
defend
Valade,
itself
28
in
F.App’x
the
at
declaratory
257.
judgment
Accordingly,
the
default judgment that will be entered against REMAC and Mr.
Soresi
“does
between”
motion
not
Nautilus
for
negate
and
summary
the
Mr.
case
or
Id.
judgment,
and
Rather,
Nautilus’s
Mr.
Friend.
controversy
existing
Friend’s
opposition
thereto, must be considered separately.
III. Motion for Summary Judgment
A.
Standard of Review
Summary judgment may be entered only if there is no genuine
issue as to any material fact and the moving party is entitled
to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson,
532
F.3d
291,
297
(4th
Cir.
2008).
Summary
judgment
is
inappropriate if any material factual issue “may reasonably be
resolved in favor of either party.”
14
Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Wash.
Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
“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
showing that there is a genuine issue for trial.’”
facts
Bouchat v.
Balt. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)).
proof . . . will
not
suffice
to
prevent
“A mere scintilla of
summary
Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003).
judgment.”
“If the
evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.”
249–50 (citations omitted).
Liberty Lobby, 477 U.S. at
At the same time, the facts that
are presented must be construed in the light most favorable to
the party opposing the motion.
Scott v. Harris, 550 U.S. 372,
378 (2007); Emmett, 532 F.3d at 297.
B.
Analysis
Nautilus’s motion for summary judgment relies on the same
coverage position set forth in its complaint, i.e., that the
plain, unambiguous terms of the Employer’s Liability Exclusion
bar defense and indemnity coverage for the Underlying Action and
any other claim by Mr. Friend arising from the March 26, 2010
incident.
(See ECF No. 4-1).
In his opposition to Nautilus’s
motion, Mr. Friend does not challenge the merits of Nautilus’s
15
position that the Employer’s Liability Exclusion, on its face,
bars coverage for his claims.
(See ECF No. 11-1).
Instead, Mr.
Friend suggests that the applicability of Maryland law to the
interpretation of the Policy is “not a foregone conclusion” and
posits that, if West Virginia law were to apply, the “reasonable
expectations” doctrine recognized in that state may provide a
viable defense to Nautilus’s motion.
(Id. at 3).7
As such, Mr.
Friend requests that a ruling be deferred until the parties can
engage in discovery regarding (1) “the material facts related to
the formation and scope of the Policy” and (2) “whether the
exclusionary
provisions
of
attention of the insured.”
the
Policy
(Id.).
were
brought
to
the
Mr. Friend’s request is
unavailing.
Ordinarily,
summary
judgment
is
inappropriate
if
“the
parties have not had an opportunity for reasonable discovery.”
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d
435, 448 (4th Cir. 2011).
Rule 56(d) allows the court to deny a
motion for summary judgment or delay ruling on the motion until
7
Mr. Friend also attempts to create a genuine issue of
material fact by questioning the authenticity of the version of
the Policy submitted by Nautilus in connection with its motion
for summary judgment.
(ECF No. 11-1, at 2).
In its reply,
Nautilus negates this argument with a declaration confirming
that the Policy attached to its motion as Exhibit 3 was
certified as a true and correct copy of the Policy issued to
REMAC. (ECF No. 16-1, at 2, Nechamkin Decl. ¶ 2).
16
discovery has occurred if the “nonmovant shows by affidavit or
declaration that, for specified reasons, it cannot present facts
Fed.R.Civ.P. 56(d).8
essential to justify its opposition.”
The Fourth Circuit places “great weight” on the affidavit
requirement and has observed that “[a] reference to [Rule 56(d)]
and to the need for additional discovery in a memorandum of law
in
opposition
to
a
motion
for
summary
judgment
is
adequate substitute for a [Rule 56(d)] affidavit.”
not
an
Evans v.
Techs. Applications & Serv. Co., 80 F.3d 954, 961 (4th Cir. 1996)
(internal
quotation
marks
omitted)
(first
alteration
in
original).
Indeed, a failure to file a Rule 56(d) affidavit “is
itself sufficient grounds to reject a claim that the opportunity
for discovery was inadequate.”
Id.
the
always
Fourth
Circuit
has
“not
At the same time, however,
insisted”
on
a
formal
affidavit and has excused non-compliance with Rule 56(d) “if the
nonmoving party has adequately informed the district court that
the motion is premature and that more discovery is necessary.”
Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244
(4th Cir. 2002).
Notably,
requests
made
pursuant
to
Rule
56(d)
simply demand discovery for the sake of discovery.’”
8
“‘cannot
Hamilton
The 2009 Amendments to the Federal Rules of Civil
Procedure transferred the language of former Rule 56(f) to Rule
56(d).
17
v. Mayor & City Council of Balt., 807 F.Supp.2d 331, 342 (D.Md.
2011) (quoting Young v. UPS, No. DKC–08–2586, 2011 WL 665321, at
*20 (D.Md. Feb. 14, 2011)).
Courts interpreting Rule 56(d) have
consistently held that a nonmovant’s request may be denied if
“the additional evidence sought for discovery would not have by
itself created a genuine issue of material fact sufficient to
defeat summary judgment.”
Ingle ex rel. Estate of Ingle v.
Yelton, 439 F.3d 191, 195 (4th Cir. 2006) (internal quotation
marks
omitted).
Put
simply,
“fishing expedition[s].”
Rule
56(d)
does
not
authorize
Morrow v. Farrell, 187 F.Supp.2d 548,
551 (D.Md. 2002), aff’d, 50 F.App’x 179 (4th Cir. 2002).
Here,
it
judgment
prior
however,
has
is
to
not
undisputed
that
Nautilus
engaging
in
any
submitted
a
formal
moved
discovery.
Rule
56(d)
for
summary
Mr.
Friend,
affidavit.
Instead, he makes a general, unsworn request for discovery in
his opposition to Nautilus’s motion for summary judgment.
This
omission is, by itself, sufficient to deny his request, given
that the Fourth Circuit places great weight on the affidavit
requirement.
More
importantly,
Mr.
Friend’s
request
must
be
denied
because neither area of discovery he identifies would create a
genuine
issue
of
material
fact
regarding
defend or indemnify under the Policy.
Nautilus’s
duty
to
First, Mr. Friend posits
that he needs to explore the details surrounding the formation
18
of the Policy to ascertain which state’s law should govern and,
in
particular,
whether
West
Virginia
law
might
apply.
Mr.
Friend fails to explain what set of facts could possibly compel
the conclusion that West Virginia law governs.
Because
subject
matter
jurisdiction
in
this
case
is
predicated on diversity of citizenship, the choice of law rules
of
Maryland,
the
forum
state,
must
be
applied.
Klaxon
v.
Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496-97 (1941).
In
the
absence
Maryland
contractus
of
generally
to
a
contractual
adheres
decide
to
choice
the
which
of
doctrine
state’s
interpretation of an insurance contract.
Ins. Co. v. Hart, 327 Md. 526, 529 (1992).
law
law
of
provision,
lex
loci
controls
the
See, e.g., Allstate
Under the lex loci
doctrine, the law of the jurisdiction where the contract was
made governs its interpretation.
TIG Ins. Co. v. Monongahela
Power Co., 209 Md.App. 146, 161 (2012).
Maryland’s appellate
courts view the locus contractus of an insurance policy as the
state in which the policy is delivered and where the premiums
are paid, because such acts are the last acts necessary to make
an insurance policy binding.
See Aetna Cas. & Sur. Co. v.
19
Souras, 78 Md.App. 71, 77 (1989); Monongahela Power, 209 Md.App.
at 162.9
Mr.
Friend
conclusorily
contends
that
West
Virginia
law
might apply, but offers nothing to suggest that the last act
needed to form the Policy occurred in West Virginia.
Nautilus
argues,
the
record
demonstrates
that
Rather, as
both
of
the
9
Several courts in this district have held that, if the
subject insurance policy specifically provides that it will not
be valid until it is countersigned by an officer or agent of the
insurer, “the place of countersigning is held to be the place of
the making of the contract, because the countersignature is the
last act necessary to effectuate the policy.”
Millenium
Inorganic Chems. Ltd. v. Nat’l Union Fire Ins. Co. of
Pittsburgh, PA, 893 F.Supp.2d 715, 725-26 (D.Md. 2012) (internal
quotation marks omitted); accord, e.g., Rouse Co. v. Fed. Ins.
Co., 991 F.Supp. 460, 464-65 (D.Md. 1998).
In December 2012,
however, the Court of Special Appeals of Maryland rejected this
approach and reaffirmed that, under traditional offer and
acceptance rules, the “last act[s]” necessary to form an
insurance policy are the delivery of the policy to the insured
and the insured’s payment of premiums.
Monongahela Power, 209
Md.App. at 165-66.
The court thus held that the place of
countersigning is irrelevant to the lex loci analysis – even
where a policy contains an express provision that it “shall not
be valid” unless countersigned. Id. at 166.
Here, the first page of the Policy states that “if required
by
state
law,
this
policy
shall
not
be
valid
unless
countersigned by our authorized representative.” (ECF No. 1-3,
at 3). As Mr. Friend observes in his opposition, the line for a
countersignature on the “Common Policy Declarations” is blank,
although there is a typewritten notation to the left of the line
stating “Countersigned:
Charlottesville, VA, 12/21/2009 CZC.”
(Id. at 4, Common Policy Declarations).
Pursuant to the
teaching of
Monongahela Power, the apparent lack of a
handwritten countersignature does not affect the validity of the
Policy, and the place of any electronic countersignature is
irrelevant to the choice of law analysis.
20
relevant “last acts” occurred in Maryland.
With respect to
delivery, Nautilus submits a declaration from Amy Nechamkin, its
Senior Litigation Counsel, who avers that the company’s standard
practice is to deliver a policy to the mailing address listed on
the policy’s declarations page.
Decl. ¶ 3).
(ECF No. 16-1, at 2, Nechamkin
As noted above, the address listed for REMAC in the
Policy’s declarations is in Potomac, Maryland.
4, Common Policy Declarations).
(ECF No. 1-3, at
It also appears that REMAC paid
the premium for the Policy in Maryland, as evidenced by the use
of Maryland’s three percent tax rate in the calculation of the
premium amount on the Common Declarations Page.
By
contrast,
there
is
nothing
(Id.).10
suggesting
that
delivery or premium payment occurred in West Virginia.
either
Ms.
Nechamkin avers that the Potomac, Maryland address was the only
address that Nautilus had on file for REMAC at the time it
10
As Judge Hollander recently observed, the Court of
Special Appeals of Maryland has issued opinions that are
somewhat contradictory regarding whether the place “where the
premiums [a]re paid” is the location where the premiums are
received by the insurer or the state from which the policyholder
pays.
See Baker’s Exp., LLC v. Arrowpoint Capital Corp., No.
ELH-10-2508, 2012 WL 4370265, at *13 (D.Md. Sept. 20, 2012)
(summarizing conflicting opinions). Most recently, however, the
Court of Special Appeals indicated that it is the state from
which
a
policyholder
pays
the
premium
that
controls.
Monongahela Power, 209 Md.App. at 165 (affirming the trial
court’s ruling that Pennsylvania law applied because the insurer
“offered no information leading to the conclusion that the
policies were delivered to New York or that the premiums were
paid from New York”) (emphasis added).
21
issued the Policy and that Nautilus was not aware that REMAC had
any operations in West Virginia.
Decl. ¶ 4).
(ECF No. 16-1, at 2, Nechamkin
In addition, the Policy itself states that REMAC’s
only location was in Potomac, Maryland.
(ECF No. 1-3, at 12,
Commercial General Liability Coverage Part Declarations).
it
appears
that
West
Virginia
formation of the Policy.
had
no
relationship
Thus,
to
the
Indeed, West Virginia’s only apparent
connection to this coverage dispute is that Mr. Friend allegedly
suffered his injuries in the state.
The place of a third-party
claimant’s injury, however, has no bearing on the choice of law
analysis for a liability insurance policy.
Because Mr. Friend
fails to offer any reasoned argument as to how West Virginia
could possibly be the locus contractus of the Policy, granting
his request to explore whether West Virginia law might apply
would be the equivalent of authorizing a fishing expedition.
The evidence Mr. Friend seeks in his second proposed area
of discovery also would not alter the conclusion that Nautilus
is entitled to judgment as a matter of law.
that,
without
affirmatively
REMAC’s
an
opportunity
brought
attention,
it
the
is
to
explore
Employer’s
impossible
Mr. Friend asserts
whether
Liability
to
know
Nautilus
Exclusion
to
whether
the
“reasonable expectations” doctrine could potentially serve to
defeat Nautilus’s coverage position.
(ECF No. 11-1, at 3-5).
In support of his argument, Mr. Friend relies exclusively on
22
citations to West Virginia case law interpreting the reasonable
expectations
doctrine.
id.).11
(See
As
discussed
above,
however, the evidence is clear that Maryland law governs the
interpretation of the Policy.
In
Maryland,
extrinsic
evidence
is
not
admissible
to
interpret an insurance policy that is unambiguous on its face.
See Cheney v. Bell Nat’l Life Ins. Co., 315 Md. 761, 766-67
(1989); Nat’l Cas. Co. v. Lockheed Martin Corp., 415 F.Supp.2d
596, 601 (D.Md. 2006) (Maryland law) (“While the character of
the
[insurance]
contract,
its
object
and
purposes,
and
the
factual circumstances of the parties at the time of execution
may
assist
in
interpreting
the
meaning
of
a
particular
contractual provision, clear and unambiguous language must be
enforced
including
as
the
written.”).
Employer’s
Here,
the
Liability
11
terms
Exclusion,
of
the
are
Policy,
plain
and
For example, Mr. Friend notes that, in West Virginia,
“the doctrine of reasonable expectations is that the objectively
reasonable expectations of applicants and intended beneficiaries
regarding the terms of insurance contracts will be honored even
though a painstaking study of the policy provisions would have
negated those expectations.”
Nat’l Mut. Ins. Co. v. McMahon &
Sons, Inc., 177 W.Va. 734, 736 (1987), overruled on other
grounds by Potesta v. U.S. Fid. & Guar. Co., 202 W.Va. 308
(1998). Relatedly, “[a]n insurer wishing to avoid liability on
a policy purporting to give general or comprehensive coverage
must make exclusionary clauses conspicuous, plain, and clear,
placing them in such a fashion as to make obvious their
relationship to other policy terms, and must bring such
provisions to the attention of the insured.”
McMahon & Sons,
177 W.Va. at 736.
23
unambiguous.
Accordingly,
the
extrinsic
evidence
that
Mr.
Friend seeks to discover could not alter the conclusion that
Nautilus owes no duty to defend or indemnify REMAC or Mr. Soresi
in connection with the Underlying Action or any other claim
arising out of the injuries Mr. Friend allegedly suffered March
26, 2010.
Mr. Friend’s request for discovery will be denied,
and judgment will be entered in favor of Nautilus.
IV.
Conclusion
For the foregoing reasons, the motions for default judgment
and for summary judgment filed by Defendant Nautilus Insurance
Company will be granted.
A separate Order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
24
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