The Humane Society of the United States et al v. National Union Fire Insurance Company of Pittsburgh, PA
Filing
84
MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 7/30/2015. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
THE HUMANE SOCIETY OF THE
UNITED STATES, et al.
:
v.
:
Civil Action No. DKC 13-1822
:
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
:
MEMORANDUM OPINION
Presently
pending
and
ready
for
resolution
in
this
insurance coverage dispute are: (1) a motion to exclude the
testimony
and
written
opinions
of
Dennis
Connolly
filed
by
Defendant National Union Fire Insurance Company of Pittsburgh,
Pa. (“National Union” or “Defendant”) (ECF No. 74); and (2) a
motion for summary judgment also filed by Defendant.
The issues
have been fully briefed, and the court now rules, no hearing
being deemed necessary.
Local Rule 105.6.
For the following
reasons, Defendant’s motion for summary judgment will be granted
in part and denied in part.
Defendant’s motion to exclude will
be denied without prejudice to renewal later in this litigation
if necessary.
I.
Background
A.
Factual Background
Unless otherwise noted, the following facts are undisputed.
Plaintiffs, Humane Society of the United States (“HSUS”) and two
of its employees, Jonathan Lovvorn and Kimberly Ockene, assert a
claim
for
insurance
coverage
against
Defendant
in
connection
with a suit filed against them by Feld Entertainment, Inc.
is
a
national
animals.
nonprofit
organization
dedicated
to
HSUS
protecting
Plaintiffs Jonathan Lovvorn and Kimberly Ockene are
employed as attorneys with HSUS.
In July 2000, the Fund for Animals (“FFA”) joined other
nonprofit organizations and a former circus employee in bringing
a lawsuit against Feld Entertainment, Inc., Ringling Brothers,
and Barnum & Bailey based on allegations that they mistreated
Asian
elephants
used
in
the
circus
in
violation
of
the
Endangered Species Act (“the ESA Litigation”).
On or about November 22, 2004, HSUS entered into an asset
acquisition agreement with FFA.
2007,
Feld
filed
a
separate
(ECF No. 75-3).
lawsuit
in
On August 28,
the
United
States
District Court for the District of Columbia against, inter alia,
FFA (but not HSUS or the individual attorneys).
alleged
violations
of
the
Racketeer
The complaint
Influenced
and
Corrupt
Organizations Act (“RICO”) and the Virginia Conspiracy Act for
conspiracy
to
violations
of
harm
a
federal
business.
and
state
The
RICO
criminal
counts
statutes,
alleged
including
bribery, obstruction of justice, and mail and wire fraud.
No. 68-8).
Litigation,
(ECF
Feld Entertainment alleged that in bringing the ESA
FFA
and
the
other
nonprofit
organizations
had
perpetrated a scheme to defraud them of money and property, with
2
the ultimate objective of banning Asian elephants in all forms
of
entertainment
and
captivity
(hereinafter
“the
Feld
Litigation”).
On November 7, 2007, the court in the District of Columbia
stayed
the
Litigation.
Feld
Litigation
pending
the
outcome
of
the
ESA
The ESA Litigation proceeded to a bench trial and
on December 30, 2009, a judgment was entered in favor of Feld
Entertainment.
See American Soc. for Prevention of Cruelty to
Animals v. Feld Entertainment, Inc., 677 F.Supp.2d 55 (D.D.C.
2009).
Subsequently, the court lifted the stay of the Feld
Litigation.
On February 16, 2010, Feld filed an amended complaint in
the
Feld
Litigation,
naming
HSUS,
as
additional
Jonathan
Lovvorn,
defendants
current
Plaintiffs)
and
Ockene.
(See ECF No. 68-12, amended complaint).
(the
Kimberly
D.
National Union
issued to HSUS a Management Liability, Professional Liability,
Crime Coverage and Kidnap and Ransom/Extortion Coverage for Non
Profit Organizations, Policy No. 01-932-56-98, for the policy
period June 1, 2009 to June 1, 2010 (“the Policy”).
(ECF No.
68-6).
The policy includes a Directors and Officers Liability
(“D&O”)
Coverage
insurance
insureds.
Insurance
section
protection
On
March
Services,
for
1,
Inc.
and
provides
the
2010,
organization
HSUS
(“BB&T”),
3
for
sent
its
a
$20
and
million
individual
letter
broker,
in
to
attaching
BB&T
the
amended complaint in the Feld Litigation and asking BB&T to
provide notice on behalf of HSUS, Lovvorn, and Ockene, and FFA
under two National Union policies - the 2009-2010 National Union
policy and a Corporate Counsel Premier Policy – and a General
Commercial Liability Policy issued by Travelers.
14,
at
2).
BB&T
subsequently
submitted
an
(ECF No. 68Accord
Liability Notice of Occurrence/Claim to National Union.
General
(ECF
No. 68-15).
On May 26, 2010, Michael T. Howard, an employee of Chartis,
the administrator handling claims under the Not-For-Profit Risk
Protector Policy on behalf of National Union, sent a letter to
HSUS denying coverage.
(See ECF No. 68-16).
The letter stated,
in relevant part:
Effective January 1, 2005, FFA and the
Humane Society of the United States (“HSUS”)
merged.
. . .
This policy, subject to its terms and
conditions,
provides
coverage
for
Loss
arising from only those claims that were
first made against an Insured and reported
to National Union during the Policy Period.
The Insured had notice of this claim on or
about September 6, 2007, but did not report
it to National Union until on or about March
2, 2010.
Consequently, the claim was not
first made and reported within the Policy
Period.
Based on the foregoing, we deny
coverage for this claim pursuant to the
Insuring Agreements in Clause 1 of the “D&O
Coverage
Section”
of
the
policy,
the
definition of Claim in Clause 2(a) of the
4
“D&O Coverage Section” of the policy and
Clause 7(a) in the General Terms and
Conditions Section of the policy entitled
“Notice/Claim Reporting Provisions” . . .
National Union expressly reserves all of its
rights under the policy, including the right
to assert additional defenses to any claims
for coverage, if subsequent information
indicates that such action is warranted.
(Id. at 3, 5).
On June 16, 2010, HSUS wrote an email to National Union
requesting reconsideration of the coverage denial.
17).
(ECF No. 68-
The email stated that the “corporate combination between
HSUS and the Fund for Animals which took effect on January 1,
2005, was absolutely not a ‘merger’.”
(Id. at 3).
HSUS also
took
complaint
the
the
position
that
the
original
in
Feld
Litigation did not name HSUS, Lovvorn, and Ockene, thus the
claim was first made against them when the amended complaint was
filed in 2010.
(Id.).
National Union responded on July 16,
2010, supplementing its position but maintaining the coverage
denial.
(ECF No. 68-18).
Defendants
Lovvorn
and
National Union provided a defense to
Ockene,1
1
subject
to
a
reservation
of
In her responses to interrogatories, Kimberly Ockene
explained that she was an attorney with the firm Meyer
Glitzenstein and Crystal (“MGC”) from October 2001 through
October 2008.
She stated that during her employment with MGC,
she had minimal involvement with the Feld Lawsuit, and was
“engaged in attorney-client communications with defendants in
the Feld Lawsuit.”
(ECF No. 68-10, at 14).
Jonathan Lovvorn
had been employed by HSUS since approximately December 2004,
maintained his appearance in the ESA Litigation and monitored
the case, and in 2007, “oversaw the search for and compilation
5
rights, under the Corporate Counsel Premier Policy, a different
policy from the 2009-2010 Policy at issue here.
(See ECF No.
68-19, Mar. 18, 2010 letter from Chartis regarding defense of
Lovvorn and Ockene; see also ECF No. 68-1, at 15 n.4)).
On
September 13, 2010, Travelers agreed to defend HSUS in the Feld
Litigation under the January 1, 2000 – December 31, 2000 Charter
Oak Fire Insurance Company policy (the “2000 Travelers Policy”),
but declined to defend the FFA, Mr. Lovvorn, or Ms. Ockene.
(ECF No. 68-20).
In September 2012, FFA filed suit against National Union in
the
Circuit
Court
for
Montgomery
County
(Case
No.
376268V)
demanding coverage under the 2007-2008 National Union Policy and
the 2009-2010 National Union Policy.
The docket from that case
reflects that on December 18, 2014, Judge Boynton entered an
amended
order
granting
in
part
National
Union’s
motion
for
summary judgment as to Count II of FFA’s amended complaint for
breach of contract relative to the 2009-2010 policy and the part
of Count III in which FFA sought a declaration that National
Union was required to provide it with coverage under the 2009-
of documents in response to the court’s August 23, 2007
discovery order as it pertained to FFA.
At the court’s
direction, he appeared before the court to answer questions
concerning FFA’s compliance with a court order.”
(ECF No. 6811, at 22).
6
2010 policy.
On March 12, 2015, a final judgment was entered in
favor of National Union on all claims.2
On
or
about
May
13,
2014,
HSUS,
FFA,
and
the
other
defendants in the Feld Litigation agreed to pay $15.75 million
to settle both Feld Entertainment’s claim for attorney’s fees in
the ESA Litigation and its claims in the Feld Litigation.
ECF
No.
68-13).
Additional
facts
will
be
presented
(See
in
the
analysis section.
B.
Procedural Background
Plaintiffs initially filed suit against National Union in
the Circuit Court for Montgomery County, Maryland.
2013,
National
Union
diversity grounds.
assert
a
arguing
breach
that
it
removed
the
(ECF No. 1).
of
“has
contract
action
this
court
on
In the complaint, Plaintiffs
claim
breached
to
On June 21,
the
against
terms
National
of
the
Union,
Policy
by
refusing to pay the losses that Plaintiffs may, are, or will be
obligated to pay because of the Feld Litigation.”
36).
(ECF No. 2 ¶
Plaintiffs also seek a declaratory judgment that National
Union is obligated to pay all losses that Plaintiffs may become
legally obligated to pay in the Feld Litigation.
(Id. ¶ 46).
In a memorandum opinion and order issued on July 3, 2014,
the court denied Defendant’s motion to strike the report and
2
The docket from Case No. 376268V indicates that The Fund
for Animals filed an appeal to the Court of Special Appeals of
Maryland on April 30, 2015.
7
testimony of Plaintiffs’ proposed expert, Dennis Connolly, but
required Plaintiffs to cure certain deficiencies and serve a
supplemental expert report.
(See ECF No. 59).
After discovery
concluded, Defendant moved for summary judgment.
Plaintiffs
opposed
the
replied (ECF No. 75).
motion
(ECF
No.
73),
(ECF No. 68).
and
Defendant
Defendant also again moved to exclude the
testimony and written opinions of Plaintiffs’ proposed expert,
Dennis Connolly.
(ECF No. 74).
Plaintiffs opposed the motion
(ECF No. 81), and Defendant replied (ECF No. 82).
II.
Standard of Review
A motion for summary judgment will be granted only if there
exists no genuine dispute as to any material fact and the moving
party
is
entitled
to
judgment
as
a
matter
of
law.
See
Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986);
Anderson
(1986).
v.
Liberty
Lobby,
Inc.,
477
U.S.
242,
250
Once a properly supported motion for summary judgment
is filed, the nonmoving party is required to make a sufficient
showing on an essential element of that party’s claim as to
which that party would have the burden of proof to avoid summary
judgment.
Celotex, 477 U.S. at 322–23.
Summary judgment is appropriate under Federal Rule of Civil
Procedure Rule 56(a) when there is no genuine dispute as to any
material
fact,
and
the
moving
party
is
plainly
judgment in its favor as a matter of law.
8
In
entitled
to
Anderson v.
Liberty Lobby, Inc., 477 U.S. at 249 (1986), the Supreme Court
explained that, in considering a motion for summary judgment,
the “judge’s function is not himself to weigh the evidence and
determine the truth of the matter but to determine whether there
is a genuine issue for trial.”
A dispute about a material fact
is genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.”
Id. at 248.
Thus,
“the judge must ask himself not whether he thinks the evidence
unmistakably favors one side or the other but whether a fairminded jury could return a verdict for the [nonmoving party] on
the evidence presented.”
Id. at 252.
In undertaking this inquiry, a court must view the facts
and the reasonable inferences drawn therefrom “in the light most
favorable to the party opposing the motion.”
Matsushita Elec.
Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)
(quoting
United
States
v.
Diebold,
Inc.,
369
U.S.
654,
655
(1962)); see also EEOC v. Navy Fed. Credit Union, 424 F.3d 397,
405 (4th Cir. 2005).
evidence
in
support
The mere existence of a “scintilla” of
of
the
non-moving
party’s
case
is
sufficient to preclude an order granting summary judgment.
not
See
Anderson, 477 U.S. at 252.
A “party cannot create a genuine dispute of material fact
through mere speculation or compilation of inferences.”
Shin v.
Shalala, 166 F.Supp.2d 373, 375 (D.Md. 2001) (citation omitted).
9
Indeed,
this
court
has
an
affirmative
obligation
to
prevent
factually unsupported claims and defenses from going to trial.
See
Drewitt
v.
Pratt,
999
F.2d
774,
778–79
(4th
Cir.
1993)
(quoting Felty v. Graves–Humphreys Co., 818 F.2d 1126, 1128 (4th
Cir. 1987)).
III. Analysis
A.
Defendant’s Motion for Summary Judgment
1.
Standard for Interpreting an Insurance Policy
The Fourth Circuit recently explained:
Insurance
policies,
like
other
contracts, must be construed “as a whole to
determine the parties’ intention.” Beale v.
Am. Nat’l Lawyers Ins. Reciprocal, 379 Md.
643, 843 A.2d 78, 89 (2004) (internal
quotation marks and citation omitted).
A
court will “examine the character of the
contract, its purpose, and the facts and
circumstances of the parties at the time of
execution.”
Pac. Indem. Co. v. Interstate
Fire & Cas. Co., 302 Md. 383, 488 A.2d 486,
488 (1985).
Policy terms are given “their
ordinary and accepted meanings,” and “[t]he
test is what meaning a reasonably prudent
layperson would attach to the term.”
Id.
Policy language is ambiguous if it is
“general” and “suggest[s] two meanings to a
reasonably prudent layperson.”
Id. at 489
(internal
quotation
marks
and
citation
omitted).
Certain Underwriters at Lloyd’s, London v. Cohen, 785 F.3d 886,
890 (4th Cir. 2015); Navigators Specialty Ins. Co. v. Medical
Benefits Adm’rs of MD, Inc., Civ. Action No. ELH-12-2076, 2014
WL 768822, at *7 (D.Md. Feb. 21, 2014) (“In deciding the issue
of coverage under an insurance policy, the primary principle of
10
construction is to apply the terms of the insurance contract
itself.” (internal quotation marks omitted)).
“[T]he same rules
apply to ambiguities in a policy application . . . prepared by
an insurer and made part of the insurance contract.”
Cohen, 785
F.3d at 890 n.2 (emphasis in original) (citing Peoples Life Ins.
Co. v. Jerrell, 271 Md. 536 (1974)).
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.,
Maryland
law
415
and
F.Supp.2d
noting
596,
that
601
(D.Md.
“[w]hile
the
2006)
(applying
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 as
written.”).
“‘Maryland does not follow the rule that insurance
policies should, as a matter of course, be construed against the
insurer.’”
Navigators, 2014 WL 768822, at *8 (quoting Megonnell
v. United Services Auto. Ass’n, 368 Md. 633 at 655 (2002)).
However,
“if
consideration
ambiguity
of
extrinsic
is
determined
evidence,
‘it
to
remain
will
after
ordinarily
be
resolved against the party who drafted the contract,’ where no
material evidentiary factual dispute exists.”
Clendenin Bros.,
Inc. v. U.S. Fire Ins. Co., 390 Md. 449, 459-60 (2006).
11
2.
Analysis
The central issue is whether National Union is required to
provide
coverage
to
Plaintiffs
with
respect
to
the
Litigation under the terms of the 2009-2010 Policy.
Feld
National
Union offers five separate reasons for why it properly denied
coverage
to
Plaintiffs
entered in its favor.
and
why
summary
judgment
should
be
National Union argues: (1) HSUS is not
covered because it cannot meet its burden of proving that the
Feld
Litigation
was
a
Claim
first
made
against
the
“Organization,” as defined in the Policy, during the 2009-2010
Policy Period; (2) coverage for the Feld Litigation is barred as
to all Plaintiffs under the exclusion in the 2009 Application;
(3)
coverage
for
the
Feld
Litigation
is
excluded
as
to
all
Plaintiffs pursuant to Endorsement No. 6 to the National Union
Policy; (4) coverage for the Feld Litigation is barred as to all
Plaintiffs by Exclusion 4(b) of the Policy; and (5) the 20092010
National
Policy.
Union
Policy
is
excess
of
the
2000
Travelers
(See ECF No. 68-1).
As an initial matter, Plaintiffs argue that National Union
waived all defenses aside from the “claims first made” argument
by failing to raise them in the first coverage denial letter.
Plaintiffs contend that “the May 26 letter did not alert HSUS
that
National
Union
was
challenging
the
accuracy
application that HSUS submitted for coverage. []
12
of
the
Nor did it
identify Endorsement No. 6, which National Union now contends is
the lynchpin of its coverage position.”
(ECF No. 73, at 41-42).
The Court of Appeals of Maryland explained waiver in insurance
coverage disputes in Creveling v. Government Employees Ins. Co.,
376 Md. 72, 96-98 (2003):
The doctrine of waiver may work to
deprive an insurer of a right it would
otherwise possess.
See GEICO v. Medical
Services, 322 Md. 645, 650 (1991).
Waiver,
in
general,
is
“the
intentional
relinquishment of a known right, or such
conduct as warrants an inference of the
relinquishment of such right, and may result
from an express agreement or be inferred
from circumstances.” Food Fair v. Blumberg,
234 Md. 521, 531 (1964) (citations omitted).
In insurance law, waiver requires “‘an
actual intention to relinquish an existing
right,
benefit,
or
advantage,
with
knowledge, either actual or constructive, of
its existence, or such conduct as to warrant
an
inference
of
such
intention
to
relinquish.’”
Medical Services, 322 Md. at
650-51. . . .
The doctrine of waiver cannot operate
to expand or establish insurance coverage.
See Medical Services, 322 Md. at 651; Neuman
v. Travelers Indemnity Co., 271 Md. 636, 654
(1974) . . . Judge Wilner, writing for the
Court of Special Appeals in Insurance Co. of
North Am. v. Coffman, described the doctrine
of waiver and this exception as follows:
“The
Court
of
Appeals
sees
a
distinction between defenses founded
upon lack of basic coverage and those
arising
from
the
failure
of
the
claimant to satisfy some ‘technical’
condition subsequent.
The former, it
is apparent, may not be waived merely
by the company’s failure to specify
13
them in its initial response to the
claim, for the effect of that would be
to expand the policy to create a risk
not intended to be undertaken by the
company.”
52 Md.App. 732, 742-43 (1982). . . .
To determine whether the doctrine of waiver
may apply, the pivotal issue is whether a
policy clause or condition proffered as a
defense pertains to coverage or whether it
arises from “the failure of the claimant to
satisfy
some
‘technical’
condition
subsequent.”
See Medical Services, 332 Md.
at 651. . . .
“Conditions going to the
coverage
or
scope
of
a
policy
as
distinguished from those furnishing a ground
for
forfeiture
may
not
be
waived
by
implication from conduct or action.
Here,
the
defenses
raised
by
National
Union
relate
to
coverage and National Union did not waive them by failing to
raise
all
possible
defenses
in
the
initial
coverage
letter.
See, e.g., Emcor Group, Inc. v. Great Am. Ins. Co., Civ. No.
ELH-12-0142,
2013
WL
1315029,
at
*29
(D.Md.
Mar.
27,
2013)
(“GAIC argues that the 2004 Policy did not provide coverage
beyond the 2003 Policy, not that Emcor failed to abide by a
technical prerequisite in filing its claim. . . .
Accordingly,
GAIC’s purported failure to preview Condition 10 as a basis for
its motion for partial summary judgment does not open the door
to waiver here.”).
Moreover, National Union explicitly reserved
its right to assert additional defenses in its May 26, 2010
coverage denial letter.
The letter stated:
14
This letter is not, and should not be
construed as, a waiver of any terms,
conditions, exclusions or other provisions
of the policy, or any other policies of
insurance issued by National Union or any of
its affiliates.
National Union expressly
reserves all of its rights under the policy,
including the right to assert additional
defenses to any claims for coverage, if
subsequent information indicates that such
action is warranted.
(ECF No. 68-16, at 5) (emphasis added).
a. “Claims First Made” Defense
Defendant
proving
that
argues
the
that
Feld
“HSUS
Litigation
cannot
comes
meet
its
within
burden
the
of
insuring
agreement of the 2009-2010 National Union Policy because the
Feld Litigation was filed in 2007.
Thus, it is not a Claim
first made against HSUS during the 2009-2010 Policy Period and
HSUS is not covered.”
(ECF No. 68-1, at 24).
HSUS seeks coverage for any loss arising from the Feld
Litigation
under
Insuring
Agreement
C
(Organization
Entity
Coverage) of the D&O Coverage Section of the 2009-2010 Policy.3
Insuring Agreement C provides:
Coverage C: Organization Entity Coverage.
3
Unlike HSUS, which seeks coverage pursuant to Insuring
Agreement C of the D&O Coverage Section, the individual
plaintiffs – Kimberly Ockene and Jonathan Lovvorn - appear to
seek coverage pursuant to Insuring Agreement A concerning
Individual Insured Insurance.
(See ECF No. 68-6, at 35).
Insuring Agreement A applicable to the individual plaintiffs
will be discussed below.
15
This policy shall pay on behalf of the
Organization Loss arising from a Claim first
made against the Organization during the
Policy Period or the Discovery Period (if
applicable) and reported to the Insurer
pursuant to the terms of this policy for any
actual or alleged Wrongful Act of the
Organization.
The
Insurer
shall,
in
accordance with and subject to Clause 5 of
this Coverage Section, advance Defense Costs
of
such
Claim
prior
to
its
final
disposition.
(ECF No. 68-6, at 35) (emphases added).
The term “Claim” is
defined as:
(1) a written demand for monetary, nonmonetary or injunctive relief (including any
request to toll or waive any statute of
limitations); or
(2)
a
civil,
criminal,
regulatory
or
administrative proceeding for monetary, nonmonetary or injunctive relief which is
commenced by:
(i) service
pleading;
of
a
complaint
or
similar
(ii) return of an indictment, information or
similar document (in the case of a criminal
proceeding); or
(iii) receipt or filing a notice of charges.
(Id.
at
36)
(emphasis
added).4
Importantly,
the
term
“Organization” is defined as: “(1) the Named Organization; (2)
4
The General Terms and Conditions of the 2010 policy state
that “Claim” means “a Claim, as that term is defined within each
Coverage Section.”
(ECF No. 68-6, at 8).
The D&O Coverage
Section states: “Pursuant to Clause 1 of the General Terms and
Conditions, the General Terms and Conditions are incorporated by
reference into, made a part of, and are expressly applicable to
16
any Subsidiary thereof; and (3) any Affiliate thereof listed by
endorsement
to
this
policy,
but
solely
with
respect
Coverage Sections indicated on such endorsement.”
(emphasis added).
to
the
(Id. at 9)
Endorsement No. 11 to the 2009-2010 Policy
states, in relevant part:
In consideration of the premium charged, it
is hereby understood and agreed that solely
with respect to the Coverage Section(s)
listed
below
[including
D&O
Coverage],
Clause 2. Definition [] “Organization” of
the GENERAL TERMS AND CONDITIONS shall
include the following entity(ies), which are
“Affiliates”
as
defined
in
Clause
2,
Definition(a).
“Affiliate” of the GENERAL
TERMS
AND
CONDITIONS,
subject
to
each
Affiliate(s)’ respective Continuity Date.
(ECF No. 68-6, at 74).
The Fund for Animals is identified as an
Affiliate in Endorsement No. 11, subject to the continuity dates
listed in Endorsements 8 and 9.
(Id. at 75).
National Union
argues that it is not obligated to provide coverage for HSUS for
the
Feld
Litigation
because
it
is
not
a
“Claim
against the Organization during the Policy Period.”
added).
defined
first
made
(emphasis
As set forth above, “Organization” under the Policy is
as
the
Named
Organization
and
any
Affiliate
thereof
listed by endorsement to this policy, and Endorsement No. 11
specifically identifies The Fund for Animals as an Affiliate
within the meaning of the Policy.
Consequently, National Union
this Coverage Section, unless otherwise explicitly stated to the
contrary in either the General Terms and Conditions or in this
Coverage Section.” (ECF No. 68-6, at 35).
17
interprets the language in Insuring Agreement C stating that
“[t]his policy shall pay on behalf of the Organization Loss
arising from a Claim first made against the Organization during
the
Policy
Period”
as
excluding
the
amended
complaint
filed
against HSUS in 2009 because The Fund for Animals, which falls
within
the
definition
of
“Organization,”
was
sued
by
Feld
Entertainment in 2007.
HSUS advances several arguments to avoid summary judgment,
none
of
which
are
persuasive.
First,
HSUS
misconstrues
Defendant’s denial of coverage to be based on HSUS’s failure to
provide timely notice of the Claim.
(ECF No. 73 (“National
Union’s contention that HSUS is not entitled to coverage because
it did not provide National Union with timely notice of the Feld
Litigation is without merit.”)).
summary
judgment
notice, however.
based
upon
National Union is not seeking
HSUS’s
failure
to
give
timely
It is undisputed that HSUS provided notice of
the Feld Litigation to National Union once it was named as a
defendant
in
the
amended
complaint.
The
crux
of
National
Union’s argument, however, is that the amended complaint is not
a “Claim” first made against “the Organization,” as defined in
the Policy, during the Policy Period for the reasons explained
above.
Second, HSUS argues that the term “Claim first made” is
ambiguous.
(ECF No. 73, at 43).
HSUS avers that the term
“Claim first made” is nowhere defined in the Policy and may mean
18
different
things
Provisions”
section
of
based
contained
the
in
Policy.
on
the
the
“Notice/Claim
General
(Id.).
The
Terms
and
Reporting
Conditions
Notice/Claim
Reporting
Provisions provide:
Notice
hereunder
shall
be
given
in
writing[.] . . .
Notice shall include and
reference this policy number as indicated in
the Declarations, as well as the Coverage
Section(s) under which the Claim is being
noticed.
If mailed, the date of mailing
shall constitute the date that such notice
was given and proof of mailing shall be
sufficient proof of notice.
1. With respect to all Coverage Sections,
other than the Crime Coverage Section, the
following shall apply:
(a) The Insureds[5] shall, as a condition
precedent to the obligations of the Insurer
under this policy, give written notice to
the Insurer of any claim made against an
Insured or any Crisis Management Event (as
defined in the D&O Coverage Section) as soon
as practicable and either:
(1) anytime during the Policy Period or
during the Discovery Period (if applicable);
or
(2) within 30 days after the end of
Policy Period or the Discovery Period
applicable) as long as such Claim
reported no later than 30 days after
date such Claim was first made against
Insured.
the
(if
is
the
an
(b) if written notice of a Claim has been
given to the Insurer pursuant to Clause 7(a)
5
The “Insured(s)” is defined in the D&O Coverage Section as
“the Organization and all Individual Insureds.” (ECF No. 68-6,
at 36).
19
above, then any Claim which is subsequently
made against the Insureds and reported to
the Insurer alleging, arising out of, based
upon or attributable to the facts alleged in
the Claim for which such notice has been
given, or alleging any Wrongful Act which is
the same as or is a Related Wrongful Act to
that alleged in the Claim of which such
notice has been given, shall be considered
made at the time such notice was given.
(c) If during the Policy Period or during
the Discovery Period (if applicable) the
Insureds
shall
become
aware
of
any
circumstances
which
may
reasonably
be
expected to give rise to a Claim being made
against the Insureds and shall give written
notice to the Insurer of the circumstances
and the reasons for anticipating such a
Claim, with full particulars as to date,
persons and entities involved, then any
Claim which is subsequently made against the
Insureds
and
reported
to
the
Insurer
alleging, arising out of, based upon or
attributable
to
such
circumstances
or
alleging any Wrongful Act which is the same
as or is a Related Wrongful Act to that
alleged or contained in such circumstances,
shall be considered made at the time such
notice of such circumstances was given.
(ECF
No.
68-6,
at
13-14).
Based
on
these
provisions,
argues:
As
demonstrated
by
the
“Notice/Claim
Reporting
Provisions”
of
the
General
Conditions of the Policy, in some instances
National Union contemplates that a claim is
“made” at the time that the insured notifies
National Union of the claim, whereas in
other instances, a claim seems to have been
“made” when initiated by a third party. . .
.
Given these provisions of National
Union’s own Policy, a reasonable layperson
may believe that a claim is “first made”
20
HSUS
upon written notice
National Union.
from
the
insured
to
(ECF No. 73, at 43-44).
HSUS
takes
a
piecemeal
approach
to
interpreting
the
applicable language of Insuring Agreement C and its arguments
are misguided.
Insuring Agreement C (pertaining to Organization
Entity Coverage) states that the policy “shall pay on behalf of
the Organization Loss arising from a Claim first made against
the Organization during the Policy Period . . . and reported to
the Insurer pursuant to the terms of this policy for any actual
or alleged Wrongful Act of the Organization.”
35).
(ECF No. 68-6, at
A “Wrongful Act” is defined as: “(2) with respect to the
Organization
under
Coverage
C,
any
breach
of
duty,
neglect,
error, misstatement, misleading statement, omission or act by or
on behalf of the Organization.”
added).
(ECF No. 68-6, at 37) (emphasis
The Notice/Claim Reporting Provisions set forth above
pertain to the reporting to National Union of a Claim first made
against
the
“Organization”
during
the
Policy
Period,
but
as
National Union argues, the Claim first was made against The Fund
for
Animals
(which
is
“Organization”) in 2007.
included
in
the
definition
of
The Claim could not have been first
made against the Organization during the Policy Period (20092010) because an “Affiliate” is included within the definition
of “Organization,” Endorsement No. 11 explicitly identifies The
21
Fund for Animals as an Affiliate, and it is undisputed that Feld
Entertainment filed a complaint against The Fund for Animals in
2007.
HSUS argues:
Despite
National
Union’s
suggestion
that it is “of no import” that HSUS was not
named in the Feld Litigation until 2010, []
that distinction is of significant import
because until the Amended Complaint was
filed, no Claim had ever been “made” that
HSUS, Mr. Lovvorn, or Ms. Ockene engaged in
any activity that could be construed as a
“Wrongful Act.”
Until 2010, Feld had not
filed suit against HSUS, Mr. Lovvorn, or Ms.
Ockene. Similarly, Feld had not transmitted
any letter, demand, or other notice to HSUS,
Mr. Lovvorn, or M[s]. Ockene suggesting that
it intended to join them as parties to the
Feld Litigation or that it was considering
seeking damages against them.
Put another
way, there was nothing for HSUS to “report”
until Feld filed its Amended Complaint in
2010, two or so weeks after which HSUS
provided timely notice to National Union of
the filing.
(ECF
No.
triggered
73,
only
at
44).
when
a
The
notice
Claim
is
requirements
first
made
above
are
against
the
Organization during the Policy Period (or the Discovery Period,
if applicable).
Here, the “Claim” was first made against The
Fund for Animals in 2007, outside the 2009-2010 coverage period.
Notably, if HSUS’s reading of Insuring Agreement C is credited,
the court would have to read into the provision “a Claim first
made against the Named Organization during the Policy Period,”
instead of the “a Claim first made against the Organization.”
22
“Named
Organization”
as
“the
Organization, designated in item 1 of the Declarations.”
(ECF
No. 68-6, at 9).
Humane
Society
Organization.”
uses
the
is
defined
in
the
Policy
Item 1 in the Declarations identifies the
of
the
United
(Id. at 2).
language
of
“a
States
Inc.
as
the
“Named
Insuring Agreement C specifically
Claim
first
made
against
the
Organization,” which includes The Fund for Animals, an Affiliate
named in Endorsement No. 11.6
Moreover,
civil
the
proceeding
Policy
for
defines
monetary,
“Claim”
as,
inter
non-monetary,
or
alia,
a
injunctive
relief which is commenced by service of a complaint or similar
pleading.
(ECF No. 68-6, at 36) (emphasis added).
The analysis
undertaken in National Union Fire Ins. Co. of Pittsburgh, PA v.
Willis, 296 F.3d 336, 341-42 (5th Cir. 2002), applies here:
All three policies define “Claim” as “a
civil . . . proceeding
. . . which is
commenced by service of a complaint or
similar pleading.”
Under this definition,
the initial complaint brought by CyberServe
“commenced” this civil proceeding as a
whole.
Under this plain reading of the
contract’s
language,
amended
complaints
cannot commence a civil proceeding that has
already been commenced by the filing and
service of the initial complaint. Any other
6
National Union also moved for summary judgment in the
insurance coverage dispute filed by The Fund for Animals in the
Circuit Court for Montgomery County (Case No. 376268-V). Judge
Boynton issued a memorandum opinion and order granting in part
the motion. Notably, he held that the 2010 Amended Complaint is
not a “Claim” first made against The Fund for Animals during the
2009-2010 policy period. (ECF No. 73-8, at 8).
23
reading
would
qualifying
as
proceedings.
result
two
in
one
different
lawsuit
civil
(emphasis added).
HSUS’s argument that pursuant to Md. Code Ann., Ins. § 19110, National Union failed to demonstrate any prejudice from the
timing of HSUS’s notice similarly misses the mark.
at 46).
(ECF No. 73,
Section 19-110 provides:
An insurer may disclaim coverage on a
liability insurance policy on the ground
that the insured . . . has breached the
policy by failing to cooperate with the
insurer or by not giving the insurer
required
notice
only
if
the
insurer
establishes
by
a
preponderance
of
the
evidence that the lack of cooperation or
notice has resulted in actual prejudice to
the insurer.
(emphasis added).
The issue here is whether the Claim first was
made against the “Organization” within the Policy Period, not
whether it was reported timely.
As National Union argues, it
“did not deny coverage, and is not seeking summary judgment,
based upon HSUS’s failure to give it timely notice of the Feld
Litigation . . .
because
its
Litigation
Period[.]”
Here, National Union need not prove prejudice
disclaimer
not
being
of
first
coverage
made
is
during
based
the
upon
the
2009-2010
Feld
Policy
(ECF No. 75, at 28) (emphasis in original); see
Navigators Specialty, Ins Co., 2014 WL 768822, at *15 (“In my
view,
Sherwood’s
conclusion
is
24
crystal
clear:
Ins.
§
19-110
applies to claims made-and-reported policies, like the one at
issue here, when the claim is made within the policy period but
is not reported until after the policy period.
In such a case,
the
order
insurer
must
show
actual
prejudice
in
to
avoid
coverage.”) (emphasis added); see also McDowell Bldg., LLC v.
Zurich American Ins. Co., Civ. Action No. RDB-12-2876, 2013 WL
5234250 (D.Md. Sept. 17, 2013) (explaining the scope of Section
19-110).
Based on the foregoing, no coverage is available for HSUS
under the 2009-2010 Policy.
b. Application Exclusion
National Union argues that HSUS failed to disclose that the
Feld Litigation was pending against The Fund for Animals in its
application for insurance coverage for 2009-2010, even though it
was required to do so in response to Question 3 of Section B of
the Application.
(ECF No. 68-1, at 19).
Consequently, National
Union contends that, based on the exclusion contained in Part B
of the Application, which became part of the 2009-2010 Policy,
coverage
is
entirely
excluded
for
HSUS
plaintiffs, Mr. Lovvorn and Ms. Ockene.
available
Policy,
to
the
application
HSUS
for
arguments
exclusion
the
Feld
regarding
will
be
the
individual
Because no coverage is
Lawsuit
the
and
under
the
applicability
addressed
only
as
2009-2010
of
the
to
the
individual plaintiffs – Kimberly Ockene and Jonathan Lovvorn.
25
The General Terms and Conditions of the Policy state:
“In
consideration of the payment of the premium, and in reliance
upon
the
statements
including
its
made
attachments
to
the
and
Insurer
the
by
application,
materials
incorporated
therein, which form a part of this policy, the Insurer agrees as
follows[.]”
(ECF No. 68-6, at 8) (emphasis added).
Question
A.4 asked: “Please list all direct and indirect Subsidiaries.
If included as an attachment herein, check here.”
3, at 2).
listing
(ECF No. 68-
HSUS checked the box and included an attachment
entity
names,
the
nature
activities, the entity type, and status.
of
the
organization’s
(Id. at 16).
The Fund
for Animals is listed in the attachment and identified as an
“Affiliate” in Entity Type.7
Question A.4 further asked: “Are
you requesting for coverage to be extended to all Subsidiaries,”
to which HSUS responded “Yes.”
(Id. at 2).
Question 3 of
Section B of the Application asks:
Has there been, or is there now pending any
claim(s),
suit(s),
investigation(s)
or
action(s)
against
the
Applicant,
its
Subsidiaries, or any individual or other
entity proposed for insurance arising out
of: (i) any director, officer, trustee,
employee, employee benefit plan or entity
liability
matter,
including
securities
matters and/or employment matters; or (ii)
any
matter
claimed
against
any
person
proposed for insurance in his or her
capacity under the proposed policy?
7
In fact, all of the entities listed in the attachment are
identified either as affiliates or a program of HSUS.
26
Please answer with regard to:
D&O and Private Company Liability
Employment Practices Liability
Fiduciary Liability
Yes
Yes
Yes
No X
No X
No X
Employed Lawyers Professional Liability
No X
(Id. at 3) (emphases added).
“entity liability matter.”
Yes
The application does not define
The question states that “[i]f ‘Yes’
was checked with respect to any of the above, please attach
complete details regarding those claims, suits, investigations
or actions.”
HSUS checked “no” for all of the boxes.
Section B
of the Application contains the following exclusion:
It is agreed that with respect to
Questions 1 through 6(e) above, if such
claim(s),
suit(s),
investigation(s),
action(s),
proceeding(s),
inquiry,
violation,
knowledge,
information
or
involvement
exists,
then such claim(s),
suit(s),
investigation(s),
action(s),
proceeding(s) or inquiry and any claim,
action, suit, investigations, proceeding or
inquiry arising therefrom or arising from
such violation, knowledge, information or
involvement is excluded from the proposed
coverage.
(Id.) (emphases added).
Plaintiffs
Union’s
argument
argue
that
that
“[i]n
coverage
of
order
HSUS
to
[and
credit
the
National
individual
plaintiffs] should be excluded because HSUS did not disclose the
Feld Litigation in response to the aforementioned Application
27
questions, it is essential that the factfinder in this case
determine
whether,
had
HSUS
disclosed
the
Feld
Litigation
against FFA, National Union would not have issued the policy
(or,
perhaps,
would
have
included
a
further
excluding the Feld Litigation from coverage).”
17).
endorsement
(ECF No. 73, at
National Union, on the other hand, believes that whether
it would have issued the 2009-2010 Policy if the Feld Litigation
had been disclosed in response to Question B.3 or whether the
individual plaintiffs believed they would be sued is immaterial.
(ECF No. 75, at 9).
Read
together,
Question
B.3
and
the
exclusion
-
which
National Union believes applies based on HSUS’s response to that
question – are ambiguous.
Question B.3 is broadly written and
appears to seek,
inter alia, information about
action
pending
proposed
matter.”
currently
for
insurance
(ECF
No.
or
ever
arising
68-3,
at
filed
out
any
against
of
As
3).
an
indicated
claim or
an
“entity
entity
liability
above,
the
question concludes with: “If ‘Yes’ was checked with respect to
any of the above, please attach complete details regarding those
claims,
suits,
investigations
record
clarifies,
however,
or
actions.”
what
qualifies
Nothing
on
as
“entity
an
the
liability matter,” what the Applicant is required to disclose in
response
to
Question
B.3,
and
the
“Yes” in response to this question.
28
consequences
of
answering
The broad exclusionary
language further amplifies the ambiguity as to what HSUS should
have disclosed in response to Question B.3.
Specifically, the
exclusion states that with respect to questions 1 through 6(e),
if such claim or suit exists, then any claim arising therefrom
is excluded from the proposed coverage.
This exclusion, as
written, can be read to mean that if a claim even exists against
an entity proposed for coverage, then regardless of how HSUS
responds to Question 3, any claim or suit arising from such an
existing claim would be excluded from proposed coverage.
interpretation
meaningless
of
the
Question
broadly
B.3,
written
however,
exclusion
because
This
renders
irrespective
of
HSUS’s disclosure of all prior claims against an entity proposed
for coverage, the exclusion still would apply.
National Union argues that because it is not seeking to
rescind coverage, whether it would have issued coverage had HSUS
answered “Yes” to Question B.3 is irrelevant.
unpersuasive
under
the
circumstances.
The
This argument is
exclusion
only
applies if HSUS had a duty to disclose specific information in
response to Question B.3.
See, e.g., Cohen, 785 F.3d at 892
(“The Court of Appeals of Maryland has repeatedly made clear
that an insurance application, as ‘a condition precedent’ to an
insurer’s reliance on it, ‘must be reasonably designed to elicit
from
[the
applicant]
the
information
which
he
possesses,
material to the risk.’” (quoting Stumpf v. State Farm Mut. Auto.
29
Ins. Co., 252 Md. 696, 707 (1969)).
Here, it is far from clear
what information HSUS was obligated to disclose in response to
Question B.3 and what effect answering “Yes” would have on the
decision to issue the Policy, and/or if the exclusion would
apply regardless.
The
Fourth
Circuit
recently
reminded
us
in
Cornerstone
Title & Escrow, Inc. v. Evanston Ins. Co., 555 F.App’x 230, 235
(4th Cir. 2014):
In
interpreting
the
insurance
contract, we should take special care to
interpret
exclusion
provisions
narrowly.
See Megonnell v. United Servs. Auto. Ass’n,
368 Md. 633 (2002). “[S]ince exclusions are
designed to limit or avoid liability, they
will
be
construed
more
strictly
than
coverage clauses and must be construed in
favor of a finding of coverage.
Id.
(quotation marks omitted).
And, in all
cases, the insurer bears the burden of
showing that an exclusion applies.
See
Prop. & Cas. Ins. Guar. Corp. v. Beebe-Lee,
431 Md. 474 (2013).
National Union has not provided any extrinsic or parol evidence
to cure the ambiguities discussed above.8
8
See Cheney v. Bell
Plaintiffs cite deposition testimony from its purported
expert, Dennis Connolly, as to his opinion regarding whether
National Union still would have issued the policy even if HSUS
disclosed the Feld Litigation in the application, but his
opinion does not resolve the ambiguities. (ECF No. 73, at 18).
Mr. Connolly acknowledged in his deposition that any suggestion
that National Union still would have issued the policy had
Plaintiffs disclosed the Feld Litigation in the application
would be speculative. (See ECF No. 73-4, at 5, “I think that is
speculation.
I speculate that they would have written the
policy.”)).
30
Nat’l Life Ins. Co., 315 Md. 761 (1989) (“In the event of an
ambiguity
.
.
.
extrinsic
and
parol
evidence
may
be
considered”).
The cases which National Union cites to show that other
courts have applied similar exclusions in upholding denials of
coverage are factually distinct and not persuasive given the
facts here.
For instance, the court in Gluck v. Executive Risk
Indem., Inc., 680 F.Supp.2d 406, 419 (E.D.N.Y. 2010), reviewed a
different exclusion in an insurance application:
The “arising from” exclusion contained in
the
Executive
Risk
application
–
and
incorporated into the contract – states:
[I]t is agreed that . . . any claim
arising
from
any
fact,
circumstance,
situation, transaction, event, act, error,
or omission required to be disclosed in
response to Questions 14, 15, 16, 17, or 21
is excluded from the proposed insurance.
. . .
This exclusion plainly eliminates
coverage for claims arising from those
facts, etc. “required to be disclosed” that
are not actually disclosed in response to
the specified questions.
(emphasis in original).9
9
The facts in International Surplus Lines Ins. Co. v.
Wyoming Coal Refining Systems, Inc., 52 F.3d 901, 903 (10th Cir.
1995), another case cited by National Union, also are vastly
different from the ones here. In that case, the question in the
application stated: “No person proposed for insurance coverage
is cognizant of any fact, circumstance or situation which said
person has reason to suppose might afford valid grounds for any
future claim against said person and/or the Organization except
as follows[.]”
The court determined that “Question 17 of the
31
Based on the foregoing, ambiguities in Question B.3 and the
corresponding exclusion preclude entry of summary judgment to
National Union as to the individual plaintiffs.
c. Endorsement No. 6
Next, National Union contends that Endorsement No. 6 to the
Policy
also
precludes
coverage
of
the
individual
plaintiffs.
The individual plaintiffs appear to seek coverage pursuant to
Insuring Agreement A of the D&O Coverage Section:
Coverage A: Individual Insured Insurance
This policy shall pay on behalf of each and
every Individual Insured Loss arising from a
Claim first made against such Individual
Insured during the Policy Period or the
Discovery
Period
(if
applicable)
and
reported to the Insurer pursuant to the
terms of this policy any actual or alleged
Wrongful Act of such Individual Insured,
except when and to the extent that the
Organization has indemnified the Individual
Insured.
The Insurer shall, in accordance
with and subject to Clause 5 of this
Coverage Section, advance Defense Costs of
such Claim prior to its final disposition.
(ECF
No.
68-6,
at
35).
“Individual
Insured(s)”
elected
appointed
or
The
as
D&O
“a
past,
director
.
Coverage
.
present
.
or
Section
or
defines
future
Employee
of
duly
the
application is unambiguous and calls for a simple disclosure of
facts indicating the probability of a covered claim.” Based on
the facts of that case, the court determined that any reasonable
person would have been aware of the possibility of the claim.
Here, the question did not ask whether any entity proposed for
coverage was aware of any circumstance which may result in a
future claim.
32
Organization,
or
Outside
Entity
Executive.
Coverage
will
automatically apply to all new persons who become Individual
Insureds after the inception date of this policy.”
(Id. at 36).
An “Employee” is broadly defined as “any past, present or future
employee of the Organization, whether such employee is in a
supervisory,
including
co-worker
any
or
subordinate
position
full-time,
part-time,
seasonal
or
otherwise,
or
temporary
employee or volunteer of the Organization in his or her capacity
as such.”
(Id.).
Kimberly Ockene and Jonathan Lovvorn are
“Employees” within the meaning of the Policy.
Endorsement No. 6 to the Policy states:
In granting coverage under this policy, it
is agreed that the Insurer has relied upon
the statements and representations contained
in the application for this policy . . . as
being accurate and complete.
All such
statements and representations are the basis
of this policy and are to be considered as
incorporated into this policy.
With respect to any statements, warranties
and
representations
contained
in
the
application, and solely with respect to the
issue of whether coverage shall be afforded
under
this
endorsement
pursuant
to
subparagraphs (1), (2) and (3) below, no
knowledge possessed by an Individual Insured
shall be imputed to any other Individual
Insured.
However, in the event that any of
the
statements,
warranties
or
representations
is
not
accurately
and
completely disclosed in the application, no
coverage shall be afforded for any Claim
alleging,
arising
out
of,
based
upon,
attributable to or in consequence of the
subject
matter
of
any
incomplete
or
33
inaccurate
statements,
warranties
representatives
with
respect
to
following Insureds:
or
the
(1) any Individual Insured who knew as of
the inception date of the Policy Period the
facts
that
were
not
accurately
and
completely disclosed in the application;
(2) any Organization to the extent it
indemnifies
any
individual
insured
referenced in subparagraph (1) above; and
(3) any Organization if any past or present
chief executive officer, chief operating
officer or chief financial officer of the
Organization knew of such inaccurate or
incomplete
statements,
warranties
or
representations,
whether or not such Individual Insured knew
that such facts were not accurately and
completed disclosed in the application.
(ECF No. 68-6, at 68) (emphases added).
Given the ambiguities in the application discussed above,
there is a genuine dispute as to whether any facts were not
accurately or completely disclosed in the application.
d. “Prior Notice” Exclusion
Next,
National
Union
argues
that
Exclusion
4(b)
of
the
2009-2010 Policy bars coverage for the Feld Litigation for the
individual Plaintiffs.
Exclusion 4(b) states:
The Insurer shall not be liable to make any
payment for Loss in connection with a Claim
made against an Insured:
(b) alleging, arising out of, based upon or
attributable to the facts alleged, or to the
34
same or Related Wrongful Act[10] alleged or
contained in any Claim which has been
reported, or in any circumstances of which
notice has been given, under any policy of
which
this
policy
is
a
renewal
or
replacement or which it may succeed in time.
(ECF
No.
68-6,
at
11).
First,
National
Union
argues
that
because HSUS gave notice of the Feld Litigation to a different
insurer,
Travelers,
under
an
earlier
policy
issued
Exclusion 4(b) precludes coverage for all Plaintiffs.
in
2000,
Secondly,
National Union argues that notice previously given by The Fund
for Animals to two other insurers – American Empire Surplus
Lines
Insurance
Company
Company
(“OneBeacon”)
–
(“AESLIC”)
under
and
earlier
precludes coverage under Exclusion 4(b).
27).
OneBeacon
issued
Insurance
policies,
also
(See ECF No. 68-1, at
In sum, National Union takes the position that because the
2009-2010 Policy issued to HSUS succeeds in time to the policies
issued
by
Travelers,
AESLIC,
and
OneBeacon,
Exclusion
4(b)
applies and precludes coverage for all Plaintiffs.
Plaintiffs, on the other hand, interpret Exclusion 4(b) as
applying only when notice is given to another insurer under a
prior
policy
before
notice
is
given
to
National
Union.
Plaintiffs contend that in a March 1, 2010 letter from Roger
10
A “Related Wrongful Act” is defined in the Policy as “a
Wrongful Act which is the same, related or continuous, or
Wrongful Act which arises from a common nucleus of facts.
Claims can allege Related Wrongful Acts regardless of whether
such Claims involve the same or different claimants, Insureds,
or legal causes of action.” (ECF No. 68-6, at 9).
35
Kindler, the General Counsel of HSUS, to BB&T, HSUS concurrently
notified
both
Travelers
and
National
Union
of
the
amended
complaint filed by Feld Entertainment.11
Plaintiffs further aver
that
under
FFA,
and
not
HSUS,
was
insured
the
AESLIC
and
OneBeacon occurrence policies,12 and that FFA gave notice of the
Feld Lawsuit to these insurance companies in August 2011, “long
after HSUS provided notice to National Union” in March 2010.
(ECF No. 73, at 37 n.14) (emphasis added); (see also ECF No. 8622, at 24-25 (“The Fund for Animals gave AESLIC notice of the
2010 Feld Amended Complaint in March 2011”); “In August 2011,
The Fund for Animals provided the OneBeacon Insurers written
notice of the 2010 Feld Complaint, and requested that defendants
provide The Fund for Animals a defense and indemnity from the
2010 Feld lawsuit.”)).
National Union’s interpretation of Exclusion 4(b) is that
whether notice was provided to another insurer under an earlierissued policy before or after notice was given to National Union
is
immaterial.
National
Union
argues
that
“[n]owhere
in
11
Plaintiffs appear to be referencing the General Liability
Notice of Occurrence/Claim that was submitted to BB&T on March
1, 2010. (See ECF No. 68-15).
12
FFA was insured by AESLIC from September 2, 2002 to
September 2, 2004 under primary and excess liability policies.
(ECF No. 68-22, at 21, complaint by Fund for Animals against
OneBeacon and AESLIC in the Circuit Court for Baltimore City).
FFA was insured by OneBeacon from May 22, 1999 to May 23, 2003.
(Id. at 12).
36
Exclusion 4(b) is there any requirement that the notice to the
insurer that issued a previous policy be given to that insurer
before notice is given to National Union.”
The
plain
language
of
Exclusion
4(b),
(ECF No. 75, at 20).
however,
precludes
coverage for Loss in connection with a Claim that “has been
reported,
or
in
any
circumstances
of
which
notice
has
been
given, under any policy of which [the National Union 2009-2010]
policy is a renewal or replacement or which it may succeed in
time.”
(ECF No. 68-6, at 11) (emphases added).
A reasonable
interpretation of this exclusion is that notice of the Claim
under a previously issued policy had to have preceded notice to
National Union, which Plaintiffs contend did not happen here.13
Indeed, National Union does not advance any arguments in its
reply memorandum to dispute that FFA gave notice to OneBeacon
and
AESLIC
Union.
in
2011,
after
HSUS
provided
notice
to
National
National Union contends that “Plaintiffs’ reference to
the date that HSUS reported the Feld Litigation to its broker
does not create an issue of fact because notice to a broker is
13
Notably, in the lawsuit filed by The Fund for Animals
against National Union in the Circuit Court for Montgomery
County, National Union also argued that the fact that FFA gave
notice of the Feld Lawsuit to AESLIC and OneBeacon under
insurance policies covering 1999 through 2004 excluded FFA from
coverage pursuant to Exclusion 4(b) of the 2009-2010 Policy.
Judge Boynton determined that summary judgment to National Union
was inappropriate on this basis, however, given FFA’s evidence
that HSUS “notified National Union of the Feld Lawsuit before
Fund for Animals notified its own insurers.” (ECF NO. 73-8, at
8-9).
37
not notice to National Union under the 2009-2010 Policy,” (ECF
No. 75, at 20), but it does not identify any date that it
believes controls for purposes of the “prior notice” exclusion.
In LaValley v. Virginia Sur. Co., Inc., 85 F.Supp.2d 740
(N.D. Ohio 2000), a case cited by National Union, the court
analyzed an exclusion in an insurance policy which barred “[a]ny
claim arising from any circumstance of which notice has been
given under any policy in effect prior to or at the inception of
the policy.”
Id. at 744.
The court reasoned:
Exclusion (f) . . . establish[es] a
presumption of no coverage where the insured
has notified a previous insurer of the
circumstances
surrounding
an
insurable
claim, and then later notifies its current
insurer of a subsequent claim that is born
of any of the same circumstances.
Whether
the insured knew that multiple claims would
be brought against it is irrelevant; under
exclusion (f), so long as there are “any
circumstance[s] of which notice has been
given”
under
previous
policies,
claims
stemming from those circumstances will be
excluded.
Id. at 744-45 (emphasis added).
In Bancinsure, Inc. v. The Park
Bank, 318 F.Supp.2d 746 (W.D.Wis. May 13, 2004), another case
cited by National Union, the court interpreted a “prior notice
exclusion,” which stated that the insurer “is not liable for
loss in connection with ‘any Claim made against the Insured
Persons’
that
arises
out
of
‘any
Wrongful
Act
or
any
fact,
circumstance or situation that has been the subject of notice
38
under any policy of insurance in effect prior to the Inception
Date of this Policy.’”
Id. at 751.
evident
policy
that
the
2001
The court held: “It is
excludes
claims
made
against
insureds if notice has been given previously under any prior
policy of the facts or situation giving rise to the claim.”
at 752 (emphasis added).14
Id.
Here, Plaintiffs contend that notice
to National Union was given at the same time notice was provided
to Travelers of the Feld Lawsuit.
Based on the foregoing, National Union has not established
that
Exclusion
4(b)
precludes
coverage
for
the
individual
Plaintiffs.
e. “Other Insurance” Clause
Finally, National Union contends that the 2009-2010 Policy
is “excess of the 2000 Travelers Policy.”
29).
(ECF No. 68-1, at
Based on their initial motion and reply memorandum, it
appears that National Union only lodges this argument to support
14
In Axis Reinsurance Co. v. HLTH Corp., 993 A.2d 1057
(Del. 2010), the Supreme Court of Delaware analyzed a prior
notice exclusion similar to the one at issue here, but as
Plaintiffs argue, the facts of that case also are readily
distinguishable.
The prior notice exclusion analyzed in Axis
precluded coverage for “[l]oss[es] in connection with any Claim
made against an Insured alleging, arising out of, based upon or
attributable to the facts alleged, or the same or related
Wrongful Acts alleged or contained in any Claim which has been
reported, or in any circumstances of which notice has been
given, under any policy of which this policy is a renewal or
replacement or which it may succeed in time.” Id. at 1063. In
that case, however, defendant provided notice to “Program I
insurers of its claims on July 21, 2005 but did not notify the
Program III insurers until December 22, 2005.” Id. at 1060.
39
denial of coverage to HSUS.
(See ECF No. 68-1, at 31 (“Thus, by
plain operation of the terms of the respective Other Insurance
clauses of the policies, there is no coverage for HSUS for any
amount
within
the
limits
of
the
2000
Travelers
policy.”
(emphasis added)); (see also ECF No. 75, at 30 (“This Court
should
adhere
to
the
plain
language
in
the
Other
Insurance
clauses in the 2009-2010 Policy and the 2000 Travelers Policy
and conclude that there is no coverage for HSUS for any amount
within
the
added)).
September
limits
Indeed,
13,
of
the
2010,
the
2000
letter
avers
Travelers
from
that
policy.”)
Travelers
Kimberly
to
Ockene
(emphasis
HSUS,
and
Lovvorn were not insured under the 2000 Travelers Policy:
It is not clear to us whether the
Humane Society is tendering to Travelers the
defense of the Fund for Animals (“FFA”)
Jonathan Lovvorn and Kimberly Ockene with
respect to the FEI Lawsuit.
Based on the
information now available to us, it appears
that neither FFA, Mr. Lovvorn nor Ms.
Kimberly Ockene is an insured under any
Travelers insurance policy issued to the
Humane Society that is potentially triggered
by the FEI Lawsuit. As set forth more fully
below, only the 2000 Travelers policies
potentially respond to the FEI Lawsuit. The
information now available to us indicates
that FFA, Mr. Lovvorn and Ms. Ockene had no
relationship with the Humane Society during
that year that would qualify them as an
insured under the 2000 Travelers policies.
(ECF No. 68-20, at 2) (emphases added).
40
dated
Jonathan
The court need not decide the merits of National Union’s
arguments with respect to the “Other Insurance” clause in the
Policy
because
summary
judgment
will
be
granted
to
National
Union on the breach of contract claim as to HSUS for the reasons
discussed.
B.
After
Defendant’s Motion to Exclude
moving
for
summary
judgment,
National
Union
again
moved to exclude all expert testimony and written opinions by
Dennis Connolly.
(ECF No. 74).
The court has not relied on any
opinions by Mr. Connolly in adjudicating the motion for summary
judgment.
seek
to
Moreover, it may well be that Plaintiffs will not
rely
Accordingly,
on
the
this
motion
witness
will
be
later
in
denied
this
without
litigation.
prejudice
to
renewal later in the litigation if necessary.
IV.
Conclusion
For the foregoing reasons, Defendant’s motion for summary
judgment
will
be
granted
in
part
and
denied
in
part.
Defendant’s motion to exclude will be denied without prejudice.
A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
41
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