State Farm Fire and Casualty Company v. Huguely et al
Filing
30
MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 3/20/2017. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
STATE FARM FIRE & CASUALTY CO.
:
v.
:
Civil Action No. DKC 13-3088
:
GEORGE W. HUGUELY, V, ET AL.
:
MEMORANDUM OPINION
Presently
pending
and
ready
for
resolution
in
this
declaratory judgment action is a motion for summary judgment
filed
by
Plaintiff
(“Plaintiff”).
State
(ECF No. 23).
Farm
Fire
and
Casualty
Company
The issues have been briefed and
a hearing was held on January 10, 2017.
For the following
reasons, the motion for summary judgment will be denied.
I.
Background1
This case involves the intersection of three actions in
which George W. Huguely, V (“Defendant”) is the defendant: a
criminal case, a civil case, and this insurance coverage case.
A.
Criminal Case
Early on the morning of May 3, 2010, one of Yeardley Love’s
roommates
found
her
dead
in
her
bedroom.
Commonwealth, 63 Va.App. 92, 99-100 (2014).
Huguely
v.
Defendant, who had
dated Yeardley Love “on and off” for years, had been drinking
1
Unless otherwise noted, the facts outlined here are
undisputed or construed in the light most favorable to
Defendant, the non-moving party.
alcohol heavily on May 2 and went to her house late that night.
Id. at 99, 101.
He admitted to police that he kicked a hole in
her bedroom door to gain access to her room, had a physical
altercation with her during an argument, and left her bleeding
on her bed.
Id. at 102 n.4.
In a 2012 trial, a jury in the
Circuit Court for the City of Charlottesville, Virginia found
Defendant responsible for her death and guilty of second degree
murder.
Id.
at
105.
Subsequently,
the
Court
of
Appeals
affirmed Defendant’s conviction, id. at 131, and the Supreme
Court of Virginia and the Supreme Court of the United States
each denied Defendant’s petitions for review, see Huguely v.
Virginia, 136 S.Ct. 119 (2015) (mem.); Petition for Writ of
Certiorari at 3, Huguely v. Virginia, 136 S.Ct. 119 (2015) (No.
14-1474).
Defendant has since filed a Petition for Writ of
Habeas Corpus in the Charlottesville court where his trial was
originally
held.
(ECF
No.
25-2).
The
post-conviction
proceedings are ongoing.
B.
Civil Case
On April 26, 2012, interested party Sharon D. Love (“Ms.
Love”), as administrator of the estate of Yeardley Love, brought
a civil suit against Defendant in the Circuit Court for the City
of
Charlottesville.
alleges
that
(ECF
Defendant
No.
was
Love’s injuries and death.
the
1-1).
Her
proximate
amended
cause
(ECF No. 1-2 ¶ 13).
2
of
complaint
Yeardley
The alternative
counts
of
the
complaint
include
ordinary
negligence,
“gross
negligence – indifference and acting with utter disregard of
caution,” “willful and wanton negligence – acting with conscious
disregard and reckless indifference,” “assault and/or battery,”
and punitive damages.
(Id. at 4-9).
Based on section 8.01-419
of the Virginia Code, the suit alleges Yeardley Love had a life
expectancy of another 58.9 years and seeks nearly thirty million
dollars in compensatory damages and an additional one million
dollars in punitive damages.
(Id. at 10-11).
In November 2015,
the circuit court stayed its proceedings to allow this court to
act in the instant insurance coverage case, but some discovery
between those parties has continued.
ECF No. 73-4, at 2-3).
(See Case No. DKC-13-1479,
Trial is now set for July 2018.
(ECF
No. 25, at 6).
C.
Insurance Case
The
case
in
this
court
concerns
whether
Plaintiff,
an
insurance company, is contractually obligated to defend and to
indemnify Defendant in the Civil Case.
Interested party Andrew
Murphy, III, Defendant’s step-father (together with Defendant
and interested party Marta Murphy, “Respondents”), purchased a
homeowners’ insurance policy (“the Policy”) from Plaintiff for
Respondents’ home in Maryland.
(ECF No. 23-4).
The Policy
includes broad indemnification provisions stating that “[i]f a
claim
is
made
or
a
suit
is
brought
3
against
an
insured
for
damages because of bodily injury . . . to which this coverage
applies, caused by an occurrence, we will: 1. pay up to our
limit of liability for the damages for which the insured is
legally liable; and 2. provide a defense at our expense . . . .”
(Id. at 20).
After Ms. Love filed her complaint in the Civil
Case, Defendant sought coverage from both Plaintiff (ECF No. 1 ¶
22)
and
Chartis
Property
Casualty
Company
(“Chartis”),
which
insured Mr. and Mrs. Murphy under two other policies (See Case
No.
DKC-13-1479,
ECF
No.
1).
Chartis
has
been
providing
a
defense for Defendant under a reservation of rights (Id. ¶ 54),
and it filed a declaratory judgment action in this court on May
23, 2013 (the “Chartis Case”).
On June 28, 2013, Plaintiff acknowledged Defendant’s claim
for coverage in the Civil Case and told Defendant that it would
be investigating his claims under the Policy.
(ECF No. 1 ¶ 33).
During its investigation, Plaintiff sought to examine Defendant
under oath, but he has refused to submit to such an examination.
(ECF Nos. 23-7; 23-8).
Defendant’s counsel in the Criminal Case
told Plaintiff that Defendant would “decline to meet with you
unless
and
until
his
criminal
matters
are
fully
concluded.”
(ECF No. 23-8).
Plaintiff then initiated this suit, on November 1, 2013,
naming Respondents and Sharon Love as interested parties and
seeking
a
declaratory
judgment
4
that
it
was
not
required
to
defend or to indemnify Defendant in the Civil Case under the
Policy.
(ECF
No.
1).
Plaintiff
alleged
that
Defendant’s
refusal to cooperate with its investigation violated a provision
of the Policy setting out the insured’s duties after a loss.
(Id.
¶
45).
With
regard
to
liability
coverage,
the
Policy
requires an insured “shall perform the following duties” and
“shall cooperate with [Plaintiff] in seeing that these duties
are performed: . . . at our request, assist in: . . . securing
and giving evidence and obtaining the attendance of witnesses.”
(ECF No. 23-4, at 23).
refusal
breach
to
of
submit
the
to
Policy
The complaint alleges that Defendant’s
an
examination
and
resulted
constituted
in
actual
a
material
prejudice
to
Plaintiff’s ability to evaluate the Civil Case and to identify
defenses to its coverage obligations, which included issues over
Defendant’s residency and provisions in the Policy that exclude
coverage for injuries that are “either expected or intended by
the insured; or . . . the result of willful and malicious acts
of the insured,” (the “Exclusions”).
(Id. ¶¶ 32, 55-63).
At the time Plaintiff filed its complaint, the court had
already
stayed
the
Chartis
appeal in the Criminal Case.
36).
Case,
pending
Defendant’s
direct
(Case No. DKC-13-1479, ECF No.
Plaintiff consented to a similar stay in this case, which
was entered on December 6, 2015.
(ECF Nos. 7; 8).
On January
5, 2016, after Defendant had exhausted all direct appeals in his
5
criminal
proceedings,
the
court
reopened
(Case No. DKC-13-1479, ECF No. 56).
reopen
this
case
November 22.
instant
on
November
2,
for
summary
Chartis
Case.
Plaintiff filed a motion to
2016,
(ECF Nos. 15; 21).
motion
the
which
was
granted
on
Plaintiff then filed the
judgment,
arguing
that
both
the
Exclusions and Defendant’s failure to cooperate provide bases to
deny
coverage.
(ECF
No.
responded in opposition.
23).
Respondents
(ECF Nos. 25; 27).
and
Ms.
Love
On January 10,
2017, the court held a joint hearing on the instant motion and a
motion for summary judgment in the Chartis Case.
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
v.
Liberty
Lobby,
Inc.,
477
U.S.
242,
(1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008).
prevail
on
a
motion
for
summary
judgment,
the
moving
250
To
party
generally bears the burden of showing that there is no genuine
dispute as to any material fact.
248-50.
Liberty Lobby, 477 U.S. at
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.”
inquiry,
a
court
must
Id. at 249.
view
the
6
facts
In undertaking this
and
the
reasonable
inferences drawn therefrom “in the light most favorable to the
party
opposing
the
motion,”
Matsushita
Elec.
Indus.
Co.
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), but 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).
III. Applicable Law
In
diversity
actions,
a
district
court
applies
the
substantive law and choice of law rules of the state in which
the court sits.
Padco Advisors, Inc. v. Omdahl, 179 F.Supp.2d
600, 605 (D.Md. 2002) (citing Erie R.R. Co. v. Tompkins, 304
U.S.
64
(1938)).
In
contract
claims,
Maryland
applies
the
doctrine of lex loci contractus, meaning that the law of the
place where the contract was made applies.
Hart, 327 Md. 526, 529 (1992).
Allstate Ins. Co. v.
“The locus contractus is the
place where the last act is performed which makes an agreement a
binding contract.”
241
Md.
delivery
Grain Dealers Mut. Ins. Co. v. Van Buskirk,
58,
65-66
of
the
(1965).
policy
In
and
constitute these “last acts.”
an
the
insurance
payment
of
contract,
the
the
premiums
Id. (citing Sun Ins. Office v.
Mallick, 160 Md. 71, 81 (1931)).
7
Although it appears that the
Policy was addressed to Mr. Murphy in California (ECF No. 23-4,
at
2,
4),
Murphys
at
Plaintiff
their
contends
Maryland
that
address
it
was
(ECF
delivered
No.
23-2,
to
at
the
15).
Plaintiff argues in the alternative that California law would
apply Maryland law because the property insured was in Maryland.
(ECF No. 23-2, at 16).
Neither Respondents nor Ms. Love dispute
that Maryland substantive law is applicable here.
Maryland law
does not, however, govern procedural rules in this court, even
when jurisdiction is based on diversity.
IV.
Declaratory Judgment While State Action Is Pending
Respondents
argue
that
declaratory
judgment
is
not
appropriate at this time, given the ongoing nature of the Civil
Case.
“Federal standards guide the inquiry as to the propriety
of declaratory relief in federal courts, even when the case is
under the court’s diversity jurisdiction.”
White v. Nat’l Union
Fire Ins. Co., 913 F.2d 165, 167 (4th Cir. 1990).
Under federal
law, district courts have “some measure of discretion [as to
whether]
to
entertain
a
declaratory
judgment
otherwise properly within its jurisdiction.”
action
that
is
Nautilus Ins. Co.
v. Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir. 1994).
The
United States Court of Appeals for the Fourth Circuit has held
that district courts should not entertain a declaratory judgment
action during the pendency of a related state proceeding “when
the result would be to ‘try a controversy by piecemeal, or to
8
try particular issues without settling the entire controversy.’”
Mitcheson v. Harris, 955 F.2d 235, 239 (4th Cir. 1992) (quoting
Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir.
1937)).
A court must consider four factors in deciding whether
to make a declaratory judgment in such a case:
(i) the strength of the state’s interest in
having the issues raised in the federal
declaratory action decided in the state
courts; (ii) whether the issues raised in
the federal action can more efficiently be
resolved in the court in which the state
action is pending; (iii) whether permitting
the federal action to go forward would
result in unnecessary “entanglement” between
the federal and state court systems, because
of the presence of “overlapping issues of
fact or law[;]”[] and (iv) whether the
declaratory judgment action is being used
merely as a device for “procedural fencing.”
Myles Lumber Co. v. CNA Financial Corp., 233 F.3d 821, 824 (4th
Cir. 2000) (quoting Nautilus, 15 F.3d at 377).
Respondents
contend
that
neutral,”
that
while
the
the
first
and
second
declaratory action here.
judgment
(ECF No. 25, at 11-14).2
inappropriate in this case.
maintain
declaratory
fourth
and
third
factors
factors
(Id. at 11-12).
are
is
They
“seemingly
weigh
against
The Fourth Circuit
held in Mitcheson that, with regard to the first factor, the
district court should have refrained from deciding a coverage
case
where
2
Maryland
law
would
preclude
a
state
court
from
Ms. Love confirmed at the motions hearing that she has no
objection to handling this declaratory judgment action prior to
the Civil Case.
9
issuing
declaratory
judgment
and
the
legal
coverage suit were “close” and “problematic.”
240.
issues
in
the
955 F.2d at 236,
The same concerns are not present here.
Maryland law
governs the contract, but the Civil Case is taking place in
Virginia,
which
clearly
has
questions of Maryland law.
a
“procedural
federal
court
fencing”
in
little
in
resolving
This case also does not appear to be
case
in
which
effort
an
interest
to
get
“a
party
certain
has
raced
issues
that
to
are
already pending before the state courts resolved first in a more
favorable
neither
forum.”
the
Nautilus,
first
nor
15
the
F.3d
fourth
at
380.
factor
Accordingly,
weighs
against
entertaining the declaratory judgment action here.
Respondents argue that it would be wasteful to engage in
“duplicative discovery” that has “already occurred in the Civil
[Case],” but, given that the trial in the Civil Case has been
stayed and will not occur for nearly a year and half, making a
determination on coverage before the trial in the Civil Case
will both “serve a useful purpose in clarifying and settling the
legal relations in issue,” and “terminate and afford relief from
the uncertainty, insecurity, and controversy giving rise to the
proceeding.”
at
325).
damages
Nautilus, 15 F.3d at 375 (quoting Quarles, 92 F.2d
Because
arising
controversy
Plaintiff’s
from
between
the
these
duties
Civil
parties,
10
to
Case
defend
and
represent
adjudication
of
to
the
the
pay
only
case
through declaratory judgment would resolve their entire dispute.
Most
importantly,
warrants
although
determination
of
Respondents
insurance
argue
coverage
that
in
efficiency
the
Virginia
courts, the Virginia Circuit Court in the Civil Case previously
stayed its proceedings specifically to allow this court to make
a determination on the insurance issue.
This factor thus weighs
in favor of proceeding with this declaratory judgment action.
Respondents also argue that there are “overlapping issues
of
fact
federal
or
and
law”
state
that
would
court
cause
actions
entanglement
because
a
between
determination
the
of
Defendant’s intent might “put at risk, by issue preclusion or
claim preclusion, the ability of any state court to adjudicate
fairly the underlying liability.”
Icarom, 904 F.Supp. at 460.
At the motions hearing, Respondents pointed to the claim for the
intentional torts of assault and battery in Count Four of the
Civil Case.
Although many of the factual determinations that
will need to be decided in the Civil Case will not overlap here,
there is some potential for overlap with regard to Defendant’s
intent, if Virginia tort law regarding intoxication and intent
aligns with Maryland insurance law on the same issues.
There is
therefore some risk of entanglement.
In United Capital Ins. Co. v. Kapiloff, 155 F.3d 488, 494
(4th
Cir.
1998),
the
Fourth
Circuit
held
that
declaratory
judgment was appropriately employed when only the third factor
11
weighed in favor of abstention.
Moreover, the entanglement was
stronger in that case than it is here because the state and
federal actions revolved around entirely “the same core issues
of law and fact,” but the court still found declaratory judgment
was appropriate.
Farm
Fire
&
Id.3
Cas.
5934669,
at
*1-*5
factors,
proceeding
A similar conclusion was reached in State
Co.
v.
(D.Md.
with
Oliver,
Oct.
this
8,
No.
ELH-15-2140,
2015).
Weighing
declaratory
judgment
2015
all
WL
four
action
is
appropriate.
V.
Denial of Coverage Based on an Intentional or Expected Act
A.
In
Duty to Pay Damages
Maryland,
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).
Thus, the words used in an insurance policy should be given
“their
“meaning
usual,
term.”
a
ordinary,
reasonably
and
prudent
accepted
layperson
meaning”
would
–
i.e.,
attach
to
the
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).
3
The comity issue was also closer in that case because the
state court was in Maryland and was applying Maryland law.
12
The two Exclusions in the Policy bar coverage for injuries
that are (1) “either expected or intended by the insured;” or
(2) “the result of willful and malicious acts of the insured.”
(ECF
No.
dispute
caused
23-4,
of
fact
Yeardley
at
21).
that
Love’s
Plaintiff
argues
“[Defendant’s]
death
were
that
actions
there
which
intentional
and
is
no
directly
[Yeardley]
Love’s injuries were expected and result from the willful and
malicious acts of [Defendant].”
(ECF No. 23-2, at 28).
As will
be discussed, Plaintiff has failed to show that there is no
dispute of material fact as to these issues.
Ordinarily,
acts
provision,
to
exclude
an
coverage
insurer
must
based
show
on
that
an
intentional
the
insured
subjectively intended the harmful results, not simply the acts
that led to the harms.
The exclusionary clause in the present
case does not contain these words; instead
it excepts “damage which is either expected
or intended from the standpoint of the
Insured.” Admittedly, the issue is the same
if stated in rough terms: whether the loss
was intentional or accidental.
The precise
approach to be used, however, differs in two
important respects.
First, there is the
question of whether the results or the means
must have been intended.
The Allstate
policy indicates, in our view, that the
insured must have intended the results
(“damages”), not simply the causing act, for
coverage not to apply. In contrast, “caused
by accident” is ambiguous with regard to
this distinction, as the Haynes court noted.
228 Md. at 400, 179 A.2d at 904.
Second,
the Allstate policy provides that the result
must be expected or intended “from the
13
standpoint
of
the
Insured,”
thereby
requiring, we believe, a more subjective
standard for intent than the test of
foreseeability applied in Harris & Brooks
and Treas.
Allstate Ins. Co. v. Sparks, 63 Md.App. 738, 742-43 (1985).
Plaintiff acknowledges that malice similarly requires that the
harmful act be made “to deliberately cause harm or injury.”
(ECF No. 23-2, at 33 (citing Henderson v. Md. Nat’l Bank, 278
Md. 514, 519 (1976))).
Plaintiff attempts to fit this case into an exception to
the
general
indicating
rule
that
by
some
comparing
acts
are
it
so
to
other
likely
to
coverage
cause
harm
cases
that
intent to commit the act establishes an intent to cause the
resulting harm.
See, e.g., Harpy v. Nationwide Mut. Fire Ins.
Co., 76 Md.App. 474, 483-84 (1988).
While it is true that an intended act
causing unintentional injury, under some
circumstances, can be considered negligence,
“[a]s the probability of injury to another,
apparent
from
the
facts
within
[the
injurer’s] knowledge, becomes greater, his
conduct takes on more of the attributes of
intent, until it reaches that substantial
certainty
of
harm
which
juries,
and
sometimes courts, may find inseparable from
intent itself.”
Id. (quoting Ghassemieh v. Schafer, 52 Md.App. 31, 41 (1982))
(finding that the intent to act and the intent to harm are
inseparable in a child molestation case).
Plaintiff further
contends that the inclusion of the term “expected” along with
14
“intended” in insurance contracts was designed to ensure that
coverage is similarly excluded where an act is “so certain to
cause a particular harm that it can be said that a person who
performed such an act intended the harm.”
Ins. Co., 22 Ariz.App. 601, 602 (1975).
Clark v. Allstate
Citing to Webster’s New
Collegiate Dictionary, Plaintiff reiterates that to “expect” is
“to anticipate . . . the coming occurrence; to consider probable
or certain.”
(ECF No. 23-2, at 31).
Plaintiff makes similar
arguments that malice might be inferred from the circumstances
under which the tort is committed.
(See ECF No. 23-2, at 33
(citing cases)).
After laying out these exceptions, however, Plaintiff makes
almost no reference to any evidence in the record supporting the
legal
conclusions
expected,
or
Plaintiff
cites
that
willful
stand
Defendant’s
and
for
acts
malicious.
the
are
At
intentional,
best,
proposition
that
the
cases
there
is
sometimes “no dichotomy between the damages resulting from [the
insured’s] conduct and his intent to perform the acts [that
cause the harm],” because the harm is “entirely contained within
the activity [to] which he admits.”
Plaintiff
fails
to
explain
what
Pettit, 349 Md. 786.
specific
acts
it
can
But
show
Defendant took during the murder of Yeardley Love and whether
those acts are similar to the acts that courts have previously
considered “substantially certain” to cause resulting harms.
15
Even if the cases Plaintiff cites supported the application
of these propositions here, Plaintiff’s evidence also fails to
answer the precedent question of whether Defendant intended to
commit any of the acts that he engaged in on the night of
Yeardley Love’s murder.
of
Plaintiff’s
Conspicuously absent from the section
motion
on
its
duty
to
pay
damages
is
reference to the implications of Defendant’s intoxication.
asked
about
Defendant’s
Plaintiff referenced
intoxication
at
the
motions
any
When
hearing,
Pettit v. Erie Ins. Exch., 349 Md. 777
(1998), Lititz Mut. Ins. Co. v. Bell, 352 Md. 782 (1999), and
Erie
Ins.
Exch.
According
to
state
mind
of
intent.
v.
Stark,
Plaintiff,
set
a
962
these
high
F.2d
cases
bar
for
(4th
349
addressing
excusing
an
Cir.
an
1992).
insured’s
individual’s
In these cases, the courts dealt with individuals with
pedophilia, explosive rage disorder, and suicidal depression.
In Pettit, the Court of Appeals of Maryland rejected evidence
that an insured who “suffered from a mental disorder known as
pedophilia . . . did not have the intent to harm” the children
who were his victims.
adopted
the
rule
that
capacity to form intent.
suffered
from
Pettit, 349 Md. at 784.
pedophilia
is
Id. at 787.
“intermittent
explosive
not
relevant
The court
to
one’s
In Lititz, the insured
disorder,”
a
mental
illness recognized by the American Psychiatric Association as
involving “the occurrence of discrete episodes of failure to
16
resist
aggressive
acts.”
impulses
that
Lititz, 352 Md. at 795.
result
in
serious
assaultive
The court, however, emphasized
that the insured could not rely on his mental illness because he
admitted that his assaults were intentional and was only arguing
that the harms were not intended.
Id. at 796-98.
The Lititz
court also made note: “If [the insured] has not intended the
contact itself due to a mental condition, then the act might be
considered an ‘accident’ and not intentional because the contact
(the
harm)
would
have
taken
place
without
expectation.”
Lititz, 352 Md. at 798.
suffered
a
from
commit suicide.
the
insured’s
insured
were
deep
depression
and
his
foresight
or
In Stark, the insured
allegedly
attempted
to
Although the court questioned the authenticity
suicide
truly
attempt,
insane,
it
acknowledged
“theoretically,
that
[the
if
the
insured’s]
mental state might also be found such as to negate all of [the
insurer’s] coverage avoidance defenses even if his purpose was
not solely to commit suicide.”
Stark, 962 F.2d at 354, 356.
Because there were factual questions at issue in the case, the
court vacated the district court’s grant of summary judgment.
These cases thus support Plaintiff’s position modestly, if
at all, and they acknowledge that an insured’s state of mind
might affect both his intent to harm and his intent to commit
the acts causing the harm.
In the decision from the Court of
Appeals in Saba v. Darling, 320, Md. 45, 50 (1990), the court
17
seemed to recognize that some amounts of alcohol might reduce a
person
to
being
“so
intentional acts.”
indicated
that
intoxicated
Id.
the
that
he
could
not
perform
Although the evidence in that case
assailant
was
in
fact
“able
to
form
the
conscious intent” to assault his victim, the court’s language
suggests that intoxication could push an individual past that
threshold.
In
witness
Id.
the
instant
affidavit
case,
stating
Ms.
that
Love
has
Defendant
produced
was
“so
an
expert
intoxicated
that he lacked the capacity to form the specific intent to hurt
[Yeardley] Love” and that he also “lacked the capacity to be
aware that he was committing any crime.”
The
affidavit
further
states
that
(ECF No. 27-2, at 6).
the
amount
of
alcohol
Defendant had consumed would have resulted in an “inability to
form a plan or develop an intent” and left him “without reason
or understanding of the consequences of his behavior.”
Id.
Thus, despite Plaintiff’s urgings, there is clearly a dispute of
fact over whether “the risk and danger [of his actions] were
known or should have been known at the time.”
33).
(ECF No. 23-2, at
Therefore, Plaintiff’s motion for summary judgment cannot
be granted on this issue.
B.
Duty to Defend
Even where an insurer’s duty to defend against a suit is
based
on
its
potential
liability
18
in
that
suit,
the
duty
to
defend is distinct from the duty to indemnify.
Walk v. Hartford
Cas. Ins. Co., 382 Md. 1, 15 (2004).
In determining whether a liability
insurer has a duty to provide its insured
with a defense in a tort suit, two types of
questions ordinarily must be answered: (1)
what is the coverage and what are the
defenses under the terms and requirements of
the insurance policy? (2) do the allegations
in the tort action potentially bring the
tort claim within the policy’s coverage?
The first question focuses upon the language
and requirements of the policy, and the
second question focuses upon the allegations
of the tort suit.
St. Paul Fire & Marine Ins. Co. v. Pryseski, 292 Md. 187, 193
(1981).
Because the duty to defend is a “broader” duty, Walk,
382 Md. at 15, if 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 [the] insured’s favor.”
Aetna Cas. & Sur. Co. v.
Cochran, 337 Md. 98, 107 (1995) (quoting U.S. Fid. & Guar. Co.
v.
Nat’l
obviously
Paving
still
Co.,
faces
228
Md.
potential
40,
54
(1962)).
liability
under
Defendant
Ms.
Love’s
negligence claims, and it cannot be declared that Plaintiff owes
no duty to defend him in the Civil Case in accordance with the
terms of the Policy.
19
VI.
Failure to Cooperate
The
Policy
following
provides
duties”
and
that
an
“shall
insured
cooperate
“shall
with
perform
the
[Plaintiff]
in
seeing that these duties are performed: . . . at our request,
assist in: . . . securing and giving evidence and obtaining the
attendance of witnesses.”
argues
that
Defendant’s
(ECF No. 23-4, at 18).
failure
to
submit
to
an
Plaintiff
examination
under oath constitutes a breach of his contractual obligations
under the Policy and that this breach “preclude[s] him from
receiving coverage under the State Farm policy in the Civil
[Case].”
In
(ECF No. 23-2, at 18).
their
papers
and
at
the
motions
hearing,
neither
Respondents nor Ms. Love has disputed that Defendant breached
these provisions of the contract.
Rather, they point to section
19-110 of the Insurance Article of the Maryland Code, which
states that
An insurer may disclaim coverage on a
liability insurance policy on the ground
that the insured or a person claiming the
benefits of the policy through 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.
According
to
Respondents,
Plaintiff
has
failed
to
show
actual prejudice due to Defendant’s failure to cooperate.
20
any
They
rely on Allstate Insurance Co. v. State Farm Mutual Automobile
Insurance Co., 363 Md. 106, 127-28 (2001), which held that “the
proper focus” in determining prejudice should be on whether the
insured “has, or may reasonably have, precluded the insurer from
establishing
liability.”
a
legitimate
jury
issue
of
the
insured’s
Under Allstate v. State Farm, the insurer need not
meet the high bar of proving “that the verdict was the result of
the lack of cooperation,” but must, at least show “that the
failure of cooperation has, in a significant way, precluded or
hampered it from presenting a credible defense to the claim.”
Id.
According to Respondents, Plaintiff has not provided any
evidence
that
it
could
have
produced
different
“credible
defenses” or established “legitimate jury issues” if Defendant
had testified.
(ECF No. 25, at 16, 19-22; see also ECF No. 27,
at 12-13).
Although Plaintiff does not address prejudice directly in
its papers, it does say that asking Defendant certain enumerated
questions “would have allowed State Farm to know exactly what
happened that night for purposes of determining whether he is
entitled
to
a
defense
insurance policy.”
or
indemnification
under
the
subject
(ECF No. 23-2, at 24; see also id. at 19).
At the motions hearing, Plaintiff adopted Chartis’s reliance on
Metlife Auto & Home v. Cunningham, 59 Mass.App.Ct. 583 (2003).
In
that
case,
the
tort
plaintiffs
21
Robert
and
Edwina
Beland
accused
the
insured,
Jason.
Id. at 584.
Brian
Cunningham,
of
killing
their
son
Mr. Cunningham sought to have Metlife, his
insurer, cover his defense and liability in the tort suit.
Id.
Mr. Cunningham agreed to sit for an examination under oath, but
he then proceeded to invoke the Fifth Amendment whenever he was
asked any questions about Jason’s death.
held
that
Defendant
breached
his
Id. at 585.
duty
to
The court
“cooperate
with
[Metlife] and assist [Metlife] in any matter concerning a claim
or
suit,”
but
acknowledged
that
Massachusetts
common
law
required “an affirmative showing of actual prejudice” in order
to relieve an insurer of its coverage duties.
Id. at 586, 590.
The court rejected the Belands’ argument that Cunningham had no
duty to cooperate with Metlife in the context of the declaratory
judgment action because it was his adversary in that case.
at 589.
“the
Id.
Instead, it held that the duty to cooperate included
obligation
to
provide
accurate
information
bearing
on
coverage,” noting that the duty to cooperate exists because an
insurer “[t]ypically . . . has little or no knowledge of the
facts
surrounding
a
claimed
loss”
and
is
therefore
entirely
“dependent on its insured for fair and complete disclosure.”
Id.
The court found that Cunningham’s unwillingness to provide
information
coverage
to
Metlife
exclusion
prejudiced
defense
for
it
in
the
intentional
context
acts.
of
its
“Because
coverage or lack thereof involved Cunningham’s intentions, his
22
statement about his own intent and expectations would have been
of
enormous
value,”
and
the
absence
of
his
statement
sufficient to prejudice Metlife in the coverage case.
was
Id. at
591.
Plaintiff does not cite to any Maryland cases supporting
Cunningham’s premise that prejudice can occur in the coverage
area, as opposed to the underlying tort suit, and the parties
dispute the context in which the prejudice must occur under
Section 19-110.
Allstate v. State Farm focused exclusively on
“a legitimate jury issue
credible
defense
to
the
of the insured’s liability” and “a
[tort]
claim,”
and
thus
appears
to
support the position that prejudice must occur in the underlying
tort
claim
–
that
is,
the
insurer
is
prejudiced
because
it
cannot properly represent the insured against a third party.
Under Cunningham, on the other hand, prejudice to the insurer
can also occur in coverage disputes – that is, the insurer is
prejudiced because it cannot properly defend itself against the
insured.
At least one treatise on insurance law clearly takes the
Cunningham view, stating that “[a]n insurer may prove prejudice
by showing that the failure to cooperate substantially impaired
its ability to investigate the insured loss or liability claim,
to defend against an otherwise-insured liability claim, or to
investigate and develop defenses to coverage.”
23
3 Jeffrey E.
Thomas,
New
Appleman
on
20.02[5][d] (3d ed. 2012).
Insurance
Law
Library
Edition
§
Another treatise posits both sides of
the issue, but prefers the articulation from Cunningham:
Note that the insured’s duty to cooperate
under a liability policy ordinarily relates
only to issues impacting on liability to the
plaintiff. It has, in fact, been held that
the cooperation provision is not breached if
the insured’s lack of cooperation relates
only to the issue of coverage.
See Martin
v. Travelers Indem. Co., 450 F.2d 542, 553,
(5th Cir. 1971) (Mississippi law) (insured’s
misrepresentations
to
insurer
of
no
significance because they related only to
the issue of coverage under the policy and
had
no
bearing
on
liability
to
the
plaintiff).
The
better rule is to the contrary.
E.g.,
Waste
Management,
Inc.
v.
International Surplus Lines Ins. Co., 144
Ill. 2d 178 (1991) (A duty to cooperate
provision created an obligation on the part
of the insured to “disclose all of the facts
within his knowledge and otherwise to aid
the insurer in its determination of coverage
under
the
policy”
—
even
though
the
provision did not “expressly” so state. The
Court broadly held that the purpose of the
cooperation clause was to enable the insurer
to protect its interests); Owens-Illinois,
Inc. v. United Ins. Co., 138 N.J. 437, 650
A.2d 974, 996 (1994) (an insured’s duty to
cooperate encompasses providing its insurer
information that would enable the insurer to
evaluate
the
insured’s
request
for
coverage).
Allan D. Windt, 1 Insurance Claims & Disputes § 3:2 at n.1 (6th
ed. 2016).
There is one case involving Maryland law and applying § 19110 that offers some support for this view, but it is a decision
24
of this court, and not a Maryland court.
In Ball v. NCRIC,
Inc., 174 F.Supp.2d 361, 366-67 (D.Md. 2001),
rev’d Ball v.
NCRIC, Inc., 40 F.App’x 760 (4th Cir. 2002), the trial court held
that
the
insured’s
failure
to
cooperate
was
prejudicial
for
multiple reasons.
The court emphasized both that cooperation
would
the
have
given
insurer
“a
chance
to
discover
any
mitigating circumstances to defend [the insured] against [the
third
party’s]
claim,”
and
that
the
insurer
“was
unable
to
ascertain whether [the claims] were intentional torts, which are
not covered under the policy.”
Id. at 367.
reversed
unpublished
that
decision
in
an
NCRIC, Inc., 40 F.App’x at 765.
The Fourth Circuit
opinion.
Ball
v.
The court acknowledged that the
district court’s conclusion had rested in part on the premise
that
“had
[the
insured]
cooperated,
he
might
have
provided
testimony that would have demonstrated . . . that [the insurer]
had
no
duty
to
indemnify.”
Id.
at
762.
It
reversed
the
district court’s decision on the ground that the insured was
only
non-cooperative
fugitive,
and
cooperation
the
after
for
a
insurer
he
had
number
had
been
not
of
years
while
attempted
to
garner
his
but
before
the
apprehended,
declaratory judgment action was brought.
he
was
a
Id. at 763; cf. U.S.
Specialty Ins. Co. v. Skymaster of Virginia, 26 F.App’x 154, 158
(4th Cir. 2001) (unpublished opinion) (holding, under Virginia
law,
which
does
not
apply
the
25
prejudice
standard,
that
an
insured
could
not
immaterial
just
exclusions
rather
avoid
because
than
answering
the
certain
questions
aiding
the
questions
related
defense
to
in
as
coverage
the
tort
litigation).
Nearly all of the Maryland cases applying § 19-110 seem to
have considered prejudice in the same context as in Allstate v.
State Farm, namely the underlying tort claim.
Those decisions,
however, were a result of the facts presented and simply do not
address
dispute.
prejudice
in
the
context
of
a
coverage
exclusion
As the court in Allstate v. State Farm stated, “[i]t
is very difficult to fashion a workable ‘one size fits all’
standard” because of “the very different circumstances, and thus
the very different kinds of prejudice, that can be presented by
breaches of [the duty to cooperate] provisions.”
Allstate v.
State Farm, 363 Md. at 124.
It thus appears to be an open question whether prejudice
under
Section
19-110
can
occur
in
the
opposed to the underlying tort suit.
coverage
dispute,
as
In applying the law of
Maryland, a federal district court must:
interpret the law in accordance with the
Court of Appeals of Maryland, or where the
law is unclear, as it appears that the Court
of Appeals would rule.
See Liberty Mut.
Ins. Co. v. Triangle Indus., 957 F.2d 1153,
1156 (4th Cir. 1992) (holding that if state
law is unclear federal courts must predict
the decision of the state’s highest court);
Brendle v. General Tire & Rubber Co., 505
F.2d 243, 245 (4th Cir. 1974). To forecast a
26
decision of the state’s highest court we can
consider,
inter
alia:
canons
of
construction,
restatements
of
the
law,
treatises, recent pronouncements of general
rules or policies by the state’s highest
court,
well
considered
dicta,
and
the
state’s trial court decisions.
See Liberty
Mut., 957 F.2d at 1156.
Wells v. Liddy, 186 F.3d 505, 527–28 (4th Cir. 1999).
If a case
presents a determinative novel issue of state law, certification
to
the
Article
Court
of
of
the
Appeals
under
Maryland
section
Code
12-603
may
be
of
the
Courts
appropriate,
but
certification should be approached cautiously:
Where there is no case law from the forum
state which is directly on point, the
district court attempts to do as the state
court would do if confronted with the same
fact pattern. Wilson v. Ford Motor Co., 656
Cir.
1981);
Empire
F.2d
960[]
(4th
Distributors of N.C. v. Schieffelin & Co.,
859 F.2d 1200, 1203 (4th Cir. 1988); Doe v.
Doe, 973 F.2d 237, 240 (4th Cir. 1992). Only
if the available state law is clearly
insufficient should the court certify the
issue to the state court.
Smith v. FCX,
Inc., 744 F.2d 1378, 1379 (4th Cir. 1984),
cert. denied, 471 U.S. 1103, 105 S.Ct. 2330,
85 L.Ed.2d 848 (1985).
Roe v. Doe, 28 F.3d 404, 407 (4th Cir. 1994).
At
this
certification
juncture,
in
any
it
would
event.
be
premature
Although
to
Plaintiff
consider
may
have
produced evidence of the reasonableness of its investigation,
the evidence of the impact of Defendant’s recalcitrance is not
so overwhelming as to prove prejudice as a matter of law.
There
has been an entire criminal trial on the underlying event, which
27
included
a
video
taped
interview
with
Defendant.
Other
individuals are available who can provide, and apparently have
provided, evidence related to Defendant’s residence at the time.
While
there
remain
disputes
of
material
fact
precluding
resolution of the exclusion issues, Plaintiff has not shown as a
matter
of
law
that
examination
under
prejudiced
its
oath
Defendant’s
or
ability
failure
otherwise
to
assert
to
to
answer
a
submit
to
an
its
questions
coverage
defense.
Accordingly, Plaintiff’s motion will not be granted based on
Defendant’s failure to cooperate.
VII. Conclusion
For the foregoing reasons, the motion for summary judgment
filed by Plaintiff State Farm Fire and Casualty Company will be
denied.
A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
28
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