Professional Documents
Culture Documents
No. 14-1239
LONDON,
Subscribing
to
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore.
Marvin J. Garbis, Senior District
Judge. (1:13-cv-01384-MJG)
Argued:
Decided:
declaration
that
Certain
Underwriters
at
Lloyds
court
erred
in
granting
summary
Because the
judgment
to
the
I.
Central to this dispute is the common wall shared by the
structures located at 55 Bryant Street, NW, Washington, DC (55
Bryant Street) and 57 Bryant Street, NW, Washington, DC (57
Bryant
Street).
55
Bryant
Street
was
owned
by
Leon
Yates
Fire).
Capital
City,
real
estate
development
work
for
the
57
Bryant
2
Street
renovations
to
J.A.
by
to
its
[Marquezs]
maintain
certain
work
and
general
further
liability
November
17,
2008,
the
required
insurance
J.A. 269.
Underwriters
issued
Marquez
naming
Accordingly,
an
insurance
through
November
17,
2009.
In
December
2008,
the
of
those
acting
on
Capital Citys
the
initial
J.A. 161.
letter,
or
to
several
letters
and
emails
Standard
underlying
obtained
Fire
complaint)
from
the
alleges
that
District
in
Capital
of
its
City
Columbia
complaint
applied
building
(the
for
and
permit
to
does
not
mention
Marquez
J.A. 80.
or
The underlying
explicitly
seek
any
the
structure
located
at
57
Bryant
Street
. . .
applicable
standard
renovations.).
of
Standard
care
Fire
while
paid
for
performing
the
repairs
said
per
its
City
responded
in
part
by
filing
third
party
to
pay
for
against
all
claims
defending
for
and
liability
indemnify
that
were
[Capital
a
result
City]
of
or
J.A. 89.
On
10,
Maryland,
2013
seeking
Underwriters
Policy.
against
have
a
a
the
Underwriters
declaration
duty
to
from
defend
in
the
Capital
the
District
of
court
that
the
City
under
the
and
the
district
court
ruled
in
favor
of
the
Underwriters.
II.
Our review of a district courts grant of summary judgment
is de novo.
genuine
issue
of
material
fact
and
the
moving
Id.
party
is
Here, we apply
Co.
v.
Stentor
(1941)
(holding
that
Elec.
a
Mfg.
federal
Co.,
313
court
U.S.
487,
exercising
496-97
diversity
the
federal
court
is
located);
Perini/Tompkins
Joint
Venture v. Ace Am. Ins. Co., 738 F.3d 95, 100 (4th Cir. 2013)
(In insurance contract disputes, Maryland follows the principle
of
lex
loci
contractus,
which
applies
the
law
of
the
where
the
policy
is
delivered
(citation omitted)).
and
the
Typically, this
premiums
paid.
First, it
the
actions
of
its
subcontractor.
Second,
Capital
City
argues that the district court should have made clear that, if
the Underwriters owe it a duty to defend, then Capital City is
entitled to recover expenses, including attorneys fees.
III.
In determining whether an insurer has a duty to defend under
an insurance policy, Maryland courts apply the following test:
(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 policys
coverage?
The first question focuses upon the
language and requirements of the policy, and the
second question focuses on the allegations of the tort
suit.
At times these two questions involve separate
and distinct matters, and at other times they are
intertwined, perhaps involving an identical issue.
St. Paul Fire & Marine Ins. Co. v. Pryseski, 438 A.2d 282, 285
(Md. 1981).
With
follow
the
rule
that
insurance
policies
are
to
be
most
Ins. Co. v. Liberty Mut. Ins. Co., 699 A.2d 482, 494 (Md. 1997).
Rather,
Maryland
insurance
law
applies
contracts.
Id.
ordinary
contract
Nevertheless,
principles
under
the
to
general
it
will
be
construed
liberally
in
favor
of
the
dispute,
we
start
with
the
As with any
relevant
policy
person
would
understand
them
to
mean.
Kendall
v.
In so doing,
contract.
Id.
source
of
support
services
in
this
v.
California,
509
U.S.
764,
772
country
for
(1993).
It
develops
standard policy forms and files or lodges them with each States
insurance
regulators;
insurance
forms.
written
Id.
in
most
the
[commercial
United
general
States
is
written
liability]
on
these
J.A. 109.
It explicitly covers
project,
but
only
with
respect
to
liability
for
Maryland
Endorsement
Court
language
of
J.A. 109.
Appeals
presented
in
has
this
not
construed
the
case.
However,
the
City,
as
the
additional
insured,
for
property
damage
. . .
(5th
Cir.
2011).
Insurance
law
commentators
have
also
2004,
insureds
it
attempt[ed]
such
that
to
for
narrow
there
to
coverage
be
for
additional
insurance
for
the
coverage to
Underwriters
argue
that
the
scope
of
coverage
is
and
sentence
remarking
of
the
that
nothing
Endorsement
in
the
. . .
whole
expressly
or
in
limits
part
. . .
maintain
is
liability
that
limited
for
the
the
to
acts
the
or
provided
additional
omissions
of
to
additional
insureds
vicarious
the
insured.
named
But
insureds
operations,
the
insurers
attempt
to
limit
Id.
See
Perini/Tompkins,
11
738
F.3d
at
101.
Here,
the
language
of
the
Endorsement
plainly
lacks
the
vicarious
Even
be
obligated
to
construe
that
ambiguity
against
the
Underwriters, see Empire Fire, 699 A.2d at 494, and to find that
the scope of the Endorsement extends to property damage caused
by Marquez, either in whole or in part, regardless of whether
the underlying complaint seeks to hold Capital City vicariously
liable for Marquezs acts or omissions.
B.
Having determined the scope of the Endorsement, the Court
turns to the second question presented by the Pryseski test,
namely whether the allegations in the tort action potentially
bring the tort claim within the policys coverage.
438 A.3d at 285.
Pryseski,
Appeals has held that the duty to defend arises as long as the
plaintiff in a tort case alleges an action that is potentially
covered by the policy, no matter how attenuated, frivolous, or
illogical that allegation may be. (quoting Sheets v. Brethren
Mut. Ins. Co., 679 A.2d 540, 543 (Md. 1996)).
Maryland
courts
generally
look
to
the
pleadings
in
the
an
insurer
not
use
extrinsic
evidence
to
contest
resolved
insured
may
in
favor
establish
of
a
the
insured.
potentiality
Id.
of
Moreover,
coverage
under
an
an
Id. at
866; see also Litz v. State Farm Fire & Cas. Co., 695 A.2d 566,
570
(Md.
1997)
established
complaint.
by
(A
potentiality
of
coverage
the
allegations
in
the
is
tort
typically
plaintiffs
When extrinsic
of
coverage,
the
insured
13
may
rely
on
evidence
outside
of
omitted)).
the
complaint.
(emphasis
added)
(citations
defense
complaint
to
which
[it]
to
plead
fails
potentiality
of
coverage
is
entitled
allegations
under
the
merely
because
that
establish
insurance
the
a
policies.
the
Id.
underlying
involvement of Marquez.
complaint
is
silent
as
to
the
in the complaint.
complaint
Marquez
against
and
its
owner,
and
has
introduced
that
[t]he
Standard
failure
of
Fires
the
underlying
Defendants
to
complaint
alleges
that
properly
excavate
and
of
care
while
performing
the
57
Bryant
Street
damage
caused
in
whole
14
or
in
part
by
Marquez.
Because
the
underlying
complaint
does
not
make
clear
that
It
holding
688
In
that
case,
the
plaintiffs
in
the
Id. at 507.
liability.
Id.
The
court
stated
that
the
tort
It concluded:
at
511.
discovery
But
showed
crucial
that
the
to
the
general
courts
holding
contractor
was
and
not
that
its
the subcontractor had been engaged to dig the pit, the evidence
also showed that BGE was responsible for filling the pit.
A.2d at 507-09.
688
only against BGE for its negligent failure to fulfill its duty,
leading the Baltimore Gas court to conclude that the insurer no
longer had a duty to defend.
By contrast, there is not such a clean delineation of which
actor
owes
which
duty
in
this
case,
in
part
because
the
But the
Rather, it
as
performing
the
renovation
work
that
led
to
the
entitled
extrinsic
to
introduce
evidence.
Litz,
Marquezs
695
involvement
A.2d
at
570.
by
way
Indeed,
of
the
complaint
potentiality
fails
of
to
plead
coverage
allegations
under
the
that
insurance
establish
polic[y].
applicable
renovations.
that
such
standard
of
care
while
allegations
rest
solely
performing
said
It is absurd to think
on
the
submission
of
in
renovation work.
actually
conducting
the
construction
and
18
We
The
Underwriters
the
have
duty
to
defend
Capital
City
in
IV.
Capital City argues that the district court should have
made clear that, if the Underwriters owe it a duty to defend,
then Capital City is entitled to recover expenses, including
attorneys fees.
question on appeal, and instead will give the district court the
opportunity to resolve the issue in the first instance.
V.
For the foregoing reasons, we conclude that the scope of
coverage under the Endorsement extends beyond acts or omissions
of Marquez for which Capital City was vicariously liable.
plain
language
of
the
Endorsement
creates
duty
to
The
defend
Capital City where Capital City is being held liable for the
acts
or
omissions
of
Marquez.
Moreover,
we
find
that
the
20