United States District Court, D. Maryland, Southern Division
W.C. AND A.N. MILLER DEVELOPMENT COMPANY, Plaintiff,
CONTINENTAL CASUALTY COMPANY, Defendant.
GEORGE JARROD HAZEL, District Judge.
This is a breach of contract action brought by Plaintiff W.C. and A.N. Miller Development Co. ("Miller") against Continental Casualty Co. ("Continental") arising out of Continental's refusal to provide Miller with legal defense costs associated with the defense of a lawsuit that Miller claims Continental was required to pay as part of Miller's insurance policy (the "Policy") with Continental. Miller now seeks from Continental $750, 000, plus interest for the costs associated with the defense of that action.
This Memorandum Opinion addresses Continental's Motion for Judgment on the Pleadings, ECF No. 22, as well as Miller's Motion for Summary Judgment, ECF No. 26. A hearing on this motion was held on October 7, 2014, during which both parties presented oral argument. As further explained below, Continental's Motion for Judgment on the Pleadings is GRANTED. Having granted Continental's motion, the Court will DENY Miller's Motion for Summary Judgment.
A. The 2006 Adversary Proceeding
In 2002, Haymount Limited Partnership ("HLP") retained International Benefits Group ("IBG") to help HLP secure financing for a real estate development project in Haymount, Virginia (the "Haymount Project"). See ECF No. 12-2 at ¶ 19. In connection with that project, HLP and IBG entered into a contract pursuant to which IBG agreed to provide HLP with introductions to various commercial lenders who might be willing to provide financing for the Haymount Project. Id. at ¶ 24. The contract stated that if HLP obtained a loan from a lender introduced to it by IBG, HLP would pay IBG a $3 million finder's fee. Id. Eventually, IBG introduced HLP to a financing company. Id. at ¶ 30. In turn, that financing company introduced HLP to yet another financier who ultimately provided HLP with financing for the Haymount Project. Id. at ¶ 37. Believing that it was entitled to the $3 million finder's fee for its role in facilitating the introduction of HLP to its lender, IBG requested its fee. Id. at ¶¶ 53-54, 60-61. That request was denied and IBG was never paid by HLP; instead, HLP paid a smaller commission to the intermediary company that was responsible for introducing HLP to its ultimate financier. Id. In reaching its decision not to pay IBG the finder's fee, IBG contends that HLP conspired with other actors to interfere with IBG's rights under the contract and to avoid payment of the finder's fee to IBG. Id. at ¶¶ 53-56, 60-61, 67-68, 79-87. As a result of HLP's alleged breach of contract and its (and others') alleged tortious conduct, IBG claims it was forced into Chapter 11 bankruptcy. Id. at ¶¶ 57, 62-63.
During IBG's bankruptcy proceeding, IBG's Bankruptcy Trustee (the "Trustee") commenced an adversary proceeding in the United States Bankruptcy Court for the District of New Jersey ("2006 Adversary Proceeding"), naming as defendants, among others: HLP; the two general partners of HLP - Westminster and Haymount; Edward J. Miller, Jr., president of Haymount and chairman of Miller; and John A. Clark, vice president of Westminster and president of The John A. Clark Company. See ECF No. 12 at ¶ 15; see also ECF No. 12-2 at ¶¶ 11-17. The adversary complaint sought damages associated with the alleged conspiracy to deny IBG its finder's fee. The complaint included causes of action for breach of contract ( id. at ¶¶ 66-70), quantum meruit /unjust enrichment ( id. at ¶¶ 71-76), tortious interference ( id. at ¶¶ 77-83), and common law and statutory conspiracy ( id. at ¶¶ 84-92). Ultimately, on January 8, 2010, judgment was entered in favor of the Trustee against HLP and others in the amount of $4, 469, 158.00.
B. The 2010 Lawsuit
On October 29, 2010, the same Trustee initiated a second action in the United States District Court for the District of New Jersey naming as defendants several of the same parties named in the 2006 Adversary Proceeding, including HLP, Edward J. Miller Jr., and John A. Clark ("2010 Lawsuit"). The very first paragraph of that complaint expressly characterized the suit as an "ancillary and adversary proceeding to recover and collect... $4, 469, 158 on a judgment entered against [HLP]" and others in the 2006 Adversary Proceeding. See ECF No. 12-3 at ¶ 1. Then, for several pages, the complaint describes, in great detail, HLP's ownership structure ( id. at ¶¶ 29-36), the Haymount Development ( id. at ¶¶ 37-41), the process by which IBG obtained financing for HLP ( id. at ¶¶ 42-47), and IBG's Chapter 11 Bankruptcy Proceeding, including the 2006 Adversary Complaint ( id. at ¶¶ 57-88). The complaint goes on to describe a number of actions allegedly taken by the defendants that, according to the Trustee, were done to transfer HLP's assets in order to make them unavailable to satisfy the $4, 469, 158 judgment from the 2006 Adversary Proceeding. Id. at ¶¶ 134-80. Based on these allegations, the Trustee sued the defendants for various causes of action, including fraudulent transfer, fraudulent conveyance, common law and statutory conspiracy, creditor fraud, and aiding and abetting as the basis of claims for compensatory and punitive damages. Id. at ¶¶ 134-80.
C. Tender of Defense to Continental
On November 10, 2010, Miller provided notice to Continental - its insurer - of the 2010 Lawsuit and informed Continental that it believed it was entitled to coverage under its Policy. See ECF No. 2 at ¶ 13. Despite Miller's demand, however, Continental advised Miller that it believed the Policy did not provide coverage for the 2010 Lawsuit. See id. at ¶ 14. According to Continental, Miller's Policy only provided coverage for those "Claims" first made during the Policy Period of November 1, 2010 to November 1, 2011. See ECF No. 12 at ¶ 34. Because, as Continental contends, the "Claim" serving as the basis for the 2010 Lawsuit was first made on March 17, 2006 (the date on which the 2006 Adversary Proceeding was commenced), prior to the inception of the Policy, the 2010 Lawsuit did not trigger coverage. Id. As such, Continental informed Miller that it would not provide a defense or defense costs to Miller or any of its affiliated persons or entities named as defendants in the 2010 Lawsuit. See ECF No. 2 at ¶¶ 14-15.
D. The Policy
Miller purchased the Policy from Continental sometime in 2010. The Policy provided coverage for claims made between November 1, 2010 and November 1, 2011 (the "Policy Period"). See ECF No. 2-1 at 1. The Policy was written on a claims-made basis, meaning that it afforded coverage only for those "Claims" that were first made during the Policy Period. See ECF No. 22-1 at 1. The Policy included two types of coverages: Director & Officer ("D&O") Coverage and Entity Coverage. These coverages protected Miller for "Claims" made against the company, its subsidiaries, and its directors and officers. See ECF No. 2-1 at 3. Under these coverages, Continental was obligated to pay all loss, including litigation-defense costs, resulting from any "Claim" made during the Policy Period against the company, its subsidiaries, and its directors or officers for wrongful acts. Id. Furthermore, under the Policy, all "Interrelated Wrongful Acts" were considered one "Claim" for purposes of coverage. Id. at 9. Specifically, the Policy stated that "[m]ore than one Claim involving... Interrelated Wrongful Acts shall be considered one Claim which ...