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First Mercury Insurance Co. v. Earleigh Heights Volunteer Fire Co. of Anne Arundel County

United States District Court, D. Maryland

December 19, 2014

FIRST MERCURY INSURANCE CO., Plaintiff,
v.
THE EARLEIGH HEIGHTS VOLUNTEER FIRE COMPANY OF ANNE ARUNDEL COUNTY, Defendant.

MEMORANDUM OPINION

ELLEN LIPTON HOLLANDER, District Judge.

This declaratory judgment case was initiated by First Mercury Insurance Co. ("Mercury" or "Insurer") against the Earleigh Heights Volunteer Fire Company of Anne Arundel County ("Fire Company"). It presents a question of insurance coverage and is related to a tort action pending in the Circuit Court for Anne Arundel County ("Tort Action"), as well as a declaratory judgment action filed by the Fire Company in the same Maryland court (the "State Declaratory Action").

The Tort Action involves a suit filed in May 2013 by Sean Snyder and Joseph Micciche, Jr., individually and as Personal Representative of the Estate of Kara Richelle Micciche and to the use of Kimberly Micciche, [1] against, inter alia, Frank Joseph & Sons, Inc. d/b/a Jolly Shows ("Jolly" or "Jolly Shows") and the Fire Company. See Micciche, et al. v. Goldman, 02-C-13-178420 (Cir. Ct. for Anne Arundel Cnty.). The Tort Action is rooted in a tragic accident that occurred on July 12, 2011, in which Kara Micciche was fatally injured and Sean Snyder was seriously injured when they were struck by a motor vehicle while crossing Ritchie Highway. The vehicle was driven by William Goldman. The complaint in the Tort Action (ECF 1-1, "State Complaint") alleges, inter alia, that Jolly and the Fire Company were negligent in failing to secure safe crossing at a roadway adjacent to a carnival sponsored by the Fire Company and operated by Jolly. The decedent and Snyder, who were pedestrians, were heading to the carnival when the accident occurred. See State Complaint ¶¶ 29, 30, 35.

In November 2013, under a general liability policy issued by the Insurer to Jolly, the Insurer undertook defense of Jolly, as an insured, and of the Fire Company, as an additional insured. See ECF 1 ("Complaint") ¶ 19. In July 2014, plaintiffs in the Tort Action voluntarily dismissed their claims against Jolly. Id. ¶ 11; ECF 1-2 (stipulation of dismissal). Thereafter, in August 2014, the Fire Company voluntarily dismissed its cross-claim in the Tort Action against Jolly. Complaint ¶ 12; ECF 1-3 (stipulation of dismissal). Soon after, Mercury ceased defending Jolly and the Fire Company. Complaint ¶ 24. When the Fire Company disputed the Insurer's right to withdraw the Fire Company's defense, the Insurer filed this action, seeking a declaratory judgment that it has no duty to defend or indemnify the Fire Company. Id. ¶¶ 28, 32.

Before me now is the Fire Company's "Motion to Dismiss" (ECF 7, "Motion"), filed pursuant to Fed.R.Civ.P. 12(b)(6), with an accompanying memorandum of law (ECF 7-1, "Memo"). The Fire Company argues that the federal declaratory action should be litigated in the Maryland court, where a parallel suit filed by the Fire Company, seeking declaratory judgment on the same issue, is currently pending. Memo at 6-8. Mercury has opposed the Motion. ECF 8 ("Opposition"). The Insurer argues that it is entitled to its forum of choice; that Maryland has no strong interest in deciding the coverage question; and that the coverage issue is separable from the tort claims in the Tort Action. Opposition at 5, 22. The Fire Company has replied. ECF 12 ("Reply").

The Motion is fully briefed, and no hearing is necessary to resolve it. See Local Rule 105.6. For the reasons that follow, I will grant the Motion.

Factual Background

The basic facts appear to be undisputed. Compare Memo at 2-4 with Opposition at 5-8 and Complaint. As discussed, this case is related to the Tort Action now pending in a Maryland trial court, as well as to the State Declaratory Action. Trial of the Tort Action is scheduled to commence on April 14, 2015. As noted, the Insurer, the plaintiff in this federal action, came to be involved by way of an insurance contract between Jolly and the Insurer.

The Insurer issued Jolly a general liability policy (the "Policy"), effective from April 18, 2011 to April 11, 2012. Complaint ¶ 13. The Policy contains an "additional insured" provision, which amends the Policy to include "additional insureds", which are individually defined as follows, id. ¶ 14 (quoting Policy) (alterations in Complaint):

any person or organization for whom you [ i.e., Jolly Shows] are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured.

The operation of the carnival at issue in the Tort Action was indeed governed by an agreement between Jolly and the Fire Company. Complaint ¶ 15. The Insurer appears to agree that the agreement obligated Jolly to name the Fire Company as an additional insured under the Policy. The agreement stated, id. ¶ 17 (quoting agreement) (alterations in Complaint):

The Lessor [ i.e., Jolly Shows] maintains for its protection, at it's [sic] own expense, workmen's compensation insurance, general liability insurance, and auto liability insurance. The Lessor will name the Lessee [ i.e., Earleigh Heights] and any property owners as additional insured on the general liability insurance policy.

As noted, in May 2013 plaintiffs in the Tort Action filed suit in State court against, inter alia, Jolly and the Fire Company. State Complaint. "Pursuant to the additional insured' endorsement and the agreement between" Jolly and the Fire Company, on November 4, 2013, the Insurer "accepted the tender of defense" from the Fire Company "under a full reservation of [the Insurer's] rights under" the Policy. Complaint ¶ 19. By August 2014, all claims against Jolly in the Tort Action had been voluntarily dismissed. See Complaint ¶ 24; ECF 1-2, ECF 1-3 (stipulations of dismissal).

Mercury sent a letter to the Fire Company on September 5, 2014, stating that it believed that, "in light of the dismissal" of Jolly, "the remaining claims against [the Fire Company] did not arise out of" Jolly's operations, and that the Insurer, therefore, "no longer had a duty to defend" the Fire Company. Complaint ¶¶ 24, 25. Further, the Insurer stated that it would continue to cover the fees of the attorney it had provided to the Fire Company, Christopher R. Dunn, for an additional 30 days, i.e. until October 5, 2014, "to help facilitate any transition of the defense.'" Id. ¶¶ 25, 27 (quoting letter).

The Fire Company disputed the Insurer's right to withdraw its defense, "contending that there is a potentiality of coverage and therefore a duty to defend on the part of" the Insurer. Id. ¶ 28; Memo at 4. Nonetheless, the Insurer withdrew its defense of the Fire Company. See Micciche, supra (the Tort Action) (docket showing only Hamilton Fisk Tyler as counsel for the Fire Company); Memo at 6 ("The issue of whether [the]... Fire Company is owed a defense has essentially been rendered moot by the timing... of [the Insurer] in withdrawing the defense.... Undersigned counsel [Hamilton F. Tyler] is defending [the]... Fire Company in the [Underlying Action]."). Moreover, as discussed in more detail, infra, it appears the Fire Company is not asking the Insurer to renew its defense of the Fire Company before resolution of the Tort Action, which is set for trial beginning April 14, 2015.

The Insurer filed this lawsuit on October 7, 2014, invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332, and seeking only a declaratory judgment, pursuant to 28 U.S.C. § 2201. ECF 1. On October 20, 2014, with the consent of the Insurer, the Fire Company filed a motion for extension of time to answer (ECF 5), seeking an extension until November 14, 2014. This Court granted the request. ECF 6. Then, on November 5, 2014, the Fire Company filed the State Declaratory Action in the Circuit Court for Anne Arundel County. See Earleigh Heights Volunteer Fire Company of Anne Arundel Cnty. v. First Mercury Insur. Co., Case No. C-02-CV-14-000308 (Cir. Ct. for Anne Arundel Cnty.); Memo at 1-2. That action appears to be nearly a mirror image of this one.

Neither side has submitted a copy of the complaint in the State Declaratory Action. However, it appears that, as plaintiff in the State Declaratory Action, the Fire Company seeks a declaration that the insurance policy issued by the Insurer to Jolly covers claims asserted by plaintiffs in the Tort Action against the Fire Company, or, in the alternative, that the Insurer has a duty to indemnify the Fire Company "for any and all claims" in the Tort Action. Memo at 4. The Fire Company argues, ECF 7-1 at 10, and the docket sheet for the State Declaratory Action shows, that more parties are involved in that case. See Docket, Earleigh Heights Volunteer Fire Company of Anne Arundel Cnty., supra, publicly available at http://casesearch.courts.state.md.us/. There, the Fire Company has named as defendants Jolly as well as four other parties from the Tort Action. Id.

The Fire Company explains here that it filed a motion in the State Declaratory Action to consolidate that case with the Tort Action, Memo at 2, and that it requested a stay of the State Declaratory Action pending resolution of the Tort Action. Id. at 5. The docket of the Tort Action reflects that a motion to consolidate with the State Declaratory Action was filed on November 13, 2014. See Micciche, supra. As of the date of this Memorandum, a motion to stay does not ...


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