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Palmer v. Audi of America, Inc.

United States District Court, D. Maryland

January 13, 2015

AUDI OF AMERICA, INC., ET AL., Defendants.



This is an action for declaratory judgment brought pursuant to § 3-406 of the Maryland Uniform Declaratory Judgments Act arising from an insurance coverage dispute between Plaintiff Charmisa Palmer and Audi of America, Inc. ("Audi of America"), Volkswagen Group of America, Inc. ("Volkswagen"), and XL Insurance of America, Inc. ("XL Insurance"). This Memorandum Opinion and accompanying Order address the motion to dismiss filed by Audi of America and XL Insurance (collectively, "Defendants"), ECF No. 9, as well as a motion to strike filed by Defendants, ECF No. 17.[1] See ECF No. 9. A hearing is not necessary. See Loc. R. 105.6 (Md.). For the reasons stated below, Defendants' motion to dismiss is DENIED.


On March 13, 2013, Clinton White took his car to be serviced at the Audi dealership in Tysons Corner, Virginia, whereupon he was issued a loaner vehicle. See ECF No. 2 at ¶ 8. On March 18, 2013, Mr. White's daughter, Ashley White, was driving the loaner on I-495 when she lost control and crashed into a guardrail. See id. at ¶¶ 9, 10. Plaintiff Charmisa Palmer ("Palmer"), who was a passenger in the loaner car, sustained serious injuries in the collision. See id. at ¶ 10. As a result of her injuries, Palmer submitted an insurance claim to Mr. White's insurance company, GEICO. See id. at ¶ 18. GEICO offered to pay Palmer $30, 000 for her injuries, which represented the policy limit for Mr. White's insurance policy. See id. This amount, however, was not enough to cover all of Palmer's damages. See id. As such, Palmer submitted a claim to Audi of America's insurer, XL Insurance America, who had issued a $2, 000, 000 insurance policy (the "Policy") to Audi of America. See id. at ¶¶ 6, 11. Defendants denied coverage for Palmer's claim because Ashley White, the driver of the vehicle, was not twenty-one (21) years old at the time of the accident, as was required by the loaner car agreement. See id. at ¶ 12; see also ECF No. 2-2.

Believing that her claim was wrongfully denied, Palmer filed a declaratory judgment action on September 16, 2014 in the Circuit Court for Prince George's County seeking an order that she was covered under the Policy. See ECF No. 2. Defendants removed the state action to this Court on October 9, 2014. See ECF No. 1. On October 16, 2014, Defendants filed a motion to dismiss Palmer's declaratory judgment action. See ECF No. 9. For the reasons stated below, the Court will deny Defendants' motion to dismiss.


The purpose of a motion to dismiss is to test the sufficiency of the plaintiff's complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). The U.S. Supreme Court has recently clarified the standard applicable to Rule 12(b)(6) motions. See Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). These cases make clear that Rule 8 "requires a showing, ' rather than a blanket assertion, of entitlement to relief." Twombly, 550 U.S. at 556 n. 3 (quoting Fed.R.Civ.P. 8(a)(2)). This showing must consist of at least "enough facts to state a claim to relief that is plausible on its face." Id. at 570.

In deciding a motion to dismiss, the Court should first review the complaint to determine which pleadings are entitled to the assumption of truth. See Iqbal, 556 U.S. at 678-79. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679. In so doing, the Court must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999). The Court need not, however, accept unsupported legal allegations, Revene v. Charles County Commissioners, 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual allegations, Papasan v. Allain, 478 U.S. 265, 286 (1986), or conclusory factual allegations devoid of any reference to actual events. United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979).

Generally speaking, however, "a motion to dismiss is rarely appropriate in a declaratory judgment action.'" 120 W. Fayette St., LLLP v. Mayor & City Council of Baltimore City, 413 Md. 309, 355, 992 A.2d 459, 487 (2010) (quoting Broadwater v. State, 303 Md. 461, 466, 494 A.2d 934, 936 (1985)). When evaluating a motion to dismiss an action for a declaratory judgment, Maryland courts have advised that:

Where a bill of complaint shows a subject matter that is within the contemplation of the relief afforded by the declaratory decree statute, and it states sufficient facts to show the existence of the subject matter and the dispute with reference thereto, upon which the court may exercise its declaratory power, it is immaterial that the ultimate ruling may be unfavorable to the plaintiff. The test of the sufficiency of the bill is not whether it shows that the plaintiff is entitled to the declaration of rights or interest in accordance with his theory, but whether he is entitled to a declaration at all; so, even though the plaintiff may be on the losing side of the dispute, if he states the existence of a controversy which should be settled, he states a cause of suit for a declaratory decree.

Broadwater, 303 Md. at 466, 494 A.2d at 936.

When a complaint fails to allege a justiciable controversy, however, a motion to dismiss is proper. See Md.Cts. & Jud.Proc. Art., § 3-409(a)(1) (authorizing declaratory judgments only when the complaint establishes that "[a]n actual controversy exists between contending parties"); Boyds Civic Ass'n v. Montgomery County Council, 309 Md. 683, 689, 526 A.2d 598, 601 (1987) ("[U]nder the statute, the existence of a justiciable controversy is an absolute prerequisite to the maintenance of a declaratory judgment action."). "A controversy is justiciable when there are interested parties asserting adverse claims upon a state of facts which must have accrued wherein a legal decision is sought or demanded." Reyes v. Prince George's County, 281 Md. 279, 288, 380 A.2d 12, 17 (1977). "To be justiciable the issue must present more than a mere difference of opinion, and there must be more than a mere prayer for declaratory relief. Indeed, the addressing of non-justiciable issues would place courts in the position of rendering purely advisory opinions, a long forbidden practice in this State." Hatt v. Anderson, 297 Md. 42, 46, 464 A.2d 1076, 1078 (1983) (internal citations omitted). A declaratory relief action that requests adjudication based on facts that have yet to occur or develop lacks ripeness and should be dismissed for failure to allege a justiciable controversy. See Hickory Point P'ship v. Anne Arundel County, 316 Md. 118, 130, 557 A.2d 626, 632 (1989) ("Generally, an action for declaratory relief lacks ripeness if it involves a request that the court declare the rights of parties upon a state of facts which has not yet arisen, or upon a matter which is future, contingent and uncertain." (internal quotation marks and citations omitted)).


Defendants contend that Palmer's declaratory judgment action is not ripe and therefore not justiciable because, according to them, Maryland law prohibits "direct action[s] against the defendant tortfeasor's liability insurer until there has been a determination of the insured's liability in the [underlying] tort action." ECF No. 9-1 at 5 (citing Washington Metro. Area Transit Auth. v. Queen, 324 Md. 326, 332, 597 A.2d 423, 426 (1991)). Because there has not yet been a "finding of liability or a judgment against Ashley White" (the alleged ...

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