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American Safety Indemnity Co. v. Shore Way, Inc.

United States District Court, D. Maryland

August 23, 2016

AMERICAN SAFETY INDEMNITY CO.
v.
SHORE WAY, INC., ET AL.

          MEMORANDUM

          J. FREDERICK MOTZ, UNITED STATES DISTRICT JUDGE

         American Safety Indemnity Company instituted this action against Shore Way, Inc., T/A Domino's Pizza, and Les Buzz, T/A Domino's Pizza seeking reimbursement from defendants of all amounts paid by American Safety to defend and settle an action instituted against defendants in the Circuit Court for Queen Anne's County, Maryland. Both sides have moved for summary judgment. American Safety's motion will be granted, and defendants' motion will be denied.

         I.

         American Standard issued an automobile insurance policy to defendants. A delivery driver named Annmarie McLemore was involved in an accident on May 10, 2013 with Michael Thomas Vodak. On December 11, 2014, Vodak brought suit against defendants in the Circuit Court for Queen Anne's County, Maryland. American Standard accepted the defense of its insured in the Vodak action under a reservation of rights.

         The policy issued by American Standard to defendants contained an endorsement that expressly provided that "This Endorsement Changes the Policy. Please read it carefully." It provided as follows:

Named Insured is a Franchise of Domino's Pizza and agrees to comply with all driver eligibility criteria required by the Franchisor. A copy of the Franchisor's standards must be on file with the Company. Failure to comply with the Franchisor's guidelines may void coverage under this policy.
I have read this SPECIAL RESTRICTION OF COVERAGE in its entirety and agree on behalf of all insured to comply with all of its terms and conditions.

         The endorsement is signed by Andy Kent as an insured or officer of insured entity.

         Domino's drivers' standards (which is attached to the policy) provided that "To be employed as a Team Member who is authorized to drive by Domino's Pizza, the applicant or Team Member's MVR [motor vehicle record] must meet the following criteria: . . . No more than two (2) violations in the past two (2) years (e.g., speeding, failure to yield, fail to obey traffic signal/device, fail to stop, improper turn, improper lane change, careless driving, follow too close, operator not restrained by safety belt).

         During her deposition held in July 2015, American Standard learned that McLemore admitted to having committed to three violations within the two-year period immediately prior to her accident with Vodak: failure to yield right of way, on January 12, 2012, speeding, on February 19, 2012, and using hand-held cell while driving, on May 9, 2013.[1]

         On January 15, 2016, the Vodak was settled for $385, 000. American Standard paid that sum to Vodak. The settlement agreement referenced this litigation that had been filed on October 14, 2015.[2] Shore Way, Inc. and Les Buzz, LLC, were parties to the settlement agreement.

         II.

         Under Maryland law, which indisputably is applicable to this action, insurance policies are interpreted in the same manner as contracts generally. See Sullins v. Allstate Ins. Co, 667 A.2d 617, 619 (Md. 1995); National Cas. Co. v. Lockheed Martin Corp., 415 F.Supp.2d 596, 601 (D. Md. 2006). Maryland adheres to the principle that where the language reported in a contract is unambiguous, a court shall give effect to its plain meaning. See Auction & Estate Representatives, Inc. v. Ashton, 731 A.2d 441, 444-45 (Md. 1999).[3]

         Defendants assert that the insurance policy is ambiguous because it uses successively, in the endorsement in question, the terms "driver eligibility criteria, " "Franchisor's standards, " and "Franchisor's guidelines." However, the endorsement makes ...


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