United States District Court, D. Maryland
L. Russell, III United States District Judge
MATTER arises out of an insurance-coverage dispute between
Plaintiff Resource Real Estate Services, LLC
(“Resource”) and Defendant Evanston Insurance
Company (“Evanston”). Pending before the Court
are the parties' Cross-Motions for Summary Judgment. (ECF
Nos. 12, 18). Principally at issue is whether the
parties' insurance contract requires Evanston to defend
and indemnify Resource in a lawsuit related to settlement
services that Resource provided. The Motions are ripe for
disposition, and no hearing is necessary. See Local Rule
105.6 (D.Md. 2016). For the reasons outlined below, the Court
will deny Resource's Motion and grant Evanston's
November 2014, Evanston issued Resource a Professional
Liability Insurance Policy (the “Policy”).
(Compl. ¶ 10, ECF No. 1). The Policy provides that,
subject to conditions not relevant to this case, Evanston is
obligated to pay Resource for claims related to
“Wrongful Act[s]” that Resource commits in the
performance of “Professional Services.” (Compl.
Ex. A [“Policy”], at 15, ECF No. 1-1). A Wrongful
Act is “any negligent act, error or omission in
Professional Services, ” (id. at 17), and
Professional Services include “settlement
services” and “title insurance, ”
(id. at 27).
Policy excludes from coverage any claim “arising out of
any actual or alleged conversion, misappropriation,
commingling, defalcation, theft, disappearance, [or]
insufficiency in the amount of escrow funds, monies, monetary
proceeds, funds or property, or any other assets, securities,
negotiable instruments or any other thing of value.”
(Id. at 4). These exclusions apply
“irrespective of which individual, party, or
organization actually or allegedly committed or caused in
whole or part the conversion, misappropriation, commingling,
defalcation, theft, disappearance, [or] insufficiency in
amount.” (Id.). The Policy also provides that
Evanston “shall have the right and duty to defend and
investigate” any claim covered under the Policy.
(Id. at 20).
The Settlement and the Proceeds
September 30, 2015, Resource performed settlement services
for the sale of Richard Deem's home in Dundalk, Maryland
(the “Settlement”). (Compl. ¶ 17). Resource
issued Deem a check for $223, 213.16 (the
“Check”), representing the net proceeds from the
sale (the “Proceeds”). (Id.). Shortly
after the Settlement, Resource received numerous e-mails from
someone claiming to be Deem (the “Alleged
Imposter”). (Id. ¶¶ 18-21). The
email address associated with all the messages was
RichardDeem@mail.com (the “EMail Account”).
(Id. ¶ 18).
two days after the Settlement, the Alleged Imposter emailed
Resource to request that Resource wire the Proceeds to his
account. (Id.). Resource responded that Deem already
had the Check for the Proceeds and Resource would not stop
payment on the Check until it received evidence that Deem
voided the Check. (Id.). The Alleged Imposter then
wrote that the Check “was trashed and payment should be
stopped immediately.” (Id.).
October 5, 2015, Resource received another email from the
Alleged Imposter. (ECF No. 19). This time, the Alleged
Imposter requested that Resource deposit the Proceeds in a TD
Bank account (the “TD Bank Account”).
(Id.). Because it did not appear that Deem's
name was on the TD Bank Account, Resource advised that it
would not stop payment on the Check or wire the Proceeds to
the TD Bank Account unless it received confirmation that the
Check was voided or that Deem owned the TD Bank Account.
(Id.). Resource then received a voided check
corresponding to the TD Bank Account, but advised that it
would not wire the Proceeds to the TD Bank Account until it
received signed authorization. (Id.). Resource later
received such authorization and observed that the signature
appeared to match Deem's signature on the settlement
documents. (Id.). Resource then placed a
stop-payment on the Check and informed the Alleged Imposter
that Resource would not wire the Proceeds until it finalized
the stop-payment -- a process which could take forty-eight
October 7 and 8, 2015, the Alleged Imposter emailed Resource
to check on the status of the wire transfer. (Id.
¶¶ 20, 21). On October 8, 2015, Resource confirmed
that it had executed the wire transfer. (Id. ¶
21). Just five days later, Resource “received an e-mail
from the E-Mail Account alleging that the E-Mail Account was
hacked by an unknown individual” and requesting that
Resource disregard all previous e-mails from the E-Mail
Account. (Id. ¶ 22). That same day, Resource
received a call from a representative of SunTrust Bank in
Florida, who advised that Deem did not receive the Proceeds
from the Check. (Id. ¶ 23). Deem allegedly
deposited the Check on October 1, 2015. (Id.). The
SunTrust representative also explained that on October 6,
2015, it received notice of the stop-payment on the Check and
advised Deem of the same. (Id.).
Deem's Suit and Evanston's Denial of
early December 2015, Deem sued Resource in the Circuit Court
for Baltimore County, Maryland, alleging that Resource was
negligent in handling the Proceeds (the “Deem
Suit”). (Id. ¶ 24). Deem alleges that at
the conclusion of the Settlement, Resource issued him the
Check for $223, 123.16 in Proceeds. (Pl.'s Mot. Partial
Summ. J. Ex. F. [“Deem's Am. Compl.”], ¶
11, ECF No. 12-8). The next day, Deem negotiated the Check by
deposit into his SunTrust account. (Id. ¶ 12).
Deem then traveled to Florida and entered into a contract to
purchase a new home. (Id. ¶ 13). Deem intended
to use the Proceeds in his SunTrust account to purchase the
new home. (Id. ¶ 14). About a week after
depositing the Proceeds, however, Deem learned that funds
were not in his SunTrust account. (Id. ¶ 15).
Resource advised that it had stopped payment on the check and
wired the Proceeds to the TD Bank Account in West Palm Beach,
Florida. (Id. ¶¶ 16, 21). Deem, however,
did not authorize Resource to stop payment on the check or
wire the funds to the TD Bank Account. (Id.
¶¶ 17, 23). Deem does not maintain an account with
TD Bank. (Id. ¶ 24). Resource failed to return
the Proceeds, leaving Deem without money from the sale of his
home and unable to purchase a new home. (Id.
¶¶ 26, 27).
after Deem filed his suit, Resource sent a letter to Evanston
proclaiming that Evanston had a duty to defend and indemnify
Resource. (Compl. ¶ 28). Less than two weeks later,
Evanston denied coverage for the Deem Suit, explaining that
Resource's claim was excluded because it “is wholly
based upon or arises out of a theft, disappearance, or
insufficiency of the monetary proceeds of the sale of the
property.” (Id. ¶ 29).