United States District Court, D. Maryland
CHARTIS PROPERTY CASUALTY CO.
GEORGE W. HUGUELY, V, ET AL.
DEBORAH K. CHASANOW United States District Judge.
pending and ready for resolution in this declaratory judgment
action is a motion for summary judgment filed by Plaintiff
Chartis Property Casualty Company (“Plaintiff”).
(ECF No. 64). The issues have been briefed and a hearing was
held on January 10, 2017. For the following reasons, the
motion for summary judgment will be granted.
case involves the intersection of three actions in which
George W. Huguely, V (“Defendant”) is the
defendant: a criminal case, a civil case, and this insurance
on the morning of May 3, 2010, one of Yeardley Love's
roommates found her dead in her bedroom. Huguely v.
Commonwealth, 63 Va.App. 92, 99-100 (2014). Defendant,
who had dated Yeardley Love “on and off” for
years, had been drinking alcohol heavily on May 2 and went to
her house late that night. Id. at 99, 101. He
admitted to police that he kicked a hole in her bedroom door
to gain access to her room, had a physical altercation with
her during an argument, and left her bleeding on her bed.
Id. at 102 n.4. In a 2012 trial, a jury in the
Circuit Court for the City of Charlottesville, Virginia found
Defendant responsible for her death and guilty of second
degree murder. Id. at 105.
his trial, Defendant petitioned for appeal of his conviction
to the Court of Appeals of Virginia on numerous grounds, and
the Court of Appeals granted Defendant's petition on
several procedural issues. (ECF Nos. 24-2; 24-3). The Court
of Appeals later affirmed Defendant's conviction,
Huguely, 63 Va.App. at 131, and, subsequently, the
Supreme Court of Virginia and the Supreme Court of the United
States each denied Defendant's petitions for review. (ECF
No. 64-6); Huguely v. Virginia, 136 S.Ct. 119 (2015)
(mem.). Defendant has since filed a Petition for Writ of
Habeas Corpus in the Charlottesville court where his trial
was originally held. (ECF No. 73-2). The post-conviction
proceedings are ongoing.
April 26, 2012, interested party Sharon D. Love (“Ms.
Love”), as administrator of the estate of Yeardley
Love, brought a civil suit against Defendant in the Circuit
Court for the City of Charlottesville. (ECF No. 1-1). Her
amended complaint alleges that Defendant was the proximate
cause of Yeardley Love's injuries and death. (ECF No.
1-2, at 4). The alternative counts of the complaint include
ordinary negligence, “gross negligence - indifference
and acting with utter disregard of caution, ”
“willful and wanton negligence - acting with conscious
disregard and reckless indifference, ” “assault
and/or battery, ” and punitive damages. (Id.
at 4-9). Based on section 8.01-419 of the Virginia Code, the
suit alleges Yeardley Love had a life expectancy of another
58.9 years and seeks nearly thirty million dollars in
compensatory damages and an additional one million dollars in
punitive damages. (Id. at 10-11). In November 2015,
the circuit court stayed its proceedings to allow this court
to act in the instant insurance coverage case, but some
discovery between those parties has continued. (ECF No. 73-4,
at 2-3). Trial is now set for July 2018. (See Case
No. DKC-13-3088, ECF No. 25, at 6).
case in this court concerns whether Plaintiff, an insurance
company, is contractually obligated to defend and to
indemnify Defendant in the Civil Case. Interested parties
Marta Murphy and Andrew Murphy, III, Defendant's mother
and stepfather (together with Defendant,
“Respondents”), purchased a homeowners'
insurance policy and an excess insurance policy (together,
“the Policies”) from Plaintiff. (ECF No. 1 ¶
24).The Policies include broad indemnification
provisions that state that Plaintiff “will pay damages
an insured person is legally obligated to pay for personal
injury . . . caused by an occurrence covered by this policy .
. . unless stated otherwise or an exclusion applies.”
(ECF No. 64-8, at 15). In addition to indemnity, the Policies
agree to “pay the costs to defend an insured person
against any suit seeking covered damages . . . even if the
suit is false, fraudulent or groundless.”
(Id.). After Ms. Love filed her complaint in the
Civil Case, Plaintiff acknowledged Defendant's claim for
coverage in that case and told Defendant that it would
provide coverage pursuant to a reservation of its rights
under the Policies. (ECF No. 59 ¶ 54).
then began an investigation of the matter to determine its
contractual obligations under the Policies. (Id.
¶¶ 55-64). Plaintiff sought to examine Defendant
under oath, but he has refused to submit to such an
examination, asserting his Fifth Amendment right against
self-incrimination. (Id. ¶¶ 80-87). After
Defendant's counsel in the Criminal Case told Plaintiff
that Defendant would “decline any visit or contact with
representatives” from Plaintiff, it initiated this
suit, naming Respondents and Sharon Love as interested
parties and seeking a declaratory judgment that it was not
required to defend or to indemnify Defendant in the Civil
Case under either of the Policies. (ECF No. 1). Plaintiff
alleged that Defendant's refusal to cooperate with its
investigation violated a provision of the Policies setting
out the insured's duties after a loss. The
homeowners' insurance policy requires an insured to
“[s]ubmit to a separate examination under oath”
“as often as [Plaintiff] reasonably require[s], ”
and both the homeowners' and excess insurance policies
require an insured to “[a]ssist and cooperate with
[Plaintiff] in the conduct of the defense by helping [it] . .
. [t]o secure and give evidence and obtain the attendance of
witnesses.” (Id. ¶¶ 36, 49).
Plaintiff has claimed that Defendant's refusal to submit
to an examination constituted a material breach of the
Policies and resulted in actual prejudice to its ability to
identify defenses to its coverage obligations, which included
issues over Defendant's residency and provisions in the
Policies that exclude coverage for intentional or criminal
acts. (Id. ¶¶ 54-60).
moved for summary judgment on its original complaint on July
3, 2013. (ECF No. 8). Respondents moved to deny or defer
consideration of that summary judgment motion (ECF No. 25),
and, at the same time, moved to stay the case pending the
outcome of Defendant's appeal in the Criminal Case (ECF
No. 24). Respondents' motion to stay was joined by Ms.
Love. (ECF No. 28). The court granted Respondents' motion
to stay proceedings pending his criminal appeal because: (1)
the Virginia Court of Appeals had accepted multiple issues
for appellate review in the Criminal Case, (2) the Insurance
Case could benefit from the factual development in the
Criminal Case, and (3) the court in the Civil Case appeared
likely to stay that case. (ECF No. 36, at 7-10). Among the
reasons favoring the stay, the court noted that
“resolution of the Criminal Case may clarify the issues
for which [Plaintiff] is claiming relief: [Defendant's]
criminal acts could become a reason for denying
coverage.” (Id. at 10).
January 5, 2016, after Defendant had exhausted all direct
appeals in his criminal proceedings, this case was reopened.
(ECF No. 56). Plaintiff's unopposed motion for leave to
amend its complaint was granted. Plaintiff added two new
counts seeking a declaratory judgment that it was not
required to defend or to indemnify Defendant under either
policy because the Civil Case resulted from his commission of
a criminal act. (ECF No. 59). Under the homeowners'
insurance policy, coverage does not extend to personal
injuries “resulting from any criminal, willful,
intentional or malicious act, ” and, under the excess
insurance policy, coverage does not extend to injuries
“[a]rising out of any criminal, willful, fraudulent,
dishonest, intentional, or malicious act” (together,
“the Exclusions”). (Id. ¶¶ 39,
Plaintiff then filed the instant motion for summary judgment,
arguing that the Exclusions and Defendant's failure to
cooperate each provide an independent basis to deny coverage.
(ECF No. 64). Respondents and Ms. Love responded in
opposition, and Plaintiff replied. (ECF Nos. 73; 75; 76).
After reviewing the motion papers, the court provided the
parties with some tentative conclusions and requested
supplemental briefing on several issues. (ECF No. 79). On
January 10, 2017, the court held a joint hearing on the
instant motion and a motion for summary judgment in case
DKC-13-3088 by State Farm Fire and Casualty Company, which
provided another insurance policy to Mr. Murphy under which
Defendant has claimed coverage as an insured. (See
Case No. DKC-13-3088, ECF No. 1).
Standard of Review
motion for summary judgment will be granted only if there
exists no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.
See Fed.R.Civ.P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986);
Emmett v. Johnson, 532 F.3d 291, 297 (4th
Cir. 2008). To prevail on a motion for summary judgment, the
moving party generally bears the burden of showing that there
is no genuine dispute as to any material fact. Liberty
Lobby, 477 U.S. at 248-50. A dispute about a material
fact is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.” Id. at 249. In undertaking this
inquiry, a court must view the facts and the reasonable
inferences drawn therefrom “in the light most favorable
to the party opposing the motion, ” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (quoting United States v. Diebold, Inc.,
369 U.S. 654, 655 (1962)); see also EEOC v. Navy Fed.
Credit Union, 424 F.3d 397, 405 (4th Cir.
2005), but a “party cannot create a genuine dispute of
material fact through mere speculation or compilation of
inferences.” Shin v. Shalala, 166 F.Supp.2d
373, 375 (D.Md. 2001) (citation omitted).
diversity actions, a district court applies the substantive
law and choice of law rules of the state in which the court
sits. Padco Advisors, Inc. v. Omdahl, 179 F.Supp.2d
600, 605 (D.Md. 2002) (citing Erie R.R. Co. v.
Tompkins, 304 U.S. 64, (1938)). In contract claims,
Maryland applies the doctrine of lex loci
contractus, meaning that the law of the place where the
contract was made applies. Allstate Ins. Co. v.
Hart, 327 Md. 526, 529 (1992). “The locus
contractus is the place where the last act is performed
which makes an agreement a binding contract.” Grain
Dealers Mut. Ins. Co. v. Van Buskirk, 241 Md. 58, 65-66
(1965). In an insurance contract, the delivery of the policy
and the payment of the premiums constitute these “last
acts.” Id. (citing Sun Ins. Office v.
Mallick, 160 Md. 71, 81 (1931)). Plaintiff has provided
undisputed evidence that Respondents received the Policies at
their residence in Maryland. (ECF No. 64-12, at
Therefore, Maryland substantive law applies to the contract
law does not, however, govern procedural rules in this court,
even when jurisdiction is based on diversity. The parties
failed to account for the distinction between substantive law
and procedural rules in their initial papers and presented
arguments based solely on Maryland law, which does not govern
certain aspects of the instant dispute, as noted below.
Denial of Coverage Based on a Criminal Act
Maryland, insurance policies are to be construed pursuant to
“ordinary principles of contract interpretation.”
Megonnell v. United Servs. Auto. Ass'n, 368 Md.
633, 655 (2002). Thus, the words used in an insurance policy
should be given “their usual, ordinary, and accepted
meaning” - i.e., the “meaning a reasonably
prudent layperson would attach to the term.” Bausch
& Lomb Inc. v. Utica Mut. Ins. Co., 330 Md. 758, 779
(1993). Where the provisions of an insurance policy are
unambiguous, the meaning of the terms is determined by the
court as a matter of law. Cole v. State Farm Mut. Ins.
Co., 359 Md. 298, 305 (2000).
Exclusions bar coverage for liability “resulting from
any criminal, willful, intentional or malicious act”
and “[a]rising out of any criminal, willful,
fraudulent, dishonest, intentional, or malicious act, ”
respectively. According to Plaintiff, “the exclusive
basis of Sharon D. Love's claims in the Civil [Case] is
the injury and harm caused by [Defendant] to [Yeardley] Love
that ultimately resulted in Love's death.” (ECF No.
64-1, at 13). Plaintiff is clearly correct that Ms.
Love's suit “results from” and “arises
out of” Defendant's acts on the night of Yeardley
Love's death. Each count of Ms. Love's complaint is
based on that incident. (ECF No. 1-2 ¶¶ 19, 27, 36,
43, 48). Respondents themselves admitted that the allegations
in Ms. Love's complaint are based on “the same
facts and circumstances underlying [his] criminal
proceedings.” (ECF No. 73, at 4).
basic argument for summary judgment is simple. Plaintiff has
introduced undisputed evidence that Defendant was convicted
of second degree murder. Plaintiff contends that
“Defendant's conviction for second degree [murder]
. . . establish[es] that his acts . . . in connection with
Love's death were criminal in nature.” (ECF No.
64-1, at 18). Because the Civil Case is based on those same
actions, Plaintiff contends that any liability it will incur
in the Civil Case resulted from Defendant's criminal act
of second degree murder, which means he is not entitled to
coverage under the Policies.
Duty to Pay Damages
Interpreting the Exclusion
the Plaintiff has a duty to pay damages in the Civil Case
thus depends on whether its evidence of what happened that
night - namely, Defendant's criminal conviction - is
sufficient to show that he committed a criminal act under the
Policies. Giving the words their ordinary meaning, a
“criminal act” is any act prohibited by a
criminal law. See Nationwide Mut. Ins. Co. v. Jones,
No. JFM-05-2792, 2006 WL 361336, at *4 (D.Md. Feb. 15, 2006)
(interpreting a criminal acts exclusion to mean an act
“defined as criminal by Maryland law”); see
also Allstate Ins. Co. v. Burrough, 120 F.3d 834, 840
(8th Cir. 1997) (interpreting a criminal acts
exclusion to mean an act “defined as criminal by the
Arkansas Criminal Code”). Although an issue might arise
if the criminal laws in the state where the act occurred
differed from the criminal laws of the state of insurance,
both Maryland ...