United States District Court, D. Maryland
STATE FARM FIRE & 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
State Farm Fire and Casualty Company
(“Plaintiff”). (ECF No. 23). 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
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. Subsequently, the Court
of Appeals affirmed Defendant's conviction, id.
at 131, and the Supreme Court of Virginia and the Supreme
Court of the United States each denied Defendant's
petitions for review, see Huguely v. Virginia, 136
S.Ct. 119 (2015) (mem.); Petition for Writ of Certiorari at
3, Huguely v. Virginia, 136 S.Ct. 119 (2015) (No.
14-1474). Defendant has since filed a Petition for Writ of
Habeas Corpus in the Charlottesville court where his trial
was originally held. (ECF No. 25-2). 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
¶ 13). 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. (See
Case No. DKC-13-1479, ECF No. 73-4, at 2-3). Trial is now set
for July 2018. (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 party
Andrew Murphy, III, Defendant's step-father (together
with Defendant and interested party Marta Murphy,
“Respondents”), purchased a homeowners'
insurance policy (“the Policy”) from Plaintiff
for Respondents' home in Maryland. (ECF No. 23-4). The
Policy includes broad indemnification provisions stating that
“[i]f a claim is made or a suit is brought against an
insured for damages because of bodily injury . . . to which
this coverage applies, caused by an occurrence, we will: 1.
pay up to our limit of liability for the damages for which
the insured is legally liable; and 2. provide a defense at
our expense . . . .” (Id. at 20). After Ms.
Love filed her complaint in the Civil Case, Defendant sought
coverage from both Plaintiff (ECF No. 1 ¶ 22) and
Chartis Property Casualty Company (“Chartis”),
which insured Mr. and Mrs. Murphy under two other policies
(See Case No. DKC-13-1479, ECF No. 1). Chartis has
been providing a defense for Defendant under a reservation of
rights (Id. ¶ 54), and it filed a declaratory
judgment action in this court on May 23, 2013 (the
28, 2013, Plaintiff acknowledged Defendant's claim for
coverage in the Civil Case and told Defendant that it would
be investigating his claims under the Policy. (ECF No. 1
¶ 33). During its investigation, Plaintiff sought to
examine Defendant under oath, but he has refused to submit to
such an examination. (ECF Nos. 23-7; 23-8). Defendant's
counsel in the Criminal Case told Plaintiff that Defendant
would “decline to meet with you unless and until his
criminal matters are fully concluded.” (ECF No. 23-8).
then initiated this suit, on November 1, 2013, 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 the Policy.
(ECF No. 1). Plaintiff alleged that Defendant's refusal
to cooperate with its investigation violated a provision of
the Policy setting out the insured's duties after a loss.
(Id. ¶ 45). With regard to liability coverage,
the Policy requires an insured “shall perform the
following duties” and “shall cooperate with
[Plaintiff] in seeing that these duties are performed: . . .
at our request, assist in: . . . securing and giving evidence
and obtaining the attendance of witnesses.” (ECF No.
23-4, at 23). The complaint alleges that Defendant's
refusal to submit to an examination constituted a material
breach of the Policy and resulted in actual prejudice to
Plaintiff's ability to evaluate the Civil Case and to
identify defenses to its coverage obligations, which included
issues over Defendant's residency and provisions in the
Policy that exclude coverage for injuries that are
“either expected or intended by the insured; or . . .
the result of willful and malicious acts of the insured,
” (the “Exclusions”). (Id.
¶¶ 32, 55-63).
time Plaintiff filed its complaint, the court had already
stayed the Chartis Case, pending Defendant's direct
appeal in the Criminal Case. (Case No. DKC-13-1479, ECF No.
36). Plaintiff consented to a similar stay in this case,
which was entered on December 6, 2015. (ECF Nos. 7; 8). On
January 5, 2016, after Defendant had exhausted all direct
appeals in his criminal proceedings, the court reopened the
Chartis Case. (Case No. DKC-13-1479, ECF No. 56). Plaintiff
filed a motion to reopen this case on November 2, 2016, which
was granted on November 22. (ECF Nos. 15; 21). Plaintiff then
filed the instant motion for summary judgment, arguing that
both the Exclusions and Defendant's failure to cooperate
provide bases to deny coverage. (ECF No. 23). Respondents and
Ms. Love responded in opposition. (ECF Nos. 25; 27). On
January 10, 2017, the court held a joint hearing on the
instant motion and a motion for summary judgment in the
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)). Although it appears
that the Policy was addressed to Mr. Murphy in California
(ECF No. 23-4, at 2, 4), Plaintiff contends that it was
delivered to the Murphys at their Maryland address (ECF No.
23-2, at 15). Plaintiff argues in the alternative that
California law would apply Maryland law because the property
insured was in Maryland. (ECF No. 23-2, at 16). Neither
Respondents nor Ms. Love dispute that Maryland substantive
law is applicable here. Maryland law does not, however,
govern procedural rules in this court, even when jurisdiction
is based on diversity.
Declaratory Judgment While State Action Is Pending
argue that declaratory judgment is not appropriate at this
time, given the ongoing nature of the Civil Case.
“Federal standards guide the inquiry as to the
propriety of declaratory relief in federal courts, even when
the case is under the court's diversity
jurisdiction.” White v. Nat'l Union Fire Ins.
Co., 913 F.2d 165, 167 (4th Cir. 1990). Under
federal law, district courts have “some measure of
discretion [as to whether] to entertain a declaratory
judgment action that is otherwise properly within its
jurisdiction.” Nautilus Ins. Co. v. Winchester
Homes, Inc., 15 F.3d 371, 375 (4th Cir.
1994). The United States Court of Appeals for the Fourth
Circuit has held that district courts should not entertain a
declaratory judgment action during the pendency of a related
state proceeding “when the result would be to
‘try a controversy by piecemeal, or to try particular
issues without settling the entire controversy.'”
Mitcheson v. Harris, 955 F.2d 235, 239
(4th Cir. 1992) (quoting Aetna Cas. & Sur.
Co. v. Quarles, 92 F.2d 321, 325 (4th Cir.
1937)). A court must consider four factors in deciding
whether to make a declaratory judgment in such a case:
(i) the strength of the state's interest in having the
issues raised in the federal declaratory action decided in
the state courts; (ii) whether the issues raised in the
federal action can more efficiently be resolved in the court
in which the state action is pending; (iii) whether
permitting the federal action to go forward would result in
unnecessary “entanglement” between the federal
and state court systems, because of the presence of
“overlapping issues of fact or ...