United States District Court, D. Maryland
W. TITUS UNITED STATES DISTRICT JUDGE.
October 15, 2015, Plaintiff CX Reinsurance Company, Ltd.
(“CX Re”) filed a Complaint against Defendant
Benjamin Kirson (“Kirson”) seeking rescission of
a commercial general liability insurance policy on the
grounds that Kirson made a material misrepresentation on his
application by falsely indicating that there had never been
any lead paint violations in the buildings to be covered by
the policies. ECF No. 1. Devon S. Johnson
(“Johnson”) obtained a $1, 628, 000 judgment
against Kirson in the Circuit Court for Baltimore City for
personal injuries arising from lead paint exposure. ECF No.
44 Ex. D. On January 18, 2017, this Court granted
Johnson's Motion to Intervene [ECF No. 19] in the action
with limitations on his taking of discovery. ECF No. 38.
Currently pending before the Court is Johnson's Motion
for Temporary Restraining Order And/Or Preliminary Injunction
[ECF No. 43], in which he seeks to enjoin CX Re and Kirson
from entering into any settlement that purports to rescind or
modify the insurance policy. For the reasons that follow,
Johnson's motion will be denied.
Standard of Review
standard for granting a temporary restraining order “is
the same as for granting a preliminary injunction.”
Montgomery v. Hous. Auth. of Baltimore City, 731
F.Supp.2d 439, 441 (D. Md. 2010). A party seeking a
preliminary injunction “must establish that he is
likely to succeed on the merits, that he is likely to suffer
irreparable harm in the absence of preliminary relief, that
the balance of equities tips in his favor, and that an
injunction is in the public interest.” Winter v.
Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008);
see also Montgomery, 731 F.Supp.2d at 441 (citing
same standard for a temporary restraining order). The movant
bears the burden of establishing all four factors.
Montgomery, 731 F.Supp.2d at 441-42.
Johnson Is Not Entitled to a Temporary Restraining Order or
Johnson has not established a likelihood of success on
argues that he is likely to succeed on the merits because
“rescission cannot take place with respect to a
third-party beneficiary under a liability insurance policy
without his consent.” ECF No. 43 at 4. He cites to the
Restatement (Second) of Contracts § 311, comment
e for the proposition that “a loss victim like
Johnson who is the beneficiary of a liability policy cannot
have that policy rescinded from under his feet.”
has not established a likelihood of success on the merits of
this claim because he has not established that he is an
intended third-party beneficiary of the insurance contract
and therefore cannot show that he is likely to succeed in
enjoining its rescission. In CX Reinsurance Co. v.
Levitas, Civ. No. JKB-15-2174, 2016 WL 4888881, at *2
(D. Md. Sept. 15, 2016), appeal docketed, No.
16-2228 (4th Cir. Oct. 25, 2016)-a similar case cited by
neither party-Judge Bredar explicitly rejected arguments
identical to the ones made by Johnson in this
case. Judge Bredar concluded that the defendant
injured by lead paint exposure in that case, Brayon Loyal,
was merely an “incidental beneficiary of the policy,
” and “[a]s such, she ha[d] no enforceable right
by virtue of the policy against either CX Re, the promisor,
or the insureds, the promisees.” Id. Judge
Bredar also noted that even if Loyal was a third-party
beneficiary of the contract, if “the policy was
rescinded due to material misrepresentation at its inception,
then any claim that Loyal would make under the policy is also
subject to the same defense.” Id. at *3. Judge
Bredar held that the “theory of promissory estoppel
[was] inapplicable” in that case because “CX Re
made no promises to [Loyal] of any kind, and it [did] not
stand in the role of promisor to her, ” id.,
and he rejected Loyal's argument that her rights were
irrevocable because the injuries were sustained when she was
an infant-the same argument that Johnson makes here, see
Id. at *4. Last, Judge Bredar held that “[c]omment
e simply reinforces the earlier conclusions that
Loyal was only an incidental beneficiary with no enforceable
rights in the insurance policy and that she had no greater
rights to indemnification under the policy than [the insured]
may have had.” Id. at *4. As in that case,
Johnson has “cited no Maryland case law in which
comment e to § 311 has been applied, much less
in which it has been found to trump an insurer's valid
defenses to enforcement of the contract.” Id.
Because all of Johnson's arguments have already been
explicitly rejected by this Court, he is unable to show a
likelihood of success on the merits and his motion for a
temporary restraining order must be denied.
Johnson has not established a likelihood of irreparable
Johnson had been able to show a likelihood of success on the
merits, he has not established a likelihood of irreparable
harm in the absence of a temporary restraining order or
preliminary injunction. A movant seeking preliminary relief
must present more than a “possibility” of
irreparable harm. Rather, the movant must “demonstrate
that irreparable injury is likely in the absence of
an injunction.” Winter, 555 U.S. at 22. The
irreparable harm must be “neither remote nor
speculative, but actual and imminent.” De Simone v.
VSL Pharmaceuticals, Inc., 133 F.Supp.3d 776, 799 (D.
Md. 2015) (quoting Direx Israel, Ltd. v. Breakthrough
Med. Corp., 952 F.2d 802, 812 (4th Cir. 1991)).
Irreparable injury is “suffered when monetary damages
are difficult to ascertain or are inadequate.”
Multi-Channel TV Cable Co. v. Charlottesville Quality
Cable Operating Co., 22 F.3d 546, 551 (4th Cir. 1994)
states only that he “may suffer irreparable
injury” in the absence of interim injunctive relief
because “if the settlement is found to effect a
rescission of the policy, it may impair any rights Johnson
has to collect on his judgment.” ECF No. 43 at 9. This
falls far short of showing that any alleged irreparable harm
is “actual and imminent.” Additionally, Johnson
has not explained how money damages are difficult to
ascertain or are inadequate given that he holds a monetary
judgment against Kirson. Accordingly, Johnson has failed to
establish a likelihood of irreparable harm.
Johnson has not established that the balance of equities
tips in his favor.
support of this element, Johnson relies again on the
assertion that he may be irreparably harmed in the absence of
preliminary injunctive relief. ECF No. 43 at 9-10. As
discussed above, however, he has not made a showing of
irreparable harm, and thus cannot show that the balance of
equities tips in his favor on this basis. And as CX Re points
out, it is also a victim of Kirson's wrongdoing, and
would suffer harm if unable to rescind contracts that are
allegedly void due to Kirson's material
misrepresentations. ECF No. 44 at 12-13. At best, the balance
of equities favors neither side.
Johnson has failed to address whether a temporary
restraining order or preliminary injunction ...