United States District Court, D. Maryland
MEMORANDUM AND ORDER
K. Bredar United States District Judge
before the Court is Defendants' motion for
reconsideration (ECF No. 66) of the Court's order (ECF
No. 61) denying Defendants' motion to dismiss or,
alternatively, for summary judgment (ECF No. 18). The motion
has been briefed (ECF Nos. 78, 83), and no hearing is
required, Local Rule 105.6 (D. Md. 2016). The motion is
granted in that reconsideration has been undertaken; upon
that reconsideration, though, the Court concludes that its
early ruling was correct, and that ruling is now reaffirmed.
Neither the statute of limitations nor laches bar Plaintiffs
suit, which was filed October 7, 2015 (Compl., ECF No. 1).
Because the Court considered evidentiary materials outside of
the complaint, the Court properly treated the motion as one
for summary judgment; the standard for summary judgment was
previously stated in the memorandum opinion of November 22,
2016 (ECF No. 60), and need not be repeated here. But this
memorandum and order provides a fuller statement of
undisputed facts and analysis of cases relevant to the
question of notice to CX Re within the context of the
Charles Piccinini and Leader, Inc., lease various residential
properties to tenants in Baltimore City. On July 11, 1997,
they submitted an application for liability insurance to CX
Re or its predecessor. (Defs.' Mot. Dismiss or Summ. J.
Supp. Mem. 2, ECF No. 19; Pl.'s Opp'n 1, ECF No. 28.)
On the application, the insurer asked the following question:
“Has the Insured ever had any lead paint violations in
the building(s)?” (Compl., Ex. 3, CNA International
Reinsurance Co., Ltd., Supp. App'n Habitational Risks,
ECF No. 1-3.) The box for “No” was checked.
(Id.) The application was signed by Defendants
Charles A. Piccinini and A.M. Slattery, and the “name
of insured” was listed as Leader Realty et al.
(Id.) The policy was issued, effective August 1,
1997, and covered a list of insureds, including Piccinini and
Leader, Inc. (“Leader”), the original Defendants
in this case. (Compl., Ex. 1, Policy, ECF No. 1-1.)
policy also included a list of properties to which the
liability insurance applied. (Id.) One of those
properties was rented to a family and became the subject of a
lead-paint liability suit against Leader and Piccinini.
Jenson v. Piccinini et al., Case No. 24C11007195,
Circuit Court for Baltimore City, filed Nov. 15, 2011.
(Defs.' Mot. Dismiss or Summ. J., Ex. 1, Stefani M.
Andrews Certification ¶ 3, ECF No. 18-1.) The law firm
of Parler & Wobber, LLP, in Towson, Maryland, represented
Leader and Piccinini in defending the lawsuit. (Id.
¶ 7.) Parler & Wobber was engaged in late 2011 or
early 2012 for this representation by third-party claims
administrators. (Id. Ex. 2, Email P. Poholsky to W.
Parler, ECF No. 21-2; Notice of Appearance, Case No.
to Stephen McFeely, claims supervisor in York, Pennsylvania,
at PRO IS, Inc. (“Pro US”), which is a Delaware
corporation, Pro U.S. employees and Lincoln General Insurance
Company (“LGIC”) employees acted as third-party
claims administrators for CX Re; LGIC lent some of its
in-house claims adjustors to Pro U.S. for the purpose of
adjusting claims under policies issued by CX Re and other
companies. (Pl.'s Opp'n, Ex. 1, McFeely Aff.
¶¶ 2, 3, May 13, 2016, ECF No. 28-1.) McFeely also
4. The third-party claims administrators' duties were
limited to the handling and adjustment of claims under
innumerable insurance policies, including, but not limited
to, Leader Realty Company's (“Leader”)
policies at issue in this litigation. These duties included,
among others, retaining defense counsel, communicating with
defense counsel about the insured's potential liability
and exposure, setting reserves and, where the anticipated
losses exceeded delegated authority, making reserve
recommendations, processing claim payments, assessing whether
tendered claims fell, or potentially fell, within the terms,
limitations and conditions of the applicable policy or
policies, and considering whether the insured's losses
might be shared with or allocated to another insurer or the
5. The third-party claims administrators had no involvement
with underwriting, and they did not generate or maintain in
the ordinary course of their duties applications or other
underwriting materials. Their duties did not include
identifying or analyzing possible rescission claims based on
misrepresentations made on insurance applications.
6. On February 10, 2014, Pro U.S. sent CX Re's
London-based business manager, PRO Insurance Solutions
Limited (“Pro UK”), a report on the
Jenson lead exposure claim for the purpose of
requesting settlement authority and the establishment of a
commensurate loss reserve. Within that report was a mention
of a lead violation notice issued in June 1997 to
Leader's property at 2637 E. Madison Street.
7. Before February 10, 2014, the third-party claims
administrators in Pennsylvania had no need for any authority
from Pro UK and, thus, had no reason to act upon or
communicate to Pro UK the information about that lead
violation notice which they had received in the course of
their claims handling.
8. Consequently, the third party claims administrators did
not inform CX Re of Leader's June 1997 lead violation
notice until February 10, 2014.
Mohn, who is a director, company secretary, and general
counsel of CX Re, “a private limited company formed
under the laws of England and Wales and with its principal
office in London, England, ” provided additional
information about the relationship between Pro U.S. and CX
3. CX Re is a party to a Run-Off Management Agreement
(“Agreement”) with Tawa Management Limited
(“Tawa Management”), a private limited company
formed under the laws of England and Wales with its principal
office in London, England. That Agreement appoints Tawa
Management as the Manager of CX Re for all purposes, subject
to the authority of CX Re's board of directors. Tawa
delegated most-but not all-of its responsibilities to Pro
Insurance Solutions Limited (“Pro UK”), a private
limited company organized under the laws of England and Wales
and headquartered and operating out of London, England. Pro
UK, in turn, delegated some-but not all-of ...