Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

James River Insurance Co. v. Brick House Title, LLC

United States District Court, D. Maryland, Southern Division

November 6, 2017

JAMES RIVER INSURANCE CO., Plaintiff,
v.
BRICK HOUSE TITLE, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm United States District Judge

         Plaintiff James River Insurance Company ("James River") provided insurance to Defendant Brick House Title, LLC ("Brick House") from July 1, 2014 to July 1, 2015 and July 1, 2015 to July 1, 2016, under two lawyers professional liability insurance policies. It filed this declaratory judgment action to clarify its obligations to indemnify and/or defend under those policies with regard to an August 13, 2016 claim against Brick House. James River now seeks summary judgment, arguing that the undisputed facts show that Brick House knew about the potential claim against it during the first policy period but failed to notify James River until the second policy period, such that coverage is excluded under both policies. Pl.'s Mot. & Mem., ECF Nos. 23, 23-1.[1] I agree. Because neither the claim against Brick House nor the notice to James River of the potential claim occurred during the first policy period, the claim is not covered by the first policy. And, because Brick House knew about, but failed to disclose, the potential claim prior to the commencement of the second policy period, it is excluded from coverage under the second policy. Further, because Brick House did not breach either policy, James River does not need to show prejudice to prevail. Therefore, I will grant James River's motion.

         Background[2]

         In 2014, Brick House handled a closing ("Closing") for real property that the Estate of Virginia L. Mathis and Mathis's great-grandson Delante Mouton (together, the "Estate") owned. Jt. Stip. ¶¶ 5-6, ECF No. 24. Brick House had been responsible for remitting payment to the Estate's mortgage holder ("Nationstar") by an agreed-upon date (April 10, 2014) in an amount that the mortgage holder agreed to accept for a short sale of the property, id. ¶¶ 7-8, but Brick House's wire transfer did not go through and it did not realize the error until April 2015, id. ¶ 11. Brick House tried again to remit the payment on May 6, 2015, this time by check. Id. ¶ 13. The next day, despite having received the check, Nationstar informed Brick House of the payoff amount, and on May 18, 2015, it sent back the check. Id. ¶¶ 14, 16. As a result, the Estate's loan was past due and the lender initiated a foreclosure action. Third Party Compl. ¶ 23 in Estate of Virginia L. Mathis, et al. v. Old Republic National Title Insurance Co. & Brick House Title, LLC, No. 2015 CA 4954 R(RP) (D.C. Sup. Ct.) (the "Mathis Suit"), Ex. N, ECF No. 24-14. In the foreclosure action, the Estate filed a third party complaint against Brick House, as well as their title insurance provider, Old Republic National Title Insurance Company ("Old Republic"), on May 16, 2016, seeking damages from Brick House for negligence and breach of contract, based on its failure to pay off the Estate's mortgage. Id.; Jt. Stip. ¶¶ 10, 22.

         Prior to the Mathis Suit, Old Republic received a letter that "advis[ed] of a potential claim against [it] relating to Nationstar's mortgage on the Estate's property." Jt. Stip. ¶ 15. Old Republic forwarded the letter to Brick House on May 12, 2015, id., and wrote to Brick House again on May 18, 2015 with regard to the claim, "seeking a response to the May 12, 2015 correspondence, " id. ¶ 17. Both of these events occurred during the 2014 Policy Period. Brick House acknowledged receipt on May 22, 2015. Id. ¶ 18. On July 23, 2015 (during the 2015 Policy Period), Brick House provided written notice of a potential claim to James River, for coverage with regard to the Mathis Suit under one of the two claims-made-and-reported insurance policies that Brick House held with James River. Id. ¶ 21; July 23, 2015 Ltr., Ex. M, ECF No. 24-13. The first policy (the "2014 Policy") was effective July 1, 2014 to July 1, 2015 (the "2014 Policy Period"), and the second policy (the "2015 Policy") was effective July 1, 2015 to July 1, 2016 (the "2015 Policy Period"). 2014 Policy, Ex. A, ECF No. 24-1; 2015 Policy, Ex. B, ECF No. 24-2.

         The Estate served Brick House on August 13, 2016, and Brick House reported the Mathis Suit to James River on August 16, 2016. Jt. Stip. ¶ 23. To date, James River has been providing Brick House with a defense in the Mathis Suit, subject to a reservation of rights. Id. ¶¶ 24, 26. It initiated this action, seeking a declaration of rights that it does not have a duty to defend or indemnify Brick House under either the 2014 Policy or the 2015 Policy. Compl., ECF No. 1. Now, it seeks summary judgment, arguing that the undisputed facts show that it "does not owe coverage to Brick House for the [Mathis Suit] under the 2014 Policy because no 'Claim' . . . relating to the Closing was made against Brick House during the 2014 Policy Period, " and Brick House did not "report a potential claim to James River" during the 2014 Policy Period. Pl.'s Mem. 2-3. It also contends that it is undisputed that Brick House knew of the claim before it entered into the 2015 Policy, such that the claim is excluded from coverage under the 2015 Policy pursuant to the "Prior Knowledge Exclusion" clause, [3] and therefore it is entitled to summary judgment with regard to the 2015 Policy as well. Id. at 2.

         Brick House counters that, because "[t]here are material facts in dispute as to whether Defendant had prior awareness of a potential claim, " summary judgment is not appropriate with regard to the 2015 Policy, and because James River has not shown prejudice, as required by the Maryland statute governing disclaiming insurance coverage in case of breach, the motion should be denied as to both policies. Def's Opp'n 1; Def's Mem. 1-2. In its reply, James River contends that Brick House misunderstands and mischaracterizes its claims, as it "has not argued or asserted that Brick House breached the Policies in any respect, " such that the "arguments as to prejudice miss the mark." Pl.'s Reply 1-2. It maintains:

[T]he undisputed facts before the Court clearly demonstrate that. . . Brick House knew or reasonably should have known prior to the 2015 Policy that Brick House's professional services rendered during the Closing could form the basis of a claim and, therefore, the Prior Knowledge Exclusion operates to bar coverage under the 2015 Policy.

Id.

         Standard of Review

         Summary judgment is proper when the moving party demonstrates, through "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, " that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 & n.10 (1986). The existence of only a "scintilla of evidence" is not enough to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., Ml U.S. 242, 251-52 (1986). Instead, the evidentiary materials submitted must show facts from which the finder of fact reasonably could find for the party opposing summary judgment. Id.

         Discussion

          Policy Provisions

          Both the 2014 Policy and the 2015 Policy provide:

THIS POLICY PROVIDES CLAIMS-MADE COVERAGE. CLAIMS MUST FIRST BE MADE AGAINST THE INSURED DURING THE POLICY PERIOD AND MUST BE REPORTED IN WRITING TO THE COMPANY DURING THE POLICY PERIOD OR THE EXTENDED REPORTED PERIOD, IF EXERCISED. . . .
THIS POLICY IS WRITTEN ON A "CLAIMS-MADE AND REPORTED BASIS" AND PROVIDES PROFESSIONAL LIABILITY COVERAGE FOR THOSE CLAFMS THAT OCCUR SUBSEQUENT TO THE RETROACTIVE DATE STATED IN THE DECLARATIONS AND WHICH ARE FIRST MADE AGAINST [THE INSURED] AND REPORTED TO [THE INSURER] WHILE THIS POLICY IS IN FORCE. NO COVERAGE EXISTS FOR CLAFMS FIRST MADE AGAINST [THE INSURED] AND REPORTED TO [THE INSURER] AFTER THE END OF THE POLICY TERM UNLESS, AND TO THE EXTENT, AN EXTENDED REPORTING PERIOD APPLIES.

2014 Policy 2, 4; 2015 Policy 2, 4.[4] They define "Claim" as "a written demand for monetary damages arising out of or resulting from the performing or failure to perform 'Professional Services, '" which, in turn, is defined as "services performed by the 'Insured' for others ... as a lawyer, notary public or title agent" or in other capacities not relevant here. 2014 Policy 5, 6; 2015 Policy 5, 6. As noted, the 2014 Policy Period ran from July 1, 2014 to July 1, 2015, and the 2015 Policy ran from ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.