United States District Court, D. Maryland
Lipton Hollander United States District Judge
case arises from unquestionably tragic events that occurred
on June 28, 2015, during the “Thunder on the
Narrows” powerboat race on the waters of the Kent
Narrows in Maryland. During the race, the driver of a
hydroplane lost control, veered off the race course, and
crashed at high speed into other boats located in the
spectator area, injuring many attendees and killing
seven-year-old Julianne Addison Rosela. ECF 37 (Third Amended
Complaint) at 6; id. ¶ 34. Plaintiffs,
surviving family of the decedent and the other injured
spectators, filed suit against numerous defendants, including
the American Power Boat Association (“APBA”); the
Kent Narrows Racing Association (“KNRA”); the
owners and the operator of the power boat; and Everest
National Insurance Company and Specialty Insurance Group,
Inc. (collectively, “SIG”), the insurance
companies that insured the race. Id. ¶¶
was initially filed in August 2016. ECF 1 (Complaint). Since
then, plaintiffs have filed three amended complaints, the
most recent of which was filed in March 2017. See
ECF 27 (Amended Complaint); ECF 29 (Second Amended
Complaint); ECF 37 (Third Amended Complaint). Plaintiffs
assert 41 counts, generally alleging negligence and related
claims, including a survival and wrongful death action. ECF
37, ¶¶ 143-517. As to the two defendants that are
Maryland corporations, jurisdiction is founded on admiralty,
under 28 U.S.C. § 1333. As to all other defendants,
jurisdiction is based on diversity, under 28 U.S.C. §
twice moved to dismiss the claims against the insurance
companies. ECF 53; ECF 89. SIG first moved to dismiss under
Fed.R.Civ.P. 12(b)(6) in April 2017, arguing that it owed no
legal duty to plaintiffs. ECF 53 (“Motion 1”).
Plaintiffs oppose Motion 1. ECF 71; ECF 72; ECF 72-1
(collectively, “Opposition 1”). SIG has replied.
ECF 78; ECF 79. Several months later, following limited
discovery, SIG submitted a “Supplemental Rule 12(b)(6)
Motion to Dismiss and/or Rule 56 Motion for Summary
Judgment.” ECF 89 (“Motion 2”). Motion 2 is
supported by 14 exhibits. ECF 89-1 through ECF 89-14.
Plaintiffs have moved to strike Motion 2 or, in the
alternative, they oppose it. ECF 90 (“Opposition
2”). SIG has replied. ECF 91.
analyzing the motions, I am mindful that plaintiffs do not
seek recovery under the policy of insurance issued by SIG;
they do not allege breach of contract. See ECF 37.
Rather, they allege that SIG was not a mere insurer.
See ECF 37, ¶¶ 42, 54. According to
plaintiffs, SIG, on behalf of APBA and KNRA, assumed the duty
to assure, inter alia, that the design of the course
and other safety standards were met, in order to protect
third parties. Id. ¶¶ 73, 74. But,
plaintiffs assert that SIG failed to abide by minimum safety
standards and failed to exercise due care. See Id.
¶¶ 67, 68. For example, plaintiffs allege that SIG
established the buffer between the race course and the
spectator area, which was allegedly inadequate, and approved
the design of the race course. Id. ¶¶
hearing is necessary to resolve the motions. See
Local Rule 105.6. For the reasons that follow, I shall deny
Factual Background 
February 2015, KNRA began organizing the 25th Thunder on the
Narrows, a boat race cosponsored by the APBA. ECF 37,
¶¶ 36-37. In order to gain the sponsorship and
official sanction of the APBA, KNRA needed to procure
insurance for the race. Id. ¶ 56. SIG,
APBA's “exclusive agent in providing coverage for
APBA and its member organizations” (id. ¶
56) is alleged to have established a consistent business
relationship with APBA and to have regularly attended
APBA's annual meetings. Id. ¶¶ 54, 56.
According to plaintiffs, SIG was responsible for the approval
of APBA regattas, and for ensuring compliance with basic
minimum safety standards. Id. ¶ 55. In this
capacity, plaintiffs allege that SIG, either on its own or in
collaboration with the APBA, developed a “Regatta
Insurance Application.” Id. ¶ 58. The
entire process of assuring compliance with minimum safety
standards, plaintiffs contend, was administered by SIG.
Id. ¶ 60. The application required KNRA to
submit a scaled diagram of the race course layout, including
the location of the spectator fleet. Id. ¶ 59.
The application, allegedly drafted by SIG, indicated that the
spectators should be located at least 250 feet outside the
outer course markers. Id. ¶ 43.
submitted the application and the diagram, but the diagram
was not to scale and was labeled with the proviso
“Drawing NOT to Scale!” Id.
¶ 65. In the diagram, the spectator fleet (where
spectators could watch the race from their boats) is shown as
being “within feet” of the outside markers.
Id. ¶ 68. Plaintiffs allege that SIG had actual
knowledge that the course in question “could not
possibly provide a 250 foot buffer between the outside course
buoys and the spectator fleets.” Id. ¶
67. A true 250 foot buffer would have placed the spectators
on land, rather than watching from their boats. Id.
¶ 68. Nevertheless, SIG accepted the application and the
diagram, and issued certificates of insurance for the race.
Id. ¶ 71. Thereafter, the APBA agreed to
sanction the race, allegedly on the basis of SIG's
approval. Id. ¶¶ 72-73.
day of the race, plaintiffs were directed to view the race
from an area “just a few feet” beyond the course
markers. Id. ¶ 123. They observed from
recreational boats, located in the designated spectator fleet
area, as determined by SIG, APBA, and KNRA. Id.
¶ 125. And, on June 28, 2015, at approximately 4:45
P.M., one of the racing boats veered off the course and
crashed into a string of the spectators' boats.
Id. ¶¶ 134-35. Seven-year-old Julianne
Addison Rosela drowned (id. ¶ 141), and other
plaintiffs suffered substantial physical injuries.
Id. ¶ 139. This suit followed.
facts are included in the Discussion.
Choice of Law
noted, this Court's jurisdiction as to the claims against
SIG is founded on diversity. See 28 U.S.C. §
1332. A federal court sitting in diversity must apply the law
of the state in which the court is located, including the
forum state's choice of law rules. Colgan Air, Inc.
v. Raytheon Aircraft Co., 507 F.3d 270, 275 (4th Cir.
2007). Thus, Maryland law applies. And, regarding tort
claims, Maryland applies the law of the state where the
alleged harm occurred (“lex loci
delicti”). See, e.g., Proctor v.
Washington Metropolitan Area Transit Auth., 412 Md. 691,
726, 990 A.2d 1048, 1068 (2010).
case, the crash giving rise to the claims occurred “on
the navigable waters of Kent Narrows, located entirely within
the geographic boundaries” of Maryland. ECF 37, ¶
34. Therefore, I shall apply Maryland tort law to the
noted, Motion 1 is a motion to dismiss under Fed.R.Civ.P.
12(b)(6). ECF 53. A defendant may test the legal sufficiency
of a complaint by way of a motion to dismiss under Rule
12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th
Cir. 2017); Goines v. Valley Cmty. Servs. Bd., 822
F.3d 159, 165-66 (4th Cir. 2016); McBurney v.
Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010),
aff'd sub nom. McBurney v. Young, 569 U.S. 221
(2013); Edwards v. City of Goldsboro, 178 F.3d 231,
243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an
assertion by a defendant that, even if the facts alleged by a
plaintiff are true, the complaint fails as a matter of law
“to state a claim upon which relief can be
granted.” Whether a complaint states a claim for relief
is assessed by reference to the pleading requirements of
Fed.R.Civ.P. 8(a)(2). That rule provides that a complaint
must contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.” The
purpose of the rule is to provide the defendants with
“fair notice” of the claims and the
“grounds” for entitlement to relief. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).
survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint
must contain facts sufficient to “state a claim to
relief that is plausible on its face.”
Twombly, 550 U.S. at 570; see Ashcroft v.
Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in
Twombly expounded the pleading standard for
‘all civil actions' . . . .” (citation
omitted)); see also Willner v. Dimon, 849 F.3d 93,
112 (4th Cir. 2017). But, a plaintiff need not include
“detailed factual allegations” in order to
satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555.
Moreover, federal pleading rules “do not countenance
dismissal of a complaint for imperfect statement of the legal
theory supporting the claim asserted.” Johnson v.
City of Shelby, __ U.S.__, 135 S.Ct. 346, 346 (2014)
the rule demands more than bald accusations or mere
speculation. Twombly, 550 U.S. at 555; see
Painter's Mill Grille, LLC v. Brown, 716 F.3d 342,
350 (4th Cir. 2013). If a complaint provides no more than
“labels and conclusions” or “a formulaic
recitation of the elements of a cause of action, ” it
is insufficient. Twombly, 550 U.S. at 555. Rather,
to satisfy the minimal requirements of Rule 8(a)(2), the
complaint must set forth “enough factual matter (taken
as true) to suggest” a cognizable cause of action,
“even if . . . [the] actual proof of those facts is
improbable and . . . recovery is very remote and
unlikely.” Twombly, 550 U.S. at 556 (internal
quotation marks omitted).
reviewing a Rule 12(b)(6) motion, a court “must accept
as true all of the factual allegations contained in the
complaint” and must “draw all reasonable
inferences [from those facts] in favor of the
plaintiff.” E.I. du Pont de Nemours & Co. v.
Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011)
(citations omitted); see Semenova v. Maryland Transit
Admin., 845 F.3d 564, 567 (4th Cir. 2017); Houck v.
Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir.
2015); Kendall v. Balcerzak, 650 F.3d 515, 522 (4th
Cir. 2011), cert. denied, 565 U.S. 943 (2011). But,
a court is not required to accept legal conclusions drawn
from the facts. See Papasan v. Allain, 478 U.S. 265,
286 (1986). “A court decides whether [the pleading]
standard is met by separating the legal conclusions from the
factual allegations, assuming the truth of only the factual
allegations, and then determining whether those allegations
allow the court to reasonably infer” that the plaintiff
is entitled to the legal remedy sought. A Society Without
a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011),
cert. denied, 566 U.S. 937 (2012).
Motion 1, SIG argues that its decision to issue an insurance
policy to other defendants to insure the race does not give
rise to liability in tort to plaintiffs, because it owed no
legal duty to plaintiffs. ECF 53 at 4-5, 10. SIG maintains
that its liability is limited to its contractual obligations,
under the applicable insurance policy, for covered losses
caused by an insured. Id. at 4-5.
to SIG, plaintiffs allege liability under the principle
articulated in the Restatement (Second) of Torts § 315,
as interpreted ...