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CX Reinsurance Company Ltd. v. Singer Realty, Inc.

United States District Court, D. Maryland

January 3, 2018

CX REINSURANCE COMPANY LIMITED, f/k/a CNA REINSURANCE COMPANY LIMITED Plaintiff,
v.
SINGER REALTY, INC., et. al, Defendants.

          REPORT AND RECOMMENDATIONS

          Stephanie A. Gallagher United States Magistrate Judge

         Pursuant to Judge Blake's February 9, 2017 Order, this matter has been referred to me for discovery disputes and related scheduling matters.[1] [ECF No. 80]. Presently pending is Plaintiff CX Reinsurance Company Limited's (“CX Re”) Motion to Compel Intervenor-Defendant Trezhur Davis's (“Davis”) Responses to Requests for Admission [ECF No. 137-1], Davis's Opposition [ECF No. 140], and CX Re's Reply [ECF No. 144]. I find that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, I recommend that Davis be DISMISSED from this case and that CX Re's Motion to Compel be DENIED.

         I. BACKGROUND

         In this action, CX Re seeks to rescind commercial general liability insurance policies (“Policies”) issued to Singer Realty, Inc. (“Singer Realty”), and other named insureds in 1997 and 1998. Pl.'s Second Am. Compl., [ECF No. 39 ¶¶ 1 & 14]. The Policies provide insurance coverage for certain risks, including lead exposure, relating to specified residential rental properties in Baltimore, Maryland. See Policies, [ECF Nos. 1-1, 1-2].

         In particular, CX Re alleges that Singer Realty made misrepresentations of material fact in the Application upon which the Policies were issued. Id. ¶ 1. Specifically, CX Re avers that Singer Realty falsely answered “No” to Question 16 of the Application, which asks whether “the [i]nsured ever had any lead paint violations in the building(s)[.]” Id. ¶¶ 25-32. CX Re argues that, if Defendants had answered this question truthfully, CX Re would not have issued the Policies, or would have issued the Policies subject to substantially higher premiums or substantially different terms. Id. ¶ 47. CX Re asserts that it first learned of the misrepresentation regarding Question 16 of the Application while conducting “a broad underwriting review of many insureds[]” in August, 2015, and it filed this action shortly thereafter in October, 2015. Id. ¶¶ 33-34.

         On March 16, 2016, Davis filed suit against Singer Realty, seeking damages for injuries sustained from lead paint exposure at a property covered by CX Re's policy (the “Kenwood Property”). [ECF No. 137-1 ¶¶ 1, 7]; [ECF No. 140 at 1]. Thus, to protect her interests and demonstrate that CX Re's policy was “not subject to rescission or void ab initio, [but] rather remain[ed] in full force and effect[, ]” Davis intervened in this action on January 13, 2017. [ECF No. 76]; [ECF No. 137-1 at 3]. On September 5, 2017, CX Re served its First Set of Requests for Admission to Davis [ECF No. 137-2], and, on October 5, 2017, Davis served her responses [ECF No. 137-3]. Five days later, on October 10, 2017, Davis filed a joint stipulation dismissing her State lead paint claims with prejudice against Singer Realty. [ECF 140-1]. The instant discovery dispute revolves around CX Re's Request for Admission [“RFA”] Nos. 4 and 5 and Davis's responses thereto. [ECF No. 137-1 at 3-5]. The Requests and Responses are as follows:

Request No. 4: From the time of your birth until at least 1999, the Kenwood Property had paint peeling, flaking, or chipping off of its surfaces.
Response: Intervenor Defendant objects to this Request because it is not relevant to the claims currently in the case. CXRe has sought rescission based on alleged statements on an insurance application related to lead paint violations at the properties included in the policies' schedule of locations. The claims do not assert that the insured misrepresented facts about the condition of the surfaces at the applicant's property. Based on this objection, the request is denied.
Request No. 5: From the time of your birth until at least 1999, the Kenwood Property had lead paint on its surfaces.
Response: Intervenor Defendant objects to this Request because it is not relevant to the claims currently in the case. CXRe has sought rescission based on alleged statements on an insurance application related to lead paint violations at the properties included in the policies' schedule of locations. The claims do not assert that the insured misrepresented facts about the condition of the surfaces at the applicant's property. Based on this objection, the request is denied.

[ECF No. 137-3 at 3-4]. CX Re argues that RFA Nos. 4 and 5 seek relevant information because, if the Kenwood Property had paint peeling, chipping, or flaking from its surfaces or had “lead paint on its surfaces from 1995-1999, that would prove that Singer's ‘No' answer to Question[s] 12 [and 14 were] false” and, as such, are germane to the issue of whether CX Re is entitled to rescission.[2] [ECF No. 137-1 at 5]. In her Opposition, however, Davis argues that, because she no longer has a claim against Singer Realty, “she lacks an interest in the CXRe policies and has no standing as a party in [this] action.” [ECF No. 140 at 1]. As such, Davis contends that she is “not a proper party to this action” and that CX Re is “not entitled to seek from her responses to requests for admission.”[3] Id. at 2. Meanwhile, CX Re argues that, after causing it to incur significant litigation expenses for almost a year, Davis utilized a “tactical ploy” to moot her interest in this litigation to prevent it “from obtaining information that would prove its right to rescind to the Policies . . . .” [ECF No. 144 at 6]. Thus, CX Re requests that this Court compel Davis to answer RFA Nos. 4 and 5 before dismissing her from this action or, alternatively, to “deem [RFA] Nos. 4 and 5 admitted under Rule 36(a)(6).” Id.

         II. TREZHUR DAVIS LACKS STANDING AND MUST BE DISMISSED

         Federal courts are restricted to adjudicating only “cases and controversies.” Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 629 F.3d 387, 396 (4th Cir. 2011). “‘[P]erhaps the most important' condition of justiciability[, ]” the doctrine of standing “ensures that a plaintiff has a personal stake in the outcome of a dispute, and that judicial resolution of the dispute is appropriate.” Id. (quoting Allen v. Wright, 468 U.S. 737, 750 (1984)). While “most defendants are pulled into a case unwillingly[, ] [] where a party tries to intervene as another defendant, ” federal courts “require[] it to demonstrate Article III standing.” Crossroads Grassroots Policy Strategies v. Fed. Election Comm'n, 788 F.3d 312, 316 (D.C. Cir. 2015) (citation omitted). Under such circumstances, “the standing inquiry for an intervening-defendant is the same as for a plaintiff: the intervenor must show injury in fact, causation, and redressability.” Id. (citing Deutsche Bank Nat. Tr. Co. v. F.D.I.C., 717 F.3d 189, 193 (D.C. Cir. 2013)). When a claimant lacks standing, “federal courts have no subject matter jurisdiction over [the] claim[s].” Davis Vision, Inc. v. Maryland Optometric Ass'n, 187 F. App'x 299, 302 (4th Cir. 2006).

         As a specific application of standing, “[a] court is deprived of jurisdiction over a case when the case becomes moot” because they “‘have no authority to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it.'” Williams v. Ozmint, 716 F.3d 801, 809 (4th Cir. 2013) (quoting Church of Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992)); see also Townes v. Jarvis, 577 F.3d 543, 546 (4th Cir. 2009) (stating that “‘[m]ootness has been described as the doctrine of standing set in a time frame'”) (quoting Arizonans for Official English v. Arizona, 520 U.S. 43, 68 n.22 (1997)). “A case becomes moot ‘when the ...


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