United States District Court, D. Maryland
ZEPP REALTY, P.A. and CHARLES ZEPP
SENTINEL INSURANCE COMPANY LTD.
Richard D. Bennett United States District Judge.
Zepp Realty, P.A. ("Zepp Realty") and Charles Zepp
bring this lawsuit against defendant Sentinel Insurance
Company Ltd. ("Sentinel") seeking damages for
alleged breach of contract. Now pending are defendant
Sentinel's motion for summary judgment (ECF No. 15) and
plaintiffs Zepp Realty's and Charles Zepp's motion to
amend the complaint (ECF No. 14). The parties have fully
briefed the motions, and no oral argument is necessary.
See Local R. 105.6. For the reasons set forth below,
defendant's motion for summary judgment is granted.
Plaintiffs' motion to amend the complaint is denied as
dispute arises out of Sentinel's allegedly wrongful
refusal to defend and indemnify plaintiffs Zepp Realty and
Charles Zepp under their insurance policy with Sentinel in a
real-estate related lawsuit filed against Zepp. (ECF No. 2).
Plaintiff Zepp Realty is a Maryland real estate sales and
development professional services corporation. (ECF No. 2,
& 2). Plaintiff Charles Zepp is the sole director,
officer, and employee of Zepp Realty. (ECF No. 2, & 4).
Defendant Sentinel is an insurance company doing business in
Maryland. (ECF No. 2, & 1). On May 20, 2014, Sentinel
issued a business liability insurance policy (the
"Policy") to Zepp Realty and Charles Zepp (jointly
referred to as "Zepp"). (ECF No. 15, Ex. 2, p. 4).
October 2014, Robert and Kimberly Rullan (the
"Rullans") sued Zepp in the Circuit Court for
Howard County, Maryland (the "Underlying Action"),
setting forth allegations against Zepp in Zepp's capacity
as both a real estate developer and real estate agent.
See Rullan v. Sill, Adcock, & Associates LLC, et
al, Case No. 13-C-14-100892. (ECF No. 2, Ex. D). In the
Underlying Action, the Rullans allege they purchased property
in a subdivision developed and marketed by Zepp, on which
they experienced periodic flooding during rain events. (ECF
No. 2, Ex. D, & 35, 44). Describing the flooding, the
Rullans allege abnormally large quantities of storm water
run-off from nearby properties were diverted onto their
property, "resulting in a continuous rapid moving,
river-like condition with a depth of one to two feet and a
width of up to forty feet flowing onto and through the
[Rullans'] property." (ECF No. 2, Ex. D, & 44).
Rullans first experienced the flooding in the fall of 2011,
at which time they notified Zepp of the problem via email.
(ECF No. 2, Ex. D, & 45; ECF No. 22, Ex. 5). The Rullans
wrote in their email, "there is and has been a large
amount of water that collects to the right of our
house." (ECF No. 22, Ex. 5). They described the flooding
in the email as a "wet pond area" and informed Zepp
the flooding was "not just a little bit of a wet area,
" but was instead "a large area of standing
water." (ECF No. 22, Ex. 5). According to the Rullans,
Zepp and the homebuilder "acknowledged their
responsibility...and undertook efforts to correct such
defects." (ECF No. 2, Ex. D, & 45).
receiving the email, Zepp went to the property and observed
"grass was not growing where it was puddling, the grass
was dying there, and... [the Rullans] had sandbags on the
patio." (ECF No. 22, Ex. 2, Charles Zepp Tr. 90:13).
Zepp informed the Rullans they should call the homebuilder to
have the problem fixed. (ECF No. 22, Ex. 2, Charles Zepp Tr.
92:11-15). Repair efforts by the homebuilder were
unsuccessful. (ECF No. 2, Ex. D, & 46-50).
Rullans again reached out to Zepp via email on May 1, 2014 to
discuss the flooding problem. (ECF No. 22, Ex. 4). This time,
they described the flooding with terms such as "a flood
plain, " "a swamp, " and "a 40' wide
by 1 V* deep river." (ECF No. 22, Ex. 4). They
informed Zepp the river had caused them to lose all use of
their backyard after rain and lamented "no one should
have to live like this." (ECF No. 22, Ex. 4). After
receiving this email, the Rullans claim Zepp again visited
the property and undertook repair efforts, which were
ultimately unsuccessful. (ECF No. 2, Ex. D, & 51-57).
October 2014, the Rullans filed suit against Zepp and other
defendants over the property defects. (ECF No. 2, Ex. D).
Specifically, the Rullans alleged negligence, negligent
misrepresentation, intentional misrepresentation, and unfair
and deceptive trade practices against Zepp. (ECF No. 2, Ex.
D). The allegations against Zepp were all based on the
river-like condition on the property. (ECF No. 2, Ex. D).
informed Sentinel of the Underlying Action and requested
Sentinel defend and indemnify Zepp. (ECF No. 2, & 8).
Sentinel denied coverage in a letter dated June 5, 2015,
explaining the Underlying Action fell within the Policy's
exclusion for real estate development and management
activities because the Underlying Action's allegations
were based on Zepp's activities as a real estate
developer. (ECF No. 2, Ex. B). The letter also reserved
Sentinel's right to add new coverage defenses. (ECF No.
2, Ex. B., p. 4). Zepp, through counsel, renewed its request
for defense and indemnification by letter dated November 1,
2016. (ECF No. 2, Ex. G). Sentinel again denied the request.
(ECF No. 2, Ex. C).
ultimately settled the Underlying Action with the Rullans for
$25, 000. (ECF No. 2, & 18). In defending the Underlying
Action, Zepp paid $108, 577.50 in attorneys' fees and $5,
825 in mediation and arbitration fees. (ECF No. 2, & 19).
filed a complaint in the Circuit Court for Howard County on
April 26, 2017, alleging Sentinel breached their contract in
refusing to defend and indemnify Zepp in the Underlying
Action. (ECF No. 1; ECF No. 2). Defendant removed the case to
the District of Maryland on June 27, 2017. (ECF No. 1). Now
pending are two motions. First, plaintiffs filed a motion to
amend the complaint on September 25, 2017. (ECF No.
Second, defendant moved for summary judgment on October
2, 2017. (ECF No. 15). On October 11, 2017, the
parties jointly requested the court rule on defendant's
motion for summary judgment (ECF No. 15) before ruling on
plaintiffs' motion to amend the complaint (ECF No. 14).
(ECF No. 18).
Federal Rule of Civil Procedure 56(c), a court must grant
summary judgment "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law." See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). A genuine
issue of material fact exists where, "the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party." Id. at 248. The party seeking
summary judgment bears the initial burden of demonstrating
the absence of a genuine dispute of material fact. See
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When
reviewing a motion for summary judgment, the court must take
all facts and inferences in the light most favorable to the
non-moving party. Scott v. Harris, 550 U.S. 372, 378
party opposing summary judgment must, however, "do more
than simply show that there is some metaphysical doubt as to
the material facts." Matsushita Elec. Indus. Co. v.
Zenith Radio Corp.,475 U.S. 574, 586 (1986); see
also In re Apex Express Corp.,190 F.3d 624, 633 (4th
Cir. 1999). The non-movant '"may not rest upon the
mere allegations or denials of [his] pleadings, ' but
rather must 'set forth specific facts showing that there
is a genuine issue for trial.'" Bouchat v. Bait.
Ravens Football Club, Inc.,346 F.3d 514, 522 (4th Cir.
2003) (alteration in original) (quoting Fed.R.Civ.P. 56(e));
see also Adickes v. S. H. Kress & Co., 398 U.S.
144, 160 (1970). A court should enter summary judgment when a
party fails to make ...