United States District Court, D. Maryland
Richard D. Bennett United States District Judge.
Capital Insurance Company (“Millers Capital”)
filed the instant action for a declaratory judgment pursuant
to Fed.R.Civ.P. 57 and U.S.C. § 2201. (Compl., ECF No.
1.), seeking a declaration that it has no duty to defend or
indemnify Defendants, Anil Vasant (“Vasant”),
Nimesha Patel, Shailesh Patel, Vasu, Inc.
(“Vasu”), and Choice Hotels International Inc.
(“Choice Hotel”), all of whom are insured under a
commercial general liability (“CGL”) policy
(“the Policy”) with Millers Capital.
Specifically, this matter arises out of a lawsuit filed in
the Circuit Court for Wicomico County, Maryland, by Jane Doe
plaintiffs, who were victims of a human trafficking and
prostitution ring. That ring operated in Salisbury, Maryland
in 2014 and utilized hotel rooms.
Choice Hotel has filed a Counterclaim for Declaratory Relief
(ECF No. 11) seeking a judgment declaring that Millers
Capital owes Choice Hotel a defense in the underlying cases
at issue as well as reimbursement for all past defense costs
in the underlying cases and attorney's fees and costs
incurred pursuing and defending the instant action.
Capital has denied its duty to defend the Defendants in the
underlying cases based solely on the Abuse or Molestation
Endorsement in its insurance policy. This denial of coverage
is without merit as it is evident that none of the Defendant
Insureds or their employees had the abuse victims under their
care, custody, or control.
pending before this Court are cross-motions for summary
judgment: (1) Millers Capital Insurance Company's Motion
for Summary Judgment (ECF No. 20); (2) Defendants Anil
Vasant, Nimesha Patel, Shailesh Patel and Vasu, Inc.'s
Cross-Motion for Summary Judgment (ECF No. 22); and (3)
Defendant Choice Hotel's Motion for Summary Judgment (ECF
No. 23). The parties' submissions have been reviewed and
no hearing is necessary. See Local Rule 105.6 (D.
Md. 2016). For the following reasons, Millers Capital's
motion shall be DENIED, and the Defendants' motions shall
be GRANTED, and Judgment shall be entered in favor of Anil
Vasant, Nimesha Patel, Shailesh Patel, Vasu, Inc., and Choice
Hotels International Inc., and against Millers Capital
Millers Capital and Defendants Anil Vasant, Nimesha Patel,
Shailesh Patel and Vasu, Inc., were parties to a contract of
insurance issued by Millers Capital, Policy No.
CPP-5049946-01 for the contract period of October 25, 2014
through October 25, 2015. (ECF No. 1 at ¶ 12.) Defendant
Choice Hotel is a franchisor of the named insureds and named
as an “additional insured” under the Policy.
(Id. at ¶ 9.) The insuring agreement includes
Millers Capital's “duty to defend the insured
against any ‘suit'” seeking bodily injury and
property damages liability as well as personal and
advertising injury liability, within stated limits and
exclusions. (ECF No. 1-1.)
Policy's Abuse or Molestation Endorsement modifies the
CGL coverage by adding the following exclusion to the
“bodily injury and property damage” and
“personal and advertising injury” coverage
The following exclusion is added to Paragraph 2., Exclusions
of Section I - Coverage A - Bodily Injury And Property Damage
Liability and Paragraph 2., Exclusions of Section I- Coverage
B - Personal And Advertising Injury Liability:
insurance does not apply to "bodily injury",
"property damage" or "personal and advertising
injury" arising out of:
1. The actual or threatened abuse or molestation by anyone of
any person while in the care, custody or control of any
2. The negligent:
d. Reporting to the proper authorities, or failure to so
of a person for whom any insured is or ever was legally
responsible and whose conduct would be excluded by Paragraph
Form CG 21 46 07 98, Compl. Ex. A, ECF No. 1-1 at 141.
The Underlying Lawsuits
action arises out of underlying lawsuits against Defendants
and others in the Circuit Court for Wicomico County,
Maryland. (ECF No. 1 at ¶ 2.) The Jane Doe plaintiffs in
the underlying lawsuits filed suit for injuries sustained
after suffering various forms of abuse by a human trafficking
and prostitution ring that they alleged operated in
Salisbury, Maryland in 2014 between the months of June and
November. (ECF No. 20-2 at ¶ 10.) The perpetrators of
the abuse used America's Best Value Inn, owned by Subh
Properties, L.L.C., as their primary headquarters, renting
hotel rooms for extended periods of time where the
prostitution and drug transactions took place. (Id.
at ¶¶ 10-11, 15-20.) The perpetrators kidnapped
women and held them against their will, took provocative
pictures and posted them on a website advertising