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Allstate Insurance Co. v. Jam #32 Corp.

United States District Court, D. Maryland

May 7, 2019

JAM #32 CORP., et al. Defendants.


          Ellen Lipton Hollander, United States District Judge

         In this insurance dispute, plaintiff Allstate Insurance Company (“Allstate”) has filed a declaratory judgment action against defendants Jam #32 Corp. (“Jam #32”); Dear Management & Construction Company (“Dear Management”); and Stanley Rochkind, individually and as trustee of the assets of both Dear Management and Jam #32. See ECF 1; see also ECF 4 (“Amended Complaint”).[1] Allstate has also sued Da'Quan Terrel Roberts and Sha'Quan Roberts (collectively, the “Tort Plaintiffs”), who were the plaintiffs in a lead paint action that they filed against Rochkind in February 2016 in the Circuit Court for Baltimore City. See Roberts v. Wyman Park Co., No. 24-C-16-949 (the “Tort Case”). In the Tort Case, the Tort Plaintiffs alleged injury from lead paint exposure in connection with a property owned, maintained, and/or managed by Rochkind. See ECF 1-2 (the “Tort Complaint”).[2]

         Beginning in June 1988, Allstate issued a Personal Umbrella Policy (ECF 1-3, the “Policy”) to Rochkind, who owns and manages residential properties in Baltimore. ECF 1, ¶ 12. The Policy, which provided excess personal liability coverage to Rochkind, was continually renewed over the next decade. Id. But, on June 13, 1999, Allstate modified the terms to exclude coverage for claims arising from lead paint exposure. Id. Then, on or about June 13, 2000, Allstate cancelled the Policy. ECF 1-3 at 8. Allstate now seeks a declaration that it has no duty to defend or indemnify Rochkind for injuries allegedly sustained by the Tort Plaintiffs arising from lead paint exposure on or after June 13, 1999, i.e., the effective date of the lead exclusion. Id. ¶ 11.

         According to Allstate, Mr. Roberts' total lead exposure was 2678 days, and it insured Rochkind for 1381 days. Therefore, Allstate claims that its total liability is 51.57% of any damages awarded against Rochkind (1381/2678). ECF 31-1 at 10. According to Allstate, Rochkind is liable for the remaining 48.43% of any judgment in favor of Mr. Roberts. Id.

         In Allstate's view, Ms. Roberts' total lead exposure was 1913 days, and it insured Rochkind for 616 days. Therefore, Allstate contends that its total liability is 32.20% of any damages awarded against Rochkind (615/1913). ECF 31 at 11. According to Allstate, Rochkind is liable for the remaining 67.8% of any judgment in favor of Ms. Roberts. Id.

         Three motions are now pending. First, Allstate has moved for summary judgment (ECF 31), supported by a memorandum of law (ECF 31-1) (collectively, the “Summary Judgment Motion”) and two exhibits. ECF 31-3; ECF 31-4. Defendants filed an opposition (ECF 36), supported by four exhibits. ECF 36-1 to ECF 36-4. Allstate replied on January 8, 2018. ECF 37.

         The exhibits docketed at ECF 31-3 and ECF 31-4, which are Mr. Roberts' and Ms. Roberts' respective answers to interrogatories, contain personally identifiable information. Therefore, on May 2, 2019, the Court, sua sponte, directed the Clerk to seal these exhibits. See ECF 45. Plaintiff is directed to file a redacted copy of each exhibit, due by May 21, 2019.

         On January 19, 2018, Allstate also filed a supplement, stating that the day before, Magistrate Judge A. David Copperthite “granted summary judgment in Allstate's favor in an identical case.” ECF 39 (citing Allstate Ins. Co. v. Blue, ADC-18-1199, 2019 WL 266281, at *4 (D. Md. Jan. 18, 2019)). In response, defendants moved to strike Allstate's supplement. ECF 41 (the “Motion to Strike”). Allstate opposes the Motion to Strike. ECF 42.

         Defendants have also moved to stay the suit until the Maryland Court of Special Appeals decides Robinson v. CX Re, No. 01888, Sept. Term 2016, involving the proper method of allocating damages resulting from lead paint exposure. ECF 43 (the “Motion to Stay”). Allstate opposes the Motion to Stay. ECF 44.

         The Motions are fully briefed and no hearing is necessary to resolve them. See Local Rule 105.6. For the foregoing reasons, I shall deny the motions.

         I. Factual Summary

         On February 17, 2016, in the Circuit Court for Baltimore City, Mr. Roberts sued Wyman Park Co. (“Wyman Park”); Homewood Realty, Inc. (“Homewood”); Stanley Sugarman, individually and on behalf of Wyman and Homewood; JAM #32; Dear Management; and Rochkind, individually and on behalf of JAM #32 and Dear Management. Roberts v. Wyman Park Co., No. 24-C-16-949; see ECF 4, ¶ 9. On December 16, 2016, the complaint was amended to add Ms. Roberts as a plaintiff. ECF 1-2; see ECF 4, ¶ 9. Mr. Roberts, who is now 24-years of age, and Ms. Roberts, now 21-years of age, alleged unfair and deceptive trade practices, battery, and negligence. ECF 1-2.

         Allstate was not a party to the Tort Case, and the parties do not state whether Allstate provided a defense to Rochkind in the suit. See ECF 1-2. During the pendency of the Tort Case, the parties engaged in discovery. During discovery, Mr. Roberts stated that he resided at 919 N. Collington Avenue, Baltimore, Maryland from the time of his birth on April 2, 1995, until an unspecified date in September 1995. ECF 31-3 at 2. Mr. Roberts resided there with his aunt, Sally Baldwin, and his mother, Melvina Dukes. Id. at 1-2. According to the Tort Plaintiffs, the property contained lead paint. ECF 1-2, ¶ 10. The property was allegedly owned or operated by defendants Wyman Park, Homewood, and Sugarman. Id. ¶ 3.[3]

         Mr. Roberts resided at 1635 N. Spring Street, Baltimore, Maryland from September 1995 through 2002. ECF 31-3 at 1. Ms. Roberts resided there from the time of her birth on October 5, 1997 through 2002. ECF 31-4 at 1. Ms. Baldwin, Ms. Dukes, the Tort Plaintiffs' father, Chester Roberts, and their sister, Ja'Quana Roberts, also lived at the Spring Street residence. ECF 31-3 at 1-2; ECF 31-4 at 1-2, 8.

         According to the Tort Plaintiffs, the property at 1635 N. Spring Street, “contain[ed] lead based paint in a dangerous condition.” ECF 31-3 at 4; ECF 31-4 at 4. Consequently, they were “exposed to and ingested lead-based paint, chips, flakes and dust.” ECF 31-3 at 8; ECF 31-4 at 9. And, the property was allegedly owned or operated by defendants JAM, Dear Management, and Rochkind. ECF 1-2 ¶ 5.

         The Tort Plaintiffs assert that they had elevated blood lead levels while residing at the property. Mr. Roberts alleged that, “[b]ased on the medical records obtained, the first elevated blood level is reported from a blood sample drawn 9/7/1996, indicating a blood lead level of 8 μ/Pb/dL.” ECF 31-3 at 5. He also asserted that while living at N. Spring Street, his blood lead levels ranged from between 8 and 9 μ/Pb/dL. Id. at 8. Ms. Roberts “was diagnosed with elevated blood lead levels” throughout the period. ECF 31-4 at 9. She provided her blood lead levels with respect to six dates: 6 μ/Pb/dL on April 9, 1998; 7 μ/Pb/dL on October 25, 2000; 5 μ/Pb/dL on September 10, 2001; 4 μ/Pb/dL on August 21, 2002; 3 μ/Pb/dL on November 5, 2003; and 0 μ/Pb/dL on March 15, 2005. Id. at 5.

         Additionally, according to the Tort Plaintiffs, they “suffered brain damage as a result of lead toxicity, ” but have “not yet been completely evaluated to determine the extent of [their] injuries.” ECF 31-3 at 8; ECF 31-4 at 9.

         II. The Policy

         As noted, Allstate's request for declaratory judgment arises out of a Personal Umbrella Policy issued to Rochkind. See ECF 1-3. The Policy covered Rochkind's properties from June 13, 1988 until June 13, 2000. ECF 1-3 at 8; see also ECF 31-1 at 2. However, effective June 13, 1999, Allstate added a lead exclusion to the Policy. Id. at 17-19.

         The Policy (ECF 1-3) “applies to an occurrence anywhere in the world while the insurance is in force.” Id. at 10. An “occurrence” is “an accident or continuous exposure to conditions.” Id. Further, it provides: “Allstate will pay when an insured becomes legally obligated to pay for personal injury or property damage caused by an occurrence.” Id. at 12. The Policy defines “personal injury, ” in relevant part, to include “bodily injury, sickness, disease or death of any person.” Id. at 11.

         III. Choice of Law

         Allstate asserts that Maryland law governs the legal issues in this diversity case. ECF 31-1 at 7-8. Defendants do not contest the point; they assume, without discussion, that Maryland law applies here. See ECF 36.

         In an action based upon diversity of citizenship, a federal court must apply the substantive law of the state in which it sits, including that state's choice of law rules. Klaxon Co. v. Stentor Elect. Mfg. Co., 313 U.S. 487, 496-97 (1941); see Colgan Air, Inc. v. Raytheon Aircraft Co., 507 F.3d 270, 275 (4th Cir. 2007); Ground Zero Museum Workshop v. Wilson, 813 F.Supp.2d 678, 696 (D. Md. 2011); Baker v. Antwerpen Motorcars, Ltd., 807 F.Supp.2d 386, 389 n.13 (D. Md. 2011).

         In a contract claim, Maryland courts follow the rule of lex loci contractus, applying the substantive law of the state where the contract was formed, unless there is a choice-of-law provision in the contract. Erie Ins. Exch. v. Heffernan, 399 Md. 598, 618, 925 A.2d 636, 648 (2007); Am. Motorists Ins. Co. v. ARTRA Group, Inc., 338 Md. 560, 573, 659 A.2d 1295, 1301 (1995); see also Cunningham v. Feinberg, 441 Md. 310, 326, 107 A.3d 1194, 1204 (2015); Lewis v. Waletzky, 422 Md. 647, 657 n.8, 31 A.3d 123, 129 n.8 (2011). “For choice-of-law purposes, a contract is made where the last act necessary to make the contract binding occurs.” Konover Property Trust, Inc. v. WHE Assocs., Inc., 142 Md.App. 476, 490, 790 A.2d 720, 728 (2002) (citing Commercial Union Ins. Co. v. Porter Hayden Co., 116 Md.App. 605, 672, 698 A.2d 1167, 1200 (1997), cert. denied, 348 Md. 205, 703 A.2d 147 (1997)).

         The Policy does not appear to contain a choice of law clause. See ECF 1-3. Nor is it clear that the Policy was executed in Maryland, although the Property and the insureds are located in Maryland. But, “[t]ypically, ‘[t]he locus contractus of an insurance policy is the state in which the policy is delivered and the premiums are paid.'” Porter Hayden, 116 Md.App. at 673, 698 A.2d at 1200 (citation and some internal quotation marks omitted). This is because delivery of the policy and the payment of the premium are ordinarily the last acts necessary to make an insurance policy binding. See Aetna Cas. & Sur. Co. v. Souras, 78 Md.App. 71, 77, 552 A.2d 908, 911 (1989).

         In any event, because the parties implicitly agree that Maryland law governs their claims, [the Court] need not inquire further into the choice-of-law questions.” Vanderhoof-Forschner v. McSweegan, 215 F.3d 1323 (Table) at *2 n.2 (4th Cir. 2000) (citing American Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997) (“[W]here the parties have agreed to the application of the forum law, their consent concludes the choice of law inquiry.”)). Accordingly, I shall apply the substantive law of Maryland.

         IV. ...

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