United States District Court, D. Maryland
TARHONIKA VAUGHN, individually and as personal representative of the Estate of TaRhonda Cromwell, et al.,
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, subscribing to Certificate/Policy No. WN118339
Catherine C. Blake United States District Judge
TaRhonika Vaughn, individually and as personal representative
of the Estate of TaRhonda Cromwell, Sheana Sade McBridge,
Christopher Robin Ervin, Jr., and James McBride filed this
action against defendant Certain Underwriters at.
Lloyd's, London, seeking a declaratory judgment that
Lloyd's insurance policy, Certificate/Policy No.
WN118339, provides up to $1, 000, 000 in Professional
Liability coverage for the plaintiffs' claims arising out
of a 2017 fire at Kozy Kottage assisted living facility.
Lloyd's filed a motion to dismiss or, in the alternative,
to stay proceedings. For the reasons set forth below, the
motion to dismiss or, in the alternative, to stay proceedings
will be denied.
Kottage operated as an assisted living facility in Maryland,
where TaRhonda Cromwell, who was disabled, as well as five
other individuals resided. Am. Compl., ECF No. 14, ¶ 6.
In March 2017, the Kozy Kottage building caught fire.
Id. The six residents, including TaRhonda Cromwell,
were injured. Id. At the time of the fire, Kozy
Kottage Assisted Living was covered under an insurance
policy, issued by defendant Lloyd's. Id. ¶
5. The insurance policy included Professional Liability
coverage to Kozy Kottage and its owner and operator, Tracee
Barnes. Id. ¶ 5.
Cromwell filed this claim for declaratory judgment on October
31, 2018. Ms. Cromwell later died from her injuries on
December 2, 2018. Id. ¶ 6. On January 8, 2019,
the plaintiffs filed an amended complaint, substituting the
estate of TaRhonda Cromwell as plaintiff (with TaRhonika
Vaughn as the personal representative), and adding Ms.
Cromwell's surviving children as plaintiffs. Prior to her
death, Ms. Cromwell had filed a negligence claim against Kozy
Kottage and Tracee Barnes in the Health Care Alternative
Dispute Resolution Office of Maryland. Def's Mot. to
Dismiss or, in the Alternative, to Stay Proceedings
[hereinafter "Defi's Mot. to Dismiss"], Ex. 2,
ECF No. 15-3. Ms. Cromwell dismissed that claim on October
11, 2018. Id. Ex. 3, ECF No. 15-4. There is
currently no case on the underlying negligence claim pending.
Def's Mem. of Law in Supp. of Def.'s Mot. to Dismiss,
ECF No. 15-1, at 7.
issue in this declaratory judgment action is the policy limit
applicable to Ms. Cromwell's claims. Specifically, the
plaintiffs request that this court declare that "the
insurance policy issued by Defendant Certain Underwriters at
Lloyd's, London, subscribing to Certificate/Policy No.
WN118339, provides up to $1, 000, 000 in Professional
Liability coverage for Plaintiffs claims for injuries and
damages arising out of the March 2017 fire at Kozy
Kottage's assisted living facility." Am. Compl., ECF
insurance policy issued to Kozy Kottage states, "More
than one claim involving the same or interrelated
Professional Liability Incidents . . . shall be deemed to
constitute a single claim[.]" Id., Ex. A at 10,
¶ 15. Lloyd's claims that the March 2017 fire at
Kozy Kottage is a single Professional Liability Incident, so
that all claims from it are subject to a $1, 000, 000 cap.
Id. ¶ 17. The plaintiffs aver that Lloyd's
has already settled the claims of the five other residents,
leaving only the remaining 1/6 portion of the $1, 000, 000
cap for the plaintiffs. Id. ¶ 17. The
plaintiffs disagree with Lloyd's position, arguing
instead that the Professional Liability Incident that caused
Ms. Cromwell's damages is different and not interrelated
to those incidents that caused injuries to the other
residents, so the relevant cap for Ms. Cromwell's claims
is the $1, 000, 000 per claim cap, rather than a shared $1,
000, 000 cap for all claims arising out of the fire.
Id. ¶ 18.
has filed a motion to dismiss or, in the alternative, to stay
proceedings, arguing that this declaratory judgment action is
premature as the issues necessary to decide this coverage
action are "intertwined" with the issues in the
yet-to-be-filed tort action on the negligence claims. Mem. of
Law in Supp. of Def's Mot. to Dismiss, ECF No. 15-1, at
7. Specifically, Lloyd's argues that resolution of this
coverage case requires a determination of "whether
Lloyd's insureds owed a professional duty of care to Ms.
Cromwell" or another kind of tort duty and whether that
duty was breached, the same issues that would be decided in a
state court action on the underlying tort claims.
Id. at 9.
plaintiffs disagree, arguing that to resolve this declaratory
judgment action, the court need only interpret the insurance
policy "and decide whether the Cromwell Claims for
breach of professional duties . .. involve 'the same or
interrelated Professional Liability Incidents' as the
claims made by other injured residents in connection with the
fire." Pls.' Opp'n to Def s Mot. to Dismiss
[hereinafter"Pls.' Opp'n"], ECF No. 16, at
Federal Declaratory Judgment Act gives a federal district
court the power, in any 'case of actual controversy
within its jurisdiction,' to 'declare the rights and
other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be
sought."' Nautilus Ins. Co. v. Winchester Homes,
Inc., 15 F.3d 371, 375 (4th Cir. 1994) (quoting 28
U.S.C. § 2201). However, § 2201 is only an
"enabling act" that confers discretion on district
courts to determine whether to exercise jurisdiction; it does
not confer "an absolute right upon the litigant."
See Penn-America Ins. Co. v. Coffey, 368 F.3d 409,
412 (4th Cir. 2004) (quoting Wilton v. Seven Falls
Co., 515 U.S. 277, 287 (1995)). "[A] federal court
may properly exercise jurisdiction in a declaratory judgment
proceeding when three essentials are met: (1) the complaint
alleges an 'actual controversy' between the parties
'of sufficient immediacy and reality to warrant issuance
of a declaratory judgment;' (2) the court possesses an
independent basis for jurisdiction over the parties (e.g.,
federal question or diversity jurisdiction); and (3) the
court does not abuse its discretion in its exercise of
jurisdiction" Volvo Constr. Equip. N. Am., Inc. v.
CLM Equip. Co., Inc., 386 F.3d 581, 592 (4th Cir. 2004)
Controversy: Generally, "a dispute between a
liability insurer, its insured, and a third party with a tort
claim against the insured over the extent of the
insurer's responsibility for that claim is an 'actual
controversy' within the meaning of the federal
Declaratory Judgment Act, even though the tort claimant has
not yet reduced his claim against the insured to
judgment." E.g., Winchester Homes, 15 F.3d at
375 n.3 (citing Md. Casualty Co. v. Pac. Coal & Oil
Co., 312 U.S. 270 (1941)); Penn-America, 368
F.3d at 414. In Winchester Homes, Penn-America, and
Maryland Casualty, the existence of an "actual
controversy" was clear because a state court action was
pending. When there is no state court action pending, there
may still be an "actual, live controversy about the
scope of. . . indemnity coverage" when the "threat
of litigation ... is both real and imminent. "
Nautilus Ins. Co. v. REMAC Am., Inc., 956 F.Supp.2d 674,
681 n.4 (D. Md. 2013).
while there is no pending state action, the threat of
litigation is real and imminent, as the plaintiffs previously
filed a claim in the Health Care Alternative Dispute
Resolution Office of Maryland, alleging negligence against
Kozy Kottage and Tracee Barnes, see Mem. of Law in
Supp. of Def.'s Mot. to Dismiss, Ex. 2, ECF No. 15-3,
which was dismissed without prejudice on October 11, 2018.
Id., Ex. 3, ECF No. 15-4. Further, the parties have