United States District Court, D. Maryland
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY & NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiffs,
BEAZER HOMES LLC Defendant.
Mark Coulson United States Magistrate Judge
case is before me for all proceedings by the consent of the
parties pursuant to 28 U.S.C. § 636(c). (ECF No. 25).
Now pending is Plaintiff Nationwide Mutual Fire Insurance
Company and Nationwide Mutual Insurance Company's
(“collectively Nationwide”) Motion for Summary
Judgment on all counts (ECF No. 30), and Beazer Home,
LLC's (Beazer”) Cross Motion for Partial Summary
Judgment. (ECF No. 42). Nationwide filed a combined
Opposition to Beazer's motion and Reply. (ECF No. 44).
Beazer filed its own Reply. (ECF No. 47). No. hearing is
needed. See Loc. R. 105.6 (D. Md. 2018). For the
reasons stated below:
1. Plaintiffs' Motion for Summary Judgment is
2. Defendant's Cross-Motion for Partial Summary Judgment
Nationwide are insurers organized under the State of Ohio and
have their principal place of business in Ohio. (ECF No. 1 at
p. 2). Defendant Beazer, a builder and property
developer, is a limited liability company organized under the
laws of the State of Delaware with its principal place of
business in Atlanta, Georgia. Id.
and various partners developed a mixed-use development, known
as The Quarry at Greenspring, in Baltimore County, Maryland
that includes retail, office, and residential space.
(Id. at p. 3; ECF No. 30-1 at p. 2). This dispute
concerns whether Nationwide's policies provide coverage
for Beazer in two separate but related lawsuits brought
against it by two homeowners associations, Greenspring Quarry
Association (“GQA”) and Highlands at Greenspring
Quarry Village Association (“Highlands”)
(collectively, the “Associations”) to recover the
costs incurred in maintaining and repairing common areas
within the development. (ECF No. 30-1 at p. 2). Beazer has
resolved both suits. (ECF No. 47 at p. 13).
Underlying Suits by GQA and Highlands
to the complaints in the underlying lawsuits,  to facilitate the
development, construction and eventual sale of the various
segments of the overall project, it was necessary to identify
certain common areas which would serve the needs of the
entire project, including roads, lighting, drainage,
utilities, sever connections, fencing, landscaping, security
gates and identifying markers, and contained jointly used
amenities such as a pool, tennis courts, and a clubhouse.
(ECF No. 30-2 at pp. 4-5). To manage and govern the use and
maintenance of the common areas, Beazer, together with its
co-developers, executed and recorded a Declaration of
Covenants, Conditions and Restrictions (the
“Declaration of Covenants”). Id.
Pursuant to the Declaration of Covenants, a “Master
Association” (i.e., GQA) would be formed,
comprising the four constituent Village Associations (of
which Highlands was one). Id. Beazer named a group
of its own employees and agents to serve as a majority of the
initial GQA Board of Directors and continued to have undue
influence over GQA's Board even after further
elections/appointments. Id. at p. 5. In turn, Beazer
caused the GQA Board to hire Tidewater Property Management,
Inc. (“Tidewater”), an entity with which it had
close business relationships, to manage the property,
including facilitating the payment of expenses for the common
areas by improperly billing the Associations. Id. at
the common areas were initially owned and maintained by
Beazer, the Declaration of Covenants provided that Beazer
would convey title to the common areas to GQA within ten
years. At the time of such conveyances, Beazer's
obligation to maintain the common areas so conveyed would
cease, with those obligations passing to GQA and its
constituent associations. Id. at p. 6. The lawsuits
allege that through its influence over the GQA Board of
Directors and Tidewater, Beazer shifted the expenses for
common area maintenance to GQA prematurely (who, in turn,
presumably passed it on to its constituent Village
Associations and ultimately individual unit-owners within
those various associations), in violation of the Declaration
of Covenants. Id. at pp. 6-7.
Nationwide insured GQA and Highlands by way of two Premier
Businessowners Policies. (ECF No. 1 at pp. 6-7). The first,
Premier Businessowners Policy number ACP BPHF 5183147087
(“Policy 7807) was issued to GQA effective from
December 15, 2009 to December 15, 2018. (ECF Nos. 1-4 to
1-12). The second, Premier Businessowners Policy, number ACP
BPHM 2404155109 (“Policy 5109”) was issued to the
Highlands effective August 2009 to August 2018. (ECF Nos.
1-13 to 1-21). Nationwide argues that neither policy provides
coverage because Beazer was not an “insured”
under the applicable definitions, and, in any event, the
existing coverage did not encompass the kind of liability
alleged in the underlying lawsuits.
STANDARD OF REVIEW
Court has diversity jurisdiction over the instant action
pursuant to 28 U.S.C. § 1332, as there is no dispute
that the parties are citizens of different states and the
initial matter in controversy exceeds $75, 000. (ECF No. 1 at
p. 3). Further, the Federal Declaratory Judgment Act
In a case of actual controversy within its jurisdiction . . .
any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal
relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.
28 U.S.C. § 2201(a); See also All-Star Settlements,
LLC v. Zurich Am. Ins. Co., 2011 WL 4543363, at *2-3 (D.
Md. Sept. 28, 2011) (deeming it appropriate to exercise
jurisdiction where ruling will clarify and settle the legal
relations between the parties).
Rule of Civil Procedure 56(a) requires the Court to
“grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” The moving
party accomplish this by demonstrating the absence of any
genuine dispute of material fact or by showing an absence of
evidence to support the non-moving party's case.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-25
(1986). “A dispute as to a material fact is genuine
‘if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.'”
J.E. Dunn Const. Co. v. S.R.P. Dev. Ltd. P'ship,
115 F.Supp.3d 593, 600 (D. Md. 2015) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
nonmoving party “opposing a properly supported motion
for summary judgment ‘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. Balt.
Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting Fed.R.Civ.P. 56(e)). A court is required to
view the facts and draw reasonable inferences in the light
most favorable to the nonmoving party. Iko v.
Shreve, 535 F.3d 225, 230 (4th Cir. 2008). However, a
court must also “abide by the ‘affirmative
obligation of the trial judge to prevent factually
unsupported claims and defenses from proceeding to
trial.'” Heckman v. Ryder Truck Rental,
Inc., 962 F.Supp.2d 792, 799-800 (D. Md. 2013) (quoting
Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir.
1993)). Consequently, a party cannot create a genuine dispute
of material fact through mere speculation or compilation of
inferences. See Deans v. CSX Transp., Inc., 152 F.3d
326, 330-31 (4th Cir. 1998).
as here, the parties have filed cross-motions for summary
judgment, this does not alter the summary judgment standard;
rather, this Court must review each motion separately on its
own merits to determine whether either of the parties
deserves judgment as a matter of law. See Gemini Ins. Co.
v. Earth Treks, Inc., 260 F.Supp.3d 467, 475 (D. Md.
2017), aff'd, 728 Fed.Appx. 182 (4th Cir. 2018).
“When considering each individual motion, the Court
must ‘resolve all factual disputes and any competing,
rational inferences in the light most favorable' to the
party opposing the motion. CX Reinsurance Co. Ltd. v.
Levitas, 207 F.Supp.3d 566, 573 (D. Md. 2016) (quoting
Rossingol v. Voorhar, 316 F.3d 516, 523 (4th Cir.
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. Allstate
Ins. Co. v. Rochkind, 381 F.Supp.3d 488, 498 (D. Md.
2019). Because the Policies were delivered in Maryland,
contain a Maryland Amendatory Provision, and the parties
agree that Maryland law governs their claims (ECF No. 42-1 at
p. 16), this Court need not inquire further into the
choice-of-law questions and will apply Maryland law.
Allstate, 381 F.Supp.3d at 498.
law is well settled that ‘the interpretation of an
insurance policy is governed by the same principles generally
applicable to the constructions of other
contracts.'” Id. at 508 (quoting
Mitchell v. AARP, 140 Md.App. 102, 116 (2001)).
Accordingly, the ordinary principles of contract
interpretation apply-- specifically, the objective
interpretation of contracts-- when evaluating the terms of
the insurance contract itself. CX, 207 F.Supp.3d at
574; Allstate, 381 F.Supp.3d at 508. Hence, the
Court gives the words of an insurance contract their
customary, ordinary, and accepted meaning, as determined by
the fictional “reasonably prudent layperson.”
Connors v. GEICO, 442 Md. 466, 482 (2015). A
“term is considered ‘ambiguous if, to a
reasonably prudent person, the term is susceptible to more
than one meaning.'” Connors, 442 Md. at
482 (quoting Cole v. State Farm Mut. Ins. Co., 359
Md. 298, 305-06 (2000)).
under Maryland law, “an insurance policy, like any
other contract, must be construed as a whole to determine the
parties' intentions.” Arajona v. St. Paul Fire
& Marine Ins. Co., 281 Md. 371, 375 (1977). This
includes an examination of the character of the contract, its
purpose, and the facts and circumstances of the parties at
the time of execution. Pacific Indem. Co. v. Interstate
Fire & Casualty Co., 302 Md. 383, 388 (1985). A
court should “read the Endorsement and the Policy
together as a single contract.” Capital City Real
Estate LLC v. Certain Underwriters, 788 F.3d 375, 379
(4th Cir. 2015). “However, ‘[i]f the endorsement
conflicts with the main policy, the endorsement
controls.'” Id. (quoting Prince
George's County v. Local Gov't Ins. Trust, 388
Md. 162, 173 (2005)). If a contract's language is plain
and unambiguous, the court will enforce the terms of the
policy as a matter of law. Harleysville Preferred Ins.
Co. v. Rams Head Savage Mill, LLC, 237 Md.App. 705, 722
(2018). In such an instance, the “court has no
alternative but to enforce those terms.” Megonnell
v. United Services Auto Ass'n, 368 Md. 633, 656
if a contractual term (within the policy itself) is
ambiguous, a court may “turn to extrinsic evidence to
determine the intent of the parties.” Connors,
442 Md. at 480-81. See Interstate Fire & Cas. Co. v.
Dimensions Assurance Ltd., 843 F.3d 133, 138 (4th Cir.
2016) (recognizing only the policy itself, not any extrinsic
sources, can create an ambiguity). If ambiguity persists
after examining extrinsic evidence, Maryland law directs that
such language be construed “liberally in favor of the
insured and against the insurer as drafter of the
instrument.” Capital City, 788 F.3d at
duty to defend is broader than the duty to indemnify, but is
not limitless. In determining whether an insurer has a
duty to defend under an insurance policy, Maryland courts
apply the following test:
(1) what is the coverage and what are the defenses under the
terms and requirements of the insurance policy? (2) do the
allegations in the [underlying] action potentially bring the
[underlying] claim within the policy's coverage? The
first question focuses upon the language and requirements of
the policy, and the second question focuses on the
allegations of the [underlying] suit. At times these two
questions involve separate and distinct matters, and at other
times they are intertwined, perhaps involving an identical
Capital City, 788 F.3d at 379.
order to establish a duty to defend, allegations of the
complaint must be analyzed to determine whether there is a
“potentiality” that the claim may be covered by
the policy. Perdue Farms, Inc. v. Traveler's
Cas. & Surety Co., 448 F.3d 252, 259 (4th Cir.
2006). The party seeking coverage has the burden of proving
that the claim is within the policy's insuring agreement.
Further, the insurer has the burden of proving the
applicability of any exclusions to coverage. Id. at
crux of both motions for summary judgment is whether the
insurance policy provides liability coverage for the injury
claimed by the Associations. Correspondingly, the Court will
first review the Policies at issue to determine the scope,
and any limitations, within the insurance coverage, including
whether the policy language presents ambiguity. For purposes
of the present dispute, the two policies are not materially
different and will be analyzed together. Thus, the
contract's terms must be consulted, and the coverage at
issue requires analyses of three documents: (1) the Premier
Businessowners Liability Coverage Form (“Liability
Coverage Form”); (2) the Maryland Amendatory
Endorsement (“MAE”); and (3) the Directors and
Officers Liability Endorsement (“D&O Liability
Endorsement”). (ECF No. 30-1 at p. 1).
Liability Coverage Form
Liability Coverage Form addresses bodily injury, personal
injury, advertising injury, property damage, and medical
claims against the Associations. (ECF No. 30-4 at p. 2). It
is undisputed that the claims for which Beazer seeks coverage
do not fall into any of these coverage categories. (ECF No.
42-1 at p. 5). Nonetheless, further discussion of the