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Nationwide Mutual Fire Insurance Co. v. Adams

United States District Court, D. Maryland

October 1, 2019

NATIONWIDE MUTUAL FIRE INSURANCE CO., Plaintiff/Consolidated Defendant,
v.
LINDA J. ADAMS, et al Defendant/Consolidated Plaintiff.

          MEMORANDUM OPINION

          A. David Copperthite United States Magistrate Judge

         Plaintiff/Consolidated Defendant, Nationwide Mutual Fire Insurance Co. ("Plaintiff'), moves this Court for summary judgment (the "Motion") (ECF No. 63).[1] Plaintiff seeks a declaratory judgment from the Court that it is not obligated to pay a default judgment from the Anne Arundel Circuit Court in favor of Linda J. Adams, the Defendant/Consolidated Plaintiff ("Defendant"), against the underlying defendants, Margaret Burgone and Welby Joe Croson.[2]Defendant filed an opposition to Plaintiffs Motion (ECF No. 66) and Plaintiff replied (ECF No. 67).

         After considering the Motion and responses thereto, the Court finds that no hearing is necessary. See Loc.R. 105.6 (D.Md. 2018). In addition, having reviewed the pleadings of record and all competent and admissible evidence submitted by the parties, the Court finds that there are genuine issues of material fact as to the claim asserted. Accordingly, the Court will DENY Plaintiffs Motion (ECF No. 63).

         Factual Background

         Evergreen Road, LLC and the Nationwide Policy

         Evergreen Road, LLC ("Evergreen") was officially formed on December 1, 2006. ECF No. 66-4 at 8-9.[3] Evergreen was a property valuation and management company. See ECF No. 66-5 at 3 (a screenshot of Evergreen's Facebook page detailing the company's services); see also ECF No. 66-6 at 6 (deposition of Welby Joe Croson). On the day of its formation, Evergreen's operating agreement was amended to reflect that Margaret Burgone was assigned a one percent membership interest in Evergreen. Id. at 12-13. The following year, on December 20, 2007, the operating agreement was again amended to increase Ms, Burgone's membership interest to 2.98%. Id. at 14-15. Ms. Burgone and her then-husband Welby Joe Croson managed and maintained rental properties owned by Evergreen. ECF No. 66-6 at 13-15.

         Plaintiff issued a Premier Businessowners Policy to Evergreen covering the period from April 24, 2014 through April 24, 2015. ECF No. 1 at 2, ¶ 8. The policy covered general liabilities as well as the properties at 1741 Underwood Road, Gambrills, Maryland 21054 ("the Premises") and 1745 Underwood Road, Gambrills, Maryland 21054. ECF No. 1-2 at 20, 22, 24, 26. Evergreen bought the Premises in March 2012. ECF No. 66-3 at 2-3. The policy provided coverage for "damages because of 'bodily injury' or 'property damage to which this insurance applies.'" ECF No. 1-2 at 70. Furthermore, the policy states, "[Plaintiff] will have the right and duty to defend the insured against any 'suit' seeking those damages for which there is coverage under this policy." Id. Covered "insureds" for limited liability companies included the company itself; "members ... but only with respect to the conduct of your business"; "managers ... but only with respect to their duties as your managers"; and "employees ... but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business." Mat 82-83.

         While Ms. Burgone and Mr. Croson lived at the Premises, they managed the rental units at 1741 and 1745 Underwood Road. ECF No. 66-6 at 6. Ms. Burgone handled leases, paperwork, and other administrative tasks, and received a paycheck from Evergreen in return. Id. at 7, 12. Mr. Croson performed various maintenance tasks on behalf of Evergreen, but it is unclear whether he received a formal paycheck. See Id. at 6, 14. At the Premises, Ms. Burgone and Mr. Croson met with potential and current renters, collected rent, and stored other Evergreen property. Id. at 14. Additionally, there was a separate room in the Premises to which Ms. Burgone and Mr. Croson referred as "the office," in which they kept a computer and printer, desks, and filing cabinets for Evergreen business. Id. at 14-15.

         The Underlying Incident and Tort Action

         On June 3, 2014, Defendant was at the Premises in her professional capacity as a hospice nurse. ECF No. 66 at 1. While at the Premises, Defendant was attacked by Ms. Burgone and Mr. Croson's bulldog, causing severe bites on her legs and a torn meniscus and stress fractures on her left knee, among other injuries. Id. After multiple surgeries in 2014, Defendant was unable to perform her work duties, and she was fired from her job. ECF No. 1-4 at 3-4, ¶ 9 (the underlying tort complaint).

         On January 26, 2017, Defendant filed a tort action against Ms. Burgone and Mr. Croson in the Circuit Court for Anne Arundel County. C-02-cv-l 7-000258, Md. Judiciary Case Search, http://casesearch.courts.sMe.md.us/casesearch/inquiryDetail.jis?caseId=C02CV17000258&loc= 60&detailLoc=ODYCIVIL. On July 28, 2017, an attorney hired by Plaintiff entered her appearance in the underlying case, filed an answer on behalf of Welby Joe Croson (the only defendant who had been served), and filed a certificate for discovery. Id; see also ECF No. 66-6 at 13 (during deposition, Mr. Croson stating, "[Nationwide] said they were going to handle it was my understanding. It was a liability policy covering that property. This incident happened on that property. So, that's how I understood it."). Neither Ms. Burgone nor Mr. Croson personally participated in the underlying suit, and Defendant was seemingly unaware during the pendency of that action that Ms. Burgone and Mr. Croson did not own the premises. ECF Nos. 66 at 3 & 1-4 at 8, ¶ 41 (Defendant alleging in her underlying complaint "[a]t all relevant times, [Ms. Burgone and Mr. Croson] were the owners of the premises").

         On October 3, 2017, counsel Plaintiff hired for Mr. Croson in the underlying action filed a motion to strike and withdraw her appearance. C-02-cv-l 7-000258, supra. On November 6, 2017, the Anne Arundel County court granted the motion to withdraw, and instructed the clerk to notify Mr. Croson he needed to appoint new counsel. Id. No new attorney ever entered their appearance in the underlying case, id., and it is not clear that Mr. Croson had actual knowledge prior to the judgment that his attorney had withdrawn. ECF No. 66-6 at 13 (responding to a question asking if he became aware Plaintiff did not "cover" the underlying litigation, Mr. Croson said, "At some point, yeah. I thought that the case would end. I didn't know about this judgment until I received this paper. So, I thought the case had been kind of just thrown out, gone away... .[I didn't know about the judgment] [u]ntil I was served with papers for today.").

         Without the participation of Ms. Burgone and Mr. Croson in the underlying action, the Anne Arundel County court entered a default judgment in favor of Defendant on February 27, 2018. C-02-cv-17-000258, supra. The court awarded Defendant damages in the amount of $218, 005.00. Id., Plaintiff attempted to collect the judgment from Ms. Burgone and Mr. Croson for months, but she was unsuccessful. See id.

         Procedural ...


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