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Continental Casualty Co. v. Old Republic Insurance Corp.

United States District Court, D. Maryland

December 18, 2019

Continental Casualty Company
v.
Old Republic Insurance Corporation, et al.

          MEMORANDUM

          Catherine C. Blake United States District Judge.

         This case involves a dispute between insurance companies as to which is liable for a settlement paid in relation to a Florida personal injury case. Now pending before the court is the defendants' motion to dismiss. The motion is fully briefed[1] and no oral argument is necessary. For the reasons stated below, the court will grant the motion as to the claim of equitable contribution and deny it as to the claim of equitable subrogation.

         FACTS AND PROCEDURAL HISTORY

         On May 4, 2012, Aldace Turner was attempting to walk down a trailer at his job site when he fell and sustained back injuries. Second Amended Compl. ("SAC") ¶ 21, ECF 5-1. The trailer was placed at the job. site by Allied Trailer Sales and Rentals ("Allied") for use by Manhattan, a construction company and the general contractor, and MCC Mechanical, a subcontractor which was providing HVAC installation and mechanical services for the project. Id. ¶¶ 23-25. According to the plaintiff, Continental Casualty Company ("Continental"), the trailer was leased by Allied to Manhattan. Id. ¶ 23. After Mr. Turner's fall, in August 2012, MCC agreed to take over Manhattan's lease of the trailer, through a "Trailer Takeover Application."[2] Id. ¶ 28.

         Aldace Turner and his wife, Suzie Turner, filed suit against Allied in Florida. Id. ¶ 1. At the time, Continental insured Allied pursuant to an umbrella insurance policy, but Allied did not notify Continental about the litigation until after the verdict was returned. Id. ¶ 38. Instead, pursuant to the lease agreements for the trailer, which included insurance provisions, Allied tendered its defense to MCC's primary commercial general liability insurer, Travelers Property Casualty ("Travelers Casualty"), id. ¶¶ 34-35, and Travelers Casualty assumed exclusive control of Allied's defense in exchange for Allied's agreement not to pursue its contractual indemnity claims against MCC or Manhattan, id. ¶¶ 46-47. According to Continental, Travelers Casualty turned down a settlement offer from Suzie Turner and one from Aldace Turner, and proceeded to trial, which resulted in a jury verdict of $3, 855, 755 against Allied. Id. ¶¶ 49-51.

         On March 23, 2018, Allied notified Continental of the litigation and the verdict against it. Id. ¶ 55. In response, Continental issued a coverage position letter disclaiming coverage on the basis that the underlying insurance limits of liability had not been exhausted and Allied had failed to timely notify Continental of the claim or the underlying suit. Id. ¶ 60. On August 14, 2018, Continental then filed this action in the Circuit Court for Howard County, seeking a judicial declaration that it had no coverage obligation for the judgment or, alternatively, a declaration regarding the priority of the coverage among itself and Travelers Casualty, Starr, and Old Republic General Insurance Corporation ("ORIC")[3], which were the various insurance carriers insuring Manhattan and MCC at the time of the accident.[4] Id. ¶ 61.

         On September 18, 2018, the Turners, Allied, Travelers Casualty, Travelers Indemnity Company of Connecticut ("Travelers Connecticut"), [5] and Continental attended a mediation in Orlando to resolve who would pay the judgment. Id. ¶¶ 62-63. At the mediation, the Turners, Travelers Casualty, Travelers Connecticut, and Allied negotiated an agreement, which Continental alleges was "collusive," wherein Travelers Casualty and Travelers Connecticut agreed to pay the Turners $2, 000, 000 pursuant to the limits of their respective policies, and the Turners agreed to release Travelers Indemnity from any coverage obligation it had to Allied under the MCC excess policy. Id. ¶ 64. Under the agreement, Allied also released Travelers Indemnity, Travelers Casualty, and Travelers Connecticut from any liability they had under the insurance policies. Id. ¶ 65. Also, Allied assigned its rights under the Continental umbrella policy to the Turners, and the Turners filed suit against Continental for recovery of the rest of the judgment. Id. ¶ 67. On January 23, 2019, Continental settled with the Turners in that case for $350, 000. Id. ¶ 68; Settlement Agreement, SAC Ex. 12, ECF 5-14.

         On February 12, 2019, Continental filed its first amended complaint and, on April 1, 2019, filed its second amended complaint. In the second amended complaint, Continental brought claims of equitable contribution and equitable subrogation against Travelers Casualty, Travelers Indemnity, Travelers Connecticut (collectively, "Travelers") and ORIC, arguing that they should reimburse Continental for its settlement payment to the Turners. Travelers filed a motion to dismiss in the Circuit Court for Howard County, to which Continental filed its opposition. On May 1, 2019, Continental settled with ORIC, and ORIC was dismissed from the case. Notice of Removal at 2, ECF 1. Continental and ORIC were both Illinois citizens, but with ORIC dismissed, complete diversity existed, and Travelers removed the case to this court. Id.

         STANDARD OF REVIEW

         To survive a motion to dismiss, the factual allegations of a complaint "must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). "To satisfy this standard, a plaintiff need not 'forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citation omitted). "Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is 'probable,' the complaint must advance the plaintiffs claim 'across the line from conceivable to plausible.'" Id. (quoting Twombly, 550 U.S. at 570). Additionally, although courts "must view the facts alleged in the light most favorable to the plaintiff," they "will not accept 'legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments'" in deciding whether a case should survive a motion to dismiss. U.S. ex rel. Nathan v. Takeda Pharm. North Am., Inc., 707 F.3d 451, 455 (4th Cir. 2013) (quoting Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012)).

         DISCUSSION

         Choice of Law:

         Travelers applies Maryland law throughout its motion to dismiss, while Continental argues that Florida law should apply. As the relevant substantive law is the same in Florida and Maryland, the court finds it unnecessary to determine at this stage which law should apply.

         Equitable ...


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