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State Farm Fire and Casualty Co. v. Huguely

United States District Court, D. Maryland

January 7, 2020




         Presently pending and ready for resolution in this declaratory judgment action is the motion for summary judgment filed by Plaintiff State Farm and Casualty Company (“Plaintiff”). (ECF No. 60). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion for summary judgment will be granted.

         I. Background

         This case centers around the actions of George W. Huguely, V (“Defendant”) and his responsibility for the death of Yeardley Love in May 2010.[1] An earlier memorandum opinion, (ECF No. 30), outlines the specifics of the multiple actions arising from that event. Therefore, only a brief summary is necessary. In a criminal case, a jury in the Circuit Court for the City of Charlottesville, Virginia found Defendant responsible for the death of Yeardley Love and guilty of second degree murder. Huguely v. Commonwealth, 63 Va.App. 92, 105 (2014). In a civil case, Sharon D. Love (Ms. Love), as administrator of the estate of Yeardley Love, brought a civil suit against Defendant in the Circuit Court for the City of Charlottesville. Her amended complaint alleges that Defendant was the proximate cause of Yeardley Love's injuries and death. The case in this court concerns whether Plaintiff, an insurance company, is contractually obligated to defend and to indemnify Defendant in the civil case. Interested party Andrew Murphy, III, Defendant's step-father (together with Defendant and interested party Marta Murphy, “Respondents”), purchased a homeowners' insurance policy (“the Policy”) from Plaintiff for Respondents' home in Maryland. (ECF No. 60-3). The Policy includes broad indemnification provisions stating that “[i]f a claim is made or a suit is brought against an insured for damages because of bodily injury. . . to which this coverage applies, caused by an occurrence, we will: 1. pay up to our limit of liability for the damages for which the insured is legally liable; and 2. provide a defense at our expense[.]” (Id., at 20). The Policy defines “occurrence” as “an accident, including exposure to conditions, which results in. . . bodily injury[.]” (Id., at 7). The Policy excludes coverage for injury that is “either expected or intended by the insured; or. . . the result of willful and malicious acts of the insured[, ]” (the “Exclusions”). (Id., at 21).

         After Ms. Love filed her complaint in the civil case, Defendant sought coverage from both Plaintiff, (ECF No. 1, ¶ 22), and Chartis Property Casualty Company (“Chartis”), which insured Mr. and Mrs. Murphy under two other policies (see Case No. DKC-13-1479, ECF No. 1). Chartis initially provided a defense for Defendant under a reservation of rights. (Id. ¶ 50). On May 20, 2013, Chartis filed a declaratory judgment action in this court (the “Chartis Case”) and on March 20, 2017, this court granted Chartis's motion for summary judgment and declared that Chartis had no duty to defend or to indemnify Defendant in the civil case.

         On November 1, 2013, Plaintiff initiated this suit, naming Respondents and Ms. Love as interested parties and seeking a declaratory judgment that it was not required to defend or to indemnify Defendant in the civil case under the Policy. On December 9, 2016, after a stay pending Defendant's direct appeal in the criminal case and the lifting of the stay upon Defendant's exhaustion of all direct appeals in his criminal proceedings, Plaintiff filed a motion for summary judgment and argued that both the Exclusions and Defendant's failure to cooperate with Plaintiff's investigation provided bases to deny coverage. (ECF No. 23). After full briefing and a hearing, the court denied Plaintiff's motion for summary judgment and concluded that genuine disputes about material facts existed regarding whether the intentional acts exclusion applied and whether Defendant's failure to cooperate with Plaintiff's investigation prejudiced Plaintiff. (ECF No. 30).

         On March 4, 2019, after Ms. Love unsuccessfully appealed this court's decision in the Chartis Case and unsuccessfully petitioned for en banc review, Plaintiff filed an amended complaint. (ECF No. 49). Plaintiff explains that Ms. Love “non-suited” the civil case in May 2018 and “re-initiated” the action in December 2018. (Id., at 3 ¶ 12). Plaintiff additionally explains that “[a] nonsuit is a procedure permitted in Virginia state court which allows a [p]laintiff to dismiss the action and re-file the same action within [six] months.” (Id., at 4 n.1). Plaintiff emphasizes that Ms. Love's re-filed complaint “removed any reference to negligence and/or gross negligence and [her] claims are now limited to claims of intentional and willful conduct and her only cause of action is for assault and battery.” (Id., at 6 ¶ 25). The amended complaint names Respondents as interested parties but does not name Ms. Love as an interested party. (Id., at 1). Plaintiff explains: “As of December 2018, the Love family has taken the position that [because] it has limited its civil claims against [Defendant] to [a]ssault and [b]attery, it no longer challenges [Plaintiff's] position on insurance coverage. . . [and] has withdrawn its participation in this declaratory proceeding.” (ECF No. 60-1, at 3 ¶ 4).

         On April 1, 2019, Respondents filed an answer and counterclaim to Plaintiff's amended complaint. (ECF No. 52). On April 22, 2019, Plaintiff answered. (ECF No. 55). On May 31, 2019, Plaintiff filed a motion for summary judgment. (ECF No. 60). On July 19, 2019, Respondents responded and stated: “Due to a number of factors, Respondents have decided to take no position on the [m]otion. Respondents respectfully defer to the [c]ourt to rule on the [m]otion as it sees fit.” (ECF No. 64, at 1). On July 29, 2019, Plaintiff replied. (ECF No. 65).

         II. Standard of Review

         Summary judgment will be granted only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). To prevail on a motion for summary judgment, the moving party generally bears the burden of showing that there is no genuine dispute as to any material fact. Liberty Lobby, 477 U.S. at 248-50. A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 249. In undertaking this inquiry, a court must view the facts and the reasonable inferences drawn therefrom “in the light most favorable to the party opposing the motion, ” Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also EEOC v. Navy Fed. Credit Union, 424 F.3d 397, 405 (4th Cir. 2005), but a “party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences, ” Shina v. Shalala, 166 F.Supp.2d 373, 375 (D.Md. 2001) (citation omitted).

         III. Applicable Law

         In diversity actions, a district court applies the substantive law and choice of law rules of the state in which the court sits. Padco Advisors, Inc. v. Omdahl, 179 F.Supp.2d 600, 605 (D.Md. 2002) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). In contract claims, Maryland applies the doctrine of lex loci contractus, meaning the law of the place where the contract was made applies. Allstate Ins. Co. v. Hart, 327 Md. 526, 529 (1992). “The locus contractus is the place where the last act is performed which makes an agreement a binding contract.” Grain Dealers Mut. Ins. Co. v. Van Buskirk, 241 Md. 58, 65-66 (1965). In an insurance contract, the delivery of the policy and the payment of the premiums constitute these “last acts.” Id. (citing Sun Ins. Office, Ltd. v. Mallick, 160 Md. 71, 81 (1931)). Although it appears that the Policy was addressed to Mr. Murphy in California, (ECF No. 60-3, at 1), Plaintiff contends that it was delivered to the Murphys at their Maryland address and that Maryland substantive law applies to the dispute (ECF No. 60-1, at 7-8). Plaintiff argues in the alternative that California law would apply Maryland law because the property insured was in Maryland. (Id., at 8). Ms. Love and Respondents did not brief the pending motion. Previously, they did not dispute that Maryland substantive law was applicable. (ECF No. 30, at 8). Maryland law does not, however, govern procedural rules in this court, even when jurisdiction is based on diversity.

         IV. Declaratory Judgment While State Action is Pending

         “Federal standards guide the inquiry as to the propriety of declaratory relief in federal courts, even when the case is under the court's diversity jurisdiction.” White v. Nat'l Union Fire Ins. Co., 913 F.2d 165, 167 (4th Cir. 1990). Under federal law, district courts have “some measure of discretion [as to whether] to entertain a declaratory judgment action that is otherwise properly within its jurisdiction.” Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir. 1994). The United States Court of Appeals for the Fourth Circuit has held that district courts should not entertain a declaratory judgment action during the pendency of a related state proceeding “when the result would be to ‘try a controversy by piecemeal, or to try particular issues without settling the entire controversy.'”[2]Mitcheson v. ...

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