DEBORAH K. CHASANOW, District Judge.
Presently pending and ready for review in this insurance coverage dispute are two motions filed by Plaintiff Nautilus Insurance Company ("Nautilus"): (1) a motion
This case involves a commercial general liability insurance policy issued by Nautilus to REMAC for the policy period of December 21, 2009 to December 21, 2010 ("the Policy"). The Policy identifies REMAC as the "Named Insured" with a mailing address in Potomac, Maryland. (ECF No. 1-3, at 4, Common Policy Declarations).
The Policy generally requires Nautilus to "pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies" and to "defend the insured against any `suit' seeking those damages." (ECF No. 1-3, at 13, Section I — Coverages, Coverage A Bodily Injury and Property Damage Liability). The Policy also requires Nautilus to "pay medical expenses ... for `bodily injury' caused by an accident. (3) Because of your operations." (Id. at 19, Section I Coverages, Coverage C Medical Payments). "Bodily injury" is defined as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." (Id. at 24, Section V — Definitions). "Suit" is defined as "a civil proceeding in which damages because of `bodily injury', `property damage' or `personal and advertising injury' to which this insurance applies are alleged." (Id. at 27).
The Policy also contains a number of exclusions. Relevant here, the Policy includes an endorsement titled "Exclusion — Injury to Employees, Contractors, Volunteers and Workers." (ECF No. 1-3, at 36, Form L205) ("the Employer's Liability Exclusion"). With respect to Coverage A for Bodily Injury and Property Damage Liability, the Employer's Liability Exclusion provides that:
This insurance does not apply to:
This exclusion applies:
(Id.). Elsewhere, the Policy contains a provision that makes all exclusions to Coverage A applicable to Coverage C Medical Payments. (Id. at 19, Coverage C Medical Payments, Section 2, Exclusion G).
On January 24, 2012, Joseph Friend filed a lawsuit against REMAC in the Circuit Court for Berkley County, West Virginia ("the Underlying Action"). Mr. Friend's complaint in the Underlying Action alleges that, on March 26, 2010, he was working on a job site located near Martinsburg, West Virginia, as a REMAC employee. (ECF No. 1-1 ¶ 5). Mr. Friend avers that, on the day in question, REMAC required him "to operate heavy construction equipment that was attached to a similar piece of heavy construction equipment by a chain." (Id.). Mr. Friend asserts that, while following REMAC's instructions to use the first piece of equipment to tow the second piece, the chain attaching the equipment "broke, or came loose, and came flying back at a high rate of speed and struck [him] in the head, severely injuring him." (Id.).
In Count I, Friend alleges that REMAC "negligently, grossly negligent[ly], carelessly, willfully, wantonly, wrongfully, and/or otherwise [unlawfully]" engaged in a number of acts or omissions that directly and proximately caused him to sustain the following harms: temporary and permanent bodily injury; past and future medical expenses; past and future lost income; physical pain and suffering; mental anguish and emotional distress; loss of enjoyment of life; permanent scarring; humiliation; and embarrassment. (ECF No. 1-1 ¶¶ 1-11). Specifically, Mr. Friend alleges that REMAC failed to use a chain that was appropriate and safety-rated for towing; failed to provide him with an enclosed cab to prevent him from being struck by flying debris; failed to perform a hazard assessment of the work site; and created or permitted unsafe and hazardous working conditions by, inter alia, not providing him with required personal protective equipment. In Count II, Mr. Friend alleges that REMAC failed to follow federal workplace safety rules and that this failure proximately caused his injuries and damages. (Id. ¶¶ 12-14). In Count III, Mr. Friend alleges that REMAC knew about the unsafe and hazardous conditions at the work site; knew that such conditions violated "a safety statute, rule, regulation or ... a commonly accepted and well-known safety standard"; and nonetheless intentionally exposed its employees to the unsafe working conditions, directly and proximately causing Mr. Friend's injuries and damages. (Id. ¶¶ 15-19). Mr. Friend also seeks punitive damages in connection with Counts I and II.
On March 1, 2012, REMAC removed the Underlying Action to the United States District Court for the Northern District of West Virginia. See Friend v. REMAC Am., Inc., No. 12-cv-17 (N.D.W.Va.). On November 15, 2012, Mr. Friend moved for leave to file an amended complaint in the
On January 15, 2013, Nautilus filed a complaint in this court that names REMAC and Mr. Soresi as Defendants and Mr. Friend as an "Interested Party." (ECF No. 1). Nautilus seeks a judgment declaring (1) that it has no duty under the Policy to defend REMAC or Mr. Soresi against any claim asserted by Mr. Friend in the Underlying Action or that otherwise arises out of the "Occurrence," defined by Nautilus as the March 26, 2010 incident during which Mr. Friend was allegedly injured; and (2) that it has no duty under the Policy to indemnify REMAC or Mr. Soresi for any sums that either Defendant becomes liable to pay Mr. Friend in the Underlying Action or that otherwise arise out of the Occurrence. (Id. at 11). On January 25, ten days after filing its complaint, Nautilus moved for summary judgment. (ECF No. 4). On January 29, Nautilus served REMAC, Mr. Soresi, and Mr. Friend with a copy of the complaint, the summons, and its motion for summary judgment. (ECF Nos. 6, 8, & 10).
On March 7, 2013, Mr. Friend filed an answer to Nautilus's complaint (ECF No. 14), a jury trial demand (ECF No. 13), and a response to the motion for summary judgment (ECF No. 11). Nautilus filed a reply in support of its motion for summary judgment (ECF No. 16) and moved for entry of default against REMAC and Mr. Soresi (ECF Nos. 17, 19, & 20). On May 15, 2013, the clerk entered default against REMAC and Mr. Soresi. (ECF No. 21). On May 22, Nautilus moved for default judgment against REMAC and Mr. Soresi, incorporating its summary judgment motion by reference. (ECF No. 22).
Federal Rule of Civil Procedure 55(b)(2) authorizes the entry of default judgment against a properly served defendant who fails to file a timely responsive pleading. In reviewing a motion for default judgment, the well-pleaded factual allegations in the complaint as to liability are accepted as true. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir.2001). It must still be determined, however, "whether these unchallenged factual allegations constitute a legitimate cause of action." Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494 (D.Md.2010).
Where, as here, a plaintiff seeks declaratory relief rather than monetary damages, default judgment is appropriate if the well-pleaded allegations of the complaint establish the plaintiff's right to such relief. See, e.g., Nautilus Ins. Co. v. BSA Ltd. P'ship, 602 F.Supp.2d 641, 645-46 (D.Md.2009) (awarding default judgment in declaratory judgment action); Am. Select Ins. Co. v. Taylor, 445 F.Supp.2d 681, 684 (N.D.W.Va.2006) (same); cf. Penn Am. Ins. Co. v. Valade, 28 Fed.Appx. 253, 257-58 (4th Cir.2002) (unpublished per curiam opinion) (affirming summary judgment in favor of insurer, against third party, following entry of default judgment against insured in declaratory judgment action).
Taking as true the well-pleaded allegations of the complaint, Nautilus states a
Under Maryland law, an insurer's duty to defend is a "contractual duty arising out of the terms of a liability insurance policy" and is "broader than the duty to indemnify." Litz v. State Farm Fire & Cas. Co., 346 Md. 217, 225, 695 A.2d 566 (1997).
Determining whether an insurer has a duty to defend is a two-step process. St. Paul Fire & Marine Ins. Co. v. Pryseski, 292 Md. 187, 193, 438 A.2d 282 (1981). First, the policy must be reviewed to determine the scope of, and any limitations on, coverage. Id.; Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98, 103-04, 651 A.2d 859 (Md.1995). Insurance policies are to be construed pursuant to "ordinary principles of contract interpretation." Megonnell v. United Servs. Auto. Ass'n, 368 Md. 633, 655, 796 A.2d 758 (2002) (internal quotations marks omitted). Thus, the words used in a policy should be given "their usual, ordinary, and accepted meaning" — i.e., the "meaning a reasonably prudent layperson would attach to the term." Bausch & Lomb Inc. v. Utica Mut. Ins. Co., 330 Md. 758, 779, 625 A.2d 1021 (1993). Where the provisions of an insurance policy are unambiguous, the meaning of the terms is determined by the court as a matter of law. Cole v. State Farm Mut. Ins. Co., 359 Md. 298, 305, 753 A.2d 533 (2000).
As the second step in the duty-to-defend inquiry, the allegations of the underlying complaint must be analyzed to determine whether they would potentially be covered under the subject policy. Pryseski, 292 Md. at 193, 438 A.2d 282; Cochran, 337 Md. at 103-04, 651 A.2d 859. If there is any doubt as to "whether or not the allegations of a complaint against the insured state a cause of action within the coverage of a liability policy sufficient to compel the insurer to defend the action, such doubt will be resolved in insured's favor." Id. at 107, 651 A.2d 859 (quoting U.S. Fid. & Guar. Co. v. Nat'l Paving Co., 228 Md. 40, 54, 178 A.2d 872 (1962)).
Application of this two-step standard here establishes Nautilus's entitlement to a declaration that it has no duty to defend. As to the scope of coverage afforded by the Policy, the Employer's Liability Exclusion unequivocally excludes coverage for "bodily injury" to "an employee of any insured arising out of and in the course of (a) Employment by any insured; or (b) Performing duties related to the conduct of any insured's business." (ECF No. 1-3, at 36).
The same is true of any claims arising out of the March 26, 2010 incident that Mr. Friend might attempt to assert against Mr. Soresi in his capacity as an executive officer, director, or stockholder of REMAC.
As noted above, the duty to defend is broader than the duty to indemnify. Because the well-pleaded allegations of the complaint establish that Nautilus owes no duty to defend, they necessarily also establish
Mr. Friend, however, is "`not bound by the default judgment because, as an injured third party, [he is] entitled to defend on the merits in the declaratory judgment proceeding.'" BSA Ltd. P'ship, 602 F.Supp.2d at 646 n. 2 (quoting Valade, 28 Fed.Appx. at 256 n. *). When an insurer brings a declaratory judgment action against the insured and the injured third party, the third party "acquires standing — independent of that of the insured — to defend itself in the declaratory judgment proceeding." Valade, 28 Fed.Appx. at 257. Accordingly, the default judgment that will be entered against REMAC and Mr. Soresi "does not negate the case or controversy existing between" Nautilus and Mr. Friend. Id. Rather, Nautilus's motion for summary judgment, and Mr. Friend's opposition thereto, must be considered separately.
Summary judgment may be entered only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir.2008). Summary judgment is inappropriate if any material factual issue "may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); JKC Holding Co. LLC v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir.2001).
"A 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 former Fed. R.Civ.P. 56(e)). "A mere scintilla of proof... will not suffice to prevent summary judgment." Peters v. Jenney, 327 F.3d 307, 314 (4th Cir.2003). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Liberty Lobby, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted). At the same time, the facts that are presented must be construed in the light most favorable to the party opposing the motion. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); Emmett, 532 F.3d at 297.
Nautilus's motion for summary judgment relies on the same coverage position set forth in its complaint, i.e., that the plain, unambiguous terms of the Employer's Liability Exclusion bar defense and indemnity coverage for the Underlying Action and any other claim by Mr. Friend arising from the March 26, 2010 incident. (See ECF No. 4-1). In his opposition to Nautilus's motion, Mr. Friend does not challenge the merits of Nautilus's position that the Employer's Liability Exclusion, on its face, bars coverage for his claims. (See ECF No. 11-1). Instead, Mr. Friend suggests that the applicability of Maryland law to the interpretation of the Policy is "not a foregone conclusion" and posits that, if West Virginia law were
Ordinarily, summary judgment is inappropriate if "the parties have not had an opportunity for reasonable discovery." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011). Rule 56(d) allows the court to deny a motion for summary judgment or delay ruling on the motion until discovery has occurred if the "nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition." Fed.R.Civ.P. 56(d).
The Fourth Circuit places "great weight" on the affidavit requirement and has observed that "[a] reference to [Rule 56(d) ] and to the need for additional discovery in a memorandum of law in opposition to a motion for summary judgment is not an adequate substitute for a [Rule 56(d) ] affidavit." Evans v. Techs. Applications & Serv. Co., 80 F.3d 954, 961 (4th Cir.1996) (internal quotation marks omitted) (first alteration in original). Indeed, a failure to file a Rule 56(d) affidavit "is itself sufficient grounds to reject a claim that the opportunity for discovery was inadequate." Id. At the same time, however, the Fourth Circuit has "not always insisted" on a formal affidavit and has excused non-compliance with Rule 56(d) "if the nonmoving party has adequately informed the district court that the motion is premature and that more discovery is necessary." Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th Cir.2002).
Notably, requests made pursuant to Rule 56(d) "`cannot simply demand discovery for the sake of discovery.'" Hamilton v. Mayor & City Council of Balt., 807 F.Supp.2d 331, 342 (D.Md.2011) (quoting Young v. UPS, No. DKC-08-2586, 2011 WL 665321, at *20 (D.Md. Feb. 14, 2011)). Courts interpreting Rule 56(d) have consistently held that a nonmovant's request may be denied if "the additional evidence sought for discovery would not have by itself created a genuine issue of material fact sufficient to defeat summary judgment." Ingle ex rel. Estate of Ingle v. Yelton, 439 F.3d 191, 195 (4th Cir.2006) (internal quotation marks omitted). Put simply, Rule 56(d) does not authorize "fishing expedition[s]." Morrow v. Farrell, 187 F.Supp.2d 548, 551 (D.Md.2002), aff'd, 50 Fed.Appx. 179 (4th Cir.2002).
Here, it is undisputed that Nautilus moved for summary judgment prior to engaging in any discovery. Mr. Friend, however, has not submitted a formal Rule 56(d) affidavit. Instead, he makes a general, unsworn request for discovery in his opposition to Nautilus's motion for summary judgment. This omission is, by itself, sufficient to deny his request, given
More importantly, Mr. Friend's request must be denied because neither area of discovery he identifies would create a genuine issue of material fact regarding Nautilus's duty to defend or indemnify under the Policy. First, Mr. Friend posits that he needs to explore the details surrounding the formation of the Policy to ascertain which state's law should govern and, in particular, whether West Virginia law might apply. Mr. Friend fails to explain what set of facts could possibly compel the conclusion that West Virginia law governs.
Because subject matter jurisdiction in this case is predicated on diversity of citizenship, the choice of law rules of Maryland, the forum state, must be applied. Klaxon v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In the absence of a contractual choice of law provision, Maryland generally adheres to the doctrine of lex loci contractus to decide which state's law controls the interpretation of an insurance contract. See, e.g., Allstate Ins. Co. v. Hart, 327 Md. 526, 529, 611 A.2d 100 (1992). Under the lex loci doctrine, the law of the jurisdiction where the contract was made governs its interpretation. TIG Ins. Co. v. Monongahela Power Co., 209 Md.App. 146, 161, 58 A.3d 497 (2012). Maryland's appellate courts view the locus contractus of an insurance policy as the state in which the policy is delivered and where the premiums are paid, because such acts are the last acts necessary to make an insurance policy binding. See Aetna Cas. & Sur. Co. v. Souras, 78 Md.App. 71, 77, 552 A.2d 908 (1989); Monongahela Power, 209 Md.App. at 162, 58 A.3d 497.
Mr. Friend conclusorily contends that West Virginia law might apply, but offers nothing to suggest that the last act needed to form the Policy occurred in West Virginia. Rather, as Nautilus argues, the record demonstrates that both of the relevant "last acts" occurred in Maryland. With respect to delivery, Nautilus submits a declaration from Amy Nechamkin, its Senior Litigation Counsel, who avers that the company's standard practice is to deliver a policy to the mailing address listed on the
By contrast, there is nothing suggesting that either delivery or premium payment occurred in West Virginia. Ms. Nechamkin avers that the Potomac, Maryland address was the only address that Nautilus had on file for REMAC at the time it issued the Policy and that Nautilus was not aware that REMAC had any operations in West Virginia. (ECF No. 16-1, at 2, Nechamkin Decl. ¶ 4). In addition, the Policy itself states that REMAC's only location was in Potomac, Maryland. (ECF No. 1-3, at 12, Commercial General Liability Coverage Part Declarations). Thus, it appears that West Virginia had no relationship to the formation of the Policy. Indeed, West Virginia's only apparent connection to this coverage dispute is that Mr. Friend allegedly suffered his injuries in the state. The place of a third-party claimant's injury, however, has no bearing on the choice of law analysis for a liability insurance policy. Because Mr. Friend fails to offer any reasoned argument as to how West Virginia could possibly be the locus contractus of the Policy, granting his request to explore whether West Virginia law might apply would be the equivalent of authorizing a fishing expedition.
The evidence Mr. Friend seeks in his second proposed area of discovery also would not alter the conclusion that Nautilus is entitled to judgment as a matter of law. Mr. Friend asserts that, without an opportunity to explore whether Nautilus affirmatively brought the Employer's Liability Exclusion to REMAC's attention, it is impossible to know whether the "reasonable expectations" doctrine could potentially serve to defeat Nautilus's coverage position. (ECF No. 11-1, at 3-5). In support of his argument, Mr. Friend relies exclusively on citations to West Virginia case law interpreting the reasonable expectations doctrine. (See id.).
In Maryland, extrinsic evidence is not admissible to interpret an insurance policy that is unambiguous on its face. See Cheney v. Bell Nat'l Life Ins. Co., 315 Md. 761, 766-67, 556 A.2d 1135 (1989); Nat'l Cas. Co. v. Lockheed Martin Corp., 415 F.Supp.2d 596, 601 (D.Md.2006) (Maryland law) ("While the character of the [insurance] contract, its object and purposes, and the factual circumstances of the parties at the time of execution may assist in interpreting the meaning of a particular contractual provision, clear and unambiguous language must be enforced as written."). Here, the terms of the Policy, including the Employer's Liability Exclusion, are plain and unambiguous. Accordingly, the extrinsic evidence that Mr. Friend seeks to discover could not alter the conclusion that Nautilus owes no duty to defend or indemnify REMAC or Mr. Soresi in connection with the Underlying Action or any other claim arising out of the injuries Mr. Friend allegedly suffered March 26, 2010. Mr. Friend's request for discovery will be denied, and judgment will be entered in favor of Nautilus.
For the foregoing reasons, the motions for default judgment and for summary judgment filed by Defendant Nautilus Insurance Company will be granted. A separate Order will follow.
Here, the first page of the Policy states that "if required by state law, this policy shall not be valid unless countersigned by our authorized representative." (ECF No. 1-3, at 3). As Mr. Friend observes in his opposition, the line for a countersignature on the "Common Policy Declarations" is blank, although there is a typewritten notation to the left of the line stating "Countersigned: Charlottesville, VA, 12/21/2009 CZC." (Id. at 4, Common Policy Declarations). Pursuant to the teaching of Monongahela Power, the apparent lack of a handwritten countersignature does not affect the validity of the Policy, and the place of any electronic countersignature is irrelevant to the choice of law analysis.
