Nationwide Mutual Fire Insurance Company v. Joan M. Wilbon , 960 F. Supp. 2d 263 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________
)
NATIONWIDE MUTUAL FIRE )
INSURANCE COMPANY, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-11 (RMC)
)
JOAN WILBON, et al., )
)
Defendants. )
_________________________________ )
OPINION
Because the rear door of an apartment building was chained shut from the outside,
residents could not escape quickly when a fire broke out. A child was killed and others were
injured. The question presented here is whether the children’s injuries are covered by specific
insurance policies. The parties have filed cross motions for summary judgment. Nationwide
Mutual Fire Insurance Company issued two policies that covered various properties to the
property manager, but because the apartment building and the management office were not listed
as insured premises, there is no coverage here. Judgment will be entered in favor of the insurer.
I. FACTS
Sheba Alexander lived in an apartment at 3113 Buena Vista Terrace, S.E.,
Washington, D.C., with her three minor children. On February 4, 2011, an electrical outlet in the
building caught fire, causing Ms. Alexander’s children to flee. The children attempted to leave
through the rear door of the building, but could not get out because the door was padlocked from
the outside. They then tried to leave through the building’s front door. Two of the children
managed to get past the smoke and flames, but the third perished in the fire. The two children
who escaped required medical treatment.
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Joan Wilbon was appointed as the personal representative of the estate of the
deceased child. Ms. Wilbon and Ms. Alexander filed suit in D.C. Superior Court against: the
District of Columbia, Community Partnership for the Prevention of Homelessness (CPPH),
Bailey Real Estate Holdings LLC, and Buena Vista Terrace LLC (Underlying Suit). See Am.
Compl. [Dkt. 18], Ex. B (Wilbon v Dist. of Columbia, C.A. No. 0008700-11 (D.C. Super. Ct.)
(Compl. filed Nov. 3, 2011)). Ms. Alexander and her children had been homeless and their
housing was provided by the District of Columbia and CPPH. Buena Vista Terrace LLC (Buena
Vista) owned the apartment building at 3113 Buena Vista where the fire took place, and Bailey
Real Estate Holdings LLC (Bailey) managed the building. The Underlying Suit asserts claims
for survival, wrongful death, and negligence due to the failure to maintain the apartment building
in a reasonably safe condition, free of unreasonable hazards, and in compliance with all
applicable codes.
Defendants claim that Bailey is covered by specific insurance policies issued by
Nationwide Mutual Fire Insurance Company (Nationwide) and that Nationwide is obligated to
defend and indemnify Bailey in the Underlying Suit. Nationwide asks for declaratory judgment
that it has no duty to defend or indemnify Bailey in the Underlying Suit under the policies issued
to Bailey. Am. Compl. ¶¶ 18-23.
To be sure, Nationwide insured Bailey pursuant to two policies. The first of
these, “Policy 7634,” is a Premier Businessowners Policy, number ACP BPHF 5123327634,
effective from June 17, 2010 to June 17, 2011. Pl.’s Mot. for Summ. J. [Dkt. 24], Ex. 2 [Dkt. 24-
4]. The Common Declarations of Policy 7634 identify the insured’s mailing address as Bailey’s
office located at 1434 Park Road, NW, Washington D.C. The Common Declarations describe
the insured business as “Apartment Building – Single BL.” Id. at 1. The Property Declarations
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list the addresses of various properties owned and/or managed by Bailey that are located in the
District of Columbia and set forth coverage limits for each. The apartment building on Buena
Vista Terrace is not listed. Policy 7634 also contains a Limitation of Coverage to Designated
Premises Endorsement that provides:
This endorsement modifies Insurance provided under the
following:
Premier Businessowners Liability Coverage Form
This insurance applies only to “bodily injury,” “property damage,”
“personal and advertising injury,” and medical expenses arising
out of the ownership, maintenance or use of those premises that
are shown in the Declarations, and your operations necessary or
incidental to those premises.
Defs. Mot. for Summ. J. [Dkt. 23], Defs. Exs. [23-2], Ex. F at 55 (emphasis added). 1
The second policy issued to Bailey by Nationwide, “Policy 7635,” is a Premier
Businessowners Policy, number ACP BPHF 5123327635, effective from June 22, 2010 to June
22, 2011. Pl.’s Mot. [Dkt. 24], Ex. 3 [Dkt. 24-5]. The substantive terms of Policy 7635 are
identical to Policy 7634 in all relevant respects. The Common Declarations again identify the
insured’s mailing address as the Park Road office and describe the insured business as an
“Apartment Bldg[–]Sngl Bldg w/5 or more [residences].” Policy 7635 lists various covered
properties in the Property Declarations but does not list the Buena Vista apartment building.
Policy 7635 also contains a Limitation of Coverage to Designated Premises Endorsement
identical to the one quoted above. See Defs. Exs., Ex. F.
Nationwide is currently defending both Buena Vista and Bailey in the Underlying
Suit under the terms of a different insurance policy––number ACP BPHM 2404851807 (“Policy
1807”), issued to Buena Vista. Policy 1807 expressly lists the apartment building at 3113 Buena
1
The page numbers cited for Exhibits are those assigned by the electronic case filing system.
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Vista Terrace as an insured property. The parties agree that Bailey is an additional insured under
Policy 1807 for purposes of Nationwide’s duty to defend but not for purposes of the duty to
indemnify. See Pl. Mot. for Summ. J. at 14.
Nationwide filed this suit seeking a declaratory judgment that it is not obligated to
defend or indemnify Bailey in the Underlying Suit under Policies 7634 and 7635. The parties
agree that no material facts are in dispute and Nationwide moves for summary judgment. Bailey,
Buena Vista, Ms. Alexander, and Ms. Wilbon (collectively, Defendants) cross move for
summary judgment.
II. LEGAL STANDARD
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall
be granted “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.” Fed. R. Civ. P. 56(a); accord Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Moreover, summary judgment is properly
granted against a party who “after adequate time for discovery and upon motion . . . fails to make
a showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
In ruling on a motion for summary judgment, the court must draw all justifiable
inferences in the nonmoving party’s favor and accept the nonmoving party’s evidence as true.
Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than “the mere
existence of a scintilla of evidence” in support of its position. Id. at 252. In addition, the
nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton,
164 F.3d 671, 675 (D.C. Cir. 1999). Rather, the nonmoving party must present specific facts that
would enable a reasonable jury to find in its favor. Id. at 675. If the evidence “is merely
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colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477
U.S. at 249-50 (citations omitted).
III. ANALYSIS
A liability insurer such as Nationwide has no duty to defend a suit brought by a
third party against its insured when the underlying complaint fails to bring the case within the
coverage of the policy. See Indep. Petrochem. Corp. v. Aetna Cas. & Sur. Co., 654 F. Supp.
1334, 1345-46 (D.D.C. 1986). The insured bears the burden of showing that the underlying
complaint comes within the policy’s coverage, id., and the insurer bears the burden of showing
that an exclusion under the policy applies. Cameron v. USAA Prop. & Cas. Ins. Co., 733 A.2d
965, 969 (D.C. 1999). An insurer that invokes an exclusion must establish that it is stated in
clear language that applies to the particular case. Essex Ins. Co. v. Cafe Dupont, LLC, 674 F.
Supp. 2d 166, 170 (D.D.C. 2009) (citation omitted). Any doubt as to whether the allegations in a
complaint are covered by the policy must be resolved in favor of the insured, and any
ambiguities regarding policy coverage must also be construed in favor of the insured.
Continental Cas. Co. v. Cole, 809 F.2d 891, 895 (D.C. Cir. 1987).
Since insurance contracts are written exclusively by insurers,
courts generally interpret any ambiguous provisions in a manner
consistent with the reasonable expectations of the purchaser of the
policy. However, when such contracts are clear and unambiguous,
they will be enforced by the courts as written, so long as they do
not violate a statute or public policy.
Travelers Indem. Co. v. United Food & Comm. Workers Int’l Union, 770 A.2d 978, 986 (D.C.
2001).
The Limitation of Coverage to Designated Premises Endorsement in Policies
7634 and 7635 limits coverage to injuries “arising out of the ownership, maintenance or use of
those premises that are shown in the Declarations, and your operations necessary or incidental to
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those premises.” Nationwide contends (1) that this prominent Limitation restricts coverage to
the premises “designated” for coverage in the Property Declarations of each Policy; (2) that
neither the Park Road office nor the Buena Vista apartment building is listed on the Property
Declarations of either Policy; and (3) therefore, Policies 7634 and 7635 do not cover injuries that
occurred at the Buena Vista Terrace property. As a result, Nationwide argues, it does not have a
duty to defend or indemnify Bailey in the Underlying Suit under either of the two Policies at
issue.
Defendants respond that the Policies cover Bailey for defense and liability
because Policies 7634 and 7635 encompass injuries arising from the “use of those premises
shown in the Declarations.” Defendants emphasize that the word “Declarations” is plural and
contend that, in context, it is ambiguous. They argue that the Policies should therefore be
construed in their favor to mean insurance coverage should be extended to all properties listed in
both the Property Declarations and the Common Declarations. Their logic proceeds accordingly:
(1) Bailey’s Park Road office address is set forth in the Common Declarations; (2) the Limitation
of Coverage Endorsement states that insurance applies to injuries arising from the “use” of
premises shown in the “Declarations”; (3) the Underlying Suit alleges negligent management of
the Buena Vista apartment building; and (4) Bailey managed the Buena Vista apartment building
from its Park Road office.
Defendants read too much into the term “Declarations.” The Common
Declarations merely list the name and mailing address of the insured entity and do not purport to
set forth the address of any insured property, the coverage types, and the limits that apply to any
insured property. In contrast, the Property Declarations identify the specific addresses of insured
premises, the types of coverage that apply, and the dollar limits of such coverage. The
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Limitation of Coverage to Designated Premises Endorsement does not refer to the Common
Declarations since that part of the policy does not designate insured premises. Interpreting the
Policies in a manner that is consistent with the reasonable expectations of the purchaser, see
Travelers, 770 A.2d at 986, the Court finds that Bailey could not reasonably have expected that
Policies 7634 and 7635 covered Bailey’s office on Park Road since the office was listed only as
Bailey’s mailing address and not designated as an insured property.
Defendants further argue that Nationwide’s underwriting manual acknowledges
that a designated premises limitation may be nullified when an owner manages other locations
from an insured location. See Defs. Exs., Ex. K (Underwriting Manual) at 72. The manual states
that agents should limit coverage to designated premises and gives the following example:
Insured owns several apartment buildings. The policy is endorsed
regularly with additions of new complexes purchased and deleting
[sic] those sold. The underwriter adds CG 2144 [i.e., Limitation of
Coverage to Designated Premises Endorsement] 2 to the policy to
limit coverage to the known apartment exposures only.
Note, if our property owner is managing their locations out of our
insured location, they are in effect “using” the premises to run their
business, thereby nullifying the effect of the limitation
endorsement. Underwriting should secure as much information as
possible to properly apply this endorsement.
Id. The flaw in Defendants’ argument is that neither Policy 7634 nor Policy 7635 designated the
Bailey office on Park Road as an insured premises, but only listed it as the address of the insured
entity.
Even if Bailey’s office were insured under either Policy, the tragedy at 3113
Buena Vista Terrace would not be covered under the disputed Policies. There is no consensus
among courts whether a “limitation of liability to designated premises” provision limits
2
See Underwriting Manual at 71.
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insurance coverage to injury at only the specified insured premises or whether it extends
insurance coverage to all business operations conducted from the insured premises, thereby
covering off-site injuries. Compare Southeast Farms, Inc. v. Auto-Owners Ins. Co., 714 So. 2d
509 (Fla. App. 1998) (coverage provided for off-site injury), and Sun Ins. Co. of New York v.
Hamanne, 306 A.2d 786 (N.H. 1973) (same), with Home Ins. Co. of Manchester v. Phillips, 815
F. Supp. 1471 (S.D. Fla. 1993) (no coverage for off-site injury), aff’d without op., 26 F.3d 1121(11th Cir. 1994) (Table), and Hartford Fire Ins. Co. v. Annapolis Bay Charters, Inc., 69 F. Supp.
2d 756 (D. Md. 1999) (same). The parties agree that District of Columbia law applies in this
case, 3 but there are no reported cases from the District of Columbia that answer. However,
Maryland courts have examined such language, and D.C. courts look to Maryland law in the
absence of D.C. precedent. 4
Two courts in Maryland have interpreted almost identical coverage language and
held that an injury at a location not designated in a premises liability policy is not covered even
when the location was managed from a designated insured property. See Hartford Fire Ins. Co.
v. Annapolis Bay Charters, Inc., 69 F. Supp. 2d 756 (D. Md. 1999); Chesapeake Physicians Prof.
Ass’n v. The Home Ins. Co., 608 A.2d 822 (Md. App. 1992).
In Hartford, the insured was Annapolis Bay Charters, Inc., a charter boat
company. A customer’s hand was badly injured when it was caught in a rope as the charter
captain attempted to dock a boat. Hartford, 69 F. Supp. 2d at 759. The customer sued the
3
In insurance cases, where the insured is headquartered in the District of Columbia and the
underlying events took place in the District, D.C. law applies. Nationwide Mut. Ins. Co. v.
Richardson, 270 F.3d 948, 953 (D.C. Cir. 2001).
4
D.C. courts generally look to Maryland law for guidance because the District of Columbia
derives its common law from Maryland. Conesco Indus. Ltd. v. Conforti & Eisele, Inc., 627 F.2d
312, 315-16 (D.C. Cir. 1980); Potomac Plaza Terraces, Inc. v. QSC Products, Inc., 868 F. Supp.
346, 352 n.9 (D.D.C. 1994).
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charter company alleging, inter alia, negligence by an incompetent captain. Id. at 761. The
charter company claimed insurance coverage. The insured premises were the company’s office
and its retail hardware store, and the policy contained a “limitation of liability to designated
premises” endorsement. Id. at 759. In words identical to the provision at issue, the Hartford
endorsement limited coverage to injuries “arising out of the ownership, maintenance or use of
the premises described in the Declarations and operations necessary or incidental to those
premises.” Id. The charter company insisted that all business operations at its office were
insured––including chartering boats––so that a customer’s injury on a chartered boat was
covered by its policy. Id. at 760. The Maryland district court rejected this broad interpretation
because (1) it would extend coverage to every aspect of the charter company’s business since all
acts could be said to arise from the use of the company’s office; and (2) it was clear from the
plain language of the policy that the parties signed a premises liability insurance policy, not a
comprehensive general liability policy. Id. at 761. The court reasoned that the “specialized
business operation of chartering watercraft to be used off-site simply [did] not qualify as a ‘use .
. . of the premises’” because “use” meant the use of the physical structures and real estate at the
insured office and hardware store. Id.
The Maryland Court of Special Appeals undertook a similar analysis in
Chesapeake. In that case, an association of physicians maintained an insurance policy with an
almost identical endorsement that limited coverage to injuries “arising out of the ownership,
maintenance or use of the insured premises and all operations necessary or incidental thereto.”
Id. at 826. The association’s office was the only designated premises. A surviving spouse
brought suit against the association alleging, inter alia, that the association had negligently
misrepresented the scope of coverage of an health maintenance organization for which the
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association provided services. The widow alleged misrepresentation concerning coverage for
liver transplants that caused denial of transplant surgery to her husband, who soon died. Id. at
824. The association claimed insurance coverage.
Like the Hartford court, the trial court concluded that the association held only a
premises liability policy and not a general liability policy. Id. at 824. The Court of Special
Appeals affirmed, finding that the policy was clearly a premises liability policy and that
coverage did not extend beyond the association’s location. Id. at 827. The court noted that if all
of the association’s business operations were covered, the policy would have included a more
precise definition of its activities. Id.
The policies analyzed in Hartford and Chesapeake are analogous to the Policies
contested here. Even if Policies 7634 and 7635 covered Bailey’s office on Park Road, which the
Court finds they do not, the Policies would not extend beyond that office to cover injuries from a
fire at Buena Vista Terrace because the Policies are limited to premises liability. In other words,
even if either Policy covered the specific premises of Bailey’s office, they clearly are not
comprehensive general liability policies that would cover injury at a property that is not named
in any of the Declarations. “Use” of premises means use of the physical structures and real
estate at the designated properties. See Hartford, 69 F. Supp. 2d at 761. If the Policies covered
Bailey’s management operations beyond its Park Road office, the Policies would have spelled
out the nature of such operations. See Chesapeake, 608 A.2d at 827.
Notably, another Maryland case Sallie v. Tax Sale Investors, Inc., 814 A.2d 572(Md. App. 2002), examined similar “limitation of coverage to designated premises” language
and found the provision ambiguous. However, the facts of Sallie are clearly distinguishable from
this case. The insured in Sallie was a real estate agent, and the insured property was the agent’s
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office. 814 A.2d at 578. The agent sued for insurance coverage for a wrongful eviction claim
brought by a tenant evicted at a different location. The trial court found no coverage beyond the
agent’s office. Id. at 573-74. The Maryland Court of Special Appeals vacated and remanded,
finding the policy ambiguous because, even though it limited coverage to designated premises, it
also expressly covered injury due to wrongful eviction. Id. at 578, 582-84.
The case at hand does not present the same conundrum, and the Sallie case does
not control. Bailey’s office is not designated as an insured property on either Policy. To the
contrary, the designated properties are clearly specified with addresses and coverage amounts in
each Property Declaration. In addition, the designated insured properties are identified as
apartment buildings, not as property management businesses. In sum, following the reasoning of
Hartford and Chesapeake, Policies 7634 and 7635 are limited to the premises designated in the
Property Declarations and do not provide insurance coverage for injury caused by the fire at
Buena Vista Terrace. Nationwide is entitled to a declaratory judgment that it has no duty under
Policies 7634 and 7635 to defend or indemnify Bailey in the Underlying Suit. Summary
judgment will be granted in favor of Nationwide.
IV. CONCLUSION
For the reasons set forth above, Nationwide’s motion for summary judgment
[Dkt. 24] will be granted, and Defendants’ motion for summary judgment [Dkt. 23] will be
denied. A memorializing Order accompanies this Opinion.
Date: August 16, 2013
/s/
ROSEMARY M. COLLYER
United States District Judge
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