Claudia Mora v. Lancet Indemnity

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-1566
CLAUDIA M. MORA, individually and as a parent, natural guardian and next
friend of A.C., a minor and S.C., a minor; JUAN CARLOS CASTILLO;
ADVANCE WALK-IN URGENT CARE, LLC; and UNION MULTI-CARE
MEDICAL CENTER, INC.,
Plaintiff - Appellees,
and
RICHARD OSEI AKOTO, M.D., P.C., LLC; and RICHARD OSEI AKOTO,
M.D.,
Plaintiffs,
v.
LANCET INDEMNITY RISK RETENTION GROUP, INC.,
Defendants - Appellants.
Appeal from the United States District Court for the District of Maryland at Greenbelt.
Paula Xinis, District Judge. (8:16-cv-00960-PX)
Argued: January 29, 2019 Decided: May 7, 2019
Before MOTZ, KING, and WYNN, Circuit Judges.
Affirmed by unpublished opinion. Judge Wynn wrote the opinion, in which Judge Motz
and Judge King concurred.
ARGUED: John Becker Mumford, Jr., HANCOCK, DANIEL & JOHNSON, P.C., Glen
Allen, Virginia, for Appellant. Matthew Peter Maloney, MALONEY LAW OFFICE,
LLC, Kensington, Maryland, for Appellees. ON BRIEF: Kathryn E. Kasper,
HANCOCK, DANIEL & JOHNSON, P.C., Glen Allen, Virginia, for Appellant.
Unpublished opinions are not binding precedent in this circuit.
2
WYNN, Circuit Judge:
In this appeal, we confront the issue of whether a medical malpractice insurer
owes coverage for a default judgment obtained against an insured physician who fled the
country and refused to participate in the defense of a malpractice action against him. The
insurer contends that it does not owe coverage under the Policy because Maryland law
prohibited it from defending the malpractice claim without the physician’s consent and
because his refusal to participate prejudiced the insured’s ability to defend the
malpractice action. The district court rejected these arguments and found the insured
liable for payment under the terms of the Policy. For the reasons below, we affirm the
judgment of the district court.
I.
In January 2015, Dr. Ishtiaq Malik treated Juan Castillo for his complaints of chest
pains and shortness of breath. After administering a treadmill stress test and an EKG, Dr.
Malik prescribed a beta blocker but did not refer Castillo to a cardiologist or instruct him
to seek any other immediate medical attention. Eight days later, Castillo died from a
cardiac event.
On July 2, 2015, counsel for Castillo’s wife, Claudia Mora, and children notified
Dr. Malik’s malpractice insurer, Lancet Indemnity Risk Retention Group, Inc.
(“Lancet”), that they were preparing to file a medical malpractice action against Dr.
Malik. Plaintiffs indeed filed that action on July 24, 2015 in Montgomery County,
Maryland state court naming as defendants: Dr. Malik, P.C.; Dr. Malik’s two physician
practices, Advanced Walk-In, LLC (“Advanced”) and Union Multi-Care Medical Center,
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Inc. (“Union,” and collectively with Advanced and Dr. Malik, “the Insureds”); Castillo’s
former physician, Dr. Richard Akoto; and Dr. Richard Osei Akoto, M.D., P.C., LLC.
Mora v. Advanced Walk-In Urgent Care LLC, No. 407276 (Montgomery Cnty. Cir. Ct.
July 24, 2015). Plaintiffs alleged that Dr. Malik and Dr. Akoto negligently failed to refer
Castillo to a cardiologist, leaving his condition undiagnosed and untreated, resulting in
Castillo’s death. That same day, Plaintiffs mailed a copy of the complaint to Lancet and
Lancet’s outside counsel.
In response to the letter and lawsuit, Lancet informed the Insureds that it had been
contacted by the plaintiffs in the malpractice action, had retained defense counsel on the
Insureds’ behalf, and required Dr. Malik’s assistance in discussing the allegations against
the Insureds. The attorney retained by Lancet, Brad Kelly, made multiple attempts to
contact Dr. Malik by phone, email, and in writing. Dr. Malik, however, never responded,
despite repeated attempts to reach him over the course of many months. After speaking
with one of Dr. Malik’s former attorneys, Lancet learned Dr. Malik had moved to
Pakistan and had no plans to return to the United States.
Unable to reach Dr. Malik, Kelly advised Lancet that because he had not obtained
Dr. Malik’s consent to representation, the Maryland Rules of Professional Conduct
barred him from appearing in the malpractice action. After Kelly advised Lancet that he
believed he was ethically barred from appearing on Dr. Malik’s behalf, Lancet elected
not to participate in the malpractice action—it did not investigate the malpractice claim, it
did not obtain Castillo’s medical records, and it did not answer Plaintiffs’ complaint.
4
Several months later, in October 2015, Lancet sent a letter to Dr. Malik’s last
known address informing him that it was disclaiming coverage because of his failure to
cooperate in defense of the malpractice suit. Lancet sent two similar letters to Pakistani
addresses thought to be where Dr. Malik might be residing.
In February 2016, Plaintiffs moved for Entry of an Order of Default against the
Insureds, which the state court granted on March 11, 2016. The attorney for the Plaintiffs
notified Lancet that it had thirty days to move to vacate the order. Three days before a
state-court scheduled hearing on damages, Lancet filed a motion to intervene—its first
effort to participate in the case—which the court granted. Thereafter, Lancet
unsuccessfully moved to delay the damages hearing. The state court then entered
judgment in the Plaintiffs’ favor in the amount of $2.56 million.
On March 2, 2016, Mora, her two minor children, and her adult son, Juan Carlos
Castillo, filed the instant action in Maryland state court, seeking a declaration that Lancet
owed coverage under the Policy for the judgment in the malpractice action. Lancet
removed the case to federal court and filed a counterclaim seeking a declaration that the
Policy was void because of Dr. Malik’s failure to comply with notice and cooperation
provisions in the Policy. 1
1
Following a Rule 16 pretrial conference, Mora, Lancet, and Dr. Akoto stipulated
that Advanced and Union, as well as Defendants Richard Akoto, M.D. and Richard Osei
Akoto, M.D., P.C., LLC, should be realigned as plaintiffs in the declaratory judgment
action against Lancet.
5
Thereafter, both parties filed motions for summary judgment, which the court
denied in an opinion and order entered March 1, 2017. Mora v. Lancet Indem. Risk
Retention Group, Inc., No. PX 16-960, 2017 WL 818718, at *1 (D. Md. Mar. 1, 2017).
Applying Maryland law, the district court held that as a matter of law Lancet could not
disclaim coverage based on lack of notice because it had received notice from Plaintiffs’
counsel. Id. at *6–7. However, the court determined that there were triable issues of fact
precluding summary judgment on the issue of whether, under the terms of the Policy,
Lancet could disclaim coverage on grounds that it was prejudiced by Dr. Malik’s absence
and refusal to cooperate. Id. at *10.
Following a two-day bench trial on the issue of prejudice, the district court entered
judgment in favor of Plaintiffs, declaring that Lancet was “liable for the money damages
of its Insureds pursuant to the Policy’s terms.” Mora v. Lancet Indem. Risk Retention
Grp., Inc., 2017 WL 4618461, at *1 (D. Md. Oct. 16, 2017). Specifically, the district
court found that neither ethical rules, nor Maryland law, nor the terms of the Policy
prevented counsel for Lancet from entering an appearance and defending the malpractice
action. Id. at *8. Accordingly, Lancet’s decision not to participate in the malpractice
action “belie[d] its argument that it was prejudiced by Dr. Malik’s lack of cooperation.”
Id. Furthermore, the district court concluded that Lancet had failed to meet its burden to
establish that it had been actually prejudiced by Dr. Malik’s refusal to participate
because, even in Dr. Malik’s absence, Lancet had several viable paths to defending the
malpractice action, which it elected not to pursue. Id. at *9–10. After a separate hearing
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on damages, the district court awarded Plaintiffs damages in the amount of $996,840.50
as well as post-judgment interest. 2 Lancet timely appealed.
II.
On appeal from a bench trial, this Court reviews the district court’s factual
findings for clear error and its legal conclusions de novo. Larsen v. Terk Techs. Corp.,
151 F.3d 140, 145 (4th Cir. 1998).
Lancet raises four arguments. First, it contends that under the Maryland
Attorneys’ Rules of Professional Conduct, Maryland law, and the terms of the Policy, its
counsel could not enter an appearance in the malpractice action without the consent of
Dr. Malik. Second, Lancet argues that, as a matter of fact, even if it had defended the
malpractice suit, it would have been prejudiced by Dr. Malik’s absence and refusal to
cooperate, therefore voiding coverage under the terms of the Policy. Third, Lancet
argues that Dr. Malik’s failure to notify Lancet of the malpractice action voided the
Policy. Finally, Lancet challenges the district court’s award of $996,840.50 plus post-
judgment interest, arguing that the policy is subject to a $1 million limit that cannot be
exceeded by post-judgment interest.
Resolution of several of these questions requires this Court to construe the Policy.
Under Maryland law—which the parties agree controls this diversity case—courts should
2
This amount of damages was half of the total judgment entered by the Maryland
Circuit Court. A separate settlement with Dr. Akoto had reduced the amount owed by the
Insureds to 50% of the Circuit Court’s judgment.
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“interpret the language of an insurance policy with the same principles and rules of
construction that [are] use[d] to interpret other contracts.” Connors v. Gov’t Emps. Ins.
Co., 113 A.3d 595, 603 (Md. 2015). Courts must construe insurance policies “as a whole
to determine the intention of parties.” Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 889
A.2d 387, 393 (Md. 2006). An insurance policy should be “measured by its terms unless
a statute, a regulation, or public policy is violated thereby.” Pac. Indem. Co. v. Interstate
Fire & Cas. Co., 488 A.2d 486, 488 (Md. 1985) (citations omitted).
In interpreting an insurance policy, courts must “look first to the contract language
employed by the parties to determine the scope and limitations of the insurance
coverage.” Cole v. State Farm Mut. Ins. Co., 753 A.2d 533, 537 (Md. 2000). “When
interpreting the words of a contract, [courts should] seek to give the words their
customary, ordinary, and accepted meaning.” Id. (internal quotation marks omitted).
Additionally, a court tasked with interpreting an insurance contract should “examine the
character of the contract, its purpose, and the facts and circumstances of the parties at the
time of execution.” Clendenin Bros., 889 A.2d at 393 (internal quotation marks omitted).
Although Maryland does not follow the majority of states in construing policies
strictly against the insurer, Sullins v. Allstate Ins. Co., 667 A.2d 617, 619 (Md. 1995), if
an insurance policy is ambiguous, “it will be construed liberally in favor of the insured
and against the insurer as drafter of the instrument,” Megonnell v. United States Auto.
Ass’n, 796 A.2d 758, 772 (Md. 2002) (quoting Empire Fire & Marine Ins. Co. v. Liberty
Mut. In. Co., 699 A.2d 482, 494 (Md. 1997) (emphasis in original). “A term of a contract
8
is ambiguous if, to a reasonably prudent person, the term is susceptible to more than one
meaning.” Cole, 753 A.2d at 537.
A.
Lancet first argues that the district court erred in relying on Lancet’s failure to
participate in the malpractice action in rejecting its prejudice argument. According to
Lancet, the Maryland Attorneys’ Rules of Professional Conduct, Maryland law, and the
terms of the Policy precluded “Lancet (whether through appointed defense counsel or on
its own behalf) to appear” without the consent and cooperation of Dr. Malik, meaning
that Lancet should not be faulted for electing not to participate in the medical malpractice
action. Appellant’s Br. at 8.
Consistent with Kelly’s advice, Lancet maintains that if an attorney had entered an
appearance in the malpractice action without Dr. Malik’s consent, the attorney would
have violated two of the Maryland Rules of Professional Conduct: Rule 1.2(a), which
requires counsel to “abide by a client’s decisions concerning the objectives of the
representation and, when appropriate, shall consult with the client as to the means by
which they are to be pursued,” and Rule 1.8(f)(1), which provides that “[a]n attorney
shall not accept compensation for representing a client from one other than the client
unless . . . the client gives informed consent.” But an attorney would not have violated
either rule if the attorney appeared in the malpractice proceedings on behalf of Lancet
and the Insureds because Section 2 of the Policy conferred on Lancet “the right and duty
to defend any Claim covered by the Policy.” J.A. 84 (emphasis added). That provision
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also afforded Lancet the “right” to investigate any covered claims against the Insureds
and the “right” to choose counsel to defend any claims asserted against the Insureds. Id.
Maryland courts have recognized the validity of such “advanced” consent
provisions in insurance contracts, which allow defense counsel to represent both the
insurer and the insured simultaneously:
The customary clause in insurance policies requiring the insured to permit
the insurer’s lawyer to defend claims insured against is consent in advance
by the insured to such dual representation and obviates an improper
relationship, but if, in the course of the dual representation an actual
conflict develops between the interests of the insured and those of the
insurer, the lawyer must either withdraw entirely from the case or continue
to represent one of the clients only.
Fid. & Cas. Co. v. McConnaughy, 179 A.2d 117, 121 (Md. 1962) (emphasis added).
To that end, Plaintiffs’ expert in Maryland insurance defense law, Albert Brault—
who has decades of experience defending medical malpractice actions in Maryland—
testified that absent an advance consent provision, like Section 2 of the Policy, the
insurance company would be left “totally dependent on a doctor” and unable to “control
the defense itself” or to defend its own interests. J.A. 1401. Brault explained that
insurers include advance consent clauses in their policies because the insurers bear the
ultimate financial risk and therefore need the authority to defend the action. Brault
further testified that, as a matter of practice, Maryland malpractice defense attorneys
routinely receive cases directly from an insurer and begin working on the cases without
waiting for additional consent from the insured.
According to Brault, even if Kelly eventually would have had to withdraw from
representing the Insureds due to Dr. Malik’s noncooperation, Kelly could have continued
10
to represent Lancet’s interests in the suit. Indeed, in testimony credited by the district
court, Brault opined that “where the conflict arises from a failure of the insured to
cooperate, the attorney must nonetheless vigorously defend on behalf of the insurer, and
protect its potential denial of coverage by issuing a reservation of rights letter.” Mora,
2017 WL 4618461, at *8 (emphasis added). Brault further testified that Lancet had the
ability to “settle as to their own liability, not as to the liability that may be applicable to
the individual.” J.A. 1391.
Accordingly, Kelly’s contention that he lacked the ability to enter an appearance
without the consent of Dr. Malik finds no support in the Policy, in Maryland law, or in
the expert testimony presented to and credited by the district court. Notably, both Brault
and Lancet’s malpractice defense expert, William Artz, agreed that Kelly could have
made an appearance. Curiously, Lancet appears not to have consulted with any other
attorneys before electing not to participate in the malpractice proceedings.
Lancet nevertheless argues that the Maryland Court of Appeals’ decision in
Chapman v. Kamara, 739 A.2d 387 (Md. 1999), establishes that Kelly could not enter an
appearance—and Lancet could not have participated in the action—without Dr. Malik’s
consent. In Chapman, the court vacated a judgment against a defendant after an
insurance company filed an answer on behalf of the defendant denying liability in a
wrongful death claim. Id. at 397. Lancet emphasizes that, in vacating the judgment, the
court noted that the client had never authorized the attorney’s appearance and had never
spoken to or met with the insurance company’s attorney. Id. at 394.
11
For several reasons, Lancet’s reliance on Chapman is misplaced. To begin, the
Court of Appeals noted that there was no evidence in the record that the insurance policy
at issue included an advanced consent provision. Id. at 393 & n.5. Indeed, the record did
not include a copy of the insurance policy at issue. Id. Equally significant, the Court of
Appeals vacated the judgment not for absence of consent, but rather due to the plaintiff’s
failure to serve the defendant. Id. at 393–94. Here, the Insured gave advanced consent in
the Policy, and there is no dispute as to the adequacy of Plaintiffs’ service. Based on the
advanced consent, Kelly could have entered an appearance on behalf of the Insureds and
Lancet under Maryland’s well-established dual representation doctrine. Accordingly,
Chapman does not control this case.
B.
Lancet next argues that the district court clearly erred in finding that Lancet failed
to meet its burden to establish that it was prejudiced by Dr. Malik’s refusal to cooperate
in the defense of the malpractice claim.
“A court reviewing for clear error may not ‘reverse a lower court’s finding of fact
simply because [it] would have decided the case differently. Rather, a reviewing court
must ask whether, on the entire evidence, it is left with the definite and firm conviction
that a mistake has been committed.’” United States v. Wooden, 693 F.3d 440, 451 (4th
Cir. 2012) (quoting Easley v. Cromartie, 532 U.S. 234, 242 (2001)). “If the district
court’s account of the evidence is plausible in light of the record viewed in its entirety,
the court of appeals may not reverse it even though convinced that had it been sitting as
12
the trier of fact, it would have weighed the evidence differently.” Anderson v. Bessemer
City, 470 U.S. 564, 573–74 (1985).
Section 25 of the policy—titled “Cooperation and Assistance”—provides:
The Insured must cooperate and assist the Company and the appointed
defense counsel in all aspects of the investigation and defense; and shall,
upon request, submit to examination and interrogation by a representative
of the Company, under oath if required, attend hearings, depositions and
trials, assist in effecting any settlement, securing and giving evidence, and
obtaining the attendance of witnesses, all without charge to the Company.
J.A. 103. That section further provides that “[a]ny failure of the Insured to cooperate that
prejudices our ability to defend any Claim, shall void this Policy.” Id. Lancet argues that
Dr. Malik’s absence prejudiced it, thereby voiding the policy.
Because the term is undefined in the policy, we must decide what “prejudice”
entails. The leading case defining prejudice for purposes of Maryland law states that “the
proper focus should be on whether the insured’s wilful conduct has, or may reasonably
have, precluded the insurer from establishing a legitimate jury issue of the insured’s
liability, either liability vel non or for the damages awarded.” Allstate Ins. Co. v. State
Farm Mut. Auto. Ins. Co., 767 A.2d 831, 843 (Md. 2001) (emphasis added). The insurer
has the burden of proof to show prejudice. Nat’l Union Fire Ins. Co. v. Fund for
Animals, 153 A.3d 123, 137 (Md. 2017). And although the insurer does not have to
overcome “the almost insurmountable burden” of proving that the verdict was the direct
result of a lack of cooperation, it must show that the insured’s failure to cooperate “has,
in a significant way, precluded or hampered it from presenting a credible defense to the
claim.” Allstate, 767 A.2d at 843. Under this standard, “possible, theoretical,
13
conjectural, or hypothetical” prejudice does not suffice. Nat’l Union, 153 A.3d at 136–37
(internal quotation marks omitted).
Correctly applying the definition of prejudice set forth above, the district court
found that Lancet failed to meet its burden to establish prejudice. In rendering that
finding, the district court first rejected Lancet’s contention that it was prejudiced by
Kelly’s inability to enter an appearance. See Mora, 2017 WL 4618461, at *8. As
explained above, however, the plain language of the Policy authorized counsel for Lancet
to enter an appearance, see supra Part II.A, meaning that Lancet’s errant strategic
decision—not Dr. Malik’s noncooperation—caused any prejudice attributable to Lancet’s
failure to participate in the malpractice proceeding. Mora, 2017 WL 4618461, at *8
(“Lancet [wa]s prejudiced by its own choice not to defend the action from the outset.”).
The district court reasonably found that because Lancet elected not to mount a defense,
any prejudice attributable to Dr. Malik’s noncooperation was “hypothetical” and
therefore not a sufficient basis to void the policy. Id. at *10.
The district court also rejected Lancet’s argument that “even if it had chosen to
pursue the litigation, Dr. Malik’s absence would have hamstrung Lancet on defending
against Malik’s violation of [the] standard of care.” Id. at *9. In support of that finding,
the district court noted that, during the trial, “Lancet vigorously pressed, through its
medical expert, cardiologist Dr. Richard Schwartz, that the state of the evidence absent
Malik would be insufficient to establish one way or the other whether Malik violated the
standard of care.” Id. The district court explained that “this is itself a credible defense to
the Malpractice Lawsuit” because it demonstrated that, in Dr. Malik’s absence, “precious
14
little” evidence was available for Plaintiffs to meet their burden to show “that Malik’s
conduct violated the standard of care.” Id. This determination constitutes a reasonable
inference from facts in the record and therefore is not subject to reversal as clearly
erroneous.
The district court also found credible testimony by Plaintiffs’ expert on emergency
medicine, Dr. Alec Anders, that “the medical records alone provided sufficient evidence
for medical experts to opine on [the] standard of care” because Dr. Malik’s
“contemporaneous notes reflect[ed] his diagnostic impressions, course of care, and
follow-up plan.” Id. According to Dr. Anders, such notes are not only used by other
physicians administering additional treatment, but also are used by experts at trials
testifying as to whether a defendant physician met the standard of care. Plaintiffs’
medical malpractice defense expert, Brault, likewise testified that it would have been
possible for Lancet to mount a defense that Dr. Malik’s conduct met the standard of care
primarily, if not exclusively, from his consultation notes:
[An expert opinion] can be formed right from this record, what he did by
examination and what he did by treatment, and that’s what we need.
Whatever the doctor may have been thinking makes no difference. This is
what he did. And if what he did meets the standard of care, you’ve got a
defense.
J.A. 1375–76. The district court reasonably inferred from this evidence that “record
evidence was sufficient to render a standard of care opinion,” Mora, 2017 WL 4618461,
at *10—a well-supported finding not subject to reversal as clearly erroneous.
In sum, the district court’s factual findings as to Lancet’s failure to meet its burden
to establish prejudice find ample evidentiary support in the record and are not subject to
15
reversal under the deferential standard of review that we must apply to a district court’s
factual findings. Accordingly, the district court did not reversibly err in finding that
Lancet failed to meet its burden to establish prejudice.
C.
Next, Lancet argues that the district court erred in holding that the Policy’s notice
provision was satisfied by Plaintiffs’ counsel—as opposed to Dr. Malik—notifying
Lancet of the malpractice claim.
Section 6 of the Policy provides that “[n]otifying us of an Occurrence or Claim
does not provide coverage hereunder unless it contains . . . written notice received by an
Insured, and forwarded to us, from a person or entity, or on behalf of such person or
entity by another party legally empowered to act on their behalf, alleging that such person
or entity has been damaged by an Insured.” J.A. 90 (bolded font in original). The
district court concluded—and we agree—that this language is ambiguous as to whether
notice by a third-party is sufficient to trigger coverage. See Mora, 2017 WL 818718, at
*6. As the district court explained, the Policy “does not expressly state that the ‘person
or entity’ cannot be a third party such as Plaintiff who forwarded the information to
Lancet. Moreover, the provision does not say that the notice received by an insured has
to be forwarded to Lancet by that insured.” Id.
Lancet emphasizes the Policy further states that “it is a condition precedent to your
rights under this policy that you give us immediate written notice thereof and provide us
with all documentation comprising the claim.” J.A. 90 (capitalized in original). “You”
refers to the Insureds. J.A. 83. But whereas Section 6 expressly deals with “coverage,”
16
the language upon which Lancet relies renders notice a “condition precedent” to the
insured’s “rights under this policy.” J.A. 90 (emphasis added). As the district court
noted, “[n]owhere in the Policy is ‘rights under this policy’ used or explained. . . .
Accordingly, ‘your rights’ as used may or may not encompass ‘coverage hereunder.’”
Mora, 2017 WL 818718, at *7.
The Policy, therefore, is ambiguous as to whether third-party notice is sufficient.
Because ambiguities are to be resolved “against the insured as drafter of the instrument,”
Megonnell, 796 A.2d at 772, we must construe the ambiguous notice provisions against
Lancet. Therefore, the notice provided by Plaintiffs’ counsel satisfied the Policy.
D.
Finally, Lancet argues that the district court’s award of post-judgment interest
violated the terms of the Policy. The District Court awarded Plaintiffs $996,840.50 in
damages. With the addition post-judgment interest, the amount of Lancet’s obligation to
Plaintiffs will exceed the Policy’s $1 million limitation of liability. According to Lancet,
awarding Plaintiffs post-judgment interest over-and-above the $1 million limit “read[s]
the Policy’s limits of liability out of the Policy entirely.” Appellant’s Br. at 29. We
disagree.
In the General Terms and Conditions, the Policy states that “Defense Costs are
included in the Limitations of Liability.” J.A. 83. The Policy further defines “Defense
Costs” as including “Interests on that part of the judgment covered by this Policy, after
the entry of the judgement and before we have paid, offered to pay, or deposited in court
that part of the judgment that is within our Limits of Insurance.” J.A. 86.
17
However, the General Terms and Conditions also state that if any term in that
section “is inconsistent or in conflict with the terms and conditions of the Coverage
Section, the terms and conditions of the Coverage Section shall control.” J.A. 84. And
under the “Supplemental Payments” portion of the Coverage Section, the Policy provides
that Lancet agrees to pay “[a]ll interest on the full amount of any judgment that accrues
after entry of the judgment and before we have paid, offered to pay, or deposited in court
the part of the judgment that is within the applicable Limit of Liability.” J.A. 108
(emphasis added). Courts routinely interpret materially indistinguishable provisions in
insurance contracts as requiring payment of interest in full, despite any limitation on
liability. See Wilkerson v. Md. Cas. Co., 119 F. Supp. 383, 388 (E.D. Va. 1953), aff’d,
Md. Cas. Co. v. Wilkerson, 210 F.2d 245, 246 (4th Cir. 1954); see also Fratus v. Republic
W. Ins. Co., 147 F.3d 25, 28 (1st Cir. 1998) (noting that the contract terms “could not be
clearer” and that “‘all interest’ does not mean ‘partial interest’”). Notably, these courts
have held that such provisions require that the insurer pay interest in full even when the
award of interest would render the total payment in excess of the policy’s limit. See
Fratus, 147 F.3d at 29.
The Policy includes conflicting language as to whether post-judgment interest that
brings an award over-and-above the Policy’s $1 million limit is covered. Whereas the
General Terms and Conditions define post-judgment interest as a “Defense Cost” subject
to the limitation of liability, the Coverage Section provides for payment of “all interest,”
including interest over-and-above the Policy’s limit. The Policy expressly provides that
in the event of any such conflict, the Coverage Section controls. Accordingly, the district
18
court did not err in awarding Plaintiffs post-judgment interest in excess of the Policy’s
limit.
III.
For the reasons stated above, we affirm the judgment of the district court.
AFFIRMED
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