Hartford Casualty Insurance v. MCJ Clothiers, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
HARTFORD CASUALTY INSURANCE 
COMPANY,
Plaintiff-Appellee,
v.  No. 02-1433
MCJ CLOTHIERS, INCORPORATED, t/a
Joan Vass,
Defendant-Appellant.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Deborah K. Chasanow, District Judge.
(CA-00-81-DKC)
Argued: December 3, 2002
Decided: December 27, 2002
Before NIEMEYER, LUTTIG, and MOTZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Richard Brian Rosenblatt, THE LAW OFFICES OF
RICHARD B. ROSENBLATT, P.C., Rockville, Maryland, for Appel-
lant. George Edwin Reede, Jr., NILES, BARTON & WILMER,
L.L.P., Baltimore, Maryland, for Appellee. ON BRIEF: Linda M.
Dorney, THE LAW OFFICES OF RICHARD B. ROSENBLATT,
P.C., Rockville, Maryland, for Appellant. Robert S. Reverski, Jr.,
2 HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC.
NILES, BARTON & WILMER, L.L.P., Baltimore, Maryland, for
Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Appellant, MCJ Clothiers ("MCJ"), appeals the district court’s
grant of summary judgment for appellee, Hartford Casualty Insurance
Co. ("Hartford Casualty"), on counterclaims MCJ brought against
Hartford Casualty for breach of contract and bad faith. Hartford Casu-
alty initially brought suit against MCJ, its insured, for declaratory
judgment after denying an insurance claim MCJ made for property
damage it suffered as a consequence of a fire on its premises. The dis-
trict court concluded that MCJ did not proffer sufficient evidence to
support its counterclaims and so granted Hartford Casualty summary
judgment. We conclude that this determination was proper and affirm
the judgment.
I.
At the time of the events central to this case, MCJ operated a
Washington, D.C.-based clothing store, which store was insured by
Hartford Casualty against property damage, including that caused by
fire. On June 18, 1999, a fire broke out in the store, and though a
sprinkler system quickly extinguished the blaze, water from the sprin-
klers caused substantial damage to the store and its inventory. Ms.
Moscarillo, MCJ’s owner-proprietor, filed a claim under MCJ’s insur-
ance policy with Hartford Casualty to recoup losses, but Hartford
Casualty refused to pay on the claim after it discovered via an investi-
gation that an accelerant, poured out over the store’s electrical trans-
former, had fueled the fire. Hartford Casualty concluded that the fire
was intentionally set and that, as a consequence, MCJ was responsible
HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC. 3
for its own losses. On January 10, 2000, following its denial of the
claim, Hartford Casualty filed a declaratory judgment action against
MCJ to establish its right in denying the claim. MCJ counterclaimed
in response for breach of contract and bad faith.
Hartford Casualty submitted several interrogatories to MCJ during
discovery in order to prepare its counterclaims defense. Two of these
interrogatories, and particular portions of MCJ’s response to them, lie
at the heart of this appeal:
Interrogatory 1: Identify each lay witness who will give
opinion testimony on your behalf at trial, and state the opin-
ions to which each witness will testify and the grounds for
those opinions.
MCJ Response: [Ms.] Moscarillo concerning.1
Interrogatory 6: If you contend that you are entitled to
recover attorney fees in this case, state the factual basis to
support your contention, and the precise terms of your fee
agreement with your attorneys.
MCJ Response: Defendant will be amending the Counter-
claim withdrawing the bad faith count and request for attor-
ney fees.
MCJ amended its response to Interrogatory 6 three weeks before
the close of discovery in a letter to Hartford Casualty:
Please be advised that Defendant’s Answer to Interrogatory
Number 6 will be amended as follows: "The Defendant con-
tends that Plaintiff acted with bad faith in denying this
claim. This action violates applicable law in the District of
1
MCJ’s answer to Interrogatory 1 originally read: "[Ms.] Moscarillo
concerning all issues raised in this litigation" (J.A. 264-68). However,
after Hartford Casualty objected to the generality of this answer as unre-
sponsive, MCJ amended it by striking "all issues raised in this litigation"
(J.A. 334-35).
4 HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC.
Columbia which provides for attorney’s fees as well as other
damages."
(J.A. 340-41). MCJ did not disclose the alleged basis for this reas-
serted bad faith claim, however, until five weeks after discovery
closed.
Also relevant to this appeal is a sanction ruling that the magistrate
judge supervising discovery issued against MCJ. MCJ used delay and
unresponsiveness consistently to undercut Hartford Casualty’s efforts
to prosecute discovery and obtain responses to interrogatories.2 Even-
tually the magistrate intervened, ordering MCJ to produce and to
answer, and ultimately sanctioning MCJ for its conduct. The magis-
trate’s sanction ruling barred MCJ "from presenting expert testimony
from any witness aside from William J. Cysyk [MCJ’s expert on the
fire’s origins]" (J.A. 338).
Hartford Casualty moved for summary judgment on MCJ’s coun-
terclaims subsequent to the close of discovery and the magistrate’s
sanction ruling. Hartford Casualty argued that as to the contracts
counterclaim, MCJ had not proffered a basis for proving damages.
MCJ countered by arguing it had made two distinct proffers that
could prove damages. It argued that its proffer of James Harper, an
expert retained to assess "business losses under the insurance con-
tract," J.A. at 267 (Defendant’s Answers to First Set of Interrogato-
ries), could prove damages provided the court reversed the sanction
barring MCJ’s experts’ testimony, and that its proffer of Ms.
Moscarillo’s testimony could also prove damages. The district court
upheld the sanction ruling, precluding the Harper proffer, and rejected
MCJ’s contention that Ms. Moscarillo’s testimony was a satisfactory
alternative proffer on which to prove damages. On these grounds, the
court granted Hartford Casualty summary judgment on the contract
counterclaim. As to the bad faith counterclaim, Hartford Casualty
argued that MCJ had proffered no basis for it whatsoever. The court,
agreeing with Hartford Casualty, granted summary judgment as to it
as well. Hartford Casualty then filed a motion for voluntary dismissal
2
For example, MCJ answered Hartford Casualty’s interrogatories only
after the magistrate’s extended production deadlines had passed.
HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC. 5
of its remaining declaratory judgment claims, which the court also
granted. MCJ now appeals the court’s summary judgment rulings.
II.
MCJ first contends that the district court erred by concluding that
MCJ proffered no evidence with which to prove the fact of and extent
of damages caused by the fire, and thus erred in granting summary
judgment on its contract counterclaim. Under the authority of both
Maryland law, see Lazorcak v. Feuerstein, 273 Md. 69 (1974), and
the provisions of the insurance contract at issue, see J.A. at 35, MCJ
has the burden of proving these elements of its contract claim, so our
sole concern is whether, on de novo review, we can discern any prof-
fer by MCJ on which a jury might be able to establish MCJ’s dam-
ages.
On appeal, MCJ does not challenge the district court’s affirmance
of the sanction ruling that barred the Harper testimony, but relies
solely on its alternative argument that it had proffered Ms. Moscaril-
lo’s testimony as to damages and that her testimony could suffice to
prove such. MCJ argues that the district court never actually
addressed this argument and that the court based its ruling solely on
an errant interpretation of the sanction ruling instead, mistakenly bar-
ring all witness from testifying as to damages, rather than merely
expert witnesses.
Though the district court’s order is not free of ambiguity, a careful
reading of the order reveals that the court did address and reject
MCJ’s proffer of Ms. Moscarillo, and that it did not misinterpret the
sanction ruling. The order follows:
Because there was no timely objection to [the sanction] rul-
ing, MCJ Clothiers could not proffer any testimony that was
properly disclosed in discovery in opposition to Hartford’s
motion for summary judgment . . . .
J.A. at 405. This language contains two distinct analytical conclu-
sions: (1) it rejects MCJ’s challenge to the sanction ruling, with the
result being that the Harper proffer is barred; and (2) it establishes
6 HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC.
that no other damages testimony was properly disclosed. Since it was
never even suggested that Harper’s testimony was not properly dis-
closed, and since Ms. Moscarillo’s was the only testimony, other than
Harper’s, that MCJ argued it had proffered to prove damages, the
court’s order necessarily refers to Ms. Moscarillo’s testimony and
concludes that her testimony as to damages had not been properly dis-
closed, and, as a consequence, could not be proffered.
The district court’s reasoning on this question is not in error. The
record establishes that though Ms. Moscarillo was proffered as a gen-
eral witness in MCJ’s response to Interrogatory 1, she was never prof-
fered as an opinion witness as to damages in such a way as to satisfy
Fed. R. Civ. P. 37. Under Rule 37, where parties do not disclose, in
response to interrogatory requests, opinions to which witnesses will
testify, the undisclosed testimony is inadmissible.
A party that without substantial justification fails to disclose
information required by Rule 26(a) or 26(e)(1), or to amend
a prior response to discovery as required by Rule 26(e)(2),
is not, unless such failure is harmless, permitted to use as
evidence at trial, at a hearing, or on a motion any witness
or information not so disclosed.
Fed. R. Civ. P. 37(c)(1).
Nowhere in the record did MCJ put Hartford Casualty on notice
that their deposition questioning or their trial strategy ought to take
into account Ms. Moscarillo’s opinions as to damages. In response to
Interrogatory 1’s query of what lay opinion testimony would be pre-
sented at trial, MCJ answered with respect to Ms. Moscarillo only,
"[Ms.] Moscarillo concerning," without further elaboration. The dis-
trict court’s conclusion that this non-descriptive response could not
constitute a proffer of an opinion as to damages was proper. And so
likewise were its conclusions that MCJ had proffered no basis on
which to prove damages, and that Hartford Casualty was due sum-
mary judgment.
III.
MCJ also appeals the district court’s grant of summary judgment
to Hartford Casualty on the bad faith counterclaim. The court granted
HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC. 7
summary judgment on this claim because MCJ proffered no basis for
the claim, by virtue of its failure to properly disclose the alleged basis.
The court said:
[MCJ] does not, however, contest the assertion that the basis
for this claim was not provided in discovery, nor did it
amend earlier answers or move to reopen discovery.
Accordingly there is no justification for accepting its asser-
tions made for the first time in response to the motion.
J.A. at 402.
In the face of this plain ruling, MCJ argues that "the District Court
did not rely on or make a Rule 37(c) determination." Appellant’s
Reply Br. at 6. This contention is meritless. Though the court, in this
cursory order, does not expressly reference Rule 37(c), as it did not
in its rejection of the contract counterclaim, its language and reason-
ing make clear here, as on the contract counterclaim, that the court
relied upon the requirements of proper disclosure codified within
Rule 37.
The record fully supports the district court’s conclusion under Rule
37 that MCJ did not properly disclose the alleged basis for its bad
faith claim. Hartford Casualty submitted an interrogatory seeking the
basis for the claim, but MCJ never answered. Hartford Casualty did
not challenge this unresponsiveness because MCJ withdrew the claim
in answer to Interrogatory 6. When MCJ amended that answer, reas-
serting the bad faith claim, it did so only three weeks prior to the
close of discovery, and still did not provide the claim’s alleged basis.
Not until five weeks after the close of discovery did MCJ finally dis-
close the claim’s basis. On this record, the district court was well jus-
tified in adjudging MCJ’s disclosure to be untimely, its proffer of the
claim’s basis to be precluded, and summary judgment to be due Hart-
ford Casualty.
MCJ also argues that even if its disclosures were untimely, Rule
37’s harmlessness exception should apply. But the exception does not
apply here because Hartford Casualty was prejudiced by MCJ’s
actions, since its failure to notice Hartford Casualty in a timely fash-
8 HARTFORD CASUALTY INSURANCE v. MCJ CLOTHIERS, INC.
ion of the claim’s basis prevented Hartford Casualty from using dis-
covery fully to prepare its defense.
CONCLUSION
For the reasons stated herein, the judgment of the district court is
affirmed.
AFFIRMED