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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

EMANUEL et al v. ACE AMERICAN INSURANCE COMPANY Defendant Motion to Dismiss

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Case 1:11-cv-00875-ELH Document 9
Filed 04/18/11 Page 1 of 3
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND (Northern Division) NORMAN J. EMANUEL, d/b/a EMANUEL TIRE COMPANY, et al. Plaintiffs, * v. * ACE AMERICAN INSURANCE COMPANY * Defendant. * * * * * * * * * * * * * * Case 1:11-cv-00875-ELH * *
MOTION TO DISMISS Defendant ACE American Insurance Company, by its undersigned counsel and pursuant to Federal Rule of Civil Procedure 12(b)(6), makes this Motion to dismiss Plaintiffs’ Complaint in its entirety, and states as follows. 1. This case involves a dispute over Plaintiffs’ entitlement to insurance
coverage under ACE Commercial General Liability Policy GS1776798. 2. The Plaintiffs have been sued in Maryland and Florida as a result of a
single automobile accident which occurred on August 9, 2007 in the State of Florida. Complaint at ¶ 7; Complaint Exhibits 1 through 4. The automobile accident and
resulting bodily injuries are alleged by all to have been caused by the sudden tread separation on a used automobile tire sold to a retail consumer by these Plaintiffs, and for which these Plaintiffs are liable. Complaint at ¶¶ 9(c), (e), and (g). 3. ACE Commercial General Liability Policy GS1776798 conspicuously and
unambiguously excludes coverage for any bodily injury arising from that portion of the Plaintiffs’ operations which involve the retail sale of used tires. Complaint at ¶ 16-17.
Case 1:11-cv-00875-ELH Document 9
Filed 04/18/11 Page 2 of 3
4.
The Plaintiffs have failed to state a claim against this Defendant upon
which relief can be granted. 5. The points and authorities in support of dismissal are set forth in the
Memorandum of Law submitted in support of this Motion, filed contemporaneously hereto and incorporated herein by reference. For the foregoing reasons, Defendant respectfully requests that this Court grant this Motion, dismissing Plaintiffs’ complaint, and that it be awarded such further and other relief as is deemed appropriate by the Court, including costs and attorneys’ fees. Respectfully submitted,
/s/ Cynthia L. Maskol (Bar #25390) Wilson, Elser, Moskowitz, Edelman & Dicker, LLP 200 St. Paul Place, Suite 2530 Baltimore, MD 21202 Tel: (410) 539-1800 Fax: (410) 962-8758 Email: cynthia.maskol@wilsonelser.com Counsel for Defendant, ACE American Insurance Company
Case 1:11-cv-00875-ELH Document 9
Filed 04/18/11 Page 3 of 3
CERTIFICATE OF SERIVCE I hereby certify that on this 18th day of April, 2011, I served a copy of Defendant’s Motion to Dismiss, Memorandum of Law in Support thereof, and proposed Order on the following counsel of record via ECF: Jonathan A. Azrael, Esquire John R. Solter, Jr., Esquire Azrael, Franz, Schwab & Lipowitz, LLC 101 E. Chesapeake Avenue, 5th Floor Baltimore, MD 21286 Attorneys for Plaintiff
/s/ Cynthia L. Maskol, Esquire
Case 1:11-cv-00875-ELH Document 9-1
Filed 04/18/11 Page 1 of 7
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND (Northern Division) NORMAN J. EMANUEL, d/b/a EMANUEL TIRE COMPANY, et al. Plaintiffs, * v. * ACE AMERICAN INSURANCE COMPANY * Defendant. * * * * * * * * * * * * * * Case 1:11-cv-00875-ELH * *
MEMORANDUM AND POINTS OF AUTHORITIES IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PLAINTIFFS’ COMPLAINT I. FACTUAL AND PROCEDURAL BACKGROUND This case involves a dispute over entitlement to coverage under a contract of insurance (attached to Plaintiffs‟ Complaint at Exhibit 5). The Plaintiffs each seek a declaration that ACE is legally obligated to defend and indemnify them under ACE Commercial General Liability Policy GS1776798 (the “Policy”), and with regard to four (4) lawsuits (the “Lawsuits”) which have been brought against them.1 (Count I.) See
Exhibits 1 through 4 to Plaintiffs‟ Compliant. If the Court‟s declaration is in their favor, Plaintiffs then additionally seek reimbursement of monies they have expended thus far in their defense of the four Lawsuits. (Count II.) The four Lawsuits arise from a single occurrence -- an automobile accident on August 9, 2007 in the State of Florida (the “Occurrence”). Complaint at ¶7. The
Occurrence is alleged to have been caused by sudden tread separation on a used automobile tire (the “Used Tire”). Complaint at ¶¶ 9(c), (e), and (g). The liability of these
1
Plaintiff Emanuel Tire of Pennsylvania, Inc. is not a named insured under the subject Policy.
Case 1:11-cv-00875-ELH Document 9-1
Filed 04/18/11 Page 2 of 7
Plaintiffs in the Lawsuits is alleged to arise exclusively because they sold and installed the Used Tire to a retail consumer. In August 2009, Plaintiffs tendered a claim to ACE related to the Occurrence and the first Lawsuit that had been filed against them in Florida.
2
Complaint at ¶ 10.
In
September 2009, after reviewing the terms of the Policy and the allegations contained in the Florida Lawsuit, ACE notified the Plaintiffs that coverage for any bodily injury arising from the sale of used tire to a consumer is excluded by the Policy, and declined Plaintiffs‟ request to pay for their litigation defense. Complaint at ¶ 11. II. LEGAL STANDARDS A. Motion to Dismiss.
A motion to dismiss filed pursuant to Fed. R. Civ. P. 12(b)(6) tests whether the facts as stated in the Complaint support a claim for relief. The United States Supreme Court set forth the standard for deciding a Rule 12(b)(6) motion in Conley v. Gibson, 355 U.S. 41 (1957). In Conley, the Supreme Court held that such a motion may be granted if "it appears beyond a reasonable doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 45-46. When considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court must accept plaintiff‟s factual allegations as true. Albright v. Oliver, 510 U.S. 266
(1994). However, “conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.” Campbell v. San Antonio, 43 F.3d 973, 975 (5th Cir. 1995); Bender v. Suburban Hosp., Inc., 159 F.3d 186, 192 (4th Cir. 1998) (conclusory allegations were not required to be taken as true in
2
Emanuel Tire Retail of Maryland, LLC, Emanuel Tire of Pennsylvania, Inc., and Emanuel Tire at Hollins Ferry, LLC are also defendants to the Lawsuits, but are not insured by the Policy.
2
Case 1:11-cv-00875-ELH Document 9-1
Filed 04/18/11 Page 3 of 7
employment discrimination suit when plaintiff labeled certain relationships as employment relationships, but her factual allegations made it obvious that this was a legal conclusion that inaccurately characterized relationships); Northern Trust Company v. Peterson, 69 F.3d 123, 129 (7th Cir. 1995) (conclusory statements of law, and their unwarranted inferences, are not sufficient to defeat a motion to dismiss for failure to state a claim). As set forth below, no set of facts will change the words of the insurance contract or the allegations contained within the Lawsuits, such that coverage would be created for the Plaintiffs under the Policy. Dismissal is, therefore, appropriate. B. Duty to Defend.
Under Maryland law, the question of whether an insurance company has a duty to defend is determined by a two-part inquiry: (1) What is the coverage and defenses to coverage under the insurance policy; and (2) Do the allegations in the lawsuit potentially bring the claims against the insured within the policy‟s coverage? St. Paul Fire &
Marine Ins. Co. v. Pryseski, 292 Md. 187, 193, 438 A.2d 282, 285 (1985) (citations omitted). The insurance company may not consider extrinsic evidence when
determining whether the claims in the lawsuit establish a potentiality of coverage unless that evidence is provided to it by the insured, and only “if that reference is necessary to determine whether there is a potentiality of coverage under an insurance policy.” 3 Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98, 107-108, 651 A.2d 859, 863-864 (1995)(citations omitted).
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Plaintiffs were invited in September 2009 to submit extrinsic evidence in support of their claim for coverage, but failed to do so.
3
Case 1:11-cv-00875-ELH Document 9-1
Filed 04/18/11 Page 4 of 7
An insurance company‟s duty to defend is, therefore, triggered only when “an examination of the policy, the complaint and appropriate extrinsic evidence discloses a potentiality of coverage under the policy. Chantel Assoc. v. Mount Vernon Fire Ins. Co., 338 Md. 131, 141, 656 A.2d 779, 784 (1995). Plaintiffs have failed to state a claim
against ACE upon which relief can be granted to them by this Court. III. ARGUMENT A. The Policy very specifically excludes coverage for any bodily injury which arises from that portion of Plaintiffs’ retail business operation involving used tires.
Where an analysis of an insurance policy‟s language shows that the contract‟s terms are plain and unambiguous, the court will determine their meaning as a matter of law. Clendenin Bros., Inc. v. United States Fire Ins. Co., 390 Md. 449, 889 A.2d 387, 393 (2006). Words are given their customary, ordinary, and accepted meaning. Maryland
Sheets v. Brethren Mut. Ins. Co., 342 Md. 634, 679 A.2d 540, 543 (1996).
does not follow the view that insurance policies must be construed against the insurer. Clendenin, 889 A.2d at 394. The Policy contract is divided into five Sections. Section I defines the categories of coverage provided by the Policy as: - Coverage A: Bodily Injury and Property Damage; - Coverage B: Personal and Advertising Injury Liability; - Coverage C: Medical Payment; and - Supplementary Payments under Coverages A and B. Section II defines who the insured is under the Policy. Section III defines limitations on coverage. Section IV defines conditions to coverage. Section V defines certain terms as used in Sections I through IV.
4
Case 1:11-cv-00875-ELH Document 9-1
Filed 04/18/11 Page 5 of 7
Section I, Coverage A, Paragraph 1, defines the coverage available to Plaintiffs for the claims for bodily injury raised in the Lawsuits. Section I, Coverage A, Paragraph 2, outlines the Exclusions to coverage available to Plaintiffs for claims for bodily and injury. In their Complaint, the Plaintiffs acknowledge that ACE has no duty to defend them against any suit seeking damages for bodily injury for which the insurance does not apply. Complaint at ¶ 13. The Plaintiffs additionally acknowledge the existence of Policy Endorsement 2153 (the “Endorsement”), which amends Section I, Paragraph 2 to ADD the following Exclusion to coverage for bodily injury: This insurance does not apply to “bodily injury” or “property damage” arising out of the ongoing operations described in the Schedule of this endorsement, regardless of whether such operations are conducted by you or on your behalf or whether the operations are conducted for yourself or for others. (Emphasis added.) The Endorsement “Schedule” defines the “Description of Designated Ongoing Operation(s)” excluded from coverage as: ANY AND ALL OPERATIONS
THAT CONSIST OF RETAIL USED TIRES TO INCLUDE PERSONAL INJURY AND MEDICAL PAYMENTS. Complaint at Exhibit 5, and pages 1 and 2 of that Exhibit. This Policy Endorsement is unambiguous. The Plaintiffs did not purchase and were provided with no coverage under this Policy for bodily injury arising out of that portion of their business operations having anything whatsoever to do with used tires in a retail setting -- irrespective of whether the allegation as to that used tire is as to its design, manufacture, testing, inspection, sale, installation, or failure to warn. B. The only claims in the Lawsuits against these Plaintiffs seek liability for bodily injury arising from that portion of Plaintiffs’ retail business operation involving used tires, and there is no potential for coverage of those claims under the Policy.
5
Case 1:11-cv-00875-ELH Document 9-1
Filed 04/18/11 Page 6 of 7
The four Lawsuits are interrelated, and each assert the same claim against the Plaintiffs – that the Plaintiffs are liable for bodily injuries which resulted from the Occurrence, because they sold the Used Tire to a consumer and installed it on her personal automobile. Plaintiffs assert that their coverage falls within the “Products-Completed Operations Hazard” liability limits of the Policy. Complaint at ¶ 15. “Products-
Completed Operations Hazard” is defined at Section IV, Paragraph 16 of the Policy as bodily injury occurring away from the insured‟s premises, but arising out of the insured‟s product or work. 4 Section I, Coverage A, Paragraph 1, outlines the coverage available under the Policy for bodily injury occurring away from the insured‟s premises, but arising out of the insured‟s product or work. However, the Endorsement to that Section is equally clear
that coverage will not include bodily injury arising from the Plaintiffs‟ business operations which include used tires in a retail setting -- irrespective of whether the allegation as to that used tire is as to its design, manufacture, testing, inspection, sale, installation, or duty to warn. C. There is no extrinsic evidence to support the probability that the Lawsuit raises claims other than those that arise from Plaintiffs’ retail business operation involving used tires, or that are covered by the Policy.
The Plaintiffs state in their Complaint that there is extrinsic evidence which will show that they “did not sell or install the subject tire, as the Plaintiffs do not perform any operations that consist of „retail used tires.‟” Complaint at ¶ 20. This is irrelevant. The
4
The Plaintiffs appear to argue, alternatively, that the Endorsement does not apply to their claim for coverage, because the Used Tire was no longer in their possession at the time of the Occurrence and, therefore, was not a part of their “ongoing operations”. Complaint at ¶ 19. In doing this, Plaintiffs ignore that the claims in the Lawsuits are for bodily injury arising out of that portion of Plaintiffs‟ ongoing business operation which has to do with the sale of used tires in a retail setting.
6
Case 1:11-cv-00875-ELH Document 9-1
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only extrinsic evidence that would be relevant to or save their claims from dismissal would be evidence which suggests the probability that there is coverage available to them under the Policy for the claims made against them in the Lawsuits. Evidence of whether the allegations made against them in the Lawsuits are truthful or false is simply irrelevant. If the allegations are false, then Plaintiffs have no liability in the Lawsuits. ACE has a duty to defend these Plaintiffs only if it can be shown that they are potentially covered under the Policy for the claims that are made against them in the Lawsuits, which they cannot do. Sheets, supra. IV. CONCLUSION For the foregoing reasons, it is clear that Plaintiffs have not and can not state a viable cause of action against Defendant ACE American Insurance Company. Wherefore, ACE American Insurance Company respectfully prays: A. B. C. That Defendant‟s Motion to Dismiss be Granted; That Plaintiffs‟ Complaint be dismissed with prejudice; and That Defendant be awarded such other and further relief to which this
Court deems it entitled. Respectfully submitted,
/s/ Cynthia L. Maskol (Bar #25390) Wilson, Elser, Moskowitz, Edelman & Dicker, LLP 200 St. Paul Place, Suite 2530 Baltimore, MD 21202 Tel: (410) 539-1800 Fax: (410) 962-8758 Email: cynthia.maskol@wilsonelser.com Counsel for Defendant, ACE American Insurance Company
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Case 1:11-cv-00875-ELH Document 9-2
Filed 04/18/11 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND (Northern Division) NORMAN J. EMANUEL, d/b/a EMANUEL TIRE COMPANY, et al. Plaintiffs, * v. * ACE AMERICAN INSURANCE COMPANY * Defendant. * * * * * * * * * ORDER * * * * * Case 1:11-cv-00875-ELH * *
Having Considered Defendant ACE American Insurance Company’s Motion to Dismiss, its Memorandum of Law in Support thereof, any Opposition or Reply thereto, and any argument heard thereon, it is this ____ day of __________________, 2011, hereby ORDERED, that the Motion to Dismiss be and is hereby GRANTED; and it is further ORDERED, that Plaintiffs’ Complaint be and is hereby DISMISSED with prejudice.
_____________________________ Ellen L. Hollander United States District Judge
Copies to: Jonathan A. Azrael, Esquire John R. Solter, Jr., Esquire Azrael, Franz, Schwab & Lipowitz, LLC 101 E. Chesapeake Avenue, 5th Floor Baltimore, MD 21286 Attorneys for Plaintiffs Cynthia L. Maskol, Esquire Wilson, Elser, Moskowitz, Edelman & Dicker, LLP 200 St. Paul Place, Suite 2530 Baltimore, Maryland 21202 Attorneys for Defendant

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