Title: Board of Education v. Horace Mann

State: maryland

Issuer: Maryland Supreme Court

Document:

HEADNOTE:
A board of education’s duty to provide an employee or agent with a defense under Md. Code
(1978, 2004 Repl. Vol.), § 4-104 of the Education Article is independent of its duty to
procure insurance to protect itself, its agents and employees pursuant to Md. Code (1978,
2004 Repl. Vol.), § 4-105 of the Education Article.  Our holding in Bd. of Education v.
Mann Insurance, 383 Md. 527, 860 A.2d 909 (2004),  made clear that there is only one test
for determining whether an educator is entitled to a defense under § 4-104 of the Education
Article and to pass that test an educator need only establish “a potentiality that the conduct
at issue was undertaken in performance of the [educator’s] duties, was within the scope of
employment, and was without malice.”  383 Md. at 545, 860 A.2d at 919-20.  
In the Circuit Court for Worcester County
Civil 
IN THE COURT OF APPEALS
OF MARYLAND
No. 90
September Term, 2008
BOARD OF EDUCATION OF WORCESTER
COUNTY 
v.
HORACE MANN INSURANCE COMPANY
Bell, C.J.
Harrell
Battaglia
Greene
Murphy
Adkins
Barbera,
JJ.
Opinion by Greene, J.
Filed:   April 10, 2009
1The complaint was filed through Tracy L. Souders, Souders’ Mother and next friend.
In August of 2005, Pocomoke High School student Bradley Souders (“Souders”)
brought a civil action in the Circuit Court for Worcester County,1 alleging that Vice
Principal, James L. Covington (“Mr. Covington”), had assaulted him.  The issue presented
for our review is whether the Board of Education of Worcester County (“the Board”) had
a duty to provide Covington with a defense in this action pursuant to Md. Code (1978, 2004
Repl. Vol.), §§ 4-104 and 4-105 of the Education Article.  We shall hold that § 4-104 of the
Education Article required the Board to provide Covington with a defense because the
allegations of the complaint, and extrinsic evidence brought to the Board’s attention,
established the potentiality that Covington’s actions were taken within the performance of
his duties, within the scope of his employment and without malice.
I.  Background
The parties agree that Mr. Covington summoned Souders to his office because
Souders had been accused of harassing another student.  While Souders was in Covington’s
office, the events that gave rise to Souders’ complaint occurred.  In his complaint, Souders
described the events as follows:
On March 17, 2004, [Mr. Covington] summoned [Souders] to his office,
closed the door, removed the cord from the handset of the telephone, and in
the course of subsequent conversation, removed from the bottom drawer of his
desk, a knife with a six to seven inch blade and brandished it directly in front
of [Souders], hereby [sic] placing [Souders] in fear of imminent harm.
Souders’ complaint also alleged:
2 Souders’ Responses to Interrogatories also corroborated that Covington showed him
the knife in the context of telling Souders a story about a smaller child who had brought the
weapon to school because he was often “picked on” or teased.
3 Md. Code (1978, 2004 Repl. Vol.), § 4-104(d)(1) of the Education Article provides:
(continued...)
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That because of the student-vice principal relationship between the parties,
giving [Mr. Covington] control over [Souders], because they were alone in
[Mr. Covington’s] office, because [Mr. Covington] remove [sic] the cord from
the handset of his telephone, and because [Mr. Covington] brandished the
knife, [Souders] was caused to suffer and continue to suffer mental pain,
suffering fright [sic], nervousness, indignity, humiliation, embarrassment, and
other damages.
Mr. Covington’s version of the events differed significantly.  In response to Souders’
complaint, Mr. Covington indicated that his duties as Vice Principal required him to address
disciplinary issues and that he called Souders to his office to address a potential disciplinary
problem.  When Souders arrived in Mr. Covington’s office, according to Mr. Covington, he
engaged in a discussion with Souders regarding “where harassment could lead.”  Mr.
Covington stated that during the course of this discussion, he showed Souders a knife that
he had confiscated from a former student who was small and often teased at school.  Mr.
Covington asserted that he then asked Souders “how he would feel if someone that he had
picked on had brought the knife to school.”2
Mr. Covington denied assaulting Souders and indicated that he believed his actions
were appropriate and pursuant to his duties as Vice Principal.  Accordingly, Mr. Covington
asked the Board to provide him with a defense in the assault action pursuant to Md. Code
(1978, 2004 Repl. Vol.), § 4-104(d) of the Education Article.3   The Board refused to defend
(...continued)
(d) Counsel to be provided in suits against teachers and other board agents
and employees. – (1) In any suit or claim brought against a principal, teacher,
school security guard, or other agent or employee of a county board by a
parent or other claimant with respect to an action taken by the agent or
employee, the board shall provide for counsel for that individual if:
(i) The action was taken in the performance of his duties, within the
scope of his employment and without malice; and
(ii) The board determines that he was acting within his authorized
official capacity in the incident.
4Mr. Covington is a member of the Maryland State Teachers Association.
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Covington because he was charged with assault, an intentional tort.  The Board contended
that assault could never be without malice, and thus, did not fall within the purview of § 4-
104(d) of the Education Article.  
The Board self-insures through the Maryland Association of Boards of Education
Group Insurance Pool (“the Pool”).  As a member of the Pool, the Board is covered under
the Pool’s self-insurance agreement.  The Pool also refused to provide Covington with a
defense, asserting that the actions alleged in Souders’ complaint were not covered under the
self- insurance agreement because the agreement excludes coverage for intentional acts.  The
Pool further asserted that Souders’ complaint alleged a type of damage, emotional distress,
that was not covered under its policy. 
Ultimately, Horace Mann Insurance Company (“Horace Mann”) provided Mr.
Covington with a defense pursuant to an Educators Employment Liability Policy that it had
issued to the Maryland State Teachers Association.4   The case was tried before a jury and
the  jury found Mr. Covington did not assault Souders.  Subsequently, Horace Mann filed
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an action for declaratory judgment in the Circuit Court for Worcester County, seeking a
declaration that: (1) the Board had a duty to defend Covington against the allegations in the
underlying action, (2) the Board breached its duty by refusing to provide Covington with
such defense, and (3) the Board was obligated to reimburse Horace Mann for the expense
of defending Covington in the underlying action and for the expense of bringing the
declaratory judgment action.
The Circuit Court for Worcester County determined that if the Board had a duty to
defend Covington, that duty either arose out of the Pool’s self-insurance agreement or § 4-
104(d) of the Education Article.  The court then concluded that Souders’ complaint and
Covington’s defense did not allege facts that invoked a potentiality of coverage under the
terms of the Pool’s self-insurance agreement and thus, the Pool owed no duty to defend
Covington under that policy.  The court analyzed the Pool’s policy as follows:
There are two potential scopes of coverage applicable to this situation. The
“Legal Liability Scope” specifically disclaims responsibility for any assault
case, no matter how frivolous.  The “Casualty Scope” is limited to payments
for “bodily injury” and requires an “occurrence.”  An “occurrence” is defined
as an accident or a professional incident.  The underlying complaint, and Mr.
Covington’s defense, do not allege there was an accident and the term
“professional incident” applies to medical services. 
 Next, the court held that the Board was required to provide Covington with a defense
pursuant to § 4-104(d) of the Education Article.  Analogizing the case to Aetna v. Cochran,
337 Md. 98, 651 A.2d 859 (1995), the Court reasoned:
Mr. Covington was entitled to a defense when he was acting in the “scope of
his employment” and “without malice.” Like self-defense, acting in the scope
5 The question presented for review is: “Whether, under §§ 4-104 and 4-105 of the
Education Article, a county school board is required to defend a school employee in an
underyling tort action even where the only cause of action alleged was an intentional tort.”
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of his employment is not something that would be pled in a complaint if the
plaintiff were seeking recovery solely against Mr. Covington.  That defense
serves to disprove the intent element necessary in an assault case and, if
proved, would mean that Mr. Covington met all the criteria of 4-104(d).
* * * * 
[A] legitimate defense that raises a potentiality of coverage must be
considered. Mr. Covington raised a credible defense that was covered by 4-
401(d), so credible in fact that he won his case.  The Defendants were
obligated to provide a defense and they are obligated to compensate Horace
Mann for the cost of the defense they provided.
The Board noted a timely appeal to the Court of Special Appeals, but before that court
could consider the case, we issued a writ of certiorari on our own initiative, Board of Educ.
v.  Horace Mann, 406 Md. 192, 957 A.2d 999 (2008).5
II.  DISCUSSION
The Board asserts that the Circuit Court for Worcester County misapplied the
Education Article and established precedent.  Specifically, the Board contends that the trial
court’s holding that “a county board of education has a duty to defend one of its employees
pursuant to the Education Article, § 4-104, even where the only claim asserted against the
employee was an intentional assault, effectively imposes upon county school boards an
absolute duty to defend virtually any claim against a board employee.” The Board also urges
that the holding below breaks the chain that exists between §§ 4-104 and 4-105 of the
6Md. Code (1978, 2004 Repl. Vol.), § 4-105 of the Education Article provides: 
(a) Comprehensive liability insurance. – Each county board shall carry
comprehensive liability insurance to protect the board and its agents and
employees.  The purchase of this insurance is a valid educational expense.
(b) Standards for policies; coverage. – The State Board shall establish
standards for these insurance policies, including a minimum liability coverage
of not less than $100,000 for each occurrence. The policies purchased under
this section shall meet these standards.
(c) Self-insurance; minimum coverage. – (1) A county board complies with
this section if it:
(i) Is individually self-insured for at least $100,000 for each occurrence
under the rules and regulations adopted by the State Insurance Commissioner;
or 
(ii) Pools with other public entities for the purpose of self-insuring
property or casualty risks under Title 19, Subtitle 6 of the Insurance Article.
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Education Article6 in contradiction to this Court’s holding in Board of Ed. v. Mann
Insurance, 383 Md. 527, 860 A.2d 909 (2004).  The Board explains:
[T]he Board in this instance did procure the coverage required under § 4-105,
coverage which, as the trial court itself held and which Horace Mann does not
challenge on appeal, provided no duty to defend a single count of intentional
assault.  The trial court’s holding, therefore, or at least its effect, is to break the
very relationship between  §§ 4-104 and 4-105 that the Court of Appeals
recognized exists in [Mann Insurance], 383 Md. 527, 860 A.2d 909.  Simply
put, the Circuit Court in this case found a duty to defend under § 4-104 that
would not exist under the likely terms of insurance that the Board was
required to procure under § 4-105.
Conversely, Horace Mann argues that the trial court correctly held that under § 4-
104(d) of the Education Article, the Board was required to provide Mr. Covington with a
defense, because there was a potentiality that Mr. Covington’s conduct was performed
pursuant to his duties as Vice Principal, within the scope of his employment, and without
malice.  Horace Mann  asserts that the Board is required to defend employees for acts
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performed within the scope of the employee’s employment and without malice, not simply
for damages arising out of an occurrence as that term is typically used in liability policies.
According to Horace Mann, § 4-104(d) of the Education Article is to be “liberally construed
to effectuate its beneficent purpose because it is remedial legislation enacted for the benefit
of school board employees.” 
We shall hold that the Board had a duty to defend Covington under § 4-104 of the
Education Article because the evidence presented established the potentiality that
Covington’s conduct was undertaken in the performance of his duties as Vice Principal, was
within the scope of his employment, and was without malice.   To begin our analysis, we
point out that the trial court correctly noted that the Pool’s self-insurance policy provided no
potentiality of coverage for the conduct alleged in this case.  As the court noted, the Pool’s
self-insurance policy contains two parts: the “Legal Liability Scope of Coverage” and the
“Casualty Scope of Coverage.”  The “Legal Liability Scope of Coverage” expressly indicates
that the Pool will not make any payment or defend any claim that arises out of an “actual or
alleged” assault.  The “Casualty Scope of Coverage” indicates that the Pool will only provide
coverage for claims arising out of “occurrences,” i.e., accidents or repeated exposure to a
harmful condition, or “professional incidents,” defined to mean medical or professional care.
Because there was no potentiality of coverage under the terms of the policy,  the Pool had
no duty to provide Covington with a defense under the policy as written. 
Notwithstanding the above conclusions, we expressly reject the Board’s argument that
7We use the term “educator” throughout the Opinion to refer to agents or employees
of a county board of education.
8 Thus, under our holding in Mann Insurance, 383 Md. 527, 860 A.2d 909 (2004), an
educator who is accused of the intentional tort of assault is entitled to a defense under a self-
insurance agreement that excludes coverage for intentional torts if the complaint and
extrinsic evidence provided in the case establish the potentiality that the educator was acting
(continued...)
-8-
it had no duty to provide Covington with a defense under § 4-104(d) of the Education Article
because the terms of the self-insurance policy it procured excluded the alleged conduct from
coverage.  A board’s duty to provide an educator7 with a defense under § 4-104 of the
Education Article is independent of its duty to procure insurance to protect itself, its agents
and employees pursuant to § 4-105 of the Education Article.  Mann Insurance, 383 Md. at
532, 860 A.2d at 912.
In Mann Insurance, we explained that while the duties contained in §§ 4-104 and 4-
105 of the Education Article are independent duties, they are also in some ways interrelated.
Mann Insurance, 383 Md. at 544, 860 A.2d at 919.  In that case we concluded that the duty
to defend that is explicit in § 4-104 of the Education Article is implicit in § 4-105 of the
Education Article.  Mann Insurance, 383 Md. at 544-45, 860 A.2d at 919.  Accordingly, we
held that an educator is entitled to a defense under the terms of a self-insurance agreement
procured pursuant to § 4-105 of the Education Article if: 1) there is a potentiality that the
employee was acting within the scope of employment, pursuant to duty and without malice,
and 2) that potentiality brings the employees’ acts or omissions within the policy’s scope of
coverage.8  We did not hold in Mann Insurance that a school board’s duty to defend an
(...continued)
in way that would entitle him or her to a defense under  § 4-104 of the Educational Article.
An educator is entitled to a defense under that Article if the educator establishes the
potentiality that he or she was acting pursuant to his or her duties, within the scope of his or
her employment, and without malice at the time the alleged misconduct occurred.  Mann
Insurance, 383 Md. at 545, 860 A.2d at 919.  Mr. Covington is not entitled to a defense
under the self-insurance agreement in this case because, amongst other things, the agreement
expressly excludes coverage for assault and allegations of assault. 
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educator as mandated by § 4-104 of the Education Article is in any way limited by the type
of insurance coverage or self-insurance policy that a board procures pursuant to § 4-105 of
the Education Article.  In fact, our decision in Mann Insurance made clear that there is only
one test for determining whether an educator is entitled to a defense under § 4-104 of the
Education Article.  383 Md. at 545, 860 A.2d at 919-20.  To pass that test an educator need
only establish “a potentiality that the conduct at issue was undertaken in the performance of
the [educator’s] duties, was within the scope of employment and was without malice.” Id.
To determine if there is a potentiality that the educator’s alleged conduct meets the
requirements of the above test, the Court looks to the allegations of the complaint and to any
relevant extrinsic evidence provided by the insured.  Mann Insurance, 383 Md. at 545, 860
A.2d at 920; see also Cochran, 337 Md. at 110-11, 651 A.2d at 866 (holding that an insured
may establish a potentiality of coverage under an insurance policy through the use of
extrinsic evidence).  We have said that, “at least where the underlying complaint in the tort
action neither conclusively establishes nor conclusively negates a potentiality of coverage,
an insurer must examine any relevant extrinsic evidence brought to its attention that might
establish a potentiality of coverage.”  Mann Insurance, 383 Md. at 538, 860 A.2d at 915
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(summarizing our holding in Cochran, 337 Md. 98, 651 A.2d 859); see also Cowan Sys. v.
Harleyville Mut. Ins. Co., 457 F.3d 368, 372 (4th Cir. 2006) (explaining that under Maryland
law, any “doubts about the potentiality of coverage must be resolved in favor of the
insured”).  In this case, Mr. Covington’s response to the allegations contained in Souders’
complaint, and the documents produced in discovery, established the potentiality that Mr.
Covington was acting pursuant to his duties, within the scope of his employment and without
malice at the time the alleged assault occurred.  The evidence in this case indicates that  Mr.
Covington  was required to address disciplinary matters pursuant to his duties as Vice
Principal of Pocomoke High School.  It further indicates that Mr. Covington called Souders
to his office to resolve a potential disciplinary issue and that while Souders was in Mr.
Covington’s office, Mr. Covington  showed him  a  knife during the context of a discussion
about the negative impacts of peer to peer harassment.  Based on this evidence, a trier of fact
could reasonably find that Mr. Covington did not engage in unlawful or malicious behavior.
As such, the Board owed Mr. Covington a defense under § 4-104 of the Education Article.
Because the Board refused to provide Mr. Covington with such a defense, the Board is
required to reimburse Horace Mann for the sums that it expended in providing Mr.
Covington with a defense in the assault action and for the sums that it expended in
prosecuting the declaratory judgment action.
JUDGMENT OF THE CIRCUIT
COURT FOR WORCESTER
COUNTY  AFFIRMED. 
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APPELLANT  TO PAY COSTS.