UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CAROLYN GORDON, Class 

representative in the matter of

Campbell et al. v. J. Kim Institute

of Taekwon Do, Incorporated,

Plaintiff-Appellant,  No. 03-2411

v.

HARTFORD FIRE INSURANCE COMPANY,

Defendant-Appellee. 

Appeal from the United States District Court

for the District of Maryland, at Greenbelt.

Alexander Williams, Jr., District Judge.

(CA-03-632-8-AW)

Argued: June 2, 2004

Decided: July 23, 2004

Before WILKINSON, SHEDD, and DUNCAN, Circuit Judges.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: Jo Ann P. Myles, Largo, Maryland, for Appellant. Douglas R. M. Nazarian, HOGAN & HARTSON, Baltimore, Maryland,

for Appellee. 
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

Appellant Carolyn Gordon serves as the class representative of

Taekwon Do lesson purchasers who prevailed in a state court default

judgment against the providers of karate services for breach of contract and numerous intentional torts. Gordon subsequently sued the

providers’ insurer in state court in order to collect the judgment. Gordon sought a declaratory judgment entitling the class to payment as

a third-party beneficiary of the insurance, as well as recovery for violation of the common law duty of good faith and fair dealing, breach

of contract, and other related claims. The insurer removed to federal

court. The district court held that the surety bond and comprehensive

general liability policy held by the insured did not cover the various

intentional actions that formed the basis of the state court default

judgment. For the reasons that follow, we affirm the judgment.

I.

Gordon is the class representative for purchasers of lessons from

the J. Kim Institute of Taekwon Do, Inc. ("JKI") in a suit against

JKI’s insurer Hartford Fire Insurance Company and Hartford Casualty

Insurance Company (collectively "Hartford"). The present lawsuit

arises out of an attempt to enforce a judgment obtained in a previous

suit in state court. In September 1992, Gordon filed a complaint on

behalf of the class in Maryland state court against JKI, its CEO

Bobby Jae Kim, and American Credit Management Corporation (collectively the "Campbell defendants"). See Order of Default, Campbell

v. J. Kim Institute of Taekwon Do, Inc., No. CAL 92-17181 (Circuit

Court for Prince George’s County, Maryland, Oct. 27, 1992). Gordon

claimed that the Campbell defendants sold the class members contracts for Taekwon Do lessons, but that the Campbell defendants misrepresented the nature of the lessons, never taught them, and

subsequently engaged in wrongful debt collection practices by falsely

2 GORDON v. HARTFORD FIRE INSURANCE CO.
reporting the delinquency of class members to credit agencies. In that

action Gordon raised a myriad of claims including breach of contract,

fraud, invasion of privacy, harassment, conspiracy, and defamation of

Gordon herself. 

In October 1992, the state court entered an "order of default"

against the Campbell defendants because none of them responded to

the complaint. Almost one decade later, on March 1, 2002, the state

court entered a proposed order that "deemed" that the class members

suffered $5 million in compensatory damages and were entitled to

recover $5 million in punitive damages. A damages trial followed on

March 4, 2002, in which none of the Campbell defendants participated. On March 11, 2002, the state court entered a judgment against

the Campbell defendants for $8 million, consisting of $3 million in

compensatory and $5 million in punitive damages. This default judgment supplanted the prior proposed order. 

Gordon sought payment on the $8 million judgment, but was

unable to collect from the Campbell defendants. Therefore, Gordon

sought to recover from Hartford, which served as JKI’s insurer. JKI

held both a surety bond and a Commercial General Liability (CGL)

policy with Hartford. JKI’s $188,000 surety bond was limited in its

coverage to benefitting "any consumer who was damaged because of

the closing or bankruptcy of [JKI’s Landover Mall] facility." JKI’s

CGL policy provided $1 million dollars of coverage for personal and

advertising injury. 

Two provisions of the CGL policy are relevant to the litigation.

First, the CGL policy covered "bodily injury" and "property damage"

caused by an "occurrence" within the coverage territory and the policy period. The policy defined an "occurrence" as "an accident,

including continuous or repeated exposure to substantially the same

general harmful conditions." The policy expressly did not apply to

"bodily injury" or "property damage" that was "expected or intended

from the standpoint of the insured." Second, the CGL policy covered

"personal injury" and "advertising injury" caused by events arising

out of the insured’s business. The policy defined "advertising injury"

as injury arising out of, inter alia, "[o]ral or written publication of

material that violates a person’s right of privacy." The policy defined

"personal injury" as injury (other than bodily injury) arising out of,

GORDON v. HARTFORD FIRE INSURANCE CO. 3
inter alia, "[o]ral or written publication of material that slanders or

libels a person," or "[o]ral or written publication that violates a person’s right to privacy." However, the policy’s coverage expressly

excluded "personal injury . . . [a]rising out of oral or written publication of material, if done by or at the direction of the insured with

knowledge of its falsity." 

Upon learning of the surety bond and CGL policy, in February

1993, Gordon filed two insurance claims with Hartford. However,

Hartford did not pay out on either the bond or the CGL policy to any

class members. After obtaining the $8 million judgment, Gordon

attempted to collect against Hartford by initiating post-judgment discovery in the Campbell case. In October 2002, Gordon subpoenaed

Hartford for documents, copies of the surety bond and CGL policy,

and Hartford’s claim files. Hartford initially disclosed thousands of

pages of documents, but Gordon was unsatisfied because some documents were redacted. Subsequently, Hartford refused to submit to further discovery proceedings, and Maryland state courts have declined

to compel Hartford to participate through the imposition of sanctions.

On December 9, 2002, Gordon filed a declaratory judgment action

against Hartford and the Campbell defendants in Maryland state

court. In the amended complaint, appellant sought: (1) a declaratory

judgment that the surety bond and the CGL policy cover the Campbell judgment and that appellant is a third-party beneficiary entitled

to payment of the $8 million judgment from Hartford; (2) damages

from Hartford for violation of the common law duty of good faith and

fair dealing for the refusal to pay the Campbell judgment; (3) damages from Hartford for breach of contract for failure to pay the Campbell judgment; and (4) damages from Hartford on a promissory

estoppel claim. 

On March 6, 2003, Hartford removed Gordon’s action to federal

district court. Gordon responded by filing a motion for remand, and

Hartford filed a Rule 12(b)(6) motion to dismiss Gordon’s complaint.

With this motion, Hartford attached a copy of the complaint in the

Campbell suit, the surety bond, and a twelve-page summary of the

insured’s CGL policy. Because Gordon was pursuing post-judgment

discovery in state court, she filed a motion to stay the district court

proceedings so that she could complete the state court discovery.

4 GORDON v. HARTFORD FIRE INSURANCE CO.
On July 31, 2003, the district court denied Gordon’s motions for

remand and to stay the proceedings. The district court then found that

Gordon’s claims were all against Hartford and not the insured Campbell defendants. It thus dismissed the Campbell defendants from the

suit under the fraudulent joinder doctrine. With the Campbell defendants dismissed, complete diversity was present. The district court

held that neither the bond nor the CGL policy covered the allegations

in the Campbell complaint. Therefore, the court found that Hartford

had no duty to cover the damages award against the Campbell defendants and granted Hartford’s motion to dismiss the complaint for failure to state a claim. Gordon now appeals.

II.

We review de novo questions of subject matter jurisdiction, including those related to the propriety of removal and fraudulent joinder.

Mayes v. Rapoport, 198 F.3d 457, 460 (4th Cir. 1999). We also

review de novo the district court’s decision to dismiss the complaint.

Brooks v. City of Winston-Salem, 85 F.3d 178, 181 (4th Cir. 1996).

We may affirm the dismissal if it appears beyond doubt that Gordon

can prove no set of facts in support of her claim that would entitle her

to relief. Flood v. New Hanover County, 125 F.3d 249, 251 (4th Cir.

1997). 

III.

We first address whether the district court properly asserted jurisdiction over the case and rejected Gordon’s motion to remand the

case to state court. To resolve this question we must determine

whether Hartford’s notice of removal was submitted in a timely fashion and whether diversity jurisdiction existed. 

A.

The removal statute, 28 U.S.C. § 1446(b), provides that "[t]he

notice of removal of a civil action or proceeding shall be filed within

thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief

upon which such action or proceeding is based." Maryland law

GORDON v. HARTFORD FIRE INSURANCE CO. 5
requires out-of-state insurance companies who offer insurance in

Maryland to have the Maryland Insurance Administration ("MIA")

serve as their statutory agent for the delivery of complaints. See Md.

Code Ann., Ins. § 4-107 (2003). 

Here Gordon asserts that she delivered the summons and complaint

to MIA on February 3, 2003. Gordon claims that the thirty-day time

frame for a notice of removal began on this date. Since Hartford submitted its notice to remove to federal court on March 6, 2003, Gordon

asserts that Hartford missed the deadline laid out in 28 U.S.C.

§ 1446(b) by one day. Therefore, Gordon argues that the district court

lacked jurisdiction and should have remanded the case back to state

court. 

Gordon simply misconstrues when the thirty-day time frame for a

notice of removal begins. No court of appeals has addressed the question of whether the thirty-day period for submitting a notice of

removal in 28 U.S.C. § 1446(b) is triggered by a statutory agent’s

receipt of service. However, the overwhelming majority of district

courts to consider the question have held that "[w]hen service is

effected on a statutory agent, rather than on an agent appointed by the

defendant, the time to remove the action to federal court does not start

to run until the defendant actually has received a copy of the complaint." Lilly v. CSX Transp., Inc., 186 F. Supp. 2d 672, 673 (S.D.

W.Va. 2002); see also Hibernia Cmty. Dev. Corp. v. U.S.E. Cmty.

Servs. Group, Inc., 166 F. Supp. 2d 511, 513 (E.D. La. 2001);

Auguste v. Nationwide Mut. Ins. Co., 90 F. Supp. 2d 231, 232

(E.D.N.Y. 2000); Monterey Mushrooms, Inc. v. Hall, 14 F. Supp. 2d

988, 991 (S.D. Tex. 1998); Skidaway Assocs., Ltd. v. Glens Falls Ins.

Co., 738 F. Supp. 980, 982 (D.S.C. 1990). 

While the statutory agent received the complaint on February 3,

2003, Hartford’s registered contractual agent for service of process,

CT Corporation System, did not receive the service from MIA until

February 7, 2003. It notified Hartford of the complaint’s existence on

that date. The time for removal begins when "the defendant actually

has received a copy of the complaint." Lilly, 186 F. Supp. 2d at 673.

Therefore, Hartford’s March 6, 2003 notice of removal clearly falls

within the thirty-day time frame laid out by 28 U.S.C. § 1446(b), and

6 GORDON v. HARTFORD FIRE INSURANCE CO.
the district court properly found that Hartford submitted its notice of

removal in a timely way.

B.

The remaining jurisdictional issue involves the presence of complete diversity. To establish diversity jurisdiction, each defendant

must be a citizen of a different state from each plaintiff. 28 U.S.C.

§ 1332(a). Under the fraudulent joinder doctrine, however, if nondiverse defendants were added to a suit improperly, a district court

may dismiss the nondiverse defendants and assume jurisdiction over

the case. Mayes, 198 F.3d at 461. "‘[T]o establish that a nondiverse

defendant has been fraudulently joined, the removing party must

establish . . . [t]hat there is no possibility that the plaintiff would be

able to establish a cause of action against the in-state defendant in

state court.’" Id. at 464 (quoting Marshall v. Manville Sales Corp., 6

F.3d 229, 232 (4th Cir. 1993)). 

Gordon contends that there was not complete diversity in this case.

Since both the Campbell defendants and the class members are indisputably Maryland residents, Gordon asserts the diversity requirement

is not satisfied. She argues that the Campbell defendants were properly named in the suit, because they were the parties to the Hartford

surety bond and CGL policies that are at the center of the complaint.

We disagree. As the district court observed, each count of the complaint pertains solely to Hartford’s alleged failure to pay out under the

surety bond and CGL policy. Gordon seeks no relief whatsoever from

the Campbell defendants in this suit. Gordon has already successfully

pursued a state court claim against the Campbell defendants, which

addressed her claims against them. Ironically, if the Campbell defendants had any role at all as parties in this case, it would likely be as

plaintiffs to attempt to collect from Hartford to reduce their own obligations. There appears to be no reason to include the Campbell defendants in this lawsuit, other than to defeat diversity jurisdiction. The

district court therefore properly dismissed these parties based on the

doctrine of fraudulent joinder, and it correctly rejected Gordon’s

motion to remand to state court. 

GORDON v. HARTFORD FIRE INSURANCE CO. 7
IV.

We now turn to the question of whether the district court properly

dismissed the complaint. As noted, Gordon argues that the district

court erred in dismissing her complaint, because both the surety bond

and the CGL policy covered her claims. Gordon’s complaint against

Hartford sought (1) a declaratory judgment establishing that the class

was a third party beneficiary to the insurance agreements and thus

entitled to payment from Hartford; (2) recovery for Hartford’s violation of the common law duty of good faith and fair dealing; (3) recovery from Hartford for breach of contract; and (4) recovery from

Hartford on the basis of promissory estoppel. 

We first consider the declaratory judgment count. Here the district

court based its decision to dismiss the complaint on consideration of

the Campbell complaint, the surety bond, and the CGL policy.*See

New Beckley Mining Corp. v. Int’l Union, United Mine Workers of

Am., 18 F.3d 1161, 1164 (4th Cir. 1994). Gordon’s complaint referenced these documents, and the Campbell complaint and the subsequent $8 million judgement formed the underlying basis of the

damages sought through the declaratory judgment action. According

to Maryland law, "[a] judgment by default constitutes an admission

by the defaulting party of its liability for the causes of action set out

in the complaint." Pacific Mortgage & Inv. Group, Ltd. v. Horn, 641

A.2d 913, 923 (Md. App. 1994). Therefore, we consider the default

judgment in the Campbell case as "‘the tacit admission by the defendant[s] in default of the truth of the allegations of the bill of complaint

as they are averred.’" Porter Hayden Co. v. Bullinger, 713 A.2d 962,

971 (Md. 1998) (quoting Hopkins v. Easton Nat. Bank, 187 A. 874

*Gordon also argues that the district court should have stayed the case

pending completion of post-judgment discovery in the state court Campbell proceedings. Gordon argues this stay would have allowed Gordon to

use the state court discovery to gather extrinsic evidence to establish the

applicability of insurance coverage. However, we agree with the district

court that Gordon "has not shown what relationship, if any, [the Campbell post-judgment discovery] issues have with the litigation in" federal

court. The district court reviewed the record including all documents discussed in the complaint, and correctly concluded that there were no

"compelling reasons for staying this action." 

8 GORDON v. HARTFORD FIRE INSURANCE CO.
(Md. 1936)). The district court properly found that the admission of

the underlying claims in the Campbell complaint formed the basis for

the request for declaratory judgment action against the Campbell

defendant’s insurer Hartford. 

The sole issue with respect to the surety bond was whether the

Campbell claims arose out of the "closing or bankruptcy of the [Landover Mall Kim’s Karate] facility." The surety bond expressly provided that it covered damages to consumers caused by the closing or

bankruptcy of the Landover Mall facility, if the claim is made within

one year of the expiration of the bond. Here the Campbell suit was

filed at least sixty days before that facility was closed, and none of

the claims arose out of the closing of the Landover Mall facility. In

fact, nowhere in the complaint is the closing of the Landover Mall

facility even mentioned. Gordon argues that claims concerning the

facility’s closure were informally raised and litigated during the

March 4, 2002, damages phase of the Campbell case. However, the

liability issues in the Campbell case had been resolved almost a

decade earlier, and Gordon could not raise a new theory of liability

during a hearing on damages. See Cole v. Gales, 423 A.2d 972, 973-

74 (Md. App. 1981) (in a default judgment context, a party is limited

to the damages pled, unless she amends the complaint). Therefore, the

district court properly determined that damages in the Campbell case

were not covered by the bond. 

As to the CGL policy, we must address whether the policy obligated the insurer to cover the acts alleged in the Campbell complaint.

The express terms of the CGL policy cover only negligence and bodily injury, and the CGL policy expressly excludes from coverage

"bodily injury" or "property damage" that was "expected or intended

from the standpoint of the insured." This provision establishes that

intentional acts or torts by the insured are not covered by the CGL

policy. Likewise, the policy expressly excludes from coverage "personal injury" that arises out of "oral or written publication of material,

if done by or at the direction of the insured with knowledge of its falsity." Additionally, Maryland law does not authorize insurance coverage for intentional acts. Mayor of Baltimore v. Utica Mut. Ins. Co.,

802 A.2d 1070, 1100 n.49 (Md. App. 2002). Thus the CGL policy’s

coverage clearly excludes intentional conduct. 

GORDON v. HARTFORD FIRE INSURANCE CO. 9
Our focus then is solely on whether the complaint alleges negligence. Contrary to Gordon’s assertions, the overarching theme of the

Campbell claims was limited to intentional acts. Count I alleges

breach of contract, and no provision of the CGL policy covers this

type of claim. Count II alleges the intentional torts of misrepresentation and fraud, and the substance of Count III entails a litany of intentional torts, which are clearly excluded from the policy’s coverage.

The defamation claims in Count IV were specifically excluded from

the default judgment by the state court and are therefore not before

this court. 

It is true, as Gordon stresses, that Count III of the Campbell complaint mentions the word "negligence" in its title, along with several

intentional torts. This count details how the Campbell defendants

engaged in a conspiracy to defame, harass, and provide malicious

credit information about Gordon and other members of the class. In

the context of discussing this conspiracy, this count asserts that the

Campbell defendants negligently failed to record payments for services made by class members, and negligently reported the supposedly delinquent payments to credit reporting agencies and other

parties. Campbell Complaint ¶¶ 50, 55. The suit also discusses general "misrepresentations" without specifying whether it refers to

intentional or negligent conduct. 

Although these vague references give some hint of negligent conduct, the substance of this count entails intentional misconduct by the

Campbell defendants in implementing a conspiracy against Gordon

and other members of the class. See Golden First Mortgage Corp. v.

Berger, 251 F. Supp. 2d 1132, 1141 (E.D.N.Y. 2003) (dismissing

negligence claim where "complaint is permeated with allegations of

intentional conduct rather than negligence"). The count discusses how

the Campbell defendants "engaged in unlawful combination, conspiracy, and course of conduct pursuant to which Defendants defamed,

harassed and provided malicious credit information." Campbell Complaint ¶ 45. It states these actions were "performed wantonly, willfully

and maliciously, in total disregard of the Classes’ rights." Campbell

Complaint ¶ 53. The count further asserts that the Campbell defendants "improperly and maliciously provided erroneous and defamatory information to local and national credit agencies." Campbell

Complaint ¶ 56. The Campbell defendants’ alleged willful and mali10 GORDON v. HARTFORD FIRE INSURANCE CO.
cious acts appear clearly intended, and any negligence appears merely

incidental to the intentional misconduct. Therefore, the district court

properly found that all of the claims against the Campbell defendants

entailed intentional acts outside of the scope of the CGL policy. The

court further correctly dismissed the declaratory judgment count

because the allegations contained in the Campbell complaint are not

covered by either the surety bond or the CGL policy. 

Finally, since Hartford had no obligation to pay Gordon under the

surety bond or CGL policy, Gordon’s claims against Hartford concerning violation of the common law duty of good faith and fair dealing or breach of contract simply lack any merit. The district court

properly dismissed these counts based on its dismissal of the declaratory judgment count. And the district court also was correct to reject

Gordon’s promissory estoppel claim because, under Maryland law,

"waiver or estoppel may occur only when it does not create new coverage." Allstate Ins. Co. v. Reliance Ins. Co., 786 A.2d 27, 32 (Md.

App. 2001) (internal citation and quotations omitted). Here, since

there was never any policy coverage for the claims underlying the

Campbell judgment, the promissory estoppel claim also fails. 

V.

We have reviewed the remaining assignments of error and find

them without merit. For all of the foregoing reasons, we affirm the

judgment.

AFFIRMED

GORDON v. HARTFORD FIRE INSURANCE CO. 11