UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 05-1726

WESTPORT INSURANCE CORPORATION,

Plaintiff - Appellee,

versus

DAVID ALBERT, a public accountant doing

business in Montgomery County; CAROLYN QUILL,

a public accountant doing business in

Montgomery County; RUBINO & MCGEEHIN, a

Maryland professional corporation doing

business in Montgomery County,

Defendants - Appellants,

and

BRUCE BURTOFF, M.D.,

 Defendant.

Appeal from the United States District Court for the District of

Maryland, at Greenbelt. Alexander Williams, Jr., District Judge.

(CA-04-2315-8-AW)

Argued: September 19, 2006 Decided: December 6, 2006

Before MICHAEL and GREGORY, Circuit Judges, and Thomas E. JOHNSTON,

United States District Judge for the Southern District of West

Virginia, sitting by designation.
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Affirmed by unpublished opinion. Judge Gregory wrote the opinion,

in which Judge Michael and Judge Johnston joined.

ARGUED: Charles Elliott Wilson, Jr., MCCARTHY WILSON, Rockville,

Maryland, for Appellants. Jeffrey John Ward, THOMPSON, LOSS &

JUDGE, L.L.P., Washington, D.C., for Appellee. ON BRIEF: Ronald W.

Cox, Jr., MCCARTHY WILSON, Rockville, Maryland, for Appellants.

Unpublished opinions are not binding precedent in this circuit. 
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GREGORY, Circuit Judge:

David Albert, Carolyn Quill, and Rubino & McGeehin

(“Appellants”) appeal the decision of the United States District

Court for the District of Maryland granting Westport Insurance

Corporation (“Westport”) summary judgment under Federal Rule of

Civil Procedure 12(c). Westport sought a declaratory ruling that

it did not have to provide coverage under either of two accounting

malpractice insurance policies for a claim made against Appellants.

For the reasons discussed below, we affirm the ruling of the

district court. 

I.

This case arises from the management of the estate of Ruth F.

Bernstein. In the 1996 codicil to her will, Bernstein named Donald

Albert, a licensed attorney and professional accountant, as

personal representative for her estate. In that codicil, Bernstein

directed that the bulk of her estate be distributed to her nephew

Bruce Burtoff, his wife, and a generation-skipping trust for his

children.

In December 1998, Bernstein entered into a Private Annuity

Agreement (“PA Agreement”) with R.B. Investments, LLC, a company

Burtoff had created. The purpose of the agreement was to provide

Bernstein with a quarterly income while transferring funds to her

beneficiaries in a way that avoided estate and gift taxes.
*

The legal malpractice claims were covered and defended by

another insurance company.

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Bernstein died in January 1999, and on August 31, 1999, Albert sued

Burtoff to challenge the PA Agreement. Burtoff sent Albert a

letter on August 22, 2001, requesting that he withdraw the suit and

stop “wasting” estate funds. On November 29, 2001, Burtoff filed

a petition in the Superior Court of the District of Columbia to

remove Albert as personal representative of Bernstein’s estate and

a motion to expedite the removal.

In his filings, Burtoff accused Albert of being a

“malfeasant,” providing “sketchy and inadequate accounting

statements,” “breach[ing] his fiduciary duties,” “mismanag[ing]

Estate property,” and failing “to perform material duties of his

office.” (J.A. 52-54.) Albert received these complaints on

December 3, 2001. On January 30, 2002, Burtoff filed a complaint

in the Superior Court of the District of Columbia, alleging

accounting and legal malpractice against Albert, Quill, Rubino &

McGeehin, Jim Farris, and Babirak, Albert, Vangello & Shaheen, PC.*

Appellants had purchased successive professional malpractice

insurance policies from Westport. The 2001 policy promised to

defend and indemnify Appellants from any accounting malpractice

claims made against and reported by them during the period from

January 1, 2001, to January 1, 2002. The 2002 policy covered the

Defendants from January 1, 2002, to January 1, 2003. The 2002
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policy also included a “Prior Knowledge Exclusion” that excluded

from coverage:

any act, error, omission, circumstance, or “personal

injury” occurring prior to the effective date of this

“policy” if any insured at the effective date knew or

could have reasonably foreseen that such act, error,

omission, circumstance or “personal injury” might be the

basis of a “claim.”

Albert gave Westport notice of the Burtoff suit on February 19,

2002.

Westport instituted its declaratory judgment action in the

District of Maryland on July 20, 2004. Westport sought a ruling

that neither the 2001 nor the 2002 policy covered Burtoff’s

malpractice claim against Appellants. Appellants filed an answer

and counterclaim on September 14, 2004, to which Westport replied

on September 30, 2004. Westport filed a motion for judgment on the

pleadings on November 11, 2004. Appellants then filed for leave to

amend their answer and counterclaim. The district court granted

summary judgment to Westport on May 31, 2005, finding that the 2001

policy did not cover the Burtoff malpractice claim and that the

2002 policy prohibited coverage of it under the prior knowledge

exclusion. After the court denied Appellants’ post-judgment

motions on September 22, 2005, Appellants appealed to this Court.

Appellants raise three issues on appeal. They first argue

that the district court erred in granting summary judgment to

Westport. They also claim that the district court abused its

discretion when it denied their motion to amend their answer and
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counterclaim. Finally, they assert that the district court abused

its discretion when it denied their motion for reconsideration.

II.

Under Federal Rule of Civil Procedure 12(c), a district court

should treat a motion for judgment on the pleadings as a motion for

summary judgment if “matters outside the pleadings are presented to

and not excluded by the court.” Fed. R. Civ. P. 12(c). Because

the district court treated Westport’s motion for judgment on the

pleadings as a motion for summary judgment, we review de novo the

district court’s grant of summary judgment to Westport. See Laber

v. Harvey, 438 F.3d 404, 415 (4th Cir. 2006). Summary judgment is

proper “if the pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

(1986). The moving party bears the burden to show that there is no

genuine issue of material fact, and the court “must assess the

evidence as forecast in the documentary materials . . . in the

light most favorable to the party opposing the motion.”

Charbonnages de Fr. v. Smith, 597 F.2d 406, 414 (4th Cir. 1979).

We review a district court’s denial of a motion to amend a

pleading for abuse of discretion. Laber, 438 F.3d. at 428. We
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similarly review a district court’s denial of post-judgment motions

made under Federal Rules of Civil Procedure 59 and 60 for abuse of

discretion. Collision v. Int’l Chem. Workers Union, 34 F.3d 233,

237 (4th Cir. 1994); Nat’l Credit Union Admin. Bd. v. Gray, 1 F.3d

262, 265 (4th Cir. 1993). 

III.

A.

Westport seeks a ruling that the prior knowledge exclusion of

the 2002 policy exempts the company from defending Appellants

against Burtoff’s malpractice suit. The policy excludes from

coverage any “act, error, omission, circumstance, or ‘personal

injury’ ” occurring prior to January 1, 2002, that the insured

“knew or could have reasonably foreseen,” even if the actual claim

against the insured was made during the policy period. Westport

contends that no genuine issue of material fact exists as to

whether Appellants could have reasonably foreseen in 2001 that

Burtoff would bring a malpractice suit against them in 2002.

Westport argues that the allegations Burtoff made in his removal

petition would have put any reasonable accountant on notice that a

malpractice suit was forthcoming. Appellants disagree, arguing

that the petition did not and could not have provided them with

such notice. We agree with Westport.
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Because Westport brought this action under the diversity

jurisdiction granted to the federal courts by 28 U.S.C. § 1332, we

look to the law of Maryland to determine the standard by which we

judge whether the prior knowledge exclusion applies. See Erie R.R.

Co. v. Tompkins, 304 U.S. 64 (1938). Maryland courts use an

objective standard of reasonableness. See Maynard v. Westport Ins.

Co., 208 F. Supp. 2d 568, 571 (D. Md. 2002); Culver v. Cont’l Ins.

Co., 1 F. Supp. 2d 545, 546 (D. Md. 1998). We therefore consider

whether there is any material fact in dispute that would have put

an objectively reasonable accountant on notice that a malpractice

suit was forthcoming.

It is undisputed that Burtoff’s removal petition made numerous

allegations against Appellants. Burtoff claimed that Albert failed

to file accounting statements, “breached his fiduciary duty,”

“mismanaged Estate property,” was “unable to discharge the duties

and powers of his office,” “failed to account for the assets of the

Estate,” and acted as a “malfeasant.” Burtoff also claimed that

Albert had “enriched himself through wasteful litigation”

concerning the estate and had delivered “sketchy” and “materially

and intentionally inaccurate” accountings when pressed. (J.A. 52-

54.) Accusations of that sort should have put a reasonable

accountant on notice that Burtoff could next file a claim for

damages. No facts that Appellants offer change the effectiveness

of that notice. Furthermore, the record reflects that Appellants
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considered, prior to the effective date of the 2002 policy,

“whether or not to report [Burtoff’s petition] to the insurance

company.” (J.A. 324.) In light of the allegations in and the

consideration Appellants gave to the removal petition, they should

have foreseen the 2002 malpractice suit and reported it to

Westport.

We find as a matter of law that the allegations Burtoff made

in his petition to remove Albert as the personal representative of

Bernstein’s estate would have put a reasonable accountant on notice

that a malpractice suit was forthcoming. The prior knowledge

exclusion included in the 2002 policy prohibits coverage for the

malpractice action Burtoff filed in 2002. Summary judgment for

Westport is therefore proper.

B.

In their original answer and counterclaim, Appellants admitted

that they had knowledge of Burtoff’s claim prior to 2002. On

December 10, 2004, they sought leave to amend to correct their

mistaken understanding of the word claim. In its summary judgment

ruling on May 31, 2005, the district court denied their motion to

amend.

Federal Rule of Civil Procedure 15(a) allows a party to amend

a pleading once as a matter of course before a responsive pleading

is served. After that opportunity has passed, the party may amend
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only by leave of the court. The Rule states that leave “shall be

freely given when justice so requires.” Fed. R. Civ. P. 15(a). We

have interpreted the Rule to provide that “leave to amend a

pleading should be denied only when the amendment would be

prejudicial to the opposing party, there has been bad faith on the

part of the moving party, or the amendment would have been futile.”

Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986).

In its denial of the motion to amend, the district court

pointed out that any amendment Appellants might make would be

futile. The court concluded that even if it allowed Appellants to

retract their admission that they knew about the forthcoming claim,

it would still find that they reasonably could have foreseen that

claim. Because the evidence shows that an objectively reasonable

accountant would have foreseen the malpractice claim prior to 2002,

we find that the district court did not abuse its discretion in

denying Appellants’ motion to amend.

C.

After the district court’s ruling, Appellants moved the court

for reconsideration, a new trial, or relief from the order. They

claimed that Westport should be required to provide coverage under

the 2001 policy as a “claims made” policy. The district court

denied those motions.
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We have held that a court may only grant a post-judgment

motion under Federal Rule of Civil Procedure 59(e) “(1) to

accommodate an intervening change in controlling law; (2) to

account for new evidence not available at trial; or (3) to correct

a clear error of law or prevent manifest injustice.” Bogart v.

Chapell, 396 F.3d 548, 555 (4th Cir. 2005). If the motion has been

made under Federal Rule of Civil Procedure 60(b), a court should

grant it only to “accomplish justice” because the rule “is

extraordinary and is only to be invoked upon a showing of

exceptional circumstances.” Compton v. Alton S.S. Co., 608 F.2d

96, 102 (4th Cir. 1979). A court should not grant reconsideration

when the movant attempts “to raise arguments which could have been

raised prior to the issuance of the judgment” or “to argue a case

under a novel legal theory that the party had the ability to raise

in the first instance.” Pac. Ins. Co. v. Am. Nat. Fire Ins. Co.,

148 F.3d 396, 403 (4th Cir. 1998).

The district court rejected Appellants’ post-judgment motions

as an attempt to raise a new argument. The court stated that

“[t]he appropriate time for Defendants to present their theory of

coverage under the 2001 policy was in opposition to Plaintiff’s

motion for judgment on the pleadings.” (J.A. 383.) Appellants

argue that they were bound by the mistaken admissions that they

made in their answer and counterclaim and thus could not have

consistently made the argument that the 2001 policy covered the
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malpractice suit. The district court properly noted that

Appellants could have pleaded their new claim in the alternative to

their argument that the 2002 policy covered the action.

The district court also rejected the argument that Maryland

law should force Westport to defend Appellants under the 2001

policy. Maryland Insurance Code section 19-110 states:

An insurer may disclaim coverage on a liability insurance

policy on the ground that the insured . . . has breached

the policy by failing to cooperate with the insurer or by

not giving the insurer required notice only if the

insurer establishes by a preponderance of the evidence

that the lack of cooperation or notice has resulted in

actual prejudice to the insurer.

Md. Code. Ann., Ins., § 19-110 (LexisNexis 1997). This law,

however, applies only to “claims made” policies and not “claims

made and reported policies.” Maynard, 208 F. Supp. 2d at 574. The

Insuring Agreement of the 2001 policy states that the insured must

give “immediate written notice” of any claim arising within the

policy period. This statement identifies the policy as a “claims

made and reported” policy not covered under Maryland Insurance Code

§ 19-110. Appellants provided notice of Burtoff’s claim against

them to Westport on February 19, 2002, and thus did not satisfy the

reporting requirement of the 2001 policy.

We find that the district court did not abuse its discretion

when it denied Appellants’ post-judgment motions. Appellants

should have raised their argument that the 2001 policy covered the

malpractice action in their opposition to Westport’s motion for
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summary judgment. Further, because the 2001 policy is a “claims

made and reported” policy, Maryland law provides Appellants no

relief.

IV.

Because Appellants have not demonstrated that any material

fact is genuinely at issue, and because the district court did not

abuse its discretion in denying Appellants’ motions, the decision

of the district court is affirmed.

AFFIRMED