Opinion ID: 2968898
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Heading: 2d 282 (1981), set forth a two-pronged inquiry:

Text: (1) what is the coverage and what are the defenses under the terms and requirements of the insurance policy? (2) do the allegations in the tort action potentially bring the tort claim within the policy’s coverage? The first question focuses upon the language and requirements of the policy, and the second question focuses upon the allegations of the tort suit. Id. at 193, 438 A.2d at 285; see also Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98, 103-04, 651 A.2d 859, 862 (1995). 12 A. In addressing the first prong of the Pryseski inquiry, we focus on the language of the insurance policy. “When interpreting the meaning of an insurance policy under the first prong of our analytical paradigm, we construe the instrument as a whole to determine the intention of the parties.” Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 390 Md. 449, 458, 889 A.2d 387, 393 (2006) (citations omitted). In determining the boundaries of coverage, a court construes an insurance policy just as it does any other contract, by giving its terms their “customary, ordinary, and accepted meaning.” Aetna Cas. & Sur. Co., 337 Md. at 104, 651 A.2d at 862 (citation omitted). Under the Policy, CAMICO Insurance owes a duty to defend claims “arising out of an Insured’s negligent act, error or omission in rendering or failing to render Professional Services.” J.A. 21. The Policy defines “Professional Services” as “any professional services performed by an Insured as long as the fees or commissions, if any, or other benefits from such services inure to the benefit of the Named Insured[.]” J.A. 26. The “Special Exclusion Endorsement,” which seeks to limit coverage, includes an insurance agent or broker exclusion. However, this “Special Exclusion Endorsement” contains several materially different versions of exclusionary language that 13 create inconsistencies in the scope of the limitation of coverage. As guidance for interpreting an ambiguity in an insurance policy, we observe that the Maryland Court of Appeals has held that: Maryland does not follow the rule, adopted in many jurisdictions, that an insurance policy is to be construed most strongly against the insurer. Rather, following the rule applicable to the construction of contracts generally, we hold that the intention of the parties is to be ascertained if reasonably possible from the policy as a whole. In the event of an ambiguity, however, extrinsic and parol evidence may be considered. If no extrinsic or parol evidence is introduced . . . it will be construed against the insurer as the drafter of the instrument. Cheney v. Bell Nat. Life Ins. Co., 315 Md. 761, 766-67, 556 A.2d 1135, 1138 (1989)(citations omitted); see also Pryseski, 292 Md. at 193, 438 A.2d at 285. Accordingly, under Maryland law, because there is no extrinsic or parol evidence introduced in this matter, any ambiguity in the “Special Endorsement Exclusion” should be resolved against CAMICO Insurance, the party that prepared the Policy. We agree with TGM’s and Myers’s assertion that because CAMICO Insurance invoked the exclusion for claims “in connection with or arising out of any act, error or omission by any Insured in his/her capacity as an [insurance] agent or broker,” the exclusion applies only to claims asserting insurance agent or broker professional liability. 14 Three similar, but not identical, clauses of the “Special Exclusion Endorsement” concern the scope of the endorsement. First, the introductory paragraph of the “Special Exclusion Endorsement” states in an incomplete clause: “This policy does not apply to any Claims in connection with, arising out of or relating to”[.] J.A. 40 (emphasis added). A later phrase reads: “This Policy does not provide insurance for any Insured’s professional liability arising from acts, errors or omissions in rendering or failure to render services as an insurance agent or broker.” J.A. 40 (emphasis added). Finally, a third clause states, in part: “This insurance does not apply to any Claim in connection with or arising out of any act, error or omission by any Insured in his/her capacity as an agent or broker for the placement or renewal of insurance products or for the sale of annuities.” J.A. 40 (emphasis added). Thus, the second clause notably does not contain the broader “in connection with and arising out of” language that appears in the first and third clauses. We decline to accept CAMICO Insurance’s argument that when CAMICO Insurance and its insureds agreed to the “in connection with or arising out of” language in the “Special Exclusion Endorsement”, they also agreed that, even if there were several grounds for a claim, coverage would be barred so long as one of the grounds was any insured’s having placed or sold an insurance 15 product. To support this contention, CAMICO Insurance and the district court rely on N. Ass. Co. of America v. EDP Floors, Inc., 311 Md. 217, 533 A.2d 682 (1987), and Mass Transit Admin. v. CSX Transport., Inc., 349 Md. 299, 708 A.2d 298 (1998). We find these two cases inapposite, as the present case deals with a “Special Exclusion Endorsement” in a professional liability policy, whereas EDP Floors involved the interpretation of an exclusion in a general liability policy, 311 Md. at 225, 533 A.2d at 686, and CSX Transportation concerned the interpretation of an indemnification clause in a contract, 249 Md. at 301, 708 A.2d at 300. As such, the focus of the exclusion at issue here is whether the acts, errors, or omissions of the insureds arise out of their capacity as brokers and agents. Here, the focus of the exclusion is not a particular type of accident or instrumentality of the injury. Instead, we must interpret whether the acts, errors, or omissions of the insureds arise out of their capacity as brokers and agents. “To be sure, the phrase ‘arising out of’ is used frequently in insurance contracts, and has been the subject of prior interpretation by Maryland courts . . . . Nevertheless, it does not have a single, ‘settled meaning’ that applies to every insurance policy. Contractual language cannot be construed in a vacuum.” Philadelphia Indem. Ins. Co. v. Md. Yacht Club, Inc., 129 Md. 16 App. 455, 469, 742 A.2d 79, 86 (1999) (citing Finci v. Am. Cas. Co., 323 Md. 358, 369-70, 593 A.2d 1069, 1075 (1991)) (internal quotation omitted). Additionally, CAMICO Insurance asserts that merely “acting” as an agent or broker is itself sufficient to invoke the “Special Exclusion Endorsement”. The terms “agent” and “broker” are not defined in the policy. But they are terms of art under Maryland law, which sets forth three factors to determine whether a principal-agent relationship exists: “(1) the agent’s power to alter the legal relations of the principal; (2) the agent’s duty to act primarily for the benefit of the principal; and (3) the principal’s right to control the agent.” Green v. H & R Block, Inc., 355 Md. 488, 503, 735 A.2d 1039, 1048 (1999) 2 (citations omitted). The burden is on the insurer, not the insured, to prove the applicability of an exclusion. See Ace Am. Ins. Co. v. Ascend One Corp., 570 F. Supp. 2d 789, 798 (D. Md. 2008) (“Under Maryland law, the burden rests on the insurer to establish the applicability of a particular exclusion from coverage.”) (citing Warfield-Dorsey Co., Inc. v. Travelers Cas. 2 Similarly, a “broker” is an “agent who acts as an intermediary or negotiator, esp. between prospective buyers and sellers; a person employed to make bargains and contracts between other persons in matters of trade, commerce, or navigation.” Black’s Law Dictionary 219 (9th ed. 2009). 17 & Sur. Co. of Illinois, 66 F. Supp. 2d 681, 685 (D. Md. 1999)). CAMICO Insurance has not proven the principal-agent factors. Thus, in answer to the first part of our inquiry under Pryseski, we conclude that the language of the “Special Exclusion Endorsement” does not preclude coverage for TGM and Myers.