Court Opinion

ID: 1022880
Source: CourtListenerOpinion
Date Created: 2013-07-04 23:29:33.906441+00
Date Added: 2024-06-11T15:37:46.664369
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                              No. 06-1140

LIBERTY MUTUAL INSURANCE COMPANY; AMG REALTY
PARTNERS, LLP,

                                               Plaintiffs - Appellees,

          and

LIBERTY MUTUAL INSURANCE COMPANY, as Subrogee
of AMG Realty Partners, LP,

                                                             Plaintiff,

          versus

CB   RICHARD   ELLIS,   INCORPORATED;       ZURICH
INSURANCE COMPANY,

                                              Defendants - Appellants.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.    Richard D. Bennett, District Judge.
(1:05-cv-00324-RDB)

Submitted:   April 19, 2007                    Decided:   June 29, 2007

Before WILKINS, Chief Judge, and KING and DUNCAN, Circuit Judges.

Reversed and remanded by unpublished per curiam opinion.
David B. Stratton, D. Stephenson Schwinn, JORDAN, COYNE & SAVITS,
L.L.P., Washington, D.C., for Appellants.    Warren D. Stephens,
DECARO, DORAN, SICILIANO, GALLAGHER & DEBLASIS, L.L.P., Lanham,
Maryland, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

     CB   Richard   Ellis,      Inc.       and   Zurich     Insurance    Company

(Appellants)   appeal     a   district      court   order    granting    summary

judgment against them and denying their motion for summary judgment

in an action prosecuted by Liberty Mutual Insurance Company and AMG

Realty Partners, LLP (Appellees).           We reverse and remand for entry

of judgment in favor of Appellants.

                                       I.

     In   March   1999,   AMG   and    Ellis     entered     into   a   Property

Management Agreement (PMA), the following provisions of which are

relevant here:

          4.1 Insurance. [AMG], at its expense, shall obtain
     and keep in force adequate insurance ... against
     liability for loss, damage or injury to property or
     person which might arise out of the occupancy,
     management, operation or maintenance of the Property
     covered by this Agreement ....

           ....

          4.2 Agent’s Insurance. .... [Ellis] must maintain
     Commercial General Liability Insurance in an amount not
     less than $10,000,000, Combined Single Limit naming [AMG]
     and Maritime Realty Corporation. [AMG] must be named as
     an additional insured as its interest may appear on
     [Ellis’] insurance policies....

           ....

          4.4 Waiver of Subrogation. Any insurance carried
     by either party with respect to the Property or any
     occurrence thereon shall, if it can be so written without
     additional premiums or with an additional premium which
     the other party agrees to pay, include a clause or
     endorsement denying to the insurer rights of subrogation
     against the other party to the extent rights have been

                                       3
     waived by the insured hereunder prior to occurrence of
     injury or loss.       Each party, notwithstanding any
     provisions of this Management Agreement to the contrary,
     hereby waives any right or recovery against the other for
     injury or loss due to hazards covered by such insurance.

             ....

          8.7 Indemnification. A. [Ellis] shall at all times
     indemnify and hold harmless [AMG], its partners, members,
     shareholders and its and their respective officers,
     directors, employees and agents from and against any and
     all claims, losses, liabilities, actions, proceedings and
     expenses    (including   reasonable    attorneys’   fees,
     disbursements and court costs) arising out of (I) any
     breach of the representations and warranties made by
     [Ellis] in this Agreement or any breach of any term,
     covenant or condition to be performed or observed by
     [Ellis] under this Agreement, or (ii) any negligent acts
     or omissions or willful and deliberate misconduct by
     [Ellis], its employees, contractors or agents.

          B.    [AMG] shall at all times indemnify and hold
     harmless [Ellis], its partners, members, shareholders and
     its and their respective officers, directors, employees
     and agents from and against any and all claims, losses,
     liabilities, actions, proceedings and expenses (including
     reasonable attorneys’ fees, disbursements and court
     costs) arising out of (I) ownership or operation of the
     Property prior to the commencement of the term of this
     Agreement, or (ii) any breach of the representations and
     warranties or covenants made by [AMG] in this Agreement
     or (iii) any negligent acts or omissions or willful and
     deliberate    misconduct   by   [AMG],   its   employees,
     contractors or agents (other than [Ellis]).

J.A. 235-36, 243-44.

     In accordance with its obligations under the PMA, AMG obtained

a   policy    from   Liberty’s   predecessor-in-interest,       Employers

Insurance of Wausau, with limits of $1,000,000 per occurrence,

$2,000,000     general   aggregate       other   than   products-completed

                                     4
operations, and $2,000,000 products-completed operations.        The

policy stated:

     We will pay those sums that the insured becomes legally
     obligated to pay as damages because of “bodily injury” or
     “property damage” to which this insurance applies. We
     will have the right and duty to defend the insured
     against any “suit” seeking those damages....

Id. at 157.    In addition to naming AMG as an insured, the policy

also included as “an insured,” “[a]ny person (other than your

‘employee’), or any organization while acting as your real estate

manager.” Id. at 166. Finally, the policy contained the following

“other insurance” provision:

     a.     Primary Insurance

            This insurance is primary except when b. below
            applies.   If this insurance is primary, our
            obligations are not affected unless any of the
            other insurance is also primary....

     b.     Excess Insurance

            This insurance is excess over:

            ....

            (2) Any other primary insurance available to
            you covering liability for damages arising out
            of the premises or operations for which you
            have been added as an additional insured by
            attachment of an endorsement.

Id. at 169, 209.

     Also as a result of the PMA, Ellis obtained a policy from

Zurich that contained the same limits as the Wausau policy and

provided:

                                  5
     We will pay those sums that the insured becomes legally
     obligated to pay as damages because of “bodily injury” or
     “property damage” to which this insurance applies....

Id. at 340.   It included the following Blanket Additional Insured-

Contractual Endorsement:

     COMMERCIAL GENERAL LIABILITY COVERAGE PART

     WHO IS AN INSURED (Section II) is amended to include as
     an insured any person or organization with whom you have
     executed a written contract prior to the occurrence of a
     loss with respect to liability arising out of the
     performance of that written contract between you and that
     person or organization, and subject to the specific
     provisions of the written contract where the provisions
     of the contract require that the person or organization
     be included as an insured....

Id. at 359.    It also contained an “other insurance” provision,

which states that the insurance “is excess over ... [a]ny insurance

policy which extends coverage to you as a real estate manager.”

Id. at 295.

     On March 2, 2000, Helen Fields-Moore was allegedly injured

when she tripped over an electrical cord in a parking garage in

Towson, Maryland that Ellis managed pursuant to the PMA.   Fields-

Moore subsequently filed suit in Baltimore County Circuit Court

against AMG, AMG’s parking lot operator (Landmark Parking, Inc.),

and other defendants.1   The parties eventually settled the action

for $175,000, with AMG and Landmark each paying one-third of that

      1
       Fields-Moore subsequently amended her complaint to allege
 claims against Ellis, but those claims were dismissed as being
 time-barred.

                                 6
amount, and Fields-Moore agreeing to forgo collection of the

remainder for 12 months or until the conclusion of this litigation.

       Liberty     subsequently   brought        suit   against   Appellants    in

federal district court, alleging that Zurich breached its duty to

defend and indemnify AMG regarding Fields-Moore’s claims and that

Ellis breached its duties under the PMA to maintain the required

insurance and to indemnify AMG in the Fields-Moore suit.                     Ellis

later filed a third-party complaint against AMG, and the district

court    granted    Appellees’    motion    to    realign   the   parties.      In

considering cross-motions for summary judgment, the court concluded

that consideration of the “other insurance” provisions of the two

policies demonstrated that Liberty holds primary insurance for

Fields-Moore’s claims and Zurich holds only excess coverage.                   The

court nevertheless determined that Ellis was obliged under the PMA

to indemnify AMG regarding Fields-Moore’s claims.                 On that basis,

the district court granted summary judgment to Appellees and denied

Appellants’ motion.

                                      II.

        We review the grant of summary judgment de novo, viewing the

disputed facts in the light most favorable to the non-moving party.

See Bacon v. City of Richmond, 475 F.3d 633, 637 (4th Cir. 2007).

When    reviewing    the   disposition      of    cross-motions     for   summary

judgment, “we consider each motion separately on its own merits to

                                       7
determine whether either of the parties deserves judgment as a

matter of law.”        Id. at 637-38 (internal quotation marks omitted).

                                           A.

      The parties agree that Maryland law applies here and that the

policies provide coverage for Fields-Moore’s claims.               They also do

not challenge the conclusion of the district court that, absent

Ellis’ promise to indemnify AMG for claims such as those advanced

by Fields-Moore, the Liberty policy would provide primary coverage

and   the     Zurich    policy     would    provide   only    excess   coverage.

Appellants argue, however, that the district court erred in ruling

that, notwithstanding the language of the respective policies,

Ellis’ promise to indemnify AMG for Ellis’ own negligence required

Appellants to indemnify Appellees for the costs relating to Fields-

Moore’s claims.        We agree.

      As Appellants maintain, Ellis’ indemnification promise does

not   apply      to   Fields-Moore’s       claims   because   Ellis    agreed    to

indemnify AMG only for losses that were not covered by insurance.

Although Article VIII of the PMA provides that Ellis and AMG will

indemnify each other for their own negligent acts and omissions,

Article     IV    states   that     “[e]ach     party,   notwithstanding        any

provisions of this Management Agreement to the contrary, hereby

waives any right or recovery against the other for injury or loss

due to hazards covered by” “insurance carried by either party with

respect to the Property or any occurrence thereon.”                     J.A. 236

                                           8
(emphasis added).         These provisions, when read together, plainly

demonstrate       the   parties’   intent   to   indemnify   each    other    for

uncovered losses arising from their own negligence but to look only

to their insurers, and not to each other, in the event of a covered

loss.2       Because Fields-Moore’s claims are indisputably covered by

insurance,       Ellis’    indemnification       promise   does     not   apply.

Accordingly, Zurich’s policy provided only excess coverage.3                 And,

because the settlement was within the limits of Liberty’s primary

coverage, Zurich breached no duty by refusing to indemnify AMG for

any part of the settlement, or to participate in the legal defense

of those claims, see Fireman’s Fund Ins. Co. v. Rairigh, 475 A.2d

509, 518 (Md. Ct. Spec. App. 1984) (“[T]he excess insurer is not

obligated to defend until the primary limits are exhausted.”).

         2
       The district court concluded that this reading would “render
 Ellis’ promise to indemnify AMG meaningless.” J.A. 483. But that
 is simply not the case.      The indemnification promise clearly
 applies to any loss for which the policies do not provide
 coverage.
         3
       Moreover, even if Ellis’ indemnification promise applied to
 Fields-Moore’s claims, the Zurich policy still would provide only
 excess coverage.   As we recently held on materially identical
 facts, the indemnification agreement between the insureds here
 affects only liability between those parties; it does not define
 the obligations that the respective insurers have to their
 insureds. See Travelers Prop. Cas. Co. of Am. v. Liberty Mut.
 Ins. Co., 444 F.3d 217, 224-25 (4th Cir. 2006). Thus, even if
 Ellis’ indemnification promise required it to indemnify AMG for
 all of the costs relating to Fields-Moore’s claims, that still
 leaves the question of which policy provides primary coverage for
 Ellis’ liability. That question necessarily must be resolved by
 the language of the respective policies, which establishes that
 Liberty provided primary coverage for such liability and Zurich’s
 coverage was excess only. See id.

                                       9
                                         B.

      Our holding that Ellis’ indemnification promise does not apply

to Fields-Moore’s suit forecloses all of Appellees’ claims except

the claim that Ellis breached its duty under the PMA to obtain

insurance that would provide primary coverage for any claims that

were also covered by AMG’s insurer.                   This claim fails for a

different reason, namely, that the PMA creates no such duty.

Article    IV,   on   which    Liberty      relies,   requires    Ellis   only   to

“maintain Commercial General Liability Insurance in an amount not

less than $10,000,000, Combined Single Limit naming [AMG] and

Maritime Realty Corporation.”4           J.A. 236.      But, that same article

also requires AMG to obtain insurance for loss, damage or injury to

property    or   person      that   might     arise   out   of   the   “occupancy,

management, operation or maintenance of the Property” covered by

the PMA.     Id. at 235.        The agreement is silent regarding which

insurance would be primary in the event that both covered a

particular claim.

                                        III.

      In sum, the district court erred in granting summary judgment

to   Appellees    and   in    denying    summary      judgment    to   Appellants.

       4
       Ellis apparently maintained insurance in the amount of only
 $1,000,000. The district court noted, however, that the parties
 agree that this apparent failure to comply with the terms of the
 PMA is not at issue since Fields-Moore’s claims amount to less
 than $1,000,000.

                                         10
Accordingly, we reverse the district court order and remand for

entry of judgment in favor of Appellants.

                                            REVERSED AND REMANDED

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