Court Opinion

ID: 2968898
Source: CourtListenerOpinion
Date Created: 2015-09-22 08:08:19.695945+00
Date Added: 2024-06-11T12:40:30.941618
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 10-1473

TRICE, GEARY & MYERS, LLC; KEVIN MYERS, CPA,

                Plaintiffs - Appellants,

           v.

CAMICO MUTUAL INSURANCE COMPANY,

                Defendant – Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     William D. Quarles, Jr., District
Judge. (1:09-cv-02754-WDQ)

Argued:   September 21, 2011            Decided:   December 22, 2011

Before GREGORY, WYNN, and DIAZ, Circuit Judges.

Reversed and remanded by unpublished opinion. Judge Wynn wrote
the opinion, in which Judge Gregory and Judge Diaz concurred.

ARGUED: Kamil Ismail, GOODELL DEVRIES LEECH & DANN, LLP,
Baltimore, Maryland, for Appellants.  Thomas S. Schaufelberger,
SAUL EWING, LLP, Washington, D.C., for Appellee.     ON BRIEF:
Joseph B. Wolf, GOODELL DEVRIES LEECH & DANN, LLP, Baltimore,
Maryland, for Appellants. Paul A. Fitzsimmons, SAUL EWING, LLP,
Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.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

      In this appeal, accounting firm Trice, Geary & Myers, LLC

(“TGM”)    and    Kevin     Myers,    CPA       (“Myers”)       contend    that     their

professional liability insurer CAMICO Mutual Insurance Company

(“CAMICO Insurance”) breached its duty to provide a defense in

connection with three state court lawsuits filed against them.

CAMICO Insurance responds that the claims arose from TGM’s and

Myers’s    work   as   insurance      agents       and    that    it    was      thus    not

obligated to provide coverage because the policy excluded 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.”    J.A. 40.

      However, the underlying actions allege that TGM and Myers

rendered substandard tax and accounting advice.                         Because these

claims raise a potentiality that there is coverage under the

professional      liability        policy,        we      conclude        that     CAMICO

Insurance’s duty to defend is triggered.                     We therefore reverse

the   district    court’s     grant    of       summary    judgment       in     favor   of

CAMICO     Insurance        and      remand       for      further        proceedings.

Furthermore,      because    any     determination         as    to    whether     CAMICO

Insurance has a duty to indemnify TGM and Myers must await the

resolution of the underlying actions, we reverse the district

court’s award of summary judgment in favor of CAMICO Insurance

on its Counterclaim.

                                            2
                                     I.

  A.        The Accountants Professional Liability Insurance Policy

       In    2007,   CAMICO   Insurance    issued   a    “claims   made   and

reported”      Accountants    Professional   Liability    Insurance   Policy

(the “Policy”) to TGM.          J.A. 20.     The Policy, effective from

July 1, 2007 to July 1, 2008, insured TGM for claims arising out

of professional accounting services. 1        Myers, a principal of TGM,

is an Insured under the Policy.

       The Policy’s Insuring Agreement provides in pertinent part:

                          I. INSURING AGREEMENTS

       A.     Coverage for Damages and Reporting Requirements

            1.   The Company will pay those sums that an
       Insured becomes legally obligated to pay as Damages
       because of a Claim arising out of an Insured’s
       negligent act, error or omission in rendering or
       failing to render Professional Services performed
       after the Retroactive Date and before the end of the
       Policy Period . . . .

J.A. 21.      Additionally, under the Insuring Agreements section of

the Policy, CAMICO Insurance “has the right and duty to defend

and settle Claims alleging Damages potentially covered by this

Policy, even if the Claim is groundless, false or fraudulent.”

J.A. 21.

       1
       CAMICO Insurance also issued a second policy, effective
July 1, 2008, to July 1, 2009. The relevant terms of the two
policies are identical.

                                      3
       The    Policy   also    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.

       Most    pertinent      to    this   matter,       the    Policy   includes     the

following “Special Exclusion Endorsement”:

       This policy does not apply to any Claims in connection
       with, arising out of or relating to:

            This Policy does not provide insurance for any
       Insured’s professional liability arising from acts,
       errors or omissions in the rendering or failure to
       render services as an insurance agent or broker.
       Therefore, the Company and the Named Insured agree to
       amend the Policy as follows:

       1.   It is hereby agreed that the following sentence
       is added to Section I. DEFINITIONS, paragraph (n):

            Professional   Services  do   not   include  any
       professional services performed by an Insured in
       his/her capacity as an agent or broker for the
       placement or renewal of insurance products or for the
       sale of annuities.

       2.   It is hereby agreed that the following is added
       in Section IV. EXCLUSIONS:

            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.

       It is agreed that the above coverage limitations will
       not preclude coverage for any Insured’s professional
       liability arising from referring any Person to another
       insurance agents [sic] for placement or renewal of
       life insurance products for the sale of annuities.

J.A. 40.

                                               4
                               B.     The Underlying Actions

                                        1. Ruark Action

       In April 2009, Thomas R. Ruark (“Ruark”), Baja Holdings,

Inc.    (“Baja          Holdings”),      Baja    Holdings,       Inc.    Defined         Benefit

Pension Plan (“Baja Defined Benefit Plan”), and Bruce Abresch

(“Abresch”), business clients of TGM and Myers (and collectively

referred to herein as the “Ruark Companies”), filed a complaint

(the “Ruark Action”) against Myers and TGM alleging causes of

action      for     negligence        and   negligent     misrepresentation              in    the

provision         of    professional        accounting     and    tax    services.             See

Ruark       v.    Myers,       Case   No.    22-C-09-000708          (Cir.   Ct.     Wicomico

County, Apr. 24, 2009).

       The Ruark Action alleged that while “purporting to act as

an accountant and tax advisor,” Myers recommended that Ruark

create the          Baja      Defined    Benefit     Plan,     which     would      be    wholly

funded      by     a    life    insurance       policy   and     annuities       written       by

Hartford Life Insurance Company (“Hartford Insurance”).                                       J.A.

44,     ¶    13.          Further,       according       to    the      complaint,         Myers

represented            that    this   arrangement     would      comply      with    Internal

Revenue Code section 412(i).                     Allegedly in reliance upon this

advice,          Baja    Holdings       invested     some      $14      million      in       life

insurance to fund the Baja Defined Benefit Plan.                                    The Ruark

Companies contend that because of Myers’s incorrect advice, they

                                                 5
were audited by the Internal Revenue Service (“IRS”), incurred

substantial related expenses, and expect to have a substantial

tax debt.

             2. Insurance Alternatives’ Third-Party Action

     The    Ruark    Companies     also       filed   a   suit    against    Hartford

Insurance; Michael A. DiMayo, a Hartford insurance agent; and

DiMayo’s     employer,       Insurance    Alternatives,          Inc.   (“Insurance

Alternatives”) in the Circuit Court for the County of Baltimore

(“Hartford Action”).          See Ruark v. Hartford Life & Annuity Ins.

Co., Case No. 03-C-08-006022 (Cir. Ct. Baltimore County, Apr.

10, 2009).     That suit, arising from the same events as the Ruark

Action, was consolidated with the Ruark Action in the Circuit

Court for the County of Baltimore.

     In     turn,     Insurance      Alternatives         filed     a   third-party

complaint (“Insurance Alternatives’ Third-Party Action”) against

Myers and TGM seeking indemnification and contribution for any

liability    it     incurs   in   connection      with    the     Hartford   Action.

Insurance Alternatives’ Third-Party Action also alleged that TGM

and Myers provided tax and accounting services for the Ruark

Companies.        The    Insurance       Alternatives’       Third-Party      Action

alleged that “Myers advised [Baja Holdings], through Abresch,

that the premiums for the insurance products that funded the

                                          6
[Baja    Holdings]   412(i)    Plan    were    tax    deductible    expenditures

under the Internal Revenue Code.”             J.A. 91, ¶6.

                              3. Fowler Action

       Similar to the Ruark Action, Caleb Fowler and his company,

Arbitration & Mediation, Inc. (“A&M”), filed a complaint (the

“Fowler Action”) against TGM and Myers alleging causes of action

for negligence and negligent misrepresentation.                   See Fowler v.

Myers, Case No. 19-C09-013249 (Cir. Ct. Somerset County, June 3,

2009).     The Fowler Action alleged that, in early 2003, “Myers,

acting as an accountant and tax advisor for [Fowler] and A&M,

recommended and proposed that [Fowler] and A&M create the A&M

DBP     [Defined   Benefit    Plan],”       funded    entirely     by   two    life

insurance policies written by Hartford Insurance.                       J.A. 101,

¶13.     The Fowler Action further asserted that “Myers arranged

for [Fowler] to receive a proposal to implement the [A&M] 412(i)

Concept.”    J.A. 101, ¶14.

       According to the Fowler Action, in late 2005 and/or early

2006, Myers prepared and filed income tax returns for 2004 for

plaintiffs     without   including       forms       required     for   a     listed

transaction, and without advising plaintiffs of the penalties

that would be incurred for failing to file such forms.                         As a

result, A&M was audited in 2006, incurred audit-related legal

and     accounting   fees     and     expenses,      and   will     likely     face

                                        7
significant tax liability.             The Fowler Action also alleged that

TGM and Myers received professional fees and failed to inform

plaintiffs        that    TGM   and     Myers     would        receive     substantial

commissions on the sale of insurance policies to A&M.

                           C. Duty to Defend Action

       CAMICO Insurance declined to defend TGM and Myers in the

actions brought by Ruark, Insurance Alternatives’ Third-Party,

and    Fowler     (collectively       the   “underlying         actions”).       CAMICO

Insurance explained that the claims at issue were “alleged to

have     arisen     because     Mr.    Myers     sold     ‘defective’         insurance

products.”       J.A. 163.      Therefore, according to CAMICO Insurance,

the    “Special     Exclusion     Endorsement”          and     “Product    Liability”

exclusion barred coverage.

       In   turn,    on   September     14,     2009,    TGM    and   Myers    filed   a

declaratory judgment and breach of contract action pertaining to

CAMICO Insurance’s duty to defend the underlying actions.                              On

October 22, 2009, CAMICO Insurance removed TGM’s and Myers’s

action      to      federal     district        court         based   on      diversity

jurisdiction.        On October 29, 2009, CAMICO Insurance filed its

answer and counterclaim seeking a declaration that it had no

indemnity obligation to TGM and Myers arising from the claims in

the underlying actions.

                                            8
       In    response,          TGM     and        Myers     moved     to     dismiss      the

counterclaim        and        for    partial       summary     judgment,        seeking    a

declaration that CAMICO Insurance had an obligation to provide

TGM and Myers with an ongoing defense in the underlying actions

and   that    CAMICO       Insurance         was    liable    for     TGM’s    and   Myers’s

previously incurred defense costs.                     TGM and Myers argued CAMICO

Insurance had a duty to defend them because the claims in the

underlying actions arose from covered “Professional Services.”

Trice, Geary & Myers, LLC v. CAMICO Mut. Ins. Co., No. WDQ-09-

2754, 2010 WL 1375389, at *4 (D. Md. March 25, 2010).

       CAMICO Insurance filed a cross-motion for summary judgment

as    to    all   counts        in    TGM’s    and    Myers’s        complaint.       CAMICO

Insurance     argued          that   the     underlying      actions     all     related    to

Myers’s sales of Defined Benefit Plans in his capacity as a

Hartford Insurance agent, which was excluded from coverage by

the “Special Exclusion Endorsement” and the “Products Liability”

exclusion.        Id.

       On   March       25,    2010,    the    district      court     denied     TGM’s    and

Myer’s motions and granted CAMICO Insurance’s motion for summary

judgment.         The district court determined that the claims were

excluded under the “Special Exclusion Endorsement” because all

of    the   claims       asserted       in    the    underlying        actions    were     “in

connection with or arising out of” Myers’s acts, errors, and

omissions regarding the sale of the Hartford life insurance and

                                                9
annuity products.          Id.    The district court therefore held that

CAMICO Insurance had no obligation to defend or indemnify TGM or

Myers.    Id. at *6.       TGM and Myers appeal.

                                          II.

     We    first    consider        TGM   and   Myers’s      argument    that     the

district court erred in finding no duty on the part of CAMICO

Insurance to defend TGM and Myers under the Policy.

     We review de novo a grant of summary judgment.                     Overstreet

v. Kentucky Life Ins. Co., 950 F.2d 931, 938 (4th Cir. 1991).

Summary     judgment        is    appropriate        where     “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.”                Fed. R. Civ. P. 56(c).

“When reviewing cross-motions for summary judgment, we may, if

appropriate,      direct    entry    of   judgment    in   favor   of    the    party

whose    motion    was   denied     by    the   district     court.”         Bakery   &

Confectionery      Union    &    Indus.    Int’l   Pension     Fund     v.    Ralph’s

Grocery Co., 118 F.3d 1018, 1020 (4th Cir. 1997) (citing Monahan

v. Cnty. of Chesterfield, 95 F.3d 1263, 1265 (4th Cir. 1996)).

     Maryland law governs our analysis in this matter because

this is a diversity action in which the Policy was issued to TGM

in Maryland.       Klaxon Co. v. Stentor Elec. Mfg. Co. 313 U.S. 487,

496-97 (1941) (holding that a federal court sitting in diversity

                                          10
jurisdiction   must    apply    the    choice-of-law      principles    of    the

state in which the federal court is located).               “[T]he law of the

place of contracting determines the validity and effect of a

contract with respect to the nature and extent of the duty owed

by a party who becomes bound to perform.”                 Traylor v. Grafton,

273 Md. 649, 660, 332 A.2d 651, 659 (1975) (citations omitted);

see also Roy v. Nw. Nat’l Life Ins. Co., 974 F. Supp. 508, 512

(D. Md. 1997) (“In insurance contract cases, Maryland courts

generally follow the rule of lex locus contractu, which requires

that the construction and validity of a contract be determined

by the law of the state where the contract is made.”) (citing

Sting Sec., Inc. v. First Mercury Syndicate, Inc., 791 F. Supp.

555, 558 (D. Md. 1992)).

       Maryland courts construe an insurer’s duty to defend its

insured very broadly:

       Our cases hold that the obligation of an insurer to
       defend its insured under the provisions of a contract
       of insurance is determined by the allegations in the
       tort action. Thus, if the plaintiff in the tort suit
       alleges a claim covered by the policy, the insurer has
       a duty to defend.   Even if a tort plaintiff does not
       allege facts which clearly bring the claim within the
       policy coverage, the insurer still must defend if
       there is a potentiality that the claim could be
       covered by the policy.

Lloyd E. Mitchell, Inc. v. Maryland Cas. Co., 324 Md. 44, 62

n.4,    595   A.2d    469,     478    n.4    (1991)   (citing     Brohawn      v.

Transamerica   Ins.    Co.,    276    Md.   396,   507,   347   A.2d   842,   850

                                       11
(1975) (holding there was a duty to defend an insured in a tort

suit brought by injured third-parties that alleged negligence

and assault, even though the policy excluded from coverage acts

that were committed with the intent to injure)).           “If there is a

possibility,   even   a   remote   one,   that   the   plaintiff’s   claims

could be covered by the policy, there is a duty to defend.”

Litz v. State Farm Fire & Cas. Co., 346 Md. 217, 231, 695 A.2d

566, 572 (1997) (citing Brohawn, 276 Md. at 408, 347 A.2d at

850; Andrew Janquitto, Insurer's Duty to Defend in Maryland, 18

U.Balt.L.Rev. 1, 13-14 (1988)).

     To determine whether there is a potentiality of coverage

giving rise to the duty to defend, the Maryland Court of Appeals

in St. Paul Fire & Marine Ins. Co. v. Pryseski, 292 Md. 187, 438

A.2d 282 (1981), set forth a two-pronged inquiry:

     (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.

                                          B.

     Under   the    next    prong    of    the    Pryseski   inquiry,    we   must

determine whether the facts alleged in the underlying actions

are potentially within the scope of the Policy’s coverage.                    The

controlling factor relating to CAMICO Insurance’s duty to defend

is whether the allegations contained in the underlying actions

“are such that a ‘potentiality’ of coverage exists.”                    W. World

Ins. Co., Inc. v. Harford Mut. Ins. Co., 784 F.2d 558, 562, (4th

Cir. 1986) (citing Brohawn, 276 Md. 396, 347 A.2d 842).

     “The fact that the pleadings state a cause of action
     that is not covered by the policy does not excuse
     insurer if another ground for recovery is stated that
     is covered . . . . Accordingly, the insurer is
     obligated to provide a defense against the allegations
     of covered as well as the noncovered claims.” Doubts
     as to whether an allegation indicates the possibility
     of coverage should be resolved in the insured’s favor.

Utica Mut. Ins. Co. v. Miller, 130 Md. App. 373, 383, 746 A.2d

935, 940-41 (2000) (quoting John Alan Appleman, Insurance Law &

Practice,    §    4684.01    (Rev.    ed.       1979)   at   102-06)    (internal

                                          18
parenthesis omitted); see also Clendenin Bros., 390 Md. at 460,

889 A.2d at 394; Litz, 346 Md. at 217, 695 A.2d at 572.

       This     Court     must     analyze     each       of   the     complaints         filed

against TGM and Myers and compare the allegations to the scope

of    the    Policy’s     coverage       to   determine        if    TGM    and     Myers    are

entitled to a defense in each of the actions.                          See Pryseski, 292

Md. at 193, 438 A.2d at 285.                  The central issue is the capacity

in which Myers acted when he provided advice to the plaintiffs

in the underlying actions.

                                              1.

       The    Ruark     Action     contained       specific         assertions      regarding

Myers’s and TGM’s professional accounting and tax services to

plaintiffs.       Myers and TGM were retained to provide accounting

and    tax    advice.         Acting     on   Myers’s      advice,         Ruark    and     Baja

Holdings allegedly invested some $14 million in life insurance

to fund the Baja Defined Benefit Plan.                              Thereafter, the IRS

audited       Ruark     and    disallowed      deductions           based    on     the     Baja

Defined Benefit Plan.                In 2004 and 2005, Myers prepared tax

returns for Ruark and did not include required forms for the

listed transaction.

       The     Ruark     Action     alleged        that    TGM      and     Myers    received

professional      fees        in   connection      with    the       accounting      and     tax

advice they       provided         but   failed     to    disclose        that    they    would

                                              19
receive      substantial      commissions       on     the    life    insurance       sales.

However,      the   Ruark    Action     did     not    identify       TGM    or    Myers    as

agents or brokers, and there were no allegations that plaintiffs

relied    on    them    to     perform    any     duties       on     their       behalf    as

insurance      agents    or     brokers.          In    fact,        the    Ruark     Action

specifically identified Michael DiMayo as the Hartford insurance

agent:        “Myers put [Ruark and Baja Holdings] in contact with

Michael DiMayo (‘DiMayo’) . . . , a licensed Hartford agent, who

provided      Plaintiffs      with    various        proposals       to     implement      the

412(i) Concept.”         J.A. 45, ¶14.            DiMayo allegedly represented

that    the    arrangement      would    comply        with   tax     regulations,         and

Myers     concurred     with     those    representations             in    his     advisory

capacity.

                                           2.

       The     Insurance       Alternatives’           Third-Party           Action        also

included specific allegations relating to TGM’s and Myers’s role

as accountants and tax advisors.                      The Insurance Alternatives’

Third-Party Action alleged specifically that “Myers and TGM . .

. have performed tax and accounting services for Ruark Company.”

J.A. 91, ¶3.           The Insurance Alternatives’ Third-Party Action

also alleged that Baja Holdings, through Abresch, relied upon

TGM and Myers’s tax advice.                   The Action further alleged that

Myers and TGM “had a duty to ensure that information conveyed .

                                           20
. . as to the deductibility of premiums . . . was accurate.”

J.A. 94, ¶21.

                                              3.

      The Fowler Action also included allegations that TGM and

Myers provided negligent accounting and tax services:

      Myers and TGM had duties (a) to act with care and
      skill of reasonably competent accountants and tax
      advisors in advising Plaintiffs with respect to the
      implementation of the 412(i) Concept, the formation of
      A&M DBP, and the selection of the A&M Policy to fund
      the A&M DBP; (b) to inform Plaintiffs of the risks
      involved with the 412(i) Concept; and (c) to inform
      Plaintiffs of all facts material to the transaction.

J.A. 108, ¶45.         Myers and TGM allegedly breached the duty of

care by “[f]ailing to advise Plaintiffs of the February 2004 IRS

Guidance making the 412(i) Concept a listed transaction; [n]ot

advising    Plaintiffs         to    file    the     required   listed     transaction

forms     with   their     2004       and     2005    tax    returns;    [and].    .   .

[a]dvising Plaintiffs that IRS Ruling 2004-20 would not apply to

Plaintiffs.”     J.A. 109, ¶46.

      In sum, contrary to the district court’s interpretation,

all of the underlying actions asserted that Myers and TGM acted

as    accountants        and        tax     advisors.         Only   the       Insurance

Alternatives’     Third-Party             Action,    which   seeks   indemnification

and     contribution     from        TGM    and     Myers,   contained     a   fleeting

allegation relating to Myers’s status as a Hartford Insurance

                                              21
agent.      Even so, this sole allegation does not irrefutably put

all   of    the      underlying      actions       within    the    “Special     Exclusion

Endorsement.”          There are no allegations in the Ruark and Fowler

Actions     that      Myers    acted    as     an    insurance       agent     or    broker.

Additionally, although CAMICO Insurance and the district court

noted that Myers and TGM received a commission on the insurance

sales, this fact does not show a principal-agent relationship or

employment as a broker, and there is no evidence in the record

to support such a conclusion.                  Moreover, even if such evidence

existed,        it   would    not    change     the    fact       that   the    underlying

actions raise the specter of coverage.                            And “[s]o long as a

complaint raises a potentiality of coverage, an insurer is under

a duty to defend an insured named in that complaint.”                               W. World

Ins. Co., 784 F.2d at 562.

      We conclude that CAMICO Insurance has a duty to defend TGM

and     Myers.         Accordingly,      we        reverse    the    district        court’s

judgment to the contrary and direct the district court to grant

TGM and Myers’s motion for partial summary judgment seeking a

declaration          that   CAMICO    Insurance       must    provide        them    with   a

defense in the underlying actions.

                                          III.

      TGM and Myers also argue on appeal that the district court

erred      by     granting     summary       judgment        on    CAMICO      Insurance’s

                                              22
Counterclaim       seeking      a     declaration         that   it     had    no     duty   to

indemnify.         “Under the potentiality rule, the insurer will be

obligated     to    defend      more    cases      than    it    will    be    required      to

indemnify because the mere possibility that the insurer will

have to indemnify triggers the duty to defend.”                               Litz, 346 Md.

at   225,    695    A.2d   at    570    (citation         omitted).           “The    duty   to

indemnify, by contrast, refers to an insurer’s responsibility to

pay a monetary award when its insured has become liable for a

covered claim.”        Perdue Farms, Inc. v. Travelers Cas. & Surety

Co. of America, 448 F.3d 252, 257-58 (4th Cir. 2006).

      If the issue upon which coverage is denied were not
      the ultimate issue to be determined in a pending suit
      by a third party, a declaratory judgment would be
      appropriate.   But where, as here, the question to be
      resolved in the declaratory judgment action will be
      decided in pending actions, it is inappropriate to
      grant a declaratory judgment.

Brohawn, 276 Md. at 406, 347 A.2d at 849 (citing Watson v.

Dorsey, 265 Md. 509, 512 n.1, 290 A.2d 530 (1972)); see also

Nautilus Ins. Co. v. BSA Ltd. P’ship, 602 F. Supp. 2d 641, 657

(D. Md. 2009) (“Generally, the question of whether a company

must indemnify ‘turns on a comparison of the ultimate findings

of   fact    concerning         the    alleged      occurrence          with    the    policy

coverage.’”)       (quoting      USAA    Cas.      Ins.    Co.    v.    Mummert,       213   F.

Supp.   2d    538,     541      (D.     Md.    2002)).           Thus,    a     declaration

concerning     indemnification           is     inappropriate           when    related      to

                                              23
issues to be litigated.             See Chantel Assocs. v. Mount Vernon

Fire Ins. Co., 338 Md. 131, 149, 656 A.2d 779, 788 (1995).

      The issue of whether Myers acted as Hartford Insurance’s

agent or broker is not independent and separable from the issues

to be decided in the underlying actions.                     Again, the gravamen of

the     underlying     actions      is       that        Myers    and    TGM        rendered

substandard      accounting      and     tax    advice.           Nevertheless,          the

underlying actions also contain causes of action for negligent

misrepresentation, based in part on TGM’s and Myers’s failure to

disclose that they would receive substantial commissions on the

life insurance sales.

      Additionally,      although        CAMICO      Insurance      is   obligated        to

defend the underlying actions based on the allegations as set

forth    in    the    complaints,      the     “ultimate         findings      of    fact,”

Nautilus Ins. Co., 602 F. Supp. 2d at 657, at trial may be that

TGM and Myers received commissions and/or acted as undisclosed

agents for Hartford Insurance, and that the allegedly negligent

tax advice “arose out” of the conflict of interest that TGM and

Myers may have had stemming from their role as tax advisers to

the plaintiffs, on the one hand, and as brokers or agents to

Hartford Insurance on the other.                    These findings may in fact

trigger the application of the “Special Exclusion Endorsement”

and absolve CAMICO Insurance of any duty to indemnify TGM and

Myers    for    any    damages    awarded           to    the    plaintiffs         in   the

                                          24
underlying actions, notwithstanding our conclusion that CAMICO

Insurance is obligated to defend the underlying actions in the

first place.

       Consequently, a declaration as to CAMICO Insurance’s duty

of    indemnification        would   be    premature   at   this     time;    such   a

declaration should instead be made after the underlying actions

are resolved.         See Brohawn, 276 Md. at 404–06, 347 A.2d at 848–

49.     Accordingly, we agree with TGM and Myers that the district

court    erred   by     granting     summary     judgment   in   favor   of    CAMICO

Insurance       on     its    Counterclaim.          Similarly,      because      the

determination         of    CAMICO   Insurance’s     duty   of     indemnification

would be premature at this time, we dismiss TGM’s and Myers’

motion to dismiss CAMICO Insurance’s Counterclaim.

                                           IV.

       In sum, because there is a potentiality of coverage, we

hold that CAMICO Insurance has a duty to defend TGM and Myers.

We therefore reverse the district court’s ruling to the contrary

and    direct    it    to    grant   TGM   and    Myers’s   motion    for     partial

summary judgment seeking a declaration that CAMICO Insurance is

obligated to defend them in the underlying actions.                          Further,

because any determination as to whether CAMICO Insurance has a

duty to indemnify TGM and Myers must await the resolution of the

underlying actions, we reverse the district court’s award of

                                           25
summary   judgment   in   favor   of   CAMICO    Insurance   on   its

Counterclaim.

                                                REVERSED AND REMANDED

                                  26