eNotes: Liability – December 2022 – Maryland

SIGNIFICANT CASE SUMMARIES

Maryland Case Summaries

Bel Air Auto Auction, Inc. v. Great N. Ins. Co.
United States Supreme Court
No. 22-392

Decided: November 21, 2022

The Supreme Court denied a Maryland company’s Petition for Writ of Certiorari on the issue of whether, under Maryland law, a COVID-related financial hit to the business was insured under the “physical loss or damage” coverage provisions of its insurance policy.

Background

Bel Air Auto Auction, Inc. (“Bel Air”), a Maryland corporation and vehicle auction facility, experienced business losses related to the COVID-19 crisis. Those losses included business interruption and the loss of use of the insured premises due to the pandemic and State and local government orders. Bel Air then sought coverage under various sections of its policy with Great Northern Insurance Company (“Great Northern”). Great Northern denied Bel Air’s claim for business interruption insurance coverage. Bel Air then filed suit and sought to certify the issue of whether “direct physical loss or damage” in the insurance policy included a detrimental or harmful loss of use of that tangible property. In response, Great Northern filed a Motion for judgment on the pleadings.

The District Court denied Bel Air’s request to certify the case to the Court of Appeals, stating that the insurance issue involved a straightforward application of Maryland contract law that did not require a certified question to the state’s highest court. By the plain language of the provisions under which Bel Air sought coverage, the District Court found that “direct physical loss or damage” required harmful structural changes or alterations to a property. The Court further found that it did not encompass a mere loss of use unrelated to physical, structural, or tangible damage to property. As all of Bel Air’s claims required a “direct physical loss or damage” to property, the District Court held that Bel Air had not met its burden of proving coverage, as it had failed to allege that COVID-19 had physically damaged or altered its property or that it had to repair or replace its property due to the pandemic. Accordingly, the District Court entered a judgment in favor of Great Northern.

Bel Air appealed the District Court’s Order. The Fourth Circuit affirmed the District Court’s decision and decided against allowing oral argument. Thereafter, the Fourth Circuit also denied Bel Air’s Petition for rehearing and rehearing en banc. Bel Air then filed a Petition for Writ of Certiorari with the Supreme Court of the United States.

Holding

The Supreme Court denied Bel Air’s Petition for Writ of Certiorari seeking review of the Fourth Circuit’s refusal to certify insurance coverage issues to Maryland’s highest court, ultimately upholding the decision that Bel Air is not entitled to recoup COVID-19 losses from Great Northern because there was no “direct physical loss or damage” to property.

Bel Air is one of at least three Maryland companies (along with the Cordish Companies Inc., and Tapestry Inc.) that has been awaiting a ruling as to whether, under Maryland law, a COVID-related financial hit to the business was insured under the “physical loss or damage” coverage provisions of its insurance policies. Currently, Cordish also has a Petition for review pending before the U.S. Supreme Court, while Tapestry has an action pending in District Court in Baltimore.

Questions about this case can be directed to Sunny Chung Lapera at (443) 641-0567 or schung@tthlaw.com.

Linz v. Montgomery Cty.
Maryland Court of Special Appeals
2022 Md. App. LEXIS 803

Decided: November 1, 2022

The Maryland Court of Special Appeals holds that a Plaintiff who sued a county for negligence arising out of a car accident could not file an Amended Complaint past the statute of limitations substituting the operator of the vehicle as the sole defendant in place of the County.

Background

On September 12, 2017, Plaintiff was involved in a motor vehicle accident with a police cruiser operated by Officer Chindblom of the Montgomery County Police Department. On August 31, 2020, twelve days before the expiration of the statute of limitations, Plaintiff filed a one-count Complaint for negligence against Montgomery County (the “County”) in the Circuit Court for Montgomery County. The Complaint identified Officer Chindblom as the driver of the police cruiser involved in the accident, but did not name Officer Chindblom as a Defendant. During settlement negotiations in February of 2021, the County took the position that its maximum liability was $30,000, pursuant to Md. Code Ann., Cts. & Jud. Proc. § 5-524; Md. Code Ann., Cts. & Jud. Proc. § 17-107(c); and Md. Code Ann., Cts. & Jud. Proc. § 17-103(b). Meanwhile, under the Local Government Tort Claims Act, the County could have been liable for up to $400,000.00 for a judgment entered directly against Officer Chindblom.

Later in February of 2021, Plaintiff filed a Motion for leave to amend his Complaint to substitute Officer Chindblom for the County as the sole Defendant in the case based on misnomer. Plaintiff claimed that once this misnomer was corrected, the Amended Complaint would relate back to the filing date of the Original Compliant, rendering the claims against Officer Chindblom timely. The Circuit Court denied the Motion, finding that Plaintiff was not seeking to correct a misnomer, but was attempting to add a new party after the statute of limitations had run. Plaintiff filed a Motion for reconsideration, which was also denied. Plaintiff entered into a consent final judgment with the County whereby the County would pay Plaintiff $30,000.00, and Plaintiff would be permitted to appeal the Orders denying the Motion for leave to amend and the Motion for reconsideration. Plaintiff appealed the decision of the Circuit Court to the Court of Special Appeals. (Readers should take note that shortly after this decision was made, Maryland voters decided to change the name of the Court of Special Appeals to the Appellate Court of Maryland.  This name change has not yet taken effect.)

Holding

The Court of Special Appeals affirmed the decision of the Circuit Court for Montgomery County. The Court of Special Appeals found that the Circuit Court did not abuse its discretion by denying the Motion to amend and the Motion for reconsideration. The Court of Special Appeals found that Plaintiff did not mistakenly sue the County instead of Officer Chindblom and therefore there was no misnomer which would justify application of the relation back doctrine. In addition, the Court of Special Appeals found that Officer Chindblom was not a real party in interest or subject to compulsory joinder because complete relief could be accorded between Plaintiff and the County without the officer’s presence as a party.

Questions about this case can be directed to Andrew White at (443) 641-0572 or awhite@tthlaw.com.