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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 21, 2003 Decided December 9, 2003
No. 02-7134
THOMAS P. ATHRIDGE AND THOMAS P. ATHRIDGE, JR.,
APPELLANTS
v.
AETNA CASUALTY & SURETY CO.,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 96cv02708)
Erik S. Jaffe argued the cause and filed the briefs for
appellants.
Geoffrey H. Genth argued the cause for appellee. With
him on the brief was Lee H. Ogburn.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Before: GINSBURG, Chief Judge, and EDWARDS, Circuit
Judge, and WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: This case is one of many
arising out of a 1987 automobile accident in which Jorge
Iglesias, driving a car owned by his aunt and uncle, struck
and severely injured Thomas P. Athridge. Here Athridge
and his father have sued Aetna Casualty and Surety Compa-
ny, insurer of Jorge’s parents at the time of the accident, both
in the Athridges’ own right and as Jorge’s assignees. See
Athridge v. Iglesias, 950 F. Supp. 1187, 1194 (D.D.C. 1996)
(ordering Jorge to convey to the Athridges his chose-in-action
assets). The Athridges claim (1) indemnification under the
auto insurance policy between Aetna and the Iglesiases; (2)
bad faith violation of certain duties and of the covenant of
good faith and fair dealing; and (3) misrepresentations and
omissions under the District of Columbia Consumer Protec-
tion Procedures Act (‘‘Consumer Protection Act’’), D.C. Code
§ 28–3905(k)(1).
The magistrate judge granted summary judgment in Aet-
na’s favor on all counts. In his first order he found that
Aetna’s actions did not constitute bad faith. Athridge v.
Aetna Cas. & Sur. Co., No. CIV.A. 96–2708, 2001 WL 214212,
at *5–12 (D.D.C. March 2, 2001). In his second he found that
Jorge was excluded from coverage under Aetna’s insurance
policy, and therefore that the Athridges could not maintain an
indemnification claim. Athridge v. Aetna Cas. & Sur. Co.,
163 F. Supp. 2d 38, 48 (D.D.C. 2001). And he rejected the
Athridges’ claim under the Consumer Protection Act. Id. at
55–56. The Athridges argue that the magistrate judge erred
in all of these rulings.
Because there is a factual issue relating to whether Aetna’s
policy exclusion applies to Jorge, the magistrate judge incor-
rectly granted summary judgment on the Athridges’ indemni-
fication claim. We therefore reverse and remand on that
claim. We affirm the magistrate’s grants of summary judg-
ment on the Athridges’ bad faith and Consumer Protection
3
Act claims (the latter on grounds different from the magis-
trate’s).
* * *
We have already described both the underlying facts and
the procedural history of this case in some detail. See
Athridge v. Rivas, 141 F.3d 357, 359–60 (D.C. Cir. 1998)
(‘‘Rivas I’’); Athridge v. Rivas, 312 F.3d 474, 475–77 (D.C.
Cir. 2002) (‘‘Rivas II’’). Facts will be developed here as
necessary to resolve specific issues.
* * *
Indemnification
Aetna asserts two grounds why we should affirm the
magistrate judge’s grant of summary judgment on the Ath-
ridges’ indemnification claim. Aetna first argues that issue
and claim preclusion bar the claim. Alternatively, Aetna
argues that the magistrate correctly found that Jorge’s acci-
dent wasn’t covered by Aetna’s insurance policy because the
policy excluded any ‘‘person using a vehicle without a reason-
able belief that the person is entitled to do so.’’ We reject
the preclusion theories (which if correct would have complete-
ly disposed of the issue). On the merits, we affirm the
magistrate’s interpretation of the policy exclusion, but re-
mand because there are material facts in dispute as to
whether that exclusion, so construed, applies.
Preclusion. Aetna brought a declaratory judgment action
against Jorge in the District of Columbia Superior Court in
1990, seeking and receiving a determination that Aetna’s
exclusion in fact applied. Here Aetna argues that under
principles of issue preclusion this judgment bars the Athridg-
es, as Jorge’s assignees, from seeking indemnification. See,
e.g., Yamaha Corp. v. United States, 961 F.2d 245, 254 (D.C.
Cir. 1992) (stating issue preclusion standard). But at oral
argument Aetna conceded that the Athridges, as judgment
creditors of Jorge, have a claim for indemnification in their
own right, not just as Jorge’s assignees. See generally Eric
4
Mills Holmes, Holmes’s Appleman on Insurance 2d § 112.10,
at 339 (2d ed. 2000). Because the Athridges were not parties
to the Superior Court action between Jorge and Aetna, that
action cannot bar the Athridges from litigating coverage in
the indemnification claim they pursue in their own right.
Aetna’s claim preclusion theory rests on the Athridges’
1992 losing suit against Aetna, as the Iglesiases’ insurer,
under the Diplomatic Relations Act. See 28 U.S.C. § 1364
(allowing direct suit against the insurers of certain diplomatic
personnel); Rivas I, 141 F.3d at 358 (affirming grant of
summary judgment in Aetna’s favor). Aetna argues that in
this suit the Athridges could have sought a declaratory
judgment that Jorge was covered by Aetna’s insurance policy.
See Aetna Cas. & Sur. Co. v. State Farm Mut. Auto. Ins. Co.,
380 A.2d 1385, 1386–87 (D.C. 1977) (allowing declaratory
judgment actions as to policy coverage before liability has
been determined). Because claim preclusion bars claims that
a litigant might have raised in prior litigation, see, e.g., Drake
v. FAA, 291 F.3d 59, 66 (D.C. Cir. 2002), Aetna argues that
the Athridges’ failure to contend that Jorge’s conduct was
covered by the policy bars them from doing so here.
In response, the Athridges argue that Aetna’s policy con-
tained a ‘‘no-action’’ clause that would have prevented them
from seeking a declaratory judgment before Jorge’s liability
was established. See Aetna auto insurance policy, at Joint
Appendix (‘‘J.A.’’) 23 (‘‘[N]o legal action may be brought
against us until TTT the amount of that obligation has been
finally determined by judgment after trial.’’). While the
preclusive effect of federal court litigation is a question of
federal law, see 17 Charles Alan Wright et al., Federal
Practice and Procedure § 4226, at n.10 (2d ed. 1988), the
meaning and effect of the no-action clause depend on District
of Columbia law in this diversity action. See, e.g., Messina v.
Nationwide Mut. Ins. Co., 998 F.2d 2, 4 (D.C. Cir. 1993) (per
curiam).
Maryland law, to which the District commonly looks for
guidance in the absence of its own precedents, see Conesco
Indus. Ltd. v. Conforti & Eisele, Inc., 627 F.2d 312, 315 (D.C.
5
Cir. 1980), provides some support for Aetna’s position. While
Maryland has a rule barring an injured claimant from bring-
ing a direct action against the tortfeasor’s liability insurer
before a verdict on liability is rendered (evidently a public
policy equivalent of Aetna’s no-action clause), it makes an
exception for declaratory judgment actions ‘‘concerning sepa-
rate and independent policy coverage issues.’’ Harford Mut.
Ins. Co. v. Woodfin Equities Corp., 687 A.2d 652, 658 (Md.
1997). A court in the District might regard the policy’s no-
action provision as similarly allowing a pre-judgment lawsuit
on the coverage issue, which here is wholly independent of
liability.
But a party invoking claim preclusion has the burden of
establishing its elements, Gen. Elec. Co. v. Deutz Ag, 270 F.3d
144, 158 (3d Cir. 2001), and there are at least two potential
holes in Aetna’s theory. First, assuming the District were to
follow Harford, it might regard a specific contract bar as
more compelling than a judge-made rule of policy, and thus
be less ready to create an exception for declaratory judg-
ments on separate and independent issues. Second, there is
at least a hint in District law of resistance to pre-judgment
suits by the injured claimant against an insurer: in Donald-
son v. Home Indemnity Co., 165 A.2d 492 (D.C. 1960), the
court rejected an insurer’s claim preclusion theory where the
tortfeasor had unsuccessfully litigated his indemnification
right through a third-party claim in the plaintiff’s suit against
him. The court said, without explanation, that the plaintiff
‘‘did not and could not bring the insurance company into the
case.’’ Id. at 493–94. Given these uncertainties, Aetna has
not met its burden of proving that the Athridges could have
brought a declaratory judgment action in 1992, and we there-
fore must reject Aetna’s claim preclusion defense.
The interpretation of Exclusion 11. Their indemnification
claim having survived Aetna’s preclusion defense, the Ath-
ridges argue that the magistrate judge erred in finding that
Jorge was excluded from coverage under Exclusion 11 of the
policy. The Athridges argue that the magistrate misinter-
preted the exclusion, which provides that Aetna
6
do[es] not provide Liability Coverage: TTT For any per-
son using a vehicle without a reasonable belief that the
person is entitled to do so.
J.A. 18. The Athridges argue that the policy distinguishes
for some purposes between ‘‘family members’’ of the policy-
holder and ‘‘any person using your auto,’’ J.A. 17; extending
that distinction to Exclusion 11, they say that Jorge, as a
‘‘family member,’’ is not covered by its ‘‘any person’’ lan-
guage. We disagree.
While the Athridges cite some cases supporting the distinc-
tion between an insurance policy’s use of the phrase ‘‘family
member’’ and its use of the phrase ‘‘any person,’’ see AIG
Hawaii Ins. Co. v. Smith, 891 P.2d 261, 270 (Hawaii 1995)
(stating that ‘‘the selective use of the terms ‘any person’ and
‘family member’ TTT creates mutually exclusive classes’’);
United Servs. Auto. Ass’n v. Dunn, 598 So.2d 1169, 1170 (La.
Ct. App. 1992) (same); Am. States Ins. Co. v. Adair Indus.,
Inc., 576 N.E.2d 1272, 1275 (Ind. App. 1991) (same), none of
those cases is binding on the District of Columbia courts, and
they appear to represent the minority view on this issue.
See, e.g., Hartford Ins. Co. of the Midwest v. Halt, 646
N.Y.S.2d 589, 591–93 (N.Y. App. Div. 1996) (discussing rele-
vant cases and finding that the ‘‘vast majority of courts
considering the issue TTT hold that ‘any person’ means exactly
that, necessarily including any ‘family member’ ’’).
Perhaps recognizing that problem, the Athridges assert
that the split in the case law requires us to find that the
contract provision at issue is ambiguous, and argue that
under District of Columbia law such an ambiguity should be
resolved in their favor. See Unklesbee v. Homestead Fire
Ins. Co., 41 A.2d 168, 169 (D.C. 1945) (‘‘A contract of insur-
ance is to be construed liberally in favor of the insured and
strictly as against the insurer.’’).
We find no ambiguity in the term ‘‘any person,’’ except in
the sense that clever lawyers with strong motivation can
always imagine multiple meanings for any word in any con-
text. That is not enough under District of Columbia law. In
the District, courts ‘‘are to give the words used in an insur-
7
ance contract ‘their common, ordinary, and TTT popular mean-
ing.’ ’’ Quadrangle Dev. Corp. v. Hartford Ins. Co., 645 A.2d
1074, 1075 (D.C. 1994) (citation omitted). Courts should not
seek out ambiguity where none exists. Medical Serv. of Dist.
of Columbia v. Llewellyn, 208 A.2d 734, 736 (D.C. 1965).
Here, ‘‘any person’’ is unambiguous and necessarily includes
the named insured and his family members, including Jorge.
Compare Smalls v. State Farm Mut. Auto. Ins. Co., 678 A.2d
32, 35 (D.C. 1996) (finding policy exclusion for ‘‘any bodily
injury to TTT any insured or any member of insured’s family’’
clear and unambiguous) (emphasis omitted); Halt, 646
N.Y.S.2d at 591 (‘‘The vast majority of courts considering the
issue TTT hold that, because the term ‘any person’ is unambig-
uous and has no technical or otherwise restricted definition in
the policy itself, it should be accorded its common meaning.’’).
Accordingly we find that Exclusion 11 of Aetna’s policy
would indeed exclude Jorge’s behavior from coverage if at the
time of the accident he was ‘‘using [the] vehicle without a
reasonable belief’’ that he was entitled to do so.
But the Athridges argue that a factual controversy exists
over whether Jorge had such a ‘‘reasonable belief’’ at the time
of the accident, precluding the grant of summary judgment.
We have already found in a previous appeal that the evidence
submitted by the Athridges in that case—which is the same
as they submit here—was enough to create a jury question as
to whether Jorge had consent to use the car on the day of the
accident. See Rivas II, 312 F.3d at 478 (discussing evidence).
If he had consent, he almost certainly had a reasonable belief
in his entitlement to use the car. We thus reverse the
magistrate judge’s grant of summary judgment on the Ath-
ridges’ indemnification claim.
Bad faith
The Athridges also argue that the magistrate judge erred
in granting summary judgment in Aetna’s favor on their
claim of Aetna’s bad faith violation of the duties of candor and
due care, and of the covenant of good faith and fair dealing.
As Jorge’s assignees, the Athridges argue that Aetna acted in
bad faith by: (1) failing to appoint independent counsel to
8
represent Jorge in the District of Columbia Superior Court
declaratory judgment proceeding; (2) twice in the liability
proceeding between Jorge and the Athridges providing Jorge
with temporary counsel that favored Aetna’s interests over
Jorge’s; and (3) failing to affirmatively seek a settlement
between Jorge and the Athridges. We again turn to District
of Columbia law to analyze these claims.
Independent counsel claim. The Athridges acknowledge
that Aetna was within its rights to bring a suit for declaratory
judgment against Jorge. See, e.g., Smalls, 678 A.2d at 34;
Cent. Armature Works, Inc. v. Am. Motorists Ins. Co., 520 F.
Supp. 283, 288 (D.D.C. 1980). But they argue that Aetna had
a duty to appoint counsel to defend Jorge in that suit, even
though Jorge already had his own counsel. The parties
address this claim under an apparent assumption that it
would have survived the Superior Court’s finding against
Jorge that Aetna’s insurance policy excluded him from cover-
age for the accident at issue. We, too, proceed under that
assumption, without resolving it.
The Athridges point to three cases supposedly supporting
their theory. Mut. Serv. Cas. Ins. Co. v. Luetmer, 474
N.W.2d 365, 369 (Minn. App. 1991); Miller v. Shugart, 316
N.W.2d 729, 733 (Minn. 1982); Nat’l Gen. Ins. Co. v. Ozella,
307 N.E.2d 745, 749 (Ill. App. 1974). These cases are not
binding on District of Columbia courts, and are in any event
easily distinguished. Ozella did not find any duty to provide
its insured with a lawyer in the company’s declaratory judg-
ment action against him, but merely upheld a trial court
decision, ‘‘in the interest of justice,’’ that the indigent insured
defendant should be represented at trial, and taxing the
attorneys’ fees to the plaintiff insurance company. Ozella,
307 N.E.2d at 749. In justifying this decision, the Illinois
appeals court relied on a case holding that a primary insurer,
rather than the excess insurer, was responsible for defending
a suit against its client. See id. (citing Fireman’s Fund
Indem. Co. v. Freeport Ins. Co., 173 N.E.2d 543, 546 (Ill. App.
1961)). Even ignoring its reliance on an off-point case, Ozella
does not support the Athridges’ proposition. Jorge was
represented by an attorney in the declaratory judgment
9
action brought by Aetna. The Athridges are not claiming
that Aetna should pay Jorge’s attorney’s fees; instead, they
are claiming that Aetna should have provided Jorge addition-
al counsel, separate from the one his family had already hired
for him.
Shugart is similarly off-point. There, the insurance compa-
ny brought a declaratory judgment action against the insured
as to the scope of the policy, ‘‘appropriately providing another
set of attorneys to defend the insureds’’ in that action. 316
N.W.2d at 733. The focus of the case was the avoidance of
conflicts of interest among counsel in insurance cases. The
quoted phrase is pure dictum, and apparently offhand dictum
at that.
Finally, in Luetmer, the Minnesota court of appeals said,
‘‘Clearly, if the insurer seeks a declaratory judgment, it
should provide its insured with separate counsel.’’ 474
N.W.2d at 369 (citing Shugart). This was also dictum, as
Luetmer was considering the question of when there is
enough of a conflict of interest between the insured and the
insurer, in a suit by the victim against the insured, to justify
the insured’s demand that the insurer pay the fees of counsel
hired by the insured. A dictum mis-citing another dictum is
pretty feeble support for the Athridges’ theory.
Finding no basis for supposing that District law imposes a
requirement that an insurer provide an already represented
insured with additional counsel in a declaratory judgment
action on the scope of the policy, we affirm the magistrate
and reject the Athridges’ independent counsel claim.
Conflict of interest claim. Aetna twice provided Jorge
with temporary counsel during the liability proceeding in
which the Athridges were ultimately awarded a $5.5 million
judgment against Jorge. See Athridge v. Iglesias, 950 F.
Supp. 1187, 1194 (D.D.C. 1996). The Athridges claim that the
counsel provided by Aetna pursued Aetna’s interests rather
than Jorge’s. While the Athridges do not characterize all
these allegations as legal malpractice claims, their arguments
are based on the premise that Aetna’s attorneys violated a
duty owed to Jorge. This sounds much like a claim of legal
10
malpractice. More important, for purposes of the District’s
requirement of expert evidence to support any non-obvious
malpractice claim (discussed below), any claim arising out of
the conflict of interest alleged here is similar to legal malprac-
tice claims in the key dimension: the factors to be balanced
are obviously not common knowledge.
To establish legal malpractice in the District of Columbia,
‘‘a plaintiff must establish the applicable standard of care, a
breach of that standard, and a causal relationship between
the violation and the harm complained of,’’ Mills v. Cooter,
647 A.2d 1118, 1123 (D.C. 1994), and ‘‘[u]nless the attorney’s
lack of care is so obvious that the jury can find negligence as
a matter of common knowledge, the standard and its violation
must be proved by expert testimony,’’ id. The Athridges
presented no expert testimony as to the applicable standard
of care or its violation. See Athridge v. Aetna Cas. & Sur.
Co., No. CIV.A. 96–2708, 2001 WL 214212, at *10 (D.D.C.
March 2, 2001). Thus the question is whether a jury could
reasonably find, as a matter of common knowledge, that
Aetna’s attorneys acted negligently toward Jorge. It could
not.
The Athridges’ first theory is that the Aetna-provided
attorneys ‘‘intentionally delayed the damages trial so that
Aetna could obtain its declaratory judgment and not have to
defend during the period of uncertainty regarding coverage.’’
But it was potentially in Jorge’s interest that the damages
trial be continued pending Aetna’s action for a declaratory
judgment. As the motion for continuance itself pointed out,
‘‘should the Superior Court conclude that coverage and a
defense through Aetna is appropriate, it is anticipated that
the possibility of a settlement in this case will be greatly
enhanced.’’ J.A. 129. In fact, a lawyer who was hired by
Jorge’s family and who represented him throughout the
Athridges’ lawsuit against Jorge was also on the motion for a
continuance (though his name was evidently signed by anoth-
er attorney, J.A. 130); his participation undercuts any idea
that the motion clearly manifested undue loyalty to Aetna.
Thus, even if expert testimony established that the delay of
the damages trial was a breach of duty, it was not so obvious
11
a breach that a jury could find liability as a matter of common
knowledge.
The Athridges also argue that the second attorney provided
by Aetna to Jorge defended him only on liability and ignored
damages. Had Aetna been responsible for Jorge’s defense,
failure to argue damages would seem an obvious breach of
duty. As Aetna points out, however, it was not responsible
for Jorge’s defense, a fact that Jorge knew: Aetna received
the favorable declaratory judgment in 1991, and the damages
trial did not start until 1996. See Athridge v. Iglesias, 950 F.
Supp. 1187, 1194 (D.D.C. 1996). In this context, any Aetna
contribution to Jorge’s defense seems like a windfall benefit
for Jorge—at least without an allegation that Aetna, Svengali-
like, talked Jorge’s lawyers out of a better defense. Even if
expert testimony established that the conduct of Aetna’s
lawyer somehow constituted a breach of duty, however, the
fact that Aetna had no duty to defend Jorge on either
damages or liability shows that it is not so obvious a breach
that a jury could find negligence as a matter of common
knowledge.
Settlement claim. The third of the Athridges’ bad faith
claims arises from Aetna’s alleged failure to seek settlement
between Jorge and the Athridges. Even if this claim has some
basis in fact, compare J.A. 193 (letter from Athridges’ attor-
ney to Irving Starr offering to settle for chose-in-action
assets) with J.A. 321–22 (magistrate judge’s finding that he
has never seen even a hint that the Athridges would have
settled their case against Jorge), it fails because Aetna had no
legal obligation to seek a settlement between Jorge and the
Athridges following the 1991 declaratory judgment stating
that Jorge was not covered under Aetna’s insurance policy.
Compare Kremen v. Maryland Auto Ins. Fund, 770 A.2d 170,
181 (Md. 2001) (finding bad faith failure to settle in a case
where there was no dispute that insured was covered by
insurance policy). Again, even if expert testimony could
establish that this failure to seek a settlement somehow
constituted a breach of duty, this was not so obvious a breach
that a jury could find negligence as a matter of common
knowledge.
12
Consumer Protection Act
The Athridges’ final argument on appeal is that the magis-
trate judge erred by granting summary judgment in Aetna’s
favor on their claims under the District of Columbia Consum-
er Protection Procedures Act (‘‘Consumer Protection Act’’),
D.C. Code § 28–3905(k)(1). The magistrate found that the
Athridges could not maintain such a claim because Jorge was
not a ‘‘consumer’’ within the meaning of the Act, because
Aetna’s potential coverage of Jorge was not a ‘‘trade practice’’
under the Act, and because Jorge did not suffer damages
sufficient to sustain an action for a violation of the Act.
Athridge v. Aetna Cas. & Sur. Co., 163 F. Supp. 2d 38, 55–56
(D.D.C. 2001). While we agree with the Athridges that the
magistrate judge misinterpreted the Consumer Protection
Act, we affirm the grant of summary judgment on the ground
that Aetna’s alleged material misrepresentations or omissions
could not, as a matter of law, have had a tendency to mislead.
See Alicke v. MCI Communications Corp., 111 F.3d 909, 912
(D.C. Cir. 1997) (affirming grant of summary judgment on
Consumer Protection Act claims because defendant’s actions
could not have misled consumer).
It is a violation of the Consumer Protection Act for any
person to misrepresent a material fact which has a tendency
to mislead or to fail to state a material fact if such failure
tends to mislead, whether or not a consumer is in fact misled,
deceived or damaged thereby. D.C. Code §§ 28–3904(e)-(f).
The Act defines a consumer as ‘‘a person who does or would
purchase, lease (from), or receive consumer goods or services,
TTT or a person who does or would provide the economic
demand for a trade practice.’’ D.C. Code § 28–3901(a)(2).
And it defines a trade practice as ‘‘any act which does or
would create,TTT make available TTT or effectuate, a sale,
lease or transfer, of consumer goods or services.’’ D.C. Code
§ 28–3901(a)(6). Finally, ‘‘goods and services’’ are ‘‘any and
all parts of the economic output of society, at any stage or
related or necessary point in the economic process, and
includes consumer credit, franchises, business opportunities,
real estate transactions, and consumer services of all types.’’
D.C. Code § 28–3901(a)(7).
13
These definitions make clear that Jorge, as a person poten-
tially insured by Aetna’s policy with the Iglesiases, is a
person who ‘‘would TTT receive consumer goods or services,’’
and as such is a ‘‘consumer’’ for purposes of the Act, even if
he was not the party who purchased the insurance. Similar-
ly, because Aetna’s insurance contract could effectuate the
transfer of consumer services to Jorge, the contract between
Aetna and the Iglesiases is a ‘‘trade practice,’’ even if Jorge
was not a party to the contract. See also Banks v. District of
Columbia Dep’t of Consumer & Regulatory Affairs, 634 A.2d
433, 437 (D.C. 1993) (discussing ‘‘trade practices’’ under the
Act).
While the Act’s coverage of Jorge and his relation to Aetna
seems clear, we have doubts about the magistrate’s alterna-
tive holding that Jorge did not suffer damages sufficient to
sustain an action for a violation of the Act. While the
Athridges are right that a misrepresentation can be a viola-
tion of the Act even if the consumer is not harmed, D.C. Code
§ 28–3904, a court action (as opposed to administrative mea-
sures) requires a showing of damages. Osbourne v. Capital
City Mortgage Corp., 667 A.2d 1321, 1329–30 (D.C. 1995).
But the magistrate’s conclusion that none of the supposed
misrepresentations could have injured Jorge, because he was
‘‘an impecunious high school dropout’’ who ‘‘never paid a
penny’’ of the $5.5 million judgment against him and ‘‘has now
been discharged in bankruptcy,’’ Athridge v. Aetna Cas. &
Sur. Co., 163 F. Supp. 2d at 56, is an oversimplification. In
the context where this issue most often arises, claims of bad
faith failure to settle, there is a split in the law: under the so-
called ‘‘judgment rule,’’ the insurer is liable for the full excess
of the judgment over the policy limits; under the ‘‘payment
rule,’’ in the case of an insolvent judgment debtor, damages
are commonly limited to the debtor’s net assets. See Gray v.
Grain Dealers Mut. Ins. Co., 871 F.2d 1128, 1131–32 (D.C.
Cir. 1989); Medical Mut. Liab. Ins. Soc. v. Evans, 622 A.2d
103, 114–16 (Md. 1993); see also Gray, 871 F.2d at 1131–32
n.5 (discussing some variations). As we noted in Gray, not all
of the states embracing the judgment rule have considered
the case of an insolvent insured. We note that Maryland
14
(whose case law the District commonly follows) is among
those jurisdictions following the judgment rule, Evans, 622
A.2d at 114–16, though not without qualms. We will assume
arguendo that under the Act the District would follow the
judgment rule; even apart from that, the Athridges have
failed to state a claim under the Act.
Broad as the Act is, it requires a representation or omis-
sion that would ‘‘tend to mislead.’’ D.C. Code § 28–3904(e).
Aetna’s alleged material misrepresentations or omissions
could not, as a matter of law, have had such a tendency. All
of them relate to an advocate’s traditional presentation of his
client’s side in litigation. See Amended Complaint, at J.A.
231–38 (alleging, for example: that Aetna’s attorney express-
ly represented to the district court that Aetna’s declaratory
action would have a substantial impact upon the Athridges’
claims, while Aetna had no intention of naming the Athridges
as parties to its declaratory judgment action; that Aetna did
not comply with District of Columbia Superior Court Rule
19(c), which requires disclosure of the existence of necessary
parties with an explanation of why such parties were not
joined; that Aetna falsely represented to the Superior Court
that the Iglesiases were citizens of the District of Columbia,
when it knew or should have known that they were citizens of
Spain; that Aetna failed to disclose facts that suggested the
Superior Court might not have subject matter jurisdiction;
and that Aetna failed to disclose to Jorge that he was entitled
to remove the declaratory action to federal court). If these
statements were actionable under the Consumer Protection
Act, either adversary litigation would be completely trans-
formed, or every lawsuit would spawn two more lawsuits,
each of them in turn spawning two lawsuits, ad infinitum.
We cannot imagine that the District of Columbia legislature
intended such a result, and therefore affirm the magistrate’s
dismissal of these counts.
* * *
For the reasons stated above, the magistrate judge’s deci-
sion is reversed and remanded for further proceedings relat-
15
ing to the disputed issue of Jorge’s ‘‘reasonable belief’’ at the
time of the accident. The judgment is otherwise affirmed.
So ordered.