Filed: June 28, 2013
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1581
(1:10-cv-02701-JKB)
MINNESOTA LAWYERS MUTUAL INSURANCE COMPANY,
Plaintiff - Appellee,
v.
BAYLOR & JACKSON, PLLC; BRYNEE K. BAYLOR; DAWN R. JACKSON;
RICHARD THOMAS; HENRY THOMAS; FREEDOM NY INC.; TEKNIC CORP.;
T.F.T.F. CAPITAL CORP.; HT FOOD PRODUCTS; RSG GROUP &
ASSOCIATES INC.,
Defendants - Appellants.
O R D E R
The Court amends its opinion filed June 27, 2013, as
follows:
On the cover sheet, opinion status section, line 2 --
the spelling of the word “wrote” is corrected.
For the Court – By Direction
/s/ Patricia S. Connor
Clerk
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1581
MINNESOTA LAWYERS MUTUAL INSURANCE COMPANY,
Plaintiff - Appellee,
v.
BAYLOR & JACKSON, PLLC; BRYNEE K. BAYLOR; DAWN R. JACKSON;
RICHARD THOMAS; HENRY THOMAS; FREEDOM NY INC.; TEKNIC CORP.;
T.F.T.F. CAPITAL CORP.; HT FOOD PRODUCTS; RSG GROUP &
ASSOCIATES INC.,
Defendants - Appellants.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. James K. Bredar, District Judge.
(1:10-cv-02701-JKB)
Argued: March 19, 2013 Decided: June 27, 2013
Before DUNCAN, FLOYD, and THACKER, Circuit Judges.
Affirmed by unpublished opinion. Judge Floyd wrote the majority
opinion, in which Judge Duncan joined. Judge Thacker wrote a
dissenting opinion.
ARGUED: Joseph Michael Creed, JOSEPH, GREENWALD & LAAKE, PA,
Greenbelt, Maryland, for Appellants. Paul Newman Farquharson,
SEMMES, BOWEN & SEMMES, Baltimore, Maryland, for Appellee. ON
BRIEF: Cary J. Hansel, JOSEPH, GREENWALD & LAAKE, PA, Greenbelt,
Maryland, for Appellants. Gregory L. Arbogast, SEMMES, BOWEN &
SEMMES, Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
FLOYD, Circuit Judge:
Appellants are Baylor & Jackson, PLLC, a law firm in
Washington, D.C., and its two principals, Brynee Baylor and Dawn
Jackson (collectively, Baylor & Jackson). In 2006, Baylor &
Jackson filed a response to a motion on behalf of its clients,
Henry Thomas (Thomas) and Richard Thomas (collectively, the
Underlying Defendants), owners and operators of several
companies, averring that their adversary, William Robbins, was
not entitled to summary judgment in a certain Maryland state-
court case. Baylor & Jackson failed to provide documentation,
as required by state procedural rules, to support its assertion
that genuine issues of material fact prevented judgment as a
matter of law, and the trial court ultimately granted judgment
to Robbins.
In 2009, the Maryland Court of Appeals affirmed the trial
court’s grant of summary judgment, reiterating Baylor &
Jackson’s failure to properly support the opposition to the
motion. Afraid that the Underlying Defendants would sue for
malpractice, Baylor & Jackson notified its legal malpractice
insurer, Appellee Minnesota Lawyers Mutual Insurance Company
(MLM) of the possibility of a claim. Shortly thereafter, the
Underlying Defendants filed the malpractice suit that Baylor &
Jackson had feared, and in turn, MLM provided coverage. Within
a year, however, MLM communicated to Baylor & Jackson that it
3
would no longer defend or indemnify it in the action because it
allegedly had failed to provide timely notification of the
possibility of a claim. Obviously, Baylor & Jackson disagreed
with MLM’s conclusion on this point, and the dispute we address
here was born. Each party petitioned the district court for a
declaratory judgment in its favor, and on cross-motions for
summary judgment, the court ruled for MLM. For the reasons
outlined below, we affirm.
I.
Four lawsuits are in play here: (1) the Underlying
Defendants’ litigation with the federal government for breach of
contract, (2) Robbins’s litigation with the Underlying
Defendants also regarding, among other things, breach of
contract, (3) the Underlying Defendants’ litigation with Baylor
& Jackson for legal malpractice, and (4) Baylor & Jackson’s
litigation with MLM for disclaiming coverage in the Underlying
Defendants’ malpractice action. Below, we provide the relevant
facts from each suit.
A.
In 1999, the Underlying Defendants sued the federal
government for breach of contract, and although they ultimately
4
prevailed, they did not do so without the financial assistance
of Robbins, at that time a friend of Thomas.
Thomas and Robbins entered into several agreements related
to the funding of the litigation: (1) On July 22, 1998, they
agreed that Thomas would repay Robbins $75,000 for every $25,000
he supplied as personal expense money, provided the litigation
was successful (3:1 Agreement); (2) on December 16, 1998, they
agreed that Robbins would finance the cost of the litigation;
(3) on November 11, 1999, they agreed that Robbins would pay the
legal fees associated with litigating and/or settling the
government claims and that, for doing so, he would receive one-
sixth of the first $21 million obtained against the government
(Cooperation Agreement); (4) on May 1, 2001, Robbins agreed that
if Thomas provided an accounting that showed he had repaid all
of the out-of-pocket expenses that Robbins had incurred, he
would give Thomas a fifty-percent discount on Thomas’s repayment
of the attorneys’ fees (Private Legal Side Agreement); and (5)
on May 20, 2002, Thomas promised to pay Robbins a $600,000
consulting fee for his advice related to the litigation (May
2002 Contract).
Between December 16, 1998, and February 20, 2004, the legal
fees associated with the litigation totaled almost $1 million.
In February 2004, Thomas’s accountant prepared a report showing
the amount that Thomas owed Robbins. The report erroneously
5
deducted nearly $200,000 and failed to include the $600,000
consulting fee. Robbins objected to the figures and immediately
retained counsel.
B.
In 2005, Robbins sued the Underlying Defendants in
Baltimore City Circuit Court, alleging breach of the Cooperation
Agreement, entitlement to declaratory relief, breach of
fiduciary duty, breach of the 3:1 Agreement, and breach of the
May 2002 Contract. Baylor & Jackson entered the case in 2006.
On July 27, 2006, Robbins moved for summary judgment on the
following claims: (1) breach of the Cooperation Agreement, (2)
breach of fiduciary duty, (3) breach of the 3:1 Agreement, and
(4) breach of the May 2002 Contract. The Underlying Defendants
filed their opposition to the motion, and Robbins replied.
Following a motions hearing, on August 22, 2006, the Baltimore
City Circuit Court granted summary judgment to Robbins. It
awarded $1,844,913 for breach of the Cooperation Agreement,
$199,995 for breach of the 3:1 Agreement, and $600,000 for
breach of the May 2002 Contract. Regarding the fiduciary duty
breach, it granted judgment to Robbins but awarded only
attorneys’ fees for his pursuit of the claim.
The import of Thomas’s litigation with Robbins lies in some
of the reasons that the circuit court granted summary judgment.
6
Obviously, the court concluded that no genuine issue of material
fact precluded judgment as a matter of law. But it was able to
arrive at that conclusion in part because Baylor & Jackson
failed to adequately support the Underlying Defendants’
opposition to Robbins’s motion.
For example, attempting to demonstrate that an issue of
material fact existed regarding the Cooperation Agreement, the
Underlying Defendants claimed the Agreement was invalid because
“it was not signed by the original designated Fund Manager.”
Robbins v. Thomas, No. 24-C-05-006855, slip op. at 6 (Balt. City
Cir. Ct. Aug. 22, 2006). But the circuit court refused to
credit this assertion, stating, “Since Thomas submitted neither
an affidavit nor a sworn statement to support this contention,
this Court finds no basis upon which to accept his argument.”
Id. Correspondence that MLM submitted to the district court in
the present action provides additional details regarding the
state court’s response to Thomas’s unsubstantiated allegation:
Baylor & Jackson filed a timely opposition to the
motion for summary judgment which argued, at least in
part, that summary judgment could not be granted as a
matter of law because genuine disputes of material
fact existed. In an attempt to present those material
facts to the court, Baylor & Jackson attached an
affidavit from Mr. Thomas. However, the affidavit was
unexecuted and had been attached in that form in
error. At the hearing on August 17, 2006, the
Honorable Joseph H.H. Kaplan refused to either allow
Mr. Thomas to execute the affidavit or testify to the
contents of the affidavit despite Mr. Thomas’[s]
presence at the hearing.
7
Minn. Lawyers Mut. Ins. Co. v. Baylor & Jackson, PLLC, 852 F.
Supp. 2d 647, 651 n.2 (D. Md. 2012) (quoting correspondence
between counsel for MLM and Baylor & Jackson). And at the
conclusion of its discussion of the Cooperation Agreement, the
court again referred to the lack of support accompanying
Thomas’s opposition: “Although Thomas disputes various items in
his Response, this Court cannot accept them as facts.
Documents, affidavits, and sworn testimony in the record
contradict the assertions made in Thomas’s Response.” Robbins,
No. 24-C-05-006855, slip op. at 8.
On appeal, the Court of Special Appeals of Maryland
affirmed the circuit court’s grant of summary judgment in part
and reversed and remanded in part. Thomas v. Robbins, No. 944,
slip op. at 20-21 (Md. Ct. Spec. App. July 8, 2009)
(unreported). Relevant here, the court observed that the
Underlying Defendants’ opposition to summary judgment “was not
supported by affidavits, deposition testimony, interrogatory
answers, or any sworn evidence as required by Maryland Rule 2–
501,” id. at 7, and that such failure “was a proper ground upon
which the trial court could conclude that no dispute of material
fact existed,” id. at 11. Specifically addressing the trial
court’s grant of summary judgment as to Robbins’s claims for
8
breach of fiduciary duty, breach of the 3:1 Agreement, and
breach of the May 2002 Contract, the court stated:
In granting summary judgment on Counts III [breach of
fiduciary duty] and IV [breach of 3:1 Agreement] and
the Consolidated Count [breach of May 2002 Contract],
the trial court did not expressly restate its
determination that appellants had failed to place
disputed material facts before the court by way of
sworn evidence. Normally, we “are confined to the
basis relied upon by that court and may not otherwise
explain its conclusion by introducing new legal
theories.” It is evident, however, that appellants’
failure to comply with Maryland Rule 2–501 severely
undermined their opposition to summary judgment on all
the counts. Consequently, we shall conduct our
analysis of whether appellee was entitled to judgment
as a matter of law on the basis of the facts as
alleged in appellee’s motion for summary judgment.
Id. at 11–12 (footnote omitted) (citation omitted).
Ultimately, the court affirmed the trial court’s judgment,
with the exception of its award of attorneys’ fees on the breach
of fiduciary duty claim. As to that matter, it reversed and
remanded the case for recalculation of the judgment.
C.
The third suit involved a legal malpractice action that the
Underlying Defendants instituted in 2009 against Baylor &
Jackson for its failure to properly support the opposition to
summary judgment in the Robbins action. As noted above, MLM
initially covered Baylor & Jackson under the legal malpractice
insurance policy that it had provided them, but later, it
9
reversed course. It was then that the fourth suit, and the one
we address here, commenced.
The legal malpractice policy that MLM provided to Baylor &
Jackson promised the following:
WE will pay all sums up to the limit of OUR liability,
which the INSURED may be legally obligated to pay as
DAMAGES due to any CLAIM:
(1) arising out of any act, error or omission of the
INSURED or a person for whose acts the INSURED is
legally responsible; and
(2) resulting from the rendering or failing to render
PROFESSIONAL SERVICES while engaged in the
private practice of law or from rendering or
failing to render PROFESSIONAL SERVICES as a PART
TIME EMPLOYED ATTORNEY OF A GOVERNMENTAL BODY,
SUBDIVISION OR AGENCY.
The policy also gave MLM “the exclusive right to investigate,
negotiate and defend CLAIMS seeking DAMAGES against the
INSURED.” MLM first contracted with Baylor & Jackson in 2003.
The policy had a term of one year, and Baylor & Jackson renewed
yearly until 2010.
As noted above, the issue in this case is whether Baylor &
Jackson provided timely notification to MLM of the possibility
of a malpractice claim. Baylor & Jackson first contacted MLM on
July 9, 2009, when it received the Court of Special Appeals’
opinion. Thomas brought his malpractice claim on August 11,
2009. MLM contends that Baylor & Jackson should have contacted
the insurance company in 2006, when the circuit court issued its
10
opinion. It was then, MLM maintains, that Baylor & Jackson
“first became aware of facts which could have reasonably
supported the claim asserted against it by Mr. Thomas.”
Upon notifying Baylor & Jackson that MLM would not
represent it, MLM filed an action in the United States District
Court for the District of Maryland, seeking a declaratory
judgment that it had “no contractual obligation, under its
insurance policy, to defend and/or indemnify Baylor & Jackson,
Baylor, and/or Jackson . . . in the case of Thomas v. Baylor,
Case No. 24-C-09-005000.” Baylor & Jackson counterclaimed,
seeking a declaratory judgment that (1) “Baylor & Jackson
provided timely notice to MLM of the possibility of a claim
against it,” (2) “MLM did not suffer any actual prejudice as a
result of Baylor & Jackson’s alleged delay in providing notice,”
(3) “MLM is estopped from denying coverage,” and (4) “MLM is
obligated to cover Baylor & Jackson’s settlement with the Thomas
Defendants in the amount of $850,000.” Both parties moved for
summary judgment. Reasoning that Baylor & Jackson failed to
provide timely notice to MLM of the possibility a claim and that
MLM did not need to show actual prejudice, the district court
granted MLM’s motion and denied Baylor & Jackson’s motion.
11
II.
“We review the grant of summary judgment de novo, asking
whether, viewing the facts in the light most favorable to
[Baylor & Jackson], there is no genuine dispute as to any
material fact and [MLM] is entitled to judgment as a matter of
law.” Lansdowne on the Potomac Homeowners Ass’n, Inc. v.
OpenBand at Lansdowne, LLC., No. 12-1925, 2013 WL 1364274, *4
(4th Cir. Apr. 5, 2013). Because we sit in diversity in this
case, we apply Maryland law. See 28 U.S.C. § 1652.
Baylor & Jackson assert that the district court erred in
determining that MLM had no obligation to provide it coverage
because (1) it timely reported the possibility of a claim to MLM
and (2) even if it did not, MLM failed to show that it suffered
actual prejudice as a result.
A.
The policy that MLM provided to Appellants includes the
following stipulations regarding notice of claims:
A CLAIM is covered only if made during the POLICY
PERIOD or extended reporting period and reported to
US:
(1) during the POLICY PERIOD;
(2) within 60 days after the end of the POLICY
PERIOD; or
(3) during the extended reporting period.
12
The act, error or omission giving rise to the CLAIM
must have occurred:
(1) during the POLICY PERIOD; or
(2) prior to the POLICY PERIOD and on or after the
PRIOR ACTS RETROACTIVE DATE, if the INSURED had
no knowledge of facts which could reasonably
support a claim at the effective date of this
policy.
A CLAIM is deemed made when:
(1) a demand is communicated to the INSURED for
DAMAGES or PROFESSIONAL SERVICES;
(2) a lawsuit is served upon the INSURED seeking
DAMAGES; or
(3) an act, error or omission by any INSURED occurs
which has not resulted in a demand for DAMAGES
but which an INSURED knows or reasonably should
know, would support such a demand.
We will not provide coverage for any CLAIM arising out
of the same, related or continuing PROFESSIONAL
SERVICES which resulted in a CLAIM prior to the first
policy issued to the INSURED by US.
. . . .
“CLAIM(S)” means:
(1) A demand communicated to the INSURED for DAMAGES
or PROFESSIONAL SERVICES;
(2) A lawsuit served upon the INSURED seeking
DAMAGES; or
(3) An act, error or omission by any INSURED which
has not resulted in a demand for DAMAGES but
which an INSURED knows or reasonably should know,
would support such a demand.
. . . .
13
“POLICY PERIOD” means the period from the effective
date of this policy to the expiration date or earlier
termination date of this policy. POLICY PERIOD does
not include any extended reporting period.
B.
First, Baylor & Jackson avers that it timely reported the
possibility of a claim to MLM. As noted above, per MLM’s
policy, a claim is deemed made when at least one of three
circumstances occurs:
(1) a demand is communicated to the INSURED for
DAMAGES or PROFESSIONAL SERVICES;
(2) a lawsuit is served upon the INSURED seeking
DAMAGES; or
(3) an act, error or omission by any INSURED occurs
which has not resulted in a demand for DAMAGES
but which an INSURED knows or reasonably should
know, would support such a demand.
And for a claim to qualify for coverage, it must have occurred
during the policy period or within a certain time prior to the
policy period, provided that the insured “had no knowledge of
facts which could reasonably support a claim” at the time the
policy took effect.
Because Baylor & Jackson first contracted with MLM for
coverage in 2003 and then renewed its coverage each year until
2010, the operative question is whether via the Baltimore City
Circuit Court’s 2006 opinion granting summary judgment to
Robbins, Baylor & Jackson “kn[ew] or reasonably should [have]
14
know[n]” that it had committed “an act, error or omission” that
“would support . . . a demand” for damages. If the opinion
provided such notice, Baylor & Jackson was obligated to report
the possibility of a claim to MLM in 2006. If not, and its
first notice of a potential demand for damages came in 2009,
when the Court of Special Appeals affirmed the circuit court,
then the contact it made with MLM in 2009 was timely.
In Maryland, an insured’s obligation to notify his insurer
of a potential claim “accrues when the [insured has knowledge
of] circumstances . . . [that] would . . . suggest[] to a
reasonable person the possibility of a claim.” Commercial Union
Ins. Co. v. Porter Hayden Co., 698 A.2d 1167, 1194 (Md. Ct.
Spec. App. 1997). We believe that Baylor & Jackson had such
knowledge when the circuit court issued its decision on August
22, 2006.
First, the specifics of opposing motions for summary
judgment are outlined clearly in Maryland’s Rules. Rule 2-501
states,
A response to a written motion for summary
judgment shall be in writing and shall (1) identify
with particularity each material fact as to which it
is contended that there is a genuine dispute and (2)
as to each such fact, identify and attach the relevant
portion of the specific document, discovery response,
transcript of testimony (by page and line), or other
statement under oath that demonstrates the dispute. A
response asserting the existence of a material fact or
controverting any fact contained in the record shall
15
be supported by an affidavit or other written
statement under oath.
Md. R. Ct. 2-501(b). Moreover, as to affidavits, the Rules
provide that they “shall be made upon personal knowledge, shall
set forth such facts as would be admissible in evidence, and
shall show affirmatively that the affiant is competent to
testify to the matters stated.” Id. 2-501(c). We think it safe
to assume that any reasonable lawyer practicing in Maryland has
knowledge of these rules. In fact, we cannot countenance
otherwise.
Assuming, then, that Baylor & Jackson was aware of these
rules, we can accurately term its attempt to oppose Robbins’s
motion with an unexecuted affidavit as rather lax. Indeed, it
should have registered no surprise when, at the motions hearing,
the circuit court refused to credit the affidavit, allow Baylor
& Jackson to execute it on the spot, or hear live testimony from
Thomas. Of course, the events at the hearing foreshadowed the
court’s ultimate grant of summary judgment to Robbins, but they
also highlight the role that Baylor & Jackson’s failure to
adequately represent Thomas played in the court’s decision. If
Baylor & Jackson left the hearing with any confusion as to
whether its representation was acceptable, the circuit court’s
opinion should have provided clarity. Indeed, we think that
upon receipt of the opinion, “a reasonable [lawyer],” especially
16
one who had been present at the summary judgment motion hearing,
would have considered “the possibility of a [malpractice]
claim.” Commercial Union Ins. Co., 698 A.2d at 1194. The 2009
opinion from the Maryland Court of Special Appeals may have
further solidified this possibility, but it hardly provided the
first inkling that Baylor & Jackson had committed an omission
that would support a demand for damages. Thus, we conclude that
the district court properly held that Baylor & Jackson failed to
timely notify MLM of the possibility of a claim.
Baylor & Jackson makes much of the fact that the circuit
court’s decision was based on “numerous alternative grounds,”
while the Court of Special Appeals decision “rested squarely on
the alleged lack of an affidavit.” It contends that “[b]ecause
the Circuit Court made it clear that . . . the Thomas Defendants
would have lost the case irrespective of whether Baylor &
Jackson submitted an affidavit, there was no reason for the firm
to expect that its clients would bring an action for
malpractice.” But as the district court aptly recognized,
Baylor & Jackson has a misplaced focus. The issue is not
whether its failure provided the only reason for the circuit
court’s judgment, but rather whether it provided any reason for
the judgment. Obviously, it did. And because it did, we
believe that Baylor & Jackson had adequate notice of the
17
possibility of a malpractice claim such that it should have
contacted MLM.
C.
Next, Baylor & Jackson avers that even if its notice was
untimely, MLM was still obligated to provide coverage because it
did not suffer actual prejudice from the untimely notice.
Baylor & Jackson correctly recognizes that Maryland law
sometimes requires insurers to demonstrate actual prejudice:
An insurer may disclaim coverage on a liability
insurance policy on the ground that the insured or a
person claiming the benefits of the policy through the
insured has breached the policy by failing to
cooperate with the insurer or by not giving the
insurer required notice only if the insurer
establishes by a preponderance of the evidence that
the lack of cooperation or notice has resulted in
actual prejudice to the insurer.
Md. Code Ann., Ins. § 19-110. But as the district court
recognized, the circumstances under which insurers are required
to provide such demonstration depends on the language of the
policy at issue. The district court concluded that section 19-
110 is inapplicable to the policy MLM provided to Baylor &
Jackson, but we decline to reach the issue. Instead, we confine
our decision to a determination of whether MLM sufficiently
demonstrated actual prejudice. If it did, we may affirm the
district court’s judgment on that basis, without determining the
applicability of section 19-110 to MLM’s policy.
18
As noted above, section 19-110 requires that an insurer
establish actual prejudice by a preponderance of the evidence.
A preponderance of the evidence is “superior evidentiary weight
that, though not sufficient to free the mind wholly from all
reasonable doubt, is still sufficient to incline a fair and
impartial mind to one side of the issue rather than the other.”
Black’s Law Dictionary 1301 (9th ed. 2009). We think that MLM
made such a showing.
We note first that MLM’s 2006 policy states, “WE have the
exclusive right to investigate, negotiate and defend CLAIMS
seeking DAMAGES against the INSURED for which the policy
provides coverage.” Thus, MLM had not only agreed to “pay all
sums up to the limit of [its] liability, which the INSURED may
be legally obligated to pay,” it had also obligated itself to
“investigate, negotiate and defend” such claims. Thus, when
Baylor & Jackson failed, upon receiving the circuit court’s
opinion, to notify MLM that a potential claim existed, such
failure hindered MLM’s ability to fulfill its contractual
duties. By the time Baylor & Jackson contacted MLM, Maryland’s
Court of Special Appeals had already affirmed the circuit
court’s grant of summary judgment. At that point, MLM had few
options. In its brief, MLM maintains that Baylor & Jackson’s
untimely notice was prejudicial because it “prevented [MLM] from
advising Baylor & Jackson to file a motion for reconsideration,
19
assisting Baylor & Jackson in crafting arguments for that
motion, and/or assisting in the appeal.” We agree. See Prince
George’s Cnty. v. Local Gov’t Ins. Trust, 879 A.2d 81, 97 (Md.
2005) (“The case for finding prejudice as a matter of law is
strongest for primary insurers who receive notice after a
judgment because the late notice deprives the primary insurers
of their right to control the investigation, defense, and
settlement of claims.”). Contrary to the suggestion that MLM’s
proffer of what it could have done is “speculative” and lacking
in concreteness as to allegations of “actual harm,” ante, at 37,
we are unsure what additional proof of actual harm MLM could
offer. By the time MLM received notice of a possible claim, the
harm supporting the malpractice judgment was irreversible.
Thus, in spite of the allegation that “MLM had the opportunity
to mitigate the potential malpractice claim before it was even
filed,” id., such an opportunity seems purely theoretical.
MLM’s real mitigation opportunity came and went during the time
that Baylor & Jackson knew about the possibility of a claim and
remained silent. And because Baylor & Jackson remained silent,
MLM can speak only to how it could have helped. That MLM was
denied its true mitigation opportunity is proof enough of actual
harm. We decline to levy a more stringent requirement under
these facts.Accordingly, we affirm the district court’s grant of
summary judgment to MLM.
20
III.
In sum, we affirm the district court’s grant of summary
judgment to MLM, holding that (1) Baylor & Jackson failed to
provide MLM with timely notice of a potential claim and (2) MLM
demonstrated actual prejudice such that if section 19-110
applies, MLM’s disclaimer of coverage comported with Maryland
law.
AFFIRMED
21
THACKER, Circuit Judge, dissenting:
The majority concludes that even if Maryland law
required the insurer, Minnesota Lawyers Mutual Insurance Company
(“MLM”), to demonstrate actual prejudice in order to disclaim
coverage of a malpractice claim untimely noticed by Baylor &
Jackson, MLM has done so such that it may properly disclaim
coverage. With respect, I cannot join the majority opinion.
In my view, the district court erroneously applied
Maryland law in two crucial respects. First, the district court
incorrectly concluded that Maryland Code Ann., Insurance § 19-
110 did not apply to require MLM to prove it was actually
prejudiced by Baylor & Jackson’s untimely notice. This was the
central question addressed by the district court. Only in a
cursory footnote did the district court predict that even if the
statute applied to require MLM to show prejudice, it could have
“easily” done so. Minn. Lawyers Mut. Ins. Co. v. Baylor &
Jackson, PLLC, 852 F. Supp. 2d 647, 662 n.8 (D. Md. 2012). It
is on this slender reed that the majority decision rests.
Because I conclude that the district court erroneously
interpreted Maryland insurance law, both with respect to whether
the actual prejudice requirement applies and whether it was
ultimately satisfied, I respectfully dissent.
22
I.
The relevant facts are largely undisputed. In March
2006, Dawn Jackson of Baylor & Jackson initiated representation
of certain defendants in a contract action in Maryland state
court (the “Underlying Litigation”). When the plaintiffs in the
Underlying Litigation moved for summary judgment on July 27,
2006, Baylor & Jackson responded on August 11, 2006, with
unsupported allegations where disputed material facts were
available and not presented and were required pursuant to the
Maryland rules of civil procedure to support their position.
The trial court promptly granted summary judgment against the
firm’s clients on August 22, 2006. See ante at 5-7. The
Maryland Court of Special Appeals affirmed on July 8, 2009,
relying in large part on Baylor & Jackson’s conspicuous failure
to present material facts sufficient to defeat summary judgment.
Id. at 7 (observing that the underlying defendants’ opposition
to summary judgment “‘was not supported by affidavits,
deposition testimony, interrogatory answers, or any sworn
evidence as required by Maryland Rule 2–501’” (quoting Thomas v.
Robbins, No. 944, slip op. at 20-21 (Md. Ct. Spec. App. July 8,
2009) (unreported))).
On the same day the appeals court issued its decision,
July 8, 2009, Baylor & Jackson notified its malpractice carrier,
MLM, of the potential for a claim. The firm’s former clients
23
then filed a malpractice action against the firm over a month
later, on August 11, 2009. True to its word, MLM defended
Baylor & Jackson for over a year, until it abruptly disclaimed
coverage on October 1, 2010. At the time MLM disclaimed,
mediation in the malpractice case had been scheduled just two
weeks later on October 11, 2010, with trial scheduled to start
December 6, 2010.
MLM filed this declaratory action on September 29,
2010, in the United States District Court for the District of
Maryland. On cross motions for summary judgment, the district
court granted judgment to MLM. See Minn. Lawyers Mut. Ins. Co.
v. Baylor & Jackson, PLLC, 852 F. Supp. 2d 647 (D. Md. 2012).
This appeal followed.
II.
A.
The Untimely Notice of a Claim
As below, Baylor & Jackson vigorously disputes the
date on which its malpractice claim was deemed “made” under the
terms of its policy with MLM. 1 In the firm’s view, the claim was
1
The relevant policy language provides as follows:
A CLAIM is deemed made when:
(1) a demand is communicated to the INSURED for DAMAGES or
PROFESSIONAL SERVICES;
(Continued)
24
not made until the Maryland appeals court issued its decision on
July 8, 2009. Using that date as a reference, its claim to the
insurer would have been timely under the policy then in force.
Like the district court and the majority here, I agree that a
claim was “made” in this case when Baylor & Jackson filed an
unsupported response to the motion for summary judgment on
August 11, 2006. See ante at 13-16. That is, the firm “kn[ew]
or reasonably should [have] know[n]” that filing a response
devoid of sufficient material facts, where such facts were
available, “would support” a demand for damages. J.A. 275. MLM
suggests that Baylor & Jackson should have known on August 22,
2006, the date on which the state trial court granted summary
judgment, though use of this latter date makes no difference:
either way, the claim was made while the 2006 policy governed.
Because I agree that the claim was made on August 11, 2006, the
2006 policy applies.
(2) a lawsuit is served upon the INSURED seeking DAMAGES;
or
(3) an act, error or omission by any INSURED occurs which
has not resulted in a demand for DAMAGES but which an
INSURED knows or reasonably should know, would support
such a demand.
J.A. 275. Citations to the “J.A.” refer to the Joint Appendix
filed by the parties in this appeal.
25
The 2006 policy was effective August 1, 2006, to
August 1, 2007. Under the terms of the policy, a claim is
covered only if made and reported during the policy period,
within 60 days after the end of the policy period, or during the
extended reporting period. 2 Although the claim was “made” during
the period, that is, on August 11, 2006, it was not reported
until July 8, 2009. Accordingly, Baylor & Jackson’s notice was
untimely.
B.
Maryland’s Prejudice Requirement
As below, Baylor & Jackson alternatively argues that
even if its notice of the claim was untimely, Maryland law
requires MLM to prove it was actually prejudiced by the untimely
notice before it may lawfully disclaim coverage. See Md. Code
Ann., Ins. § 19-110. MLM responds that § 19-110 does not apply
such that they need make no showing of actual prejudice in order
to disclaim. Addressing this central question, the district
court concluded the statute did not apply, thus relieving MLM
from its need to show actual prejudice by a preponderance of the
evidence. The majority assumes without deciding that the
2
The policy at issue is a “claims-made”-type policy, to be
distinguished from an “occurrence”-type policy. See Sherwood
Brands, Inc. v. Great Am. Ins. Co., 13 A.3d 1268, 1277-78 (Md.
2011) (explaining the difference between occurrence and claims-
made policies).
26
statute applies because, in their view, MLM established actual
prejudice in either event. See ante at 17-18. Because I do not
agree that actual prejudice was shown, I must first determine
whether the statute applies before reaching the latter question.
1.
Section 19-110: Disclaimers of Coverage on Liability Policies
Section 19-110 regulates the circumstances in which an
insurer may disclaim coverage on a liability insurance policy in
Maryland. It states as follows:
An insurer may disclaim coverage on a liability
insurance policy on the ground that the insured or a
person claiming the benefits of the policy through the
insured has breached the policy by failing to
cooperate with the insurer or by not giving the
insurer required notice only if the insurer
establishes by a preponderance of the evidence that
the lack of cooperation or notice has resulted in
actual prejudice to the insurer.
Md. Code Ann., Ins. § 19-110. The statute was most recently
interpreted in Sherwood Brands, Inc. v. Great American Insurance
Co., 13 A.3d 1268 (Md. 2011). The district court relied on
Sherwood Brands and T.H.E. Insurance Co. v. P.T.P. Inc., 628
A.2d 223 (Md. 1993), in determining that the statute did not
apply. Contrary to the district court’s reasoning, however,
Sherwood Brands makes clear that the statute applies in this
case to require MLM establish actual prejudice before it can
properly disclaim coverage.
27
In Sherwood Brands, 13 A.3d at 1270, Great American
had issued to Sherwood, a manufacturing company, a series of
annual policies providing liability insurance. The relevant
policy term was effective May 1, 2007, to May 1, 2008. Id. On
December 11, 2007, a former employee filed with the
Massachusetts Commission Against Discrimination a claim
asserting breach of contract, wrongful termination, and many
other complaints. Id. at 1272. He also filed a related
complaint in Massachusetts state court on March 28, 2008,
against Sherwood and its subsidiaries, asserting similar
theories. Id. Both the agency proceeding and the Massachusetts
state court proceeding were filed and served on Sherwood during
the pendency of the 2007–08 policy. Id. Sherwood did not
notify Great American of the claim until October 27, 2008, a
date conceded to be after the end of the policy period. Id. at
1271–72. Great American denied coverage because the notice was
untimely. Id. at 1272. During the subsequent coverage suit,
the trial court granted summary judgment to Great American,
concluding the untimely notice justified the disclaimer and the
insurer was not required to demonstrate prejudice resulting from
Sherwood’s late notice. Id. at 1273-74. The Maryland Court of
Appeals vacated the trial court’s judgment and held that § 19-
110 applied to the policy and, therefore, the insurer was
28
required to show it was actually prejudiced by Sherwood’s late
notice before disclaiming coverage. Id. at 1270.
Sherwood Brands began its discussion by engaging in a
historical exploration of the development of § 19-110 in
Maryland. This included several key cases and legislative
amendments to the state code which shaped Maryland’s notice-
prejudice jurisprudence, as well as an explanation of the types
of policies implicated by § 19-110. 3 See id. at 1277-79. Rather
than simply join most jurisdictions by concluding that the
prejudice requirement does not apply to “reporting-type” claims-
made policies, the court recognized that Maryland’s statute,
§ 19-110, softens the harsh result (a forfeiture) that would
follow from the late notice of an insurance claim. See Sherwood
Brands, 13 A.3d at 1277 (“Although the policy may speak of the
notice provision in terms of ‘condition precedent,’ . . . .
nonetheless what is involved is a forfeiture, for the carrier
seeks, on account of a breach of that provision, to deny the
insured the very thing paid for. . . . Thus viewed, it becomes
unreasonable to read the provision unrealistically or to find
that the carrier may forfeit the coverage, even though there is
no likelihood that it was prejudiced by the breach.” (internal
3
In 1996, the Legislature recodified former § 482 to
Maryland Code (1997, 2006 Repl. Vol.), Insurance Article § 19–
110.
29
quotation marks omitted)). In view of these principles, the
court concluded that § 19-110’s prejudice requirement may apply
to a reporting-type claims-made policy. 4 See id. at 1284-85
(footnotes omitted).
Sherwood Brands turned next to the text and policies
underlying § 19-110, explaining as follows:
Section 19–110 begins by stating that “[a]n insurer
may disclaim coverage . . . on the ground that the
insured . . . has breached the policy . . . .”
Accordingly, in order for § 19–110 to be in play, the
insured must breach the insurance policy “by failing
to cooperate with the insurer or by not giving the
insurer required notice.” See House, 315 Md. at 355,
554 A.2d at 417 (stating that, because the statute
requires the insured to have “breached the policy,”
the statute only “potentially applies to ‘any’
liability insurer or policy”) (emphasis in original).
Central to whether § 19–110 applies to require Great
American to show that it was prejudiced by Sherwood’s
late-delivered notice is determining whether, in
giving Great American notice more than ninety days
after the expiration date of the 2007–08 Policy,
Sherwood “breached the policy.” If the notice
provisions of the 2007–08 Policy are “conditions
precedent” to coverage, then Sherwood does not “breach
the policy” by failing to obey the notice provisions;
the nonoccurrence of a condition precedent does not
constitute a breach, it merely relieves the other
party from performing under the contract/policy. On
the other hand, if the notice provisions are deemed
4
This conclusion directly conflicts with the common law of
many states. See Sherwood Brands, 13 A.3d at 1282-83. Notably,
the court also explicitly acknowledged that two decisions of the
United States District Court for the District of Maryland and
one unpublished decision of our court erroneously applied
Maryland law by concluding that reporting-type claims-made
policies are not subject to the actual prejudice requirement of
§19-110. See id. We should not compound those errors here.
30
covenants, Sherwood’s failure to give Great American
notice no later than ninety days after the expiration
date of the 2007–08 Policy would constitute a “breach
of the policy,” such that § 19–110 would apply to
require Great American to show that it was prejudiced
by Sherwood’s late-delivered notice.
Id. at 1286 (emphasis in original and citation omitted). The
court further explained that even if the policy language
expressly denotes the notice requirement as a “condition
precedent” to coverage, “the purpose and effect” of § 19–110
“mandates that the notice provisions of the Policy be treated as
covenants, not conditions.” Id. at 1286-87.
The court concluded as follows:
We hold that § 19–110 does not apply, as was the case
in T.H.E., to claims-made policies in which the act
triggering coverage -- usually notice of a claim or
suit being filed against and served upon an insured
under third-party liability policies -- does not occur
until after the expiration of the liability policy, as
this non-occurrence of the condition precedent to
coverage is not a “breach of the policy,” as required
by the statute. On the other hand, we hold that § 19–
110 does apply, as is the case at present, to claims-
made policies in which the act triggering coverage
occurs during the policy period, but the insured does
not comply strictly with the policy’s notice
provisions. In the latter situation, § 19–110 mandates
that notice provisions be treated as covenants, such
that failure to abide by them constitutes a breach of
the policy sufficient for the statute to require the
disclaiming insurer to prove prejudice.
Id. at 1288 (emphasis supplied). In this case, we face the
latter scenario.
31
2.
Application of § 19-110 and Sherwood Brands
In view of Sherwood Brands, the key question we must
ask in order to determine if § 19-110 applies is when did the
act triggering coverage occur? If it occurred after the
expiration of the liability policy, as was the case in T.H.E.,
there is simply no policy which the insured can breach when it
fails to notify the insurer of the claim. Since there’s no
policy, there’s no breach, and the express terms of § 19-110 do
not apply. On the other hand, if the act triggering coverage
occurred during the policy term, but where the insured fails to
notify the insurer according to the policy’s requirements, the
notice requirement is a covenant that is breached, allowing the
insurer to disclaim coverage only if it can show actual
prejudice. In this case, we look to the policy language to
determine when the act triggering coverage occurred. The policy
states:
A CLAIM is deemed made when:
(1) a demand is communicated to the INSURED for
DAMAGES or PROFESSIONAL SERVICES;
(2) a lawsuit is served upon the INSURED seeking
DAMAGES; or
(3) an act, error or omission by any INSURED occurs which
has not resulted in a demand for DAMAGES but which an
INSURED knows or reasonably should know, would support
such a demand.
32
J.A. 275.
Neither of the first two options apply here. Instead,
the act triggering coverage in this case is subsection (3).
Indeed, MLM itself contends that Baylor & Jackson knew or
reasonably should have known that their failure to supply
evidence in opposition to a motion for summary judgment would
support a demand for damages. That date, as suggested by MLM,
is either the date on which Baylor & Jackson filed their summary
judgment response, August 11, 2006, or when the trial court
granted summary judgment, August 22, 2006. Whichever the date,
both clearly fall within the policy term for the 2006 Policy,
which was effective August 1, 2006, to August 1, 2007. Because
the act triggering coverage in this case occurred during the
relevant policy term, the notice provision of the policy is a
covenant, not a condition precedent, and thus § 19-110 applies.
See Sherwood Brands, 13 A.3d at 1288 (“[W]e hold that § 19–110
does apply, as is the case at present, to claims-made policies
in which the act triggering coverage occurs during the policy
period, but the insured does not comply strictly with the
policy’s notice provisions.”). 5
5
In holding otherwise, the district court simply stated
that the policy at issue here is more like the one in T.H.E.,
and emphasized the fact that the policy language in this case
makes the notice requirement a condition for coverage. But as
Sherwood Brands makes clear, Maryland law does not care how the
(Continued)
33
MLM must therefore establish it was actually
prejudiced by the untimely notice in order to properly disclaim
coverage.
3.
Proof of Actual Prejudice
a.
Burden on the Insurer
MLM has not demonstrated actual prejudice by a
preponderance of the evidence as required by § 19-110, offering
only speculation as to what it would have done had notice been
timely.
“The insurer bears the burden of proof to show
prejudice.” Prince George’s Cnty v. Local Gov’t Ins. Trust, 879
A.2d 81, 97 (Md. 2005) (citing Md. Code Ann., Ins. § 19-110
(insurer must establish actual prejudice “by a preponderance of
the evidence”)); Sherwood Brands, Inc. v. Hartford Acc. and
Indem. Co., 698 A.2d 1078, 1083 (Md. 1997) (under § 19-110, “the
notice provision is couched when determining whether the
provision is a covenant or condition precedent; what matters is
when the act triggering coverage occurred. If the act
triggering coverage (i.e., when the claim is “made”) occurred
during the policy period, the statutory prejudice requirement
applies. If the act triggering coverage falls outside of the
policy term, the prejudice requirement does not apply because
there was never a policy to be breached. The district court did
not address this pivotal distinction.
34
insurer must establish by a preponderance of affirmative
evidence that the delay in giving notice has resulted in actual
prejudice to the insurer” (emphasis supplied)).
b.
More Than Mere Speculation Necessary
Critically, § 19-110 requires an insurer to prove that
it suffered actual harm: “The requirement of ‘actual prejudice’
means that an insurer may not disclaim coverage on the basis of
prejudice that is only possible, theoretical, conjectural, or
hypothetical.” Gen. Acc. Ins. Co. v. Scott, 669 A.2d 773, 779
(Md. 1996). “Nor is it enough to surmise harm that may have
occurred by virtue of the passage of time; prejudice cannot be
presumed from the length of the delay.” Id. An insurer may
properly disclaim coverage on the basis of untimely notice only
if it can prove that -- as a matter of fact -- it actually
suffered prejudice in its ability to investigate, settle, or
defend the claim. See Sherwood Brands, 13 A.3d at 1287.
Naturally, the potential for prejudice due to late
notice is greatest where “the insurer has been deprived of all
opportunity to defend” the claim made against the insured.
Prince George’s Cnty, 879 A.2d at 98 (internal quotation marks
omitted). In fact, Maryland’s highest court has concluded that
an insurer is prejudiced as a matter of law when the insured
fails to notify the insurer of the incident, claim, and lawsuit
35
until after an adverse judgment has been entered against the
insured. See id. at 100. Indeed, the majority quotes Prince
George’s County for this principle, stating “‘The case for
finding prejudice as a matter of law is strongest for primary
insurers who receive notice after a judgment because the late
notice deprives the primary insurers of their right to control
the investigation, defense, and settlement of claims.’” Ante at
19 (quoting Prince George’s Cnty, 879 A.2d at 97). True enough.
However, the proposition does not support the majority’s
conclusion in view of the facts of this case.
In Prince George’s County, the Maryland court was
speaking to the malpractice judgment entered against the insured
-- not about underlying conduct by the insured giving rise to
the lawsuit against it. Indeed, in this case, the insured
notified MLM several weeks before it was sued by its former
clients. This is not the case of an insured who failed to
notify its insurer until after a malpractice judgment is entered
against it (the insured).
c.
Actual Harm
Regardless, as Maryland case law articulates,
prejudice is all about harm to the insurer. See Prince George’s
Cnty, 879 A.2d at 95 (“If the insured violates the notice
provision without harming the interests of the insurer -- i.e.
36
without prejudice -- then there is no reason to deny
coverage.”). Thus, the question is not how MLM could have
helped Baylor & Jackson had notice been timely, but how was MLM
actually harmed by its inability to do so as a result of the
untimely notice.
In my view, MLM has not established by a preponderance
of the evidence that it was actually harmed by Baylor &
Jackson’s untimely notice. The 2006 Policy term was in force
August 1, 2006, to August 1, 2007, and included an additional
60-day extension period. The date on which the insured reported
the “claim” to the insurer was August 11, 2009, the same day the
appeals court decision affirmed the summary judgment granted
against the firm’s clients. Thus, MLM knew as of that date that
a malpractice suit against Baylor & Jackson might be
forthcoming. Indeed, once the suit was brought, MLM provided a
defense to Baylor & Jackson for more than a year before
disclaiming coverage. This denial of coverage took place just
weeks before a scheduled mediation conference on October 11,
2010, and only three months before trial. It is telling that
there is no suggestion from MLM that it disclaimed coverage at
that time because they found themselves somehow harmed by the
37
late notice. 6 MLM simply asserted (at the time) that it was
disclaiming pursuant to the terms of the Policy requiring timely
notice. See J.A. 339.
MLM’s only argument on this issue does not address the
harm or prejudice to itself, but only to how it might have
assisted Baylor & Jackson had notice been timely, namely, that
MLM was unable to assist the firm in possible “mitigation and
remediation efforts.” Appellee’s Br. 38. Attempting to flesh
this out, MLM asserts, “[h]ad Baylor & Jackson given timely
notice of the malpractice to MLM, MLM could have advised Baylor
& Jackson to admit fault [in a motion for reconsideration],
argue that the error was through no fault of Baylor & Jackson’s
clients, and argue that Baylor & Jackson’s error did not
prejudice the opposing side.” Id. at 38-39 (emphasis supplied).
MLM suggests, “[s]uch an argument that an attorney’s conduct
constitutes excusable neglect has persuaded previous courts to
forgive the mistake and permit a refiling,” but notably cites to
no cases and makes no mention of its own actual injury. J.A.
70. This contention is speculation at best and again does not
address the issue of actual harm caused to MLM by the late
6
See Sherwood Brands, Inc. v. Hartford Acc. and Indem. Co.,
698 A.2d 1078, 1083 (Md. 1997) (observing that delay in giving
notice apparently played no material role in insurer’s decision
not to defend where insurer did not raise prospect of prejudice
until coverage suit).
38
notice. MLM has offered no other grounds for its contention
that it suffered actual prejudice.
The district court accepted the insurer’s argument in
a footnote, stating,
Even if MLM were required to show prejudice, it could
have easily done so by showing it had been excluded
from the post-summary-judgment and appellate
proceedings in the Robbins v. Thomas case; those were
the only opportunities MLM could have had to fashion a
request for relief. Whether it would have been
successful with such a request is immaterial to the
prejudice flowing from the lack of notice that would
have enabled it to participate meaningfully in the
litigation.
Minn. Lawyers Mut. Ins. Co. v. Baylor & Jackson, PLLC, 852 F.
Supp. 2d 647, 662 n.8 (D. Md. 2012). I am not as easily
persuaded as the district court, for I do not see how the above
possibilities establish actual harm as a matter of fact by a
preponderance of the evidence. The suppositions proffered by
the district court, even if reasonable, are still speculative,
and do not speak to any harm MLM actually suffered.
The majority reasons that Baylor & Jackson’s late
notice “hindered MLM’s ability to fulfill its contractual
duties,” observing that by the time the appeals court issued its
opinion, “MLM had few options” by the time it received notice.
Ante at 18. To the contrary, MLM had the opportunity to
mitigate the potential malpractice claim before it was even
filed, as it received notice of a possible claim over a month
39
before litigation commenced. And even thereafter, MLM defended
the case for over a year before abruptly disclaiming coverage
just as the pretrial practice reached its zenith. Even giving
MLM the benefit of the doubt, it is far from clear that the
untimely notice left them with “few options.” Id.
Instead, the majority rests its analysis on MLM’s mere
assertion that the untimely notice “‘prevented [MLM] from
advising Baylor & Jackson to file a motion for reconsideration,
assisting Baylor & Jackson in crafting arguments for that
motion, and/or assisting in the appeal.’” Id. (quoting
Appellee’s Br. 38). But as explained above, even if we assume
MLM knew of the malpractice immediately, advised the firm to
file the motion for reconsideration, and otherwise assisted in
the appeal, MLM has presented no facts showing how it was
actually harmed by its inability to take these discreet steps.
The speculative nature of MLM’s claims of prejudice
stands in stark contrast to those Maryland cases where an
insured notified its insurer of a claim so late that it had
little or no opportunity to participate in or otherwise
influence the litigation against the insured. See Prince
George’s Cnty., 879 A.2d at 100 (insurer actually prejudiced
where insured “failed to notify insurer of the incident, claim,
and lawsuit until after an adverse judgment was entered” against
the insured); see id. at 94-96 (citing cases).
40
But even in a case far closer than presented by this
appeal, a Maryland appeals court did not find actual prejudice.
In General Accident Insurance Co. v. Scott, 669 A.2d 773, 775–77
(Md. Ct. Spec. App. 1996), cert. denied, 673 A.2d 707 (Md.
1996), the insured did not notify the insurer of a claim until
29 months after the accident giving rise to the claim. The
insurer contended that it was prejudiced by the delay because it
could not fully investigate the underlying facts, evaluate its
potential exposure, participate in the decision as to whether to
submit the case to arbitration, and decide whether to set
high/low parameters. Id. at 779. The Maryland Court of Special
Appeals concluded that the insurer’s allegations were
insufficient to show that it suffered actual prejudice because
“conclusory allegations about difficulties and inconveniences
that would result from any delay in notification are not
sufficient” to create a material dispute of fact with respect to
the issue of prejudice. Id. (emphasis in original). I submit
that the case before us presents far fewer persuasive claims of
prejudice than in Scott, a case where no actual prejudice was
found to have even been alleged, much less proven to a
preponderance of the evidence.
Had MLM been actually prejudiced by the late notice, I
would have expected it to have presented facts before the
41
district court indicating as much. It did not there and has not
here.
Perhaps recognizing that it failed to prove actual
prejudice, MLM asks us, alternatively (and tellingly), to remand
the case to give it another chance. See Appellee’s Br. 37 (“If
this Court, however, determines that Section 19-110 does apply
to the Policy, it should remand this case to the District Court
for a determination as to whether MLM has established actual
prejudice. While the District Court noted in a footnote that
MLM would easily be able to show actual prejudice, it did not
actually reach that issue and it did not make a full factual
finding in its Opinion.” (emphasis supplied)). This argument
leaves the distinct impression that MLM is well-aware of the
absence of actual prejudice. 7
III.
At bottom, the purpose of a notice requirement in an
insurance policy is to protect the insurer “by affording the
insurer the opportunity to acquire full information about the
circumstances of the case, assess its rights and liabilities,
and take early control of the proceedings.” Prince George’s
7
MLM has not articulated any sound basis for remand. It
filed this action for a declaratory judgment and has the burden
of proof. MLM has simply failed to present any facts to satisfy
its burden.
42
Cnty, 879 A.2d at 95. But under Maryland law, if the insurer is
not actually harmed by the untimely notice, “then there is no
reason to deny coverage.” Id. The notice clause should not be
used by the insurer as a “technical escape-hatch by which to
deny coverage in the absence of prejudice.” Id. (internal
quotation marks and citation omitted). MLM should not be
allowed to so easily subvert the public policy embodied in
Maryland’s considered legislative judgment without showing how
it was actually harmed by the untimely notice. As a result, I
would reverse the judgment of the district court.
43
Minnesota Lawyers Mutual Insurance v. Baylor & Jackson, PLLC
Combined Opinion