Brohawn v. Transamerica Ins. Co.

• Decision Date: 03 December 1975
• Docket Number: No. 1,1
• Citation: 276 Md. 396,347 A.2d 842
• Parties: Mary BROHAWN v. TRANSAMERICA INSURANCE COMPANY.
• Court: Maryland Court of Appeals

Page 396

276 Md. 396

347 A.2d 842

Mary BROHAWN v. TRANSAMERICA INSURANCE COMPANY.

No. 1.

Court of Appeals of Maryland.

Dec. 3, 1975.

Francis J. Meagher, Baltimore (Goodman, Meagher & Enoch, Baltimore, on the brief), for appellant.

Edward C. Mackie, Baltimore (Rollins, Smalkin, Weston & Andrew and Robert W. Fox, Baltimore, on the brief), for appellee.

Argued before MURPHY, C. J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.

ELDRIDGE, Judge.

This case presents the question of whether an insurer is entitled to a declaratory judgment that it has no obligation to either defend or indemnify its insured in actions brought by injured third parties based on alternative allegations of negligence and assault. The policy specifically excludes from coverage any act committed by the insured with the intent to injure, and the insured had pleaded guilty to assault in a previous criminal action arising from the same incident.

In November 1970 Mary Brohawn, the insured, and Martha Schmidt, her sister, went to a nursing home in Cumberland, Maryland, where their grandmother, Ethel Rosier, resided. The two women, accompanied by Mrs. Brohawn's son, Mark, planned to take Mrs. Rosier from the home because, as Mary Brohawn claimed, the director of the home told her sister 'to come up and get my grandmother within thirty days or he was going to set her out in the street.' Because of their activities at the nursing home, both Mrs. Brohawn and Mrs. Schmidt were charged in the Circuit Court for Garrett County with the assault of two nursing home employees and with the kidnapping of their grandmother, Mrs. Rosier. Testimony heard by the court before accepting guilty pleas from the women revealed conflicting accounts of what occurred at the nursing home.

Regina Gank, an employee of the home, testified that the Brohawn group arrived at the nursing home at lunch time. Mrs. Gank requested that the group wait until lunch was over to see Mrs. Rosier. Mrs. Brohawn and Mrs. Schmidt did wait as requested but, after lunch was over, proceeded to get Mrs. Rosier and take her out of the building. Mrs. Gank informed another employee, Clara Shaffer, that a patient was being taken from the home. Mrs. Gank and Mrs. Shaffer found Mrs. Brohawn and Mrs. Schmidt leading their grandmother down the front steps of the home. Each woman was on either side of Mrs. Rosier holding her up because she could not walk well by herself. Mrs. Shaffer and Mrs. Gank tried to prevent the party from leaving by grabbing Mrs. Rosier. Mrs. Gank testified that Mark Brohawn 'hauled off around and hit me.' Mrs. Gank then saw Mrs. Shaffer falling down the steps, and she took her hand off Mrs. Rosier so that she could catch Mrs. Shaffer.

Mrs. Shaffer testified that she and Mrs. Gank tried to prevent the Brohawn party from leaving the home with their grandmother. According to her testimony, she and Mrs. Gank grabbed Mrs. Rosier by the arm as Mrs. Rosier was going out the front door. Mrs. Shaffer realized that Mrs. Rosier had difficulty in walking alone, but nonetheless she and Mrs. Gank struggled with Mrs. Schmidt and Mrs. Brohawn who were holding Mrs. Rosier. As they struggled, Mrs. Shaffer was 'jerked around by the uniform and fell against the arm-railing and hit my side and on down to the bottom floor.' Mrs. Shaffer indicated that she was aware of the fact that Mrs. Rosier's family had spoken to the director and were planning to take her from the home.

Mary Jane Friend, another employee of the home, testified that she attempted to stop Mrs. Schmidt and Mrs. Brohawn as they led Mrs. Rosier from her room. She claimed that Mrs. Brohawn hit her on the arm and knocked her into a coat rack. She also claimed that she saw Mark Brohawn hit Mrs. Gank, but she did not see any altercation between Mrs. Brohawn and her sister on the one hand and Mrs. Gank and Mrs. Shaffer on the other. Mrs. Friend also testified that Mrs. Rosier could not walk well by herself and that both Mrs. Schmidt and Mrs. Brohawn were holding Mrs. Rosier as they were going down the steps.

Mary Brohawn denied that either she or Mrs. Schmidt hit anyone or that any altercation took place. The only physical contact which occurred, according to her, was when Mrs. Gank placed her arm on Mark Brohawn's shoulder, which he shrugged off. She also testified that it was cold and snowing that day and that there was snow on the pavement.

As a result of plea bargaining, both Mrs. Brohawn and Mrs. Schmidt pleaded guilty to the assault charges, and the kidnapping charges were dismissed. Both were given a suspended 30-day sentence and fined $100 and costs.

Mrs. Shaffer and Mrs. Friend each filed suit in September 1971 in the Circuit Court for Garrett County alleging that Mrs. Brohawn and Mrs. Schmidt did 'with force and arms, willfully and maliciously and without any just cause or provocation' assault them, resulting in 'serious, painful and permanent injuries.' Both compensatory and punitive damages were sought. Amended declarations adding a second count alleging negligence and seeking compensatory damages only were filed in November 1971. The actions were removed to the Circuit Court for Allegany County but have not yet been tried.

Superior Risk Insurance Company issued to Mary Brohawn and her husband a homeowner's policy which included 'Comprehensive Personal Liability' coverage effective from June 11, 1969, to June 11, 1972. Transamerica Insurance Company acquired the policy in 1969. ¹ The insurer's obligation under the 'Comprehensive Personal Liability Section' is set out in the 'Insuring Agreements' as follows:

'a. Coverage E-Personal Liability. To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the Company shall defend any suit against the Insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this Section, even if any of the allegations of the suit are groundless, false or fraudulent; but the Company may make such investigation and settlement of any claim or suit as it deems expedient.' (Emphasis supplied.)

This section, however, is subject to certain 'Exclusions' which provide in pertinent part:

'c. to any act committed by or at the direction of the Insured with intent to cause injury or damage to person or property.'

Transamerica was notified of the original tort suits but denied coverage and refused to defend because the declarations alleged intentional acts within the policy exclusion. Mrs. Brohawn's attorney promptly informed Transamerica of the amended declarations alleging negligence and again requested that Transamerica defend. In a letter dated March 14, 1972, Transamerica informed Mrs. Brohawn that it was investigating the incident and had secured counsel to defend the suits but that such action on its part was not a waiver of any conditions of the policy or its right to deny coverage under the policy exclusions. Mrs. Brohawn was also advised that, inasmuch as the damages claimed exceeded the limits of liability coverage provided by the policy, she could have her personal attorney participate in the defense of the tort suits.

Transamerica filed this action for a declaratory judgment in the Circuit Court for Allegany County, alleging that after review of the interrogatories filed by Mrs. Shaffer and Mrs. Brohawn in the tort suits, and in light of the guilty plea in the criminal action, it concluded that the acts allegedly committed by Mrs. Brohawn were intentional and therefore excluded from coverage. Named as defendants in the declaratory judgment action were the insured Mrs. Brohawn, her sister Mrs. Schmidt, and the plaintiffs in the tort suits, Mrs. Shaffer and Mrs. Friend. Transamerica sought a declaratory judgment that it had 'no coverage under the policy hereinabove set forth or any liability that may be adjudicated against (the) Defendant Mary Brohawn . . . for injuries to defendants Shaffer and Friend as a result of any acts committed by Defendant Brohawn on or about November 24, 1970, and which are the subjects of the suits hereinabove described.' Transamerica also requested that it be 'relieved of any obligation to defend' Mrs. Brohawn in the pending suits. Additionally, it sought to enjoin Mrs. Shaffer and Mrs. Friend from prosecuting the tort suits pending resolution of the coverage and defense questions in the declaratory judgment action. Mrs. Brohawn responded by, inter alia, seeking an order 'that the Plaintiff be obliged to defend the said actions under its policy and to pay any damages afforded for actions covered by the policy.'

A hearing was held in the declaratory judgment action, after which the court (Getty, J.) denied the relief sought by Transamerica. In its order, the circuit court held that the question of coverage would be 'determined by the jury's verdict (in the tort suits) on issues submitted as to the manner in which the injuries, if any, were sustained . . ..' The court also ordered Transamerica to defend Mrs. Brohawn 'under the non-waiver agreement executed between the parties.' ²

The Court of Special Appeals sitting in banc, in a 7-2 decision, with Judge Lowe dissenting in an opinion joined by Judge Davidson, reversed the order of the circuit court and remanded the case to the circuit court, holding that the question of whether any injuries sustained were the result of intentional or negligent conduct should be decided in a declaratory judgment action prior to the trial of the tort suits. The Court of Special Appeals also noted that any determination in the declaratory judgment action would be res judicata in the pending tort suits, leaving only the question of damages to be resolved in the tort suits in the event that Mrs. Brohawn and Mrs. Schmidt were to be found liable in the declaratory judgment action. The Court of Special Appeals also found that if it were determined in the...