Unitrin Auto & Home Ins. Co. v. Karp
| Decision Date | 24 August 2020 |
| Docket Number | Civil Case No. SAG-17-3341 |
| Citation | 481 F.Supp.3d 514 |
| Parties | UNITRIN AUTO AND HOME INSURANCE COMPANY, Plaintiff, v. Robert KARP, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Jeffrey T. Brown, Steven J. Parrott, DeCaro Doran Siciliano Gallagher and DeBlasis LLP, Bowie, MD, for Plaintiff.
Andrew M. Williamson, Pierce Bainbridge Beck Price & Hecht LLP, James Sumter Carter, Jr., John Albert Gibbons, Namrata Loomba, Blank Rome LLP, Washington, DC, Francis X. Crowley, Pro Hac Vice, Blank Rome LLP, Philadelphia, PA, for Defendants.
Plaintiff Unitrin Auto and Home Insurance Company ("Unitrin") filed this declaratory judgment action against Defendants Robert and Chaya Karp ("the Karps") and PennyMac Loan Services ("PennyMac"), seeking declaratory relief defining the scope of coverage of an insurance policy covering the Karps’ home. ECF 1. PennyMac, the mortgage holder for the Karps’ property, filed a counterclaim against Unitrin, seeking contradictory declaratory relief, in addition to monetary damages for Unitrin's alleged breach of contract and failure to act in good faith. ECF 37. Unitrin and PennyMac have now filed cross-motions for summary judgment. ECF 59, 61. I have reviewed those motions, along with the relevant oppositions and replies. ECF 62, 65. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2018). For the reasons that follow, Unitrin's Motion for Summary Judgment, ECF 59, will be denied, although this Court will dismiss Count Three of the Counterclaim, without prejudice, for lack of subject matter jurisdiction, and PennyMac's Cross-Motion for Summary Judgment, ECF 61, will be granted in part and denied in part. Unitrin's Motion for Default Judgment as to the Karps, ECF 60, will be denied. Finally, Unitrin's Motion to Strike PennyMac's Reply, ECF 66, will also be denied.
The Karps purchased "Kemper Preferred" policy number RC 761778 from Unitrin ("the Policy") to insure their residence at 3911 Glengyle Avenue, Baltimore, Maryland. ECF 59-4. The Policy's effective dates were July 6, 2016 through July 6, 2017. Id. The Policy insures against direct loss to property, but also contains an exclusion ("the absolute pollution exclusion") which provides:
ECF 59-4 at 20. The Policy defines "pollutants" to include "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." Id.
On or about June 2, 2017, the Karps’ son discovered a hole in a copper
feed line between the oil tank and the furnace. ECF 59-16 at 1. Home heating oil had leaked from the hole onto the tile floor of their basement. ECF 59-13 at 2. The Karps filed a claim under their Unitrin policy, which was originally processed by the "fast response unit" in Unitrin's Charlotte Claims Center. ECF 59-6 at 69:12-70:15; 132:16-133:11. After receiving the Karps’ claim, Unitrin began remediating the damage to their basement. ECF 59-7 at 518:1-519:10.
In September of 2017, approximately three months after the incident, Unitrin assigned senior claim representative Allen Stack to review and manage the claim process. ECF 59-16 at 1. Stack reviewed the Karps’ Policy, and informed Robert Karp and the public adjuster retained by the Karps, Adam Levitt, that he believed the pollution exclusion excluded coverage for the loss. ECF 59-7 at 516:17-21; ECF 59-8 at 192:5-16. On November 9, 2017, Unitrin issued a formal coverage denial letter to the Karps, which explained that although coverage would be denied, Unitrin would complete payment of any clean-up and remediation expenses it had agreed to pay before issuing the coverage denial letter. ECF 59-9. Levitt confirmed, at his deposition, that Unitrin paid all of the expenses it had agreed to pay for remediation. ECF 59-8 at 190:9-191:2; 215:12-15; 216:16-217:8. In total, Unitrin paid $86,988.93 for the Karps’ loss, including $57,198.71 to remediate the damage to the residence. ECF 61-11.
The Karps’ health was adversely affected by the discharge of home heating oil, such that they vacated the dwelling and eventually stopped making mortgage payments to their mortgagee, PennyMac. ECF 61-12 at 157:2-19. Because PennyMac, as mortgagee, also enjoyed certain rights under the Policy, both Robert Karp and PennyMac filed complaints, at separate times, with the Maryland Insurance Administration ("MIA"), alleging that Unitrin engaged in unfair claims practices by denying the claim.1 The MIA decided in favor of Unitrin as to the issues raised by Robert Karp. ECF 59-13. Karp appealed the decision to the Office of Administrative Hearings, which held a two-day evidentiary hearing. ECF 59-14. After hearing the evidence, the Administrative Law Judge upheld the MIA's determination that Unitrin had not engaged in unfair claim settlement practices by denying Karp's claim. ECF 59-15. The Final Order issued on October 22, 2018, and it was not appealed. Id. On September 10, 2018, PennyMac filed its own complaint with the MIA. ECF 59-18. On March 29, 2019, after PennyMac had filed its Counterclaim against Unitrin in this Court, the MIA also decided PennyMac's complaint in Unitrin's favor. Id.
In its Complaint in this case, Unitrin seeks a declaratory judgment declaring that it owes no coverage to the Karps or to PennyMac under the Policy, as a result of the absolute pollution exclusion. ECF 1. PennyMac filed a Counterclaim, in which it seeks a declaratory judgment that it is entitled to joint coverage with the Karps; that the damage from the incident is covered by the Policy; that Unitrin is estopped from terminating coverage; and that the Policy requires Unitrin to provide coverage to PennyMac, even if coverage is unavailable to the Karps. ECF 37. PennyMac also asserts claims for monetary damages for breach of contract, and for failure to act in good faith. Id.
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate only "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party bears the burden of showing that there is no genuine dispute of material facts. See Casey v. Geek Squad , 823 F. Supp. 2d 334, 348 (D. Md. 2011) (citing Pulliam Inv. Co. v. Cameo Props. , 810 F.2d 1282, 1286 (4th Cir. 1987) ). If the moving party establishes that there is no evidence to support the non-moving party's case, the burden then shifts to the non-moving party to proffer specific facts to show a genuine issue exists for trial. Id. The non-moving party must provide enough admissible evidence to "carry the burden of proof in [its] claim at trial." Id. at 349 (quoting Mitchell v. Data Gen. Corp. , 12 F.3d 1310, 1315-16 (4th Cir. 1993) ). The mere existence of a scintilla of evidence in support of the non-moving party's position will be insufficient; there must be evidence on which the jury could reasonably find in its favor. Id. at 348 (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). Moreover, a genuine issue of material fact cannot rest on "mere speculation, or building one inference upon another." Id. at 349 (quoting Miskin v. Baxter Healthcare Corp. , 107 F. Supp. 2d 669, 671 (D. Md. 1999) ).
Additionally, summary judgment shall be warranted if the non-moving party fails to provide evidence that establishes an essential element of the case. Id. at 352. The non-moving party "must produce competent evidence on each element of [its] claim." Id. at 348-49 (quoting Miskin , 107 F. Supp. 2d at 671 ). If the non-moving party fails to do so, "there can be no genuine issue as to any material fact," because the failure to prove an essential element of the case "necessarily renders all other facts immaterial." Id. at 352 (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Coleman v. United States , 369 F. App'x 459, 461 (4th Cir. 2010) (unpublished)). In ruling on a motion for summary judgment, a court must view all of the facts, including reasonable inferences to be drawn from them, "in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc. , 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) ).
The Court will address Unitrin's Motion to Strike first, to establish the scope of the materials to be considered in addressing the substantive motions. Unitrin argues that PennyMac's Reply exceeded the scope of Unitrin's Opposition to PennyMac's (belatedly filed) Motion for Summary Judgment, and instead constituted an impermissible surreply to Unitrin's Motion for Summary Judgment. ECF 66. Regardless of the merits of that position, this Court has repeatedly expressed the view that a Motion to Strike is not an appropriate procedural vehicle to use in this context. See, e.g. , Dowdy v. Santander Consumer U.S.A., Inc. , Civil No. SAG-19-01386, 2019 WL 5455554, at *5 (D. Md. Oct. 14, 2019) (). Unitrin's Motion to Strike will therefore be denied. The Court notes, however, that no material that could be construed as a "surreply" proved dispositive with respect to the...
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...status as a "pollutant" ambiguous and, therefore, construed the policy against the insurer. See Unitrin Auto and Home Insurance Company v. Karp , 481 F. Supp. 3d 514, 518, 525 (D. Md. 2020) (home heating oil leaked into the basement of a home). Additionally, it appears that in many cases wh......