Baker's Express, LLC v. Arrowpoint Capital Corp., Civil Action No. ELH-10-2508
| Decision Date | 20 September 2012 |
| Docket Number | Civil Action No. ELH-10-2508 |
| Parties | BAKER'S EXPRESS, LLC, Plaintiff, v. ARROWPOINT CAPITAL CORP., et al., Defendants. |
| Court | United States District Courts. 4th Circuit. United States District Court (Maryland) |
Baker's Express, LLC ("Baker's Express"), plaintiff, sued its insurer, American & Foreign Insurance Company ("A&F"), and three other companies that are successors-in-interest to A&F: Arrowpoint Capital Corp. (f/k/a Royal and Sun Alliance USA, Inc.) ("Arrowpoint Capital"); Arrowood Indemnity Company ("Arrowood Indemnity"); and Arrowood Surplus Lines Insurance Company ("Arrowood Surplus") (collectively with A&F, "Arrowpoint" or the "Insurers").1 Baker's Express contends that the Insurers breached their contractual obligations under the insurance policy that A&F issued to Baker's Express (the "A&F Policy") by refusing to reimburse Baker's Express for legal expenses incurred in defending a lawsuit that was filed in New Jersey by Ronnie Barnes, a former employee of Baker's Express (the "Barnes Suit"). It seeks damages in the amount of $200,000, the sum of its unpaid legal expenses in the Barnes Suit, as well as its attorneys' fees incurred in prosecuting this action.
The parties have filed cross-motions for summary judgment. See Defendant's Motion for Summary Judgment ("Insurers' Motion") (ECF 31); Plaintiff's Motion for Summary Judgment (ECF 33) (collectively with its supporting memorandum, ECF 33-2, "Baker's Motion"). The motions have been fully briefed,2 and no hearing is necessary to resolve them. See Local Rule 105.6. For the reasons that follow, I will grant in part and deny in part both motions.
Baker's Express is a distributor of baked goods to "450 grocery stores located in Delaware, Pennsylvania, New York, New Jersey, Connecticut, Rhode Island, Massachusetts, New Jersey, and metropolitan New York City." Baker's Motion at 3-4. It operates out of offices and a warehouse and terminal located in South Plainfield, New Jersey. Id. at 4; see also Deposition of Greg Parker at 13-16, 44-45 ("Parker Dep.");4 Deposition of Allan Sten, General Manager of Baker's Express, at 7, 20-21, 32 ("Sten Dep."), Ex.C to Baker's Motion (ECF 33-5). Baker's Express is organized as a limited liability company under the laws of Maryland and, in its organizational filings with Maryland's Department of Assessments and Taxation, it listed an address in Baltimore, Maryland as its principal office. See Ex.B to Baker's Motion (ECF 33-4).
Notably, at the times relevant to this suit, Baker's Express was affiliated with several other business entities through common ownership. One of those business entities was H&S Holdings Corporation ("H&S"), whose offices are located at the same Baltimore address that Baker's Express listed as its principal office. See Parker Dep. at 93-94, 100-01; see also Ex.D to Baker's Motion at 3 (ECF 33-6).
Another business entity affiliated with Baker's Express through common ownership was Metroplex Harriman, a distributor of foodstuffs and supplies to McDonald's restaurants.5 See Parker Dep. at 9; Sten Dep. at 32. Metroplex Harriman's offices were located in Harriman, New York. Parker Dep. at 11. Greg Parker, Baker's Express's corporate designee, testified at his deposition that, because Baker's Express and Metroplex Harriman shared common ownership, certain administrative functions for the two companies were "centralized" with Metroplex Harriman. Parker Dep. at 10; see also id. at 10-12, 28-29. Payroll, internal accounting, some banking, and some aspects of management of insurance coverage for Baker's Express (including receipt of policies and maintenance of records regarding coverage) were handled by Metroplex Harriman out of its New York office. See id. at 10-12, 20-29, 42. Moreover, Mr. Parker, who was responsible for handling these centralized functions, was an employee of Metroplex Harriman, not Baker's Express. See id. at 8.
At all times relevant, Baker's Express was insured under a Worker's Compensation and Employer's Liability Insurance Policy issued by A&F (the "A&F Policy"). See Policy, Ex.12 to Parker Dep. (ECF 33-8 at 58-87). Baker's Express procured the A&F Policy through a broker,Insurance Services Group, Inc. ("ISG"). ISG's offices are located in Towson, Maryland. See Insurers' Motion at 2; Baker's Motion at 5.
Among other things, the A&F Policy insured Baker's Express against liability for "bodily injury by accident" suffered by its employees, up to a $500,000 limit of liability per accident. A&F Policy at 60, 68.6 The A&F Policy contained an exclusion, denominated as "Exclusion C7," which stated that the insurance did not cover "damages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against or termination of any employee, or any personnel practices, policies, acts or omissions." Id. at 70. The A&F Policy also contained a "New Jersey Part Two Employers Liability Endorsement," which provided, inter alia: "With respect to Exclusion C7 we will defend any claim, proceeding or suit for damages where bodily injury is alleged." Id. at 84.
The A&F Policy contained several interrelated provisions concerning the locations where the policy provided coverage. Only one state, New Jersey, was listed in "Item 3.A" of the Information Page, which was a listing of "Covered States." Id. at 76. In the "General Section" of the A&F policy, under the heading "Locations," the Policy provided: "This policy covers all of your workplaces listed in Items 1 or 4 of the Information Page; and it covers all other workplaces in Item 3.A. states unless you have other insurance or are self-insured for such workplaces." A&F Policy at 67. "Item 1" of the policy's "Information Page" listed the "Named Insured & Address" as Baker's Express, at the address of Metroplex Harriman's office in Harriman, New York. Id. at 60. "Item 4," which was contained on an "Extension of InformationPage," listed one "Entity" (Baker's Express, with Metroplex Harriman's address) and one "Location" (the address of Baker's Express's office and warehouse in South Plainfield, New Jersey). Id. at 77.
In addition, the A&F Policy contained provisions for "Other States Insurance," which applied to states "shown in Item 3.C. of the Information Page." Id. at 71. "Item 3.C" of the Information Page, which was also captioned "Other States Insurance," listed "All States Except" North Dakota, Ohio, Washington, West Virginia, Wyoming, and "states listed under item 3.A" (i.e., New Jersey). Id. at 76 (emphasis added). As to "Other States Insurance," the A&F Policy provided: "If you begin work in any one of those states after the effective date of this policy and are not insured or are not self-insured for such work, all provisions of the policy will apply as though that state were listed in Item 3.A. of the Information Page," (i.e., as if it were listed as one of the "Covered States"). Id. at 71. Moreover, the A&F Policy stated: "If you have work on the effective date of this policy in any state not listed in Item 3.A. of the Information Page, coverage will not be afforded for that state unless we are notified within thirty days." Id.
The A&F Policy also contained numerous endorsements that, by their terms, were applicable to New Jersey-based insureds and made reference to New Jersey law. See, e.g., A&F Policy at 79 (); id. at 81 ("New Jersey Approved Managed Care Program Endorsement"); id. at 82 ("New Jersey Premium Discount Endorsement Schedule Y"); id. at 84 (); id. at 85 ("New Jersey Participating Provision Endorsement"). However, the A&F Policy did not contain a choice of law or forum selection provision.
The jacket for the A&F Policy contained the following statement, above the signatures of three A&F officers: "IN WITNESS WHEREOF, company has caused this policy to be signed officially below, but this policy shall not be valid unless countersigned on the information page by a duly authorized representative of the company.'' A&F Policy at 59 (emphasis added).7 The Information Page contained a line for a "countersignature," which was signed (using a "rubberstamp signature") by David Dixon, an insurance producer with the insurance broker ISG. See Affidavit of David Dixon ¶¶ 6-8 ("Dixon Aff."), Ex.G to Baker's Motion (ECF 33-9). Next to the countersignature on the A&F Policy's Information Page was a listing of the "Issuing Office," an address in Baltimore that was A&F's Baltimore underwriting office. See Mooney Dep. at 50-51; Baker's Motion at 11. The A&F Policy was assembled into the jacket at A&F's Baltimore office and then transmitted to ISG. Id.
According to Mr. Dixon, ISG acted as an "agent" and "authorized representative" of A&F in establishing the policy, and Baker's Express's copy of the A&F Policy was mailed to ISG for ISG to "ensure that it contained the coverages we asked for" before countersigning it on A&F's behalf and transmitting it to Baker's Express. Id. ¶¶ 3-6.8 Mr. Dixon also averred that the A&F Policy was "'agency-billed' which means that Bakers [sic] Express paid the premium by mailing checks, in installments, to ISG's office in Towson, Maryland," and "ISG would then forward the premium payments to American & Foreign." Id. ¶¶ 9-10. Mr. Parker of Metroplex Harriman testified that Baker's Express issued the premium payment checks for the A&F Policy from Baker's Express's South Plainfield, New Jersey office to ISG in Towson, Maryland.Parker Dep. at 60; see also Ex.8 to Parker Dep. (ECF 33-8 at 54-57) ().
Baker's Express was also insured under a "Private Company Directors, Officers and Employees...
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