Burka v. Garrison Prop. & Cas. Ins. Co.
| Decision Date | 22 February 2021 |
| Docket Number | Civil No. 2:20-CV-172-DBH |
| Citation | 521 F.Supp.3d 97 |
| Court | U.S. District Court — District of Maine |
| Parties | Douglas BURKA, MD, Plaintiff v. GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY and United Services Automobile Association Insurance Company, Defendants |
Christopher C. Dinan, Laura A. Maher, Monaghan Leahy, LLP, Portland, ME, for Plaintiff.
Douglas N. Steere, Elizabeth L. Hurley, Stephen J. Schulthess, Pro Hac Vice, Getman, Schulthess & Steere, P.A., Manchester, NH, for Defendants.
DECISION AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
The central issue on these cross-motions for summary judgment is whether the United Services Automobile Association Insurance Company's (USAA's) Maine Renters Protection Policy obligated it to defend its insured Dr. Douglas Burka (Burka) against two lawsuits. Burka's former spouse Allison Cayne (Cayne) sued Burka in Maine and Maryland charging that while they were married he improperly accessed her medical records and otherwise treated her shamefully. Her parents joined the Maryland lawsuit charging improper access to their medical records. Burka is not seeking indemnification for the claims but rather his legal fees in defending against them until they were finally resolved. After oral argument on December 8, 2020, I conclude that USAA had a duty to defend but that I am unable to determine on this record whether that duty terminated as to the Maine lawsuit earlier than final resolution of the underlying Maine and Maryland lawsuits. I decline to rule on this record what discovery is appropriate as a result of my ruling; I leave that to the Magistrate Judge's discretion in responding to counsel's specific proposals.
Burka filed this duty-to-defend lawsuit against USAA in the Maine Superior Court for breach of his insurance contract, late payment, and unfair claims settlement practices. USAA removed the case to this Court based upon diversity of citizenship. The Magistrate Judge then issued a standard Scheduling Order that set deadlines for discovery and motion practice. (ECF No. 8). But the parties filed a joint proposed amendment to the Scheduling Order. (ECF No. 19). They said that before starting discovery "in earnest," they first wanted a judicial resolution of "Phase One." I quote their agreement because it frames the controversy I am deciding:
The legal issue to be addressed in Phase One is whether the defendants owed a duty to defend the plaintiff in one or both of the two lawsuits ("the underlying litigation") brought against him; and, if so, what does that duty entail when the underlying litigation is complete. Phase One also involves whether the defendant is estopped from denying the duty to defend, or has waived its ability to deny the duty to defend, when it communicated acceptance but only after completion of the underlying litigation. Finally, in the event that a duty to defend was owed, must the plaintiff prove the relatedness and reasonableness of the legal expenses incurred during the underlying litigation such that he must produce discovery in support of same.
(ECF No. 19). They proposed therefore to proceed on Phase One by cross-motions for summary judgment and to defer a scheduling order for discovery until after the Court's decision on the cross-motions. Id. The Magistrate Judge adopted their joint proposal. (ECF No. 20).1
The parties agree that only USAA's Maine Renters Protection Policy is pertinent. Defs.' Statement of Material Facts (SMF) ¶ 4 (ECF No. 29-2); Pl.'s Opposing SMF ¶ 4 (ECF No. 34). The policy says it applies to loss that occurs during the policy period, July 2, 2014, to July 2, 2015. Me. Renters Policy at Page ID #s 170, 196 (ECF No. 27-5). USAA agrees that events that are the subject of the underlying litigation occurred during that calendar period,2 but denies that any of them are covered by the policy. At the last minute and after the initial exchange of the cross-motions, USAA also seems to have challenged whether the underlying litigation has settled, and asserts that it cancelled the Renters policy on May 1, 2015. I reject those challenges as either too late or unsupported or both, or contrary to the agreement the parties presented to the Magistrate Judge that led to the procedural structure of this lawsuit—cross-motions for summary judgment in advance of serious discovery. I treat July 2, 2014, to July 2, 2015, as the policy period3 and proceed on the premise that the underlying litigation against Burka has resolved.4 Any other treatment would make a mockery of this Court's orders that were based upon the parties' agreement and would waste judicial and advocate resources.
In December 2015, Cayne filed a Complaint against Burka in the Maine Superior Court. See Me. Compl. (ECF No. 29-3). Cayne alleged that Burka accessed her medical records without her knowledge or consent and accessed her personal email and social media accounts. Id. ¶¶ 6, 7, 8. The Complaint contained four claims: Invasion of Privacy, Unlawful Disclosure of Confidential Health Care Information, Intentional Infliction of Emotional Distress, and violation of the California Comprehensive Computer Data Access and Fraud Act. Id. In March 2016, the Superior Court dismissed the Invasion of Privacy and California Act claims. Defs.' Opposing SMF, Additional Facts ¶ 3 (ECF No. 36); Pl.'s Reply to Defs.' Additional Facts ¶ 3 (ECF No. 39); see Burka v. Burka, No. CV-16-20, 2016 Me. Super. LEXIS 64 (Mar. 29, 2016).
In May 2016, Cayne filed an Amended Complaint in the Superior Court. The Amended Complaint did not include the California Act claim, but it reasserted the claim for Invasion of Privacy along with the claims for Unlawful Disclosure of Confidential Health Care Information and Intentional Infliction of Emotional Distress. See Me. First Am. Compl. (ECF No. 29-4).5 The Superior Court dismissed the Invasion of Privacy claim again on September 22, 2016. Defs.' Opposing SMF, Additional Facts ¶ 4; Pl.'s Reply to Defs.' Additional Facts ¶ 4.6 On December 14, 2016, the parties in the Maine litigation stipulated to a dismissal of the Intentional Infliction of Emotional Distress claim with prejudice. Defs.' Opposing SMF, Additional Facts ¶ 5; Pl.'s Reply to Defs.' Additional Facts ¶ 5. The Superior Court later dismissed what remained of the case. On June 7, 2017, Cayne then appealed that final judgment.7
In February 2016, Cayne along with her parents filed a Complaint in Maryland Circuit Court against Burka and his father, also a doctor, focused on improperly accessing medical records. They asserted four claims: Violation Under Health-General § 4-309(f) (a Maryland statute), Invasion of Privacy, Civil Conspiracy, and Intentional Infliction of Emotional Distress. Md. Compl. (ECF No. 29-5). A year later, the Caynes filed an Amended Complaint that dropped the Intentional Infliction of Emotional Distress claim. Md. Am. Compl. (ECF No. 29-6). The parties have not mentioned any further developments in the Maryland litigation between the filing of the Amended Complaint and resolution of the claims.
USAA issued a Maine Renters Protection Policy naming Burka as the sole named insured.8 The policy covers "bodily injury or property damage caused by an occurrence to which this coverage applies." Me. Renters Policy at Page ID # 187. It defines "occurrence" as "an accident ... which results, during the policy period, in ... bodily injury ... or ... property damage." Id. It does not define "accident." It defines "bodily injury" as "bodily harm, sickness or disease, including required care, loss of services and death that results." Id. at Page ID # 194. It says that coverage does not extend to "bodily injury or property damage ... which is expected or intended by the insured." Id. at Page ID # 208.
The parties dispute whether USAA had a duty to defend Burka under the policy in both the Maine and Maryland lawsuits, and, if so, whether and when that duty ended.9 Burka contends that USAA had a duty to defend that continued until the underlying litigation was resolved in 2017. USAA counters that it did not have a duty to defend either lawsuit and that, even if it did, it was able to withdraw its defense in the Maine litigation once the potentially covered claims were dismissed. If USAA did breach a duty to defend, the parties also contest the extent to which USAA may seek discovery to challenge the reasonableness and relatedness of the legal fees Burka incurred in defending against the underlying lawsuits.
The parties agree that Maine law applies. Maine's duty to defend is broad but not unlimited. In determining an insurer's duty to defend, the court compares two documents: the insurance policy and the underlying complaint(s) against the insured. Harlor v. Amica Mut. Ins. Co., 2016 ME 161, ¶ 8, 150 A.3d 793. "An insurer has a duty to defend an insured when the complaint, read broadly in conjunction with the policy, reveals the existence of any legal or factual basis that could potentially be developed at trial and result in an award of damages covered by the terms of the policy." Id. Mere speculation will not trigger a duty to defend, and no duty exists where "the allegations of the complaint fall entirely within a policy exclusion." Barnie's Bar & Grill, Inc. v. U.S. Liab. Ins. Co., 2016 ME 181, ¶ 6, 152 A.3d 613 (quotation marks omitted). But the Maine Law Court has "consistently applied a broad construction of the underlying complaint in favor of the insured and a strict construction of policy exclusions and ambiguities against the insurer." Id. A duty to defend may exist even for a complaint that could not survive a motion to dismiss. Mitchell v. Allstate Ins. Co., 2011 ME 133, ¶ 10, 36 A.3d 876. Finally, "an insurer has a duty to defend if any cause of action alleged in a complaint could fall within the...
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